On Tuesday, DoubleDown Interactive (NASDAQ:DDI) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

DoubleDown Interactive reported a strong start to 2026 with Q1 revenue of $94.1 million, up 13% year-over-year, and adjusted EBITDA of $38.2 million, up 24% year-over-year.

The company's social casino revenue grew by 9.5% year-over-year to $76.9 million, driven by the acquisition of wow Games and an increase in direct-to-consumer (DTC) revenue, which reached 44% of total social casino revenue.

Super Nation's iGaming revenue increased by 30% year-over-year to $17.2 million, aided by the launch of its first iGaming brand, Las Vegas, despite facing challenges from increased UK gambling taxes.

The company remains focused on strategic M&A opportunities, aiming to enhance long-term shareholder value, while maintaining a strong balance sheet with $533.4 million in cash and short-term investments.

Management is optimistic about continuing to drive profitability and cash flow, supported by operational excellence and targeted investments, but acknowledges the challenges posed by the secular decline of the social casino market.

Full Transcript

OPERATOR

Good afternoon and welcome to DoubleDown Interactive's earnings conference call for the first quarter ended March 31, 2026. My name is Lateef and I will be your operator this afternoon. Prior to this call, Double down issued its financial results for the first quarter of 2026 and a press release, a copy of which is available in the Investor Relations section of the company's website at www.DoubleDownInteractive.com. you can find the link to the Investor Relations section at the top of the homepage. Joining us on today's call are DoubleDown CEO Mr. In Ko Kim and its CFO Mr. Joe Sigrist. Following their remarks, we will open the call for questions. Before we begin, Joe Giffoni, the Company's Investor Relations Advisor, will make a brief introductory statement. Mr. Jaffoni. Thank you, Lateef.

Joe Giffoni (Investor Relations Advisor)

before Management begins their formal remarks, we need to remind everyone that some of Management's comments today will be Forward looking statements within the meaning of Section 27A of the securities Act 1933, as amended and Section 21E of the securities Exchange act of 1934 as amended, and we hereby claim the protection of the Safe harbor provision of the Private Securities Litigation Reform act of 1995. Forward looking statements are statements about future events and include expectations and projections not present or historical facts and can be identified by use of the words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate or other similar terms. Forward looking statements include and are not limited to those regarding the Company's future plans, merger and acquisition strategy, strategic and financial objectives, expected performance and financial outlook. Forward looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially and adversely from what the Company expects. Therefore, you should exercise caution in interpreting and relying on them. We refer you to DoubleDown's annual report on Form 20F filed with the SEC on March 31, 2026 and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. These forward looking statements are made only as of the date of this call. The Company does not undertake and expressly disclaims any obligation to update or alter the forward looking statements, whether as a result of new information, future events or otherwise. Except as required by law. During today's call, management will discuss non IFRS financial measures which management believes to be useful in evaluating the Company's operating performance. These measures should not be considered superior to in isolation or as a substitute for financial results prepared in accordance with IFRS. A full reconciliation of these measures to the most directly comparable IFRS measures is available in the earnings release issued this afternoon. I would like to remind everyone that this call is being recorded and will be made available for replay via the link in the Investor Relations section on Double Down's website. Thank you for your patience with that and it's now my pleasure to turn the call over to Double Down CEO Ake Kim. Ake, please go ahead.

Ake Kim

Thank you, Joe Good afternoon everyone. We are delighted to be with you today to discuss Double Down Interactive First Quarter 2026 Results Key Highlights include overall financial results reflecting a solid start to 2026, the highest quarterly revenue at Super Nation since our acquisition of the business back in 2023, significant continued growth of our direct to consumer social casino revenue and another quarter of delivering consistent profitability and significant free cash flow. We believe these results validate our strategy and demonstrate our ability to drive operational excellence across our portfolio. Let's start with the financial results. This afternoon we reported first quarter consolidated revenue of $94.1 million up nearly 13% year over year, along with adjusted EBITDA of $38.2 million up 24% year over year. In Q1, we again delivered on our priority to drive a high conversion of revenue to profit and cash flow. Net cash flow from operations was $46.4 million in the quarter we delivered this strong profit and cash flow results even as we invested in new player acquisition activities at Super Nation specifically in support of its recently launched First I Gaming brand Las Vegas, which has met with a strong player response. Our social casino segment remains the primary engine of Double Down's profit and cash flow generation. In the first quarter, social casino revenue grew 9.5% year over year to $76.9 million driven by the contribution from wow Games which was acquired in the third quarter of last year. The direct to consumer or DTC aspect of our social casino business remains a driving force behind our continued strong profitability. As mentioned on our last conference call, wow Games already benefits from a relatively large DTC component due to its strong web based history and over the last few quarters we have made significant progress in ramping up DTC purchases made in our flagship social casino DoubleDown Casino. In the first quarter of 2026, this direct to consumer transition accelerated as the DTC component of WDOWN casino revenue exceeded 40%. As a result, DTC revenue in the first quarter was 44% of total social casino revenue, up sequentially from 33% in Q4 2025 we plan to remain focused on optimizing the contribution of DTC revenue as a percentage of our overall social casino revenue throughout 2026. Recognizing that the global social casino market is estimated to be in secular decline, our priorities in this business segment remain precise execution of our product development initiatives around player and payer retention, focus on marketing and LiveOps activities to maximize payer conversion and purchasing activity, and continued focus on the direct consumer transition. Turning to our iGaming business, Super Nation's Q1 2026 revenue was $17.2 million, an increase of 30% year over year and up 6% from Q4 2025. The recent introduction of our first iGaming casino title, Las Vegas, contributed to the strong Super Nation results in the first quarter. Going forward, we look to leverage this early positive result as we continue to acquire new players through marketing and advertising investments at Super Nation. We are also focused on continuing to find offsets to the recently introduced higher UK gambling tax rate through product adjustments such as reducing bonusing rates. I'm pleased to report the early results of this action to be positive. Our first quarter results highlight how prudent targeted investments are uncovering growth opportunities while sustaining our track record of strong profitability and cash flow generation. We are successfully integrating acquisitions and optimizing our core double down business. M&A remain a strategic priority as we evaluate opportunities in online gaming and mobile entertainment to drive long term shareholder value. Now I will turn the call over to our CFO Joe Sigrid to walk us through the financials before providing my closing remarks.

Joe Sigrid

Joel thank you IK and good afternoon everyone. To review, revenues for the first quarter of 2026 were $94.1 million. This compares to total company revenues of $83.5 million in the first quarter of 2025. Our Social Casino segment grew approximately 9% from the first quarter of 2025 to $76.9 million, boosted by the inclusion of revenue from wow Games. As you'll recall, the wow Games acquisition closed in July of last year. IGaming revenues grew by $4 million or 30% year over year to $17.2 million and was up over $1 million from Q4 2025. Regarding our overall social casino KPIs, we mentioned last quarter that the metrics from wow Games are somewhat different from those from Double Down Casino. Specifically, the wow Games business experiences a higher payer conversion rate and lower average monthly revenue per payer. With this in mind, overall social casino KPI highlights for the first quarter include the payer conversion rate which is the percentage of players who pay within the social casino apps, increased to 9.7% in Q1 2026 compared to 6.9% in Q1 2025. The average revenue per daily active user or ARPDAO of $1.34 up from $1.29 in Q1 2025 and an average monthly revenue per payer at $207.00 in Q1 2026 down from $276.00 in the prior year period. In the first quarter of 2026, operating expenses were $58.7 million compared to $53.9 million in the first quarter of 2025. The increase is primarily due to the addition of WOW Games expenses. Sales and marketing expenses for the first quarter of 2026 were $17.4 million compared to $14.1 million in the first quarter of 2025 which again did not include WOW games. In addition, and as IK mentioned earlier, in Q1 we invested to acquire new players for Super Nation's recently announced fourth brand and in the fourth quarter, excuse me, and in the first quarter we also saw an opportunity to increase advertising investment in Double Down Casino. Based on recent positive ROI trends. Profit excluding non controlling interest for the first quarter of 2026 increased 48% to $35.4 million or earnings per fully diluted common share of $14.28 or $0.71 per American depository share in the first quarter of 2026 compared to profit for the interim period of $23.8 million or earnings per fully diluted share of $9.62 $0.48 per ADS in Q1 of 2025. The increase primarily reflects higher revenue and higher unrealized gain on foreign currency, partially offset by higher overall operating expenses which was primarily due to the inclusion of WOW Games and increased costs associated with the revenue growth from Super Nation. Adjusted EBITDA for the first quarter of 2026 rose to $38.2 million compared to $30.8 million for the first quarter of 2025 and $40.6 million for Q4 2025. Adjusted EBITDA margin was 40.6% for Q1 2026 as compared to 36.9% in Q1 2025 and 42.4% in Q4 2025. Net cash flows provided by operating activities in Q1 2026 were $46.4 million compared to $41.1 million in Q1 2025 due to higher profit and lower income tax paid. Inclusion of Q1 2026 meaningful cash generation. We had $533.4 million in cash, cash equivalents and short term investments with a net cash position on March 31, 2026 of approximately $500 million or approximately $10.10 per ADS. Now I'll turn the call back to IK for closing remarks.

In Ko Kim (Chief Executive Officer)

Thank you, Joe. Double Down Interactive powered by our core social casino and igaming segments delivered another quarter of strong profitability and cash flow. Building on this solid part to 2026, we remain committed to the innovation and disciplined high ROI investments and to drive DTC revenues to optimize social casino margins. Finally, our strong balance sheet and cash position provide the flexibility to pursue strategic M and A a core pillar of our strategy to enhance long term shareholder value. We are now happy to take your questions.

OPERATOR

Thank you. As a reminder to ask a question, you will need to press Star 11 on your telephone to remove yourself from the queue. You may press star 11 again. Please stand by while we compile the Q and A roster. Our first question comes from the line of David bank of Texas Capital Bank. Your line is open, David.

David

Great, thank you. And I did read the press release where you're sort of not going to be answering too much around the W expression of interest. With that being stated though, rather than asking about, you know, vote outcome potential or some of the nuances with that offer, is there any way you could help shareholders or potential ones or us just to review the process and kind of the structure, the related structure with it from here, just any detail around that would be helpful. This independent committee who may be on it, the timing of some of the voting logistics, anything that you think you could share would be helpful. Okay, I understand. And then I guess let me just ask two fundamental ones because that one I didn't get much the increased visibility into Super Nation EBITDA contribution this time around relative to last time. Are we seeing the endpoint on that inflection broadly this year and are we sort of still break even with that business line?

David

Okay, awesome. And then if I could just have one more follow up. You did mention, Joe, the KPI nuances between WOW and DDI Double Down Interactive. But if you could bifurcate perhaps DTC growth or the mix with the two we're getting here, it's like 44%. We were kind of 20 plus percent I would think by now with DDI, can you help us? Can we get to 50% plus? I'm trying to understand where we are inning wise with D2C as a full company. Okay, great. Thanks guys.

OPERATOR

Thank you. Our next question comes from the line of Eric Handler of Roth Capital. Your line is open, Eric. Thank you very much. I'm going to beat the horse to death here with the question on the W offer. But when you look at potential acquisitions, is that on hold for the moment until the offer has been evaluated? Are you still actively looking for potential deals.

Eric Handler (Analyst)

Yeah, thanks. Thanks, Eric. Well, I mean, from a operating the company perspective, the management team here at Double down, you know, continues to operate business as usual. And so we are continuing not only to run the current businesses we have, but to evaluate and analyze M and A opportunities. Because that's certainly been a big part of what we've been focused on. And so it's a big part of our growth strategy. And so we're continuing to look at opportunities. Thanks, Eric.

OPERATOR

Thank you. Next question comes from the line of Aaron Lee of Macquarie. Your question, please. Aaron.

Aaron Lee (Analyst)

Hey, good afternoon. Thanks for taking my question. Maybe to start just building off the earlier question on M and A, can you just update us on what the M and A environment looks like today? Are you still seeing deals cross your desk and what's been the gating factor so far? You know, are these deals just too small to move the needle or are seller expectations misaligned? Any color on the MA picture would be helpful. Thank you. Okay, thanks for that. And I also wanted to ask about your comment about the opportunity you saw during the quarter to increase the advertising investment in Double Down Casino. Is there any more detail you can provide on what you saw in the market as you move through the quarter and do you have visibility into whether those trends are sustainable in the coming quarters? Thank you. Awesome. Thanks, Joe.

OPERATOR

Thank you. Once again, to ask a question, please press star one one on your telephone. Again, that's star 11 on your telephone to ask a question. Our next question comes on the line of Josh Nicholas of B Riley. Your line is open, Josh.

Josh Nicholas (Analyst)

Yeah, thanks for taking my question. Just to touch on the social casino business, we've seen some improvement there. What was the organic growth rate? X. Wow. I'm just curious how we should be thinking about that trajectory as we lap the wow acquisition in July and. And move into the second half. Thanks. And last question for me. There's been a couple questions on it. Obviously wouldn't expect you to comment on the proposal itself, but anything you could say about the timing around forming a special committee or how long until the process could reach a decision? Got it. Thank you.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.