SEATTLE, April 24, 2024 (GLOBE NEWSWIRE) -- DoubleDown Interactive Co., Ltd. (NASDAQ: DDI) (“DoubleDown” or the “Company”), a leading developer and publisher of digital games on mobile and web- based platforms, announced today that it will release its 2024 first quarter financial results after the market closes on Wednesday, May 8, 2024, and host a conference call and simultaneous webcast at 5:00 p.m. ET (2:00 p.m. PT) that day. Both the call and webcast are open to the general public. On the call, DoubleDo ...

SEATTLE, March 29, 2024 (GLOBE NEWSWIRE) -- DoubleDown Interactive Co., Ltd. (NASDAQ:DDI) ("DoubleDown" or the "Company"), a leading developer and publisher of digital games on mobile and web-based platforms, announced today that at its annual general meeting of shareholders held on March 29, 2024 at 11:00 a.m., Korea Standard Time (March 28, 2024 at 10:00 p.m., U.S. Eastern Time) in Seoul, Korea, the following actions were taken by the shareholders of record as of December 29, 2023 on the proposed resoluti ...

PART I [Item 3: Key Information](index=8&type=section&id=Item%203%3A%20Key%20Information) This section outlines significant risks and uncertainties impacting the company's business, financial condition, and operations, including reliance on key games and platforms, legal challenges, and shareholder relationships [Risk Factors](index=8&type=section&id=D.%20Risk%20Factors) This subsection details specific business, operational, legal, and geopolitical risks, including player reliance, platform dependence, intellectual property, and controlling shareholder relationships - The company relies on a small percentage of players for revenue, with the **payer conversion rate at 6.4% in 2023**, up from 5.4% in 2022[35](index=35&type=chunk)[37](index=37&type=chunk) - The 'DoubleDown Casino' game generated the vast majority of revenue, accounting for **96.3% in 2023** and 96.7% in 2022[38](index=38&type=chunk) - The company settled the 'Benson case' class-action lawsuit, contributing **$145.25 million to the settlement fund**, with the final payment made in June 2023[61](index=61&type=chunk)[63](index=63&type=chunk) - The company holds significant intellectual property licensing agreements with IGT and its controlling shareholder, DoubleU Games (DUG), for game content[48](index=48&type=chunk) - As of December 31, 2023, the company had outstanding loans from DoubleU Games totaling **KRW 50 billion (approximately US$38.8 million)**, maturing in 2024[142](index=142&type=chunk) [Item 4: Information on the Company](index=34&type=section&id=Item%204%3A%20Information%20on%20the%20Company) This section provides a comprehensive overview of DoubleDown Interactive's business, including its history, corporate structure, operational strategies, key games, and regulatory environment [History and Development of the Company](index=34&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company, established in 2008 and acquired by DoubleU Games in 2017, expanded through strategic acquisitions and listed its ADSs on Nasdaq in 2021 - The company was established in Korea in 2008 and became a wholly-owned subsidiary of DoubleU Games (DUG) in 2017[170](index=170&type=chunk) - In October 2023, the company acquired SuprNation, a European iGaming operator, expanding into real-money gaming[170](index=170&type=chunk)[172](index=172&type=chunk) - The company's American Depositary Shares (ADSs) began trading on The Nasdaq Stock Market under the symbol 'DDI' on August 31, 2021[172](index=172&type=chunk) [Business Overview](index=35&type=section&id=B.%20Business%20Overview) DoubleDown Interactive is a leading social casino game developer, leveraging a data-driven approach, proprietary and licensed content, and recent expansion into European iGaming - The company is a leading social casino game developer with over **117 million installations** and an average of **1.8 million monthly players in 2023**[174](index=174&type=chunk) Key Business Metrics (2023) | Metric | Value | | :--- | :--- | | Global Social Casino Market Size | ~$7.3 billion | | DoubleDown Casino Revenue Rank | 5th | | Average Monthly Players | 1.8 million | | Average Revenue Per Daily Active User (ARPDAU) | $1.09 | - The company's content strategy includes in-house development, licensing over **2,000 slot titles from IGT**, and exclusive access to over **400 titles from DoubleU Games**[178](index=178&type=chunk)[183](index=183&type=chunk) - Primary competitors in the social casino space include Playtika, Aristocrat, SciPlay, and Take-Two Interactive[214](index=214&type=chunk) - The business is subject to evolving data privacy regulations like GDPR and CCPA, and potential scrutiny over social casino gaming[223](index=223&type=chunk)[229](index=229&type=chunk)[232](index=232&type=chunk) [Organizational Structure](index=49&type=section&id=C.%20Organizational%20Structure) As of December 31, 2023, DoubleDown Interactive Co., Ltd. operates through three wholly-owned principal subsidiaries Principal Operating Subsidiaries | Legal Entity Name | Jurisdiction | Percentage Interest Held | | :--- | :--- | :--- | | DoubleDown Interactive LLC | Washington | 100% | | SuprNation AB | Sweden | 100% | | Double8 Games Co., Ltd. | Republic of Korea | 100% | [Property, Plants and Equipment](index=49&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company leases its main facilities in Seoul, Seattle, and Malta, with the Seoul headquarters leased from its parent company, DoubleU Games - The company leases its principal Seoul office from DoubleU Games, with the current lease expiring on September 30, 2028[243](index=243&type=chunk) - Other key leased facilities include offices in Seattle, Washington, and Swieqi, Malta, with leases expiring in October 2024[243](index=243&type=chunk) [Item 5: Operating and Financial Review and Prospects](index=49&type=section&id=Item%205%3A%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes the company's financial condition and operating results, highlighting revenue trends, a significant net income turnaround in 2023 due to the absence of prior-year one-time charges, and liquidity [Operating Results](index=56&type=section&id=A.%20Operating%20Results) This subsection details the company's financial performance, showing a revenue decrease in 2023 but a significant net income turnaround due to the absence of prior-year one-time charges Consolidated Financial Results ($ in millions) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenue | $308.9 | $321.0 | $363.2 | | Operating Income (Loss) | $118.2 | $(313.9) | $98.7 | | Net Income (Loss) | $100.9 | $(234.0) | $78.1 | | Adjusted EBITDA | $118.9 | $101.6 | $120.1 | - Revenue decreased by **3.8% in 2023** to **$308.9 million**, primarily due to changes in player behavior and economic concerns, with SuprNation contributing **$4.3 million**[290](index=290&type=chunk) - The significant increase in net income in 2023 resulted from the absence of 2022's **$141.8 million Benson case loss contingency** and **$269.9 million goodwill impairment charge**[307](index=307&type=chunk)[314](index=314&type=chunk) - Sales and marketing expenses decreased by **31.0% in 2023** to **$49.6 million**, driven by reduced user acquisition advertising spend[301](index=301&type=chunk) Key Performance Indicators | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Average MAU (millions) | 1.7 | 2.2 | | Average DAU (millions) | 0.8 | 1.0 | | ARPDAU | $1.24 | $0.97 | | Payer Conversion Rate | 6.0% | 5.3% | [Liquidity and Capital Resources](index=65&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from operating cash flows, with **$206.9 million in cash** as of year-end 2023, despite a decrease due to the Benson case settlement payment Cash Flow Summary ($ in millions) | Cash Flow | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $20.8 | $50.8 | $96.1 | | Net cash used in investing activities | $(30.3) | $(67.8) | $(1.8) | | Net cash from financing activities | $0 | $0 | $86.0 | | Cash and cash equivalents at end of period | $206.9 | $217.4 | $242.1 | - Net cash from operating activities decreased to **$20.8 million in 2023**, primarily due to the **$95.3 million Benson case settlement payment**[353](index=353&type=chunk) - As of December 31, 2023, outstanding loans from DoubleU Games totaled **KRW 50 billion (US$38.8 million)**, maturing on May 27, 2024[357](index=357&type=chunk) [Critical Accounting Estimates](index=67&type=section&id=E.%20Critical%20Accounting%20Estimates) This subsection outlines critical accounting estimates, including revenue recognition for virtual currency, annual goodwill and intangible asset impairment testing, and legal contingencies like the Benson case settlement - Revenue from virtual currency sales is recognized based on estimated consumption rates derived from historical player behavior[369](index=369&type=chunk)[370](index=370&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually, resulting in a **$269.9 million impairment charge in 2022**[373](index=373&type=chunk)[378](index=378&type=chunk) - The company accrued **$141.8 million in 2022** and **$3.5 million in 2021** for the Benson case legal settlement[384](index=384&type=chunk) [Item 6: Directors, Senior Management and Employees](index=70&type=section&id=Item%206%3A%20Directors%2C%20Senior%20Management%20and%20Employees) This section details the company's leadership, including executive officers and directors, their compensation, board practices, and employee distribution as of year-end 2023 [Directors and Senior Management](index=70&type=section&id=A.%20Directors%20and%20Senior%20Management) The company's leadership comprises executive officers, including CEO In Keuk Kim and CFO Joseph A. Sigrist, and three independent directors, with detailed biographies provided Executive Officers and Directors | Name | Position(s) | | :--- | :--- | | In Keuk Kim | Chief Executive Officer; Director | | Joseph A. Sigrist | Chief Financial Officer; Director | | Haenam Kim | Chief Marketing Officer; Director | | Ki Chul Kim | Chief Data Officer; Director | | Yanghoon Cho | Independent Director | | Jaesung Chung | Independent Director | | Whanlim Kim | Independent Director | [Compensation](index=72&type=section&id=B.%20Compensation) Aggregate compensation for directors and executive officers totaled **$2,748,714 in 2023**, including performance-based bonuses contingent on ADS trading price targets - Aggregate compensation for directors and executive officers for fiscal year 2023 was **$2,748,714**[399](index=399&type=chunk) - Performance-based cash bonuses granted in 2023 are contingent on service and the company's ADS trading price exceeding specified targets[403](index=403&type=chunk)[404](index=404&type=chunk) [Board Practices](index=74&type=section&id=C.%20Board%20Practices) The seven-member Board of Directors, elected for three-year terms, oversees management, strategic plans, and risk, supported by an Audit Committee composed of three independent directors - The Board of Directors consists of **seven members**, each serving a three-year term[413](index=413&type=chunk) - The company's Audit Committee, composed of **three independent directors**, is responsible for financial oversight and auditor relations[418](index=418&type=chunk)[419](index=419&type=chunk) [Employees](index=76&type=section&id=D.%20Employees) As of December 31, 2023, DoubleDown Interactive had approximately **240 full-time employees** globally, distributed across Seoul, Seattle, and Malta, with no unions Employee Distribution (as of Dec 31, 2023) | Category | Number of Employees | | :--- | :--- | | **Total Full-Time** | **~240** | | **By Location** | | | Seoul | 129 | | Seattle | 54 | | Malta | 57 | | **By Function** | | | Technology & Content Development | 141 | | Marketing | 42 | | General Administration | 57 | [Item 7: Major Shareholders and Related Party Transactions](index=76&type=section&id=Item%207%3A%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details the company's ownership structure, with DoubleU Games as the controlling shareholder, and significant related party transactions including licensing, services, and loans [Major Shareholders](index=76&type=section&id=A.%20Major%20Shareholders) The company's ownership is concentrated, with DoubleU Games Co., Ltd. as the controlling shareholder holding **67.1%** of common shares Principal Shareholders' Ownership | Name of Beneficial Owner | Ownership Percentage | | :--- | :--- | | DoubleU Games Co., Ltd. | 67.1% | | STIC Special Situation Diamond Limited | 20.2% | | Bryant R. Riley | 8.9% | [Related Party Transactions](index=78&type=section&id=B.%20Related%20Party%20Transactions) The company has significant related party transactions with DoubleU Games, including game licensing, development services, outstanding loans, and an office sublease - The company incurred **$2.6 million in royalties in 2023** under a Game License Agreement with DoubleU Games[431](index=431&type=chunk) - A Game Development Services Agreement with DoubleU Games resulted in **$1.4 million in service fees for 2023**[431](index=431&type=chunk) - The company has indemnification agreements with executive officers and directors, with a maximum aggregate liability of **$5 million per 12-month period**[434](index=434&type=chunk) [Item 8: Financial Information](index=79&type=section&id=Item%208%3A%20Financial%20Information) This section refers to the audited financial statements and details legal proceedings, notably the **$145.25 million Benson case settlement** paid in June 2023 - The company settled the 'Benson case' class-action lawsuit by contributing **$145.25 million** to a settlement fund, with the final payment made in June 2023[440](index=440&type=chunk) [Item 10: Additional Information](index=81&type=section&id=Item%2010%3A%20Additional%20Information) This section provides additional information on corporate governance, share structure, Korean exchange controls, and material Korean and U.S. federal income tax considerations, including potential PFIC status [Memorandum and Articles of Association](index=81&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) This subsection details corporate governance rules from the articles of incorporation and Korean Commercial Act, covering board powers, dividend policies, preemptive rights, and shareholder meeting procedures - Dividends are declared annually from net assets, requiring a legal reserve of at least **10% of cash dividends** until it reaches half of stated capital[454](index=454&type=chunk) - Major corporate actions, including amending articles or transferring significant business, require a **two-thirds majority special resolution** from shareholders[464](index=464&type=chunk) [Exchange Controls](index=86&type=section&id=D.%20Exchange%20Controls) This subsection describes Korean Foreign Exchange Transaction Laws regulating non-resident investments, including reporting requirements for ADS issuance and custody for direct share holdings - Korean Foreign Exchange Transaction Laws regulate non-resident investments, granting the Ministry of Economy and Finance authority to impose emergency restrictions[481](index=481&type=chunk)[482](index=482&type=chunk) [Taxation](index=88&type=section&id=E.%20Taxation) This subsection summarizes Korean and U.S. federal income tax considerations, including Korean withholding taxes on dividends and capital gains, and the potential for the company to be classified as a Passive Foreign Investment Company (PFIC) - Dividends paid to non-resident holders are subject to a **22.0% Korean withholding tax**, potentially reduced by tax treaties[496](index=496&type=chunk) - Capital gains from common share transfers are subject to Korean withholding tax, while ADSs transferred outside Korea are generally exempt[498](index=498&type=chunk)[499](index=499&type=chunk) - The company's PFIC status is undetermined; if classified, U.S. holders could face adverse tax consequences, including higher tax rates and interest charges on excess distributions and gains[521](index=521&type=chunk)[531](index=531&type=chunk)[534](index=534&type=chunk) [Item 11: Quantitative and Qualitative Disclosures About Market Risk](index=97&type=section&id=Item%2011%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from foreign exchange rate fluctuations and interest rate changes, though sensitivity analysis indicates no significant impact on net income - The company's primary market risks are foreign exchange risk, with USD revenues against KRW/EUR functional currencies, and interest rate risk on borrowings[552](index=552&type=chunk)[553](index=553&type=chunk) - Sensitivity analysis indicates a **10% USD appreciation** against KRW or EUR, or a **100-basis-point interest rate decrease**, would not significantly impact net income as of December 31, 2023[552](index=552&type=chunk)[553](index=553&type=chunk) PART II [Item 15: Controls and Procedures](index=100&type=section&id=Item%2015%3A%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective, with no material changes reported for 2023 - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[567](index=567&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO 2013 framework[568](index=568&type=chunk) [Item 16C: Principal Accountant Fees and Services](index=101&type=section&id=Item%2016C%3A%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to the company's independent registered public accounting firms, Samil PwC in 2023 and E&Y in 2022, with all services pre-approved by the audit committee Accountant Fees (in thousands) | Fee Type | 2023 (Samil PwC) | 2022 (E&Y) | | :--- | :--- | :--- | | Audit Fees | $1,166 | $1,174 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $157 | | Other Fees | $0 | $2 | [Item 16F: Change in Registrant's Certifying Accountant](index=102&type=section&id=Item%2016F%3A%20Change%20in%20Registrant%27s%20Certifying%20Accountant) The company appointed Samil PricewaterhouseCoopers (PwC) as its auditor for fiscal year 2023, replacing Ernst & Young LLP (EY), due to a mandatory auditor rotation for its controlling shareholder - The company appointed Samil PricewaterhouseCoopers (PwC) as its auditor for fiscal year 2023, replacing Ernst & Young LLP (EY)[578](index=578&type=chunk)[581](index=581&type=chunk) - The change was prompted by a mandatory auditor rotation for the company's controlling shareholder, DoubleU Games, under Korean law[579](index=579&type=chunk) [Item 16G: Corporate Governance](index=103&type=section&id=Item%2016G%3A%20Corporate%20Governance) As a foreign private issuer, the company follows Korean corporate governance practices, which differ from NASDAQ standards regarding board independence, shareholder quorum, and committee composition - As a foreign private issuer, the company follows Korean corporate governance practices, which differ from NASDAQ rules regarding board independence, shareholder quorum, and committee composition[585](index=585&type=chunk) [Item 16K: Cybersecurity](index=104&type=section&id=Item%2016K%3A%20Cybersecurity) The company maintains a cybersecurity program overseen by the CEO and board, based on NIST CSF and ISO 27001, with no material cyber-attack impacts to date - The company has a cybersecurity program based on recognized standards like the NIST Cybersecurity Framework and ISO 27001[589](index=589&type=chunk)[591](index=591&type=chunk) - The board of directors oversees cybersecurity risk and receives regular updates, with no material cyber-attack impacts to date[590](index=590&type=chunk)[592](index=592&type=chunk)[593](index=593&type=chunk) PART III [Item 18: Financial Statements](index=105&type=section&id=Item%2018%3A%20Financial%20Statements) This section presents the company's audited consolidated financial statements for 2021-2023, prepared under U.S. GAAP, including statements of operations, balance sheets, cash flows, and detailed notes [Consolidated Statements of Operations](index=111&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported **$308.9 million in revenue for 2023**, with operating income recovering to **$118.2 million** and net income reaching **$100.9 million**, a significant turnaround from 2022's loss Consolidated Statements of Operations Highlights (in thousands of U.S. dollars) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenue | $308,864 | $321,027 | $363,205 | | Total operating expenses | $190,673 | $634,900 | $264,472 | | Operating income (loss) | $118,191 | $(313,873) | $98,733 | | Net income (loss) | $100,928 | $(233,978) | $78,108 | [Consolidated Balance Sheets](index=112&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets were **$803.3 million**, with liabilities significantly decreasing to **$75.5 million** due to the clearing of a loss contingency accrual, and shareholders' equity increasing to **$727.9 million** Consolidated Balance Sheet Highlights (in thousands of U.S. dollars) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $206,911 | $217,352 | | Goodwill | $396,704 | $379,072 | | Total assets | $803,344 | $792,052 | | **Liabilities & Equity** | | | | Total current liabilities | $68,505 | $116,482 | | Total liabilities | $75,454 | $165,826 | | Total shareholders' equity | $727,890 | $626,226 | [Consolidated Statements of Cash Flows](index=114&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$20.8 million in 2023**, decreasing due to a **$95.3 million legal settlement payment**, while cash and cash equivalents ended at **$206.9 million** Consolidated Statements of Cash Flows Highlights (in thousands of U.S. dollars) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash flows from operating activities | $20,833 | $50,791 | $96,105 | | Net cash flows (used in) investing activities | $(30,269) | $(67,830) | $(1,806) | | Net cash flows from financing activities | $0 | $0 | $86,041 | | Net (decrease) in cash and cash equivalents | $(10,441) | $(24,708) | $178,872 | | Cash and cash equivalents at end of period | $206,911 | $217,352 | $242,060 | [Notes to Consolidated Financial Statements](index=115&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, recent acquisitions, related party debt, income tax, legal contingencies including the Benson case, and significant revenue concentration with major platforms - In October 2023, the company acquired SuprNation AB for **€34.3 million (approximately $36.5 million)** cash, plus potential performance-based payments[637](index=637&type=chunk) - A **$269.9 million goodwill and intangibles impairment charge** was recognized in 2022, with no impairment in 2023 or 2021[654](index=654&type=chunk) - The company has significant revenue concentration with **Apple (55.0%)**, **Google (18.2%)**, and **Facebook (16.8%)** for the year ended December 31, 2023[648](index=648&type=chunk) - The company settled the Benson case, making a final payment in June 2023 that cleared the **$95.25 million accrual** from year-end 2022[707](index=707&type=chunk)

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DoubleDown Interactive Co., Ltd. (NASDAQ:DDI) Q4 2023 Earnings Conference Call February 13, 2024 5:00 PM ET Company Participants Richard Land - IR In Keuk Kim - CEO Joe Sigrist - CFO Conference Call Participants Aaron Lee - Macquarie Greg Gibas - Northland Securities Operator Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the Fourth Quarter and Year ended December 31, 2023. My name is Josh, and I will be your operator this afternoon. Prior to this call, DoubleDown issue ...

[Executive Summary & Business Update](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Update) DoubleDown Interactive reported strong Q4 and FY 2023 financial performance, driven by core social casino growth, strategic acquisition, and improved profitability, with the CEO emphasizing player monetization and capital efficiency [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20vs.%20Fourth%20Quarter%202022%20Summary) DoubleDown Interactive achieved strong Q4 2023 results, with core social casino revenue up 3% and Adjusted EBITDA rising 46%, boosted by the SuprNation acquisition and improved player engagement Fourth Quarter 2023 vs. Fourth Quarter 2022 Financial Highlights: | Metric | Q4 2023 | Q4 2022 | Change YoY | | :-------------------------------- | :------ | :------ | :--------- | | Revenue | $83.1 million | $76.2 million | +9% | | Revenue (ex-SuprNation) | $78.8 million | $76.2 million | +3% | | Operating Expenses | $47.5 million | $321.4 million | -85% | | Adjusted EBITDA | $36.2 million | $24.7 million | +46% | | Adjusted EBITDA Margin | 43.5% | 32.4% | +11.1 ppts | | Net Income (Loss) | $25.5 million | $(194.4) million | N/A | | EPS (ADS) | $0.51 | $(3.92) | N/A | | ARPDAU (social casino/free-to-play) | $1.24 | $0.98 | +26% | | Average monthly revenue per payer (social casino/free-to-play) | $279 | $227 | +23% | - Revenue contributed by SuprNation totaled **$4.3 million** for the 61 days the Company owned and operated the business in Q4 2023[7](index=7&type=chunk) [Full Year 2023 Highlights](index=2&type=section&id=Full%20Year%202023%20vs.%20Full%20Year%202022%20Summary) Full year 2023 saw DoubleDown Interactive achieve a net income turnaround, driven by lower operating expenses and increased Adjusted EBITDA, improving profitability despite a slight revenue decline Full Year 2023 vs. Full Year 2022 Financial Highlights: | Metric | FY 2023 | FY 2022 | Change YoY | | :-------------------------------- | :------ | :------ | :--------- | | Revenue | $308.9 million | $321.0 million | -4% | | Operating Expenses | $190.7 million | $634.9 million | -70% | | Adjusted EBITDA | $118.9 million | $101.6 million | +17% | | Adjusted EBITDA Margin | 38.5% | 31.6% | +6.9 ppts | | Net Income (Loss) | $100.4 million | $(234.0) million | N/A | | EPS (ADS) | $2.03 | $(4.72) | N/A | | ARPDAU (social casino/free-to-play) | $1.09 | $0.97 | +12% | | Average monthly revenue per payer (social casino/free-to-play) | $245 | $226 | +8% | - Full year 2022 operating expenses included a **$141.8 million** charge related to the Benson class action settlement and a **$269.9 million** goodwill and intangibles impairment charge, which were one-time in nature[11](index=11&type=chunk) [CEO Commentary & Strategic Initiatives](index=1&type=section&id=CEO%20Commentary) CEO In Keuk Kim emphasized consistent profitability and free cash flow from player monetization, with strategic focus on scaling the SuprNation acquisition and exploring further expansion opportunities - Core social casino revenue increased **3%** year-over-year to **$78.8 million** in Q4 2023, with Adjusted EBITDA increasing **46%** to **$36.2 million**[4](index=4&type=chunk) - ARPDAU and average monthly revenue per payer for the flagship social casino game DoubleDown Casino rose **26%** and **23%**, respectively, compared to Q4 2022[4](index=4&type=chunk) - The acquisition of SuprNation in Q4 2023 marked the Company's entrance into the European iGaming market, with an initial focus on scaling the business through increased marketing investment and leveraging marketing and product expertise[5](index=5&type=chunk) - At 2023 year-end, cash and cash equivalents and short-term investments net of current borrowing were approximately **$235 million**, equivalent to about **$4.75** per ADS, providing significant flexibility for capital deployment[6](index=6&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) This section provides an in-depth analysis of DoubleDown Interactive's financial performance for Q4 and full year 2023, covering revenue, expenses, profitability, and cash flows, alongside key operating metrics [Fourth Quarter 2023 Financial Performance](index=1&type=section&id=Fourth%20Quarter%202023%20Financial%20Results) Q4 2023 saw DoubleDown Interactive achieve significant financial improvements, including a 9% revenue increase, substantial operating expense reduction, and a strong rebound to net income, reflecting improved operational efficiency [Revenue](index=1&type=section&id=Q4%202023%20Revenue) Q4 2023 revenue increased by 9% year-over-year, primarily driven by enhanced engagement of the existing player base and contribution from the SuprNation acquisition Q4 Revenue Performance: | Metric | Q4 2023 | Q4 2022 | Change YoY | | :------------------------ | :------ | :------ | :--------- | | Total Revenue | $83.1 million | $76.2 million | +9% | | Revenue (exclusive of SuprNation) | $78.8 million | $76.2 million | +3% | | SuprNation Contribution | $4.3 million | N/A | N/A | - The increase in revenue was primarily driven by increased engagement of the existing player base[10](index=10&type=chunk) [Operating Expenses](index=1&type=section&id=Q4%202023%20Operating%20Expenses) Q4 2023 operating expenses significantly decreased by 85% due to the non-recurrence of a prior year impairment charge and lower cost of revenue and marketing expenses Q4 Operating Expenses: | Metric | Q4 2023 | Q4 2022 | Change YoY | | :----------------- | :------ | :------ | :--------- | | Operating Expenses | $47.5 million | $321.4 million | -85% | - The significant decrease was primarily due to the non-recurrence of a **$269.9 million** non-cash goodwill and intangibles impairment incurred in Q4 2022, along with lower cost of revenue and marketing expenses in Q4 2023[7](index=7&type=chunk)[12](index=12&type=chunk) [Adjusted EBITDA](index=1&type=section&id=Q4%202023%20Adjusted%20EBITDA) Q4 2023 Adjusted EBITDA increased by 46% to $36.2 million, driven by higher revenue and reduced cost of revenues and sales and marketing expenses Q4 Adjusted EBITDA Performance: | Metric | Q4 2023 | Q4 2022 | Change YoY | | :-------------------- | :------ | :------ | :--------- | | Adjusted EBITDA | $36.2 million | $24.7 million | +46% | | Adjusted EBITDA Margin | 43.5% | 32.4% | +11.1 ppts | - The increase in Adjusted EBITDA was primarily due to higher revenue and lower cost of revenues and sales and marketing expenses, partially offset by higher general and administrative expenses[7](index=7&type=chunk)[14](index=14&type=chunk) [Net Income](index=1&type=section&id=Q4%202023%20Net%20Income) Q4 2023 saw a significant turnaround to a net income of $25.5 million from a prior year net loss, reflecting the absence of impairment charges and lower marketing expenditures Q4 Net Income Performance: | Metric | Q4 2023 | Q4 2022 | | :-------------------------------- | :------ | :------ | | Net Income (Loss) | $25.5 million | $(194.4) million | | Earnings per fully diluted common share | $10.27 | $(78.47) | | Earnings per American Depositary Share (ADS) | $0.51 | $(3.92) | - The net loss in Q4 2022 included the impact of the **$269.9 million** non-cash impairment; Q4 2023 net income reflects increased revenue and lower marketing expenditures[13](index=13&type=chunk) [Cash Flow from Operating Activities](index=3&type=section&id=Q4%202023%20Cash%20Flow%20from%20Operating%20Activities) Q4 2023 net cash flows from operating activities significantly increased to $29.7 million, primarily due to the non-recurrence of a prior year litigation settlement payment Q4 Cash Flow from Operating Activities: | Metric | Q4 2023 | Q4 2022 | | :-------------------------------- | :------ | :------ | | Net cash flows provided by (used in) operating activities | $29.7 million | $(20.9) million | - The increase in cash flow from operating activities was primarily due to the payment of **$50 million** toward the Benson litigation settlement in Q4 2022, which did not recur in Q4 2023[15](index=15&type=chunk) [Full Year 2023 Financial Performance](index=2&type=section&id=Full%20Year%202023%20Financial%20Results) Full year 2023 saw DoubleDown Interactive transition from a significant net loss to substantial net income, driven by the absence of prior year one-time charges and improved cost management, despite a slight revenue decline [Revenue](index=2&type=section&id=FY%202023%20Revenue) Full year 2023 total revenue declined by 4%, primarily due to the normalization of player activities post-COVID and changes in player behaviors influenced by economic concerns FY Revenue Performance: | Metric | FY 2023 | FY 2022 | Change YoY | | :------------------------ | :------ | :------ | :--------- | | Total Revenue | $308.9 million | $321.0 million | -4% | | Revenue (exclusive of SuprNation) | $304.6 million | $321.0 million | -5% | - The decline in revenue was primarily due to the normalization of player activities after the lifting of stay-at-home orders and other COVID-related restrictions, as well as changes in player behaviors relating to inflation and global economic concerns during 2023[16](index=16&type=chunk) [Operating Expenses](index=2&type=section&id=FY%202023%20Operating%20Expenses) Full year 2023 operating expenses decreased significantly by 70%, primarily due to the non-recurrence of one-time charges from the Benson class action settlement and goodwill impairment in 2022 FY Operating Expenses: | Metric | FY 2023 | FY 2022 | Change YoY | | :----------------- | :------ | :------ | :--------- | | Operating Expenses | $190.7 million | $634.9 million | -70% | - The decrease was primarily due to the non-recurrence of a **$141.8 million** charge for the Benson class action settlement and a **$269.9 million** impairment of goodwill and intangibles in 2022, both of which were one-time charges[11](index=11&type=chunk)[17](index=17&type=chunk) [Adjusted EBITDA](index=2&type=section&id=FY%202023%20Adjusted%20EBITDA) Full year 2023 Adjusted EBITDA increased by 17% to $118.9 million, with a 6.9 percentage point margin improvement, driven by lower cost of revenues and sales and marketing expenses FY Adjusted EBITDA Performance: | Metric | FY 2023 | FY 2022 | Change YoY | | :-------------------- | :------ | :------ | :--------- | | Adjusted EBITDA | $118.9 million | $101.6 million | +17% | | Adjusted EBITDA Margin | 38.5% | 31.6% | +6.9 ppts | - The increases in Adjusted EBITDA and Adjusted EBITDA margin were primarily due to lower cost of revenues and sales and marketing expenses, partially offset by higher general and administrative expenses[11](index=11&type=chunk)[18](index=18&type=chunk) [Net Income](index=2&type=section&id=FY%202023%20Net%20Income) Full year 2023 saw a significant improvement to a net income of $100.4 million from a prior year net loss, inclusive of the non-recurring charges from 2022 FY Net Income Performance: | Metric | FY 2023 | FY 2022 | | :-------------------------------- | :------ | :------ | | Net Income (Loss) | $100.4 million | $(234.0) million | | Earnings per fully diluted common share | $40.53 | $(94.43) | | Earnings per American Depositary Share (ADS) | $2.03 | $(4.72) | - The significant improvement from a net loss to net income is inclusive of the Benson class action settlement and goodwill and intangibles impairment charges noted in 2022[11](index=11&type=chunk) [Cash Flow from Operating Activities](index=3&type=section&id=FY%202023%20Cash%20Flow%20from%20Operating%20Activities) Full year 2023 net cash flows from operating activities decreased to $20.8 million, primarily due to a $95.3 million payment towards the Benson litigation settlement FY Cash Flow from Operating Activities: | Metric | FY 2023 | FY 2022 | | :-------------------------------- | :------ | :------ | | Net cash flows provided by operating activities | $20.8 million | $50.8 million | | Net cash flows provided by operating activities (excluding Benson payment) | $116.1 million | N/A | - The decrease in net cash flows from operating activities was primarily due to the payment of **$95.3 million** toward the Benson litigation settlement in Q2 2023[19](index=19&type=chunk) [Key Operating Metrics](index=1&type=section&id=Key%20Operating%20Metrics) DoubleDown Interactive's social casino games showed improved player engagement and monetization in Q4 and FY 2023, with significant increases in ARPDAU and average monthly revenue per payer, despite a decrease in active users Summary Operating Results for Social Casino/Free-to-Play Games: | Metric (000s, except ARPDAU/Payer) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Average MAUs | 1,488 | 2,084 | 1,750 | 2,247 | | Average DAUs | 703 | 855 | 772 | 919 | | ARPDAU | $1.24 | $0.98 | $1.09 | $0.97 | | Average monthly revenue per payer | $279 | $227 | $245 | $226 | | Payer conversion | 6.4% | 5.4% | 6.0% | 5.3% | - ARPDAU for social casino/free-to-play games increased to **$1.24** in Q4 2023 from **$0.98** in Q4 2022, and to **$1.09** for FY 2023 from **$0.97** for FY 2022[7](index=7&type=chunk)[11](index=11&type=chunk) - Average monthly revenue per payer for social casino/free-to-play games increased to **$279** in Q4 2023 from **$227** in Q4 2022, and to **$245** for FY 2023 from **$226** in FY 2022[7](index=7&type=chunk)[11](index=11&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of DoubleDown Interactive, including its core business as a digital game developer and publisher, its recent expansion into European iGaming, and details regarding its Q4 and FY 2023 earnings conference call [About DoubleDown Interactive](index=4&type=section&id=About%20DoubleDown%20Interactive) DoubleDown Interactive is a leading digital game developer and publisher, known for its flagship social casino title, which expanded into the European iGaming market with the October 2023 acquisition of SuprNation - DoubleDown Interactive is a leading developer and publisher of digital games on mobile and web-based platforms, known for its flagship social casino title, DoubleDown Casino[23](index=23&type=chunk) - Following its acquisition of SuprNation in October 2023, the Company also operates three real-money iGaming sites in Western Europe[23](index=23&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call) DoubleDown Interactive held a conference call on February 13, 2024, to discuss Q4 and FY 2023 financial results, with access details provided for live participation and webcast replay - A conference call was held on February 13, 2024, at 5:00 p.m. Eastern Time to discuss the Q4 and FY 2023 results[20](index=20&type=chunk) - Access details for the live call and a simultaneous webcast were provided, with a replay available on the Company's Investor Relations website[21](index=21&type=chunk)[22](index=22&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section explains DoubleDown Interactive's use of Adjusted EBITDA as a non-GAAP financial measure and provides a detailed reconciliation to GAAP net income (loss) before tax [Adjusted EBITDA Reconciliation](index=4&type=section&id=Use%20and%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures) DoubleDown Interactive utilizes Adjusted EBITDA as a non-GAAP measure for consistent operational performance evaluation, with reconciliation detailing adjustments to GAAP net income (loss) before tax for non-indicative items - Adjusted EBITDA is presented as a non-GAAP financial measure to assist investors and analysts by facilitating comparison of period-to-period operational performance on a consistent basis, excluding items not indicative of core operating performance[25](index=25&type=chunk) Reconciliation of Non-GAAP Measures (in millions): | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Net income (loss) attributable to DDI Co., Ltd. | $25.5 | $(194.4) | $100.4 | $(234.0) | | Income tax (expense) benefit | (8.6) | 60.3 | (30.7) | 71.2 | | Income (loss) before tax | 34.1 | (254.7) | 131.1 | (305.2) | | Adjustments for: | | | | | | Depreciation and amortization | 0.6 | 0.1 | 0.7 | 3.8 | | Loss contingency | — | — | — | 141.8 | | Impairment of goodwill and intangibles | — | 269.9 | — | 269.9 | | Interest income | (3.2) | (2.3) | (13.7) | (5.0) | | Interest expense | 0.5 | 0.5 | 1.8 | 1.8 | | Foreign currency transaction/remeasurement (gain) loss | 4.2 | 11.2 | (1.2) | (5.8) | | Short-term investments (gain) loss | 0.0 | (0.0) | 0.1 | 0.2 | | Other (income) expense, net | 0.0 | 0.0 | 0.0 | 0.1 | | **Adjusted EBITDA** | **$36.2** | **$24.7** | **$118.9** | **$101.6** | | Adjusted EBITDA margin | 43.5% | 32.4% | 38.5% | 31.6% | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents DoubleDown Interactive's condensed consolidated balance sheets, statements of income and comprehensive income, and cash flows for the reported periods, highlighting key financial positions and performance [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects increased total assets to **$801.57 million** in 2023, a significant 55% decrease in total liabilities, and over **$100 million** growth in shareholders' equity, indicating improved financial health Condensed Consolidated Balance Sheets (in thousands of U.S. dollars): | Metric | Dec 31, 2023 | Dec 31, 2022 | | :------------------------------------ | :----------- | :----------- | | Total Assets | $801,568 | $792,052 | | Current assets: | | | | Cash and cash equivalents | $206,911 | $217,352 | | Short-term investments | $67,756 | $67,891 | | Total current assets | $315,754 | $312,882 | | Intangible assets, net | $51,571 | $35,051 | | Goodwill | $396,596 | $379,072 | | Total Liabilities | $74,261 | $165,826 | | Current liabilities: | | | | Loss contingency | — | $95,250 | | Current portion of borrowing with related party | $38,778 | — | | Total current liabilities | $59,004 | $116,482 | | Total Shareholders' Equity | $727,307 | $626,226 | - Total liabilities decreased significantly by **55%** from **$165.8 million** in 2022 to **$74.3 million** in 2023, primarily due to the resolution of the **$95.25 million** loss contingency and changes in related party borrowings[29](index=29&type=chunk) [Condensed Consolidated Statement of Income and Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Income%20and%20Comprehensive%20Income) The income statement shows a strong 2023 financial recovery, moving from a substantial net loss to **$100.46 million** net income, driven by dramatically reduced operating expenses due to the absence of prior year one-time charges Condensed Consolidated Statement of Income and Comprehensive Income (in thousands): | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Revenue | $83,098 | $76,170 | $308,864 | $321,027 | | Total operating expenses | $47,501 | $321,404 | $190,673 | $634,900 | | Operating income (loss) | $35,597 | $(245,234) | $118,191 | $(313,873) | | Income (loss) before income tax | $34,070 | $(254,681) | $131,145 | $(305,168) | | Net income (loss) | $25,496 | $(194,417) | $100,455 | $(233,978) | | Diluted Earnings per share | $10.27 | $(78.47) | $40.53 | $(94.43) | - Total operating expenses decreased by **70%** year-over-year for FY 2023, primarily due to the non-recurrence of a **$141.75 million** loss contingency and a **$269.89 million** impairment of goodwill and intangibles recorded in FY 2022[31](index=31&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) The cash flow statement indicates a decrease in FY 2023 net cash from operating activities due to a significant litigation settlement payment, with investing activities showing a net outflow from acquisitions and short-term investments Condensed Consolidated Statement of Cash Flows (in thousands of U.S. dollars): | Metric | FY 2023 | FY 2022 | | :------------------------------------------ | :------ | :------ | | Net cash flows from operating activities | $20,848 | $50,791 | | Net cash flows (used in) investing activities | $(30,269) | $(67,830) | | Net cash flows from (used in) financing activities | — | — | | Net (decrease) in cash and cash equivalents | $(10,441) | $(24,708) | | Cash and cash equivalents at end of period | $206,911 | $217,352 | - Net cash flows from operating activities for FY 2023 were **$20.8 million**, a decrease from **$50.8 million** in FY 2022, primarily due to the payment of **$95.3 million** toward the Benson litigation settlement in Q2 2023[19](index=19&type=chunk)[33](index=33&type=chunk) - Investing activities in FY 2023 included **$26.88 million** for acquisition, net of cash acquired, and significant purchases (**$146.36 million**) and sales (**$143.16 million**) of short-term investments[33](index=33&type=chunk) [Legal & Disclosures](index=4&type=section&id=Legal%20%26%20Disclosures) This section includes the Safe Harbor Statement, outlining the forward-looking nature of the press release and the inherent risks and uncertainties associated with such statements [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) The Safe Harbor Statement clarifies that the press release contains forward-looking statements subject to significant risks and uncertainties, advising readers against undue reliance and noting no obligation for updates - The press release contains "forward-looking statements" about future events and expectations, based on current beliefs, assumptions, and expectations of industry trends, future financial and operating performance, and growth plans[24](index=24&type=chunk) - These statements are subject to significant business, economic, competitive, regulatory, and other risks, contingencies, and uncertainties, many of which are beyond the company's control[24](index=24&type=chunk) - Readers should not place undue reliance on such statements, and the company assumes no obligation to update or revise any forward-looking statements[24](index=24&type=chunk)

Revenue Performance - Revenue in Q4 2023 increased by 9% year-over-year to $83.1 million, with core social casino revenue up 3% to $78.8 million[4][7] - Full-year 2023 revenue decreased 4% to $308.9 million, with Adjusted EBITDA increasing to $118.9 million from $101.6 million in 2022[8][18] - Revenue for Q4 2023 was $83.1 million, up 9.1% from $76.2 million in Q4 2022[31] - Full-year 2023 revenue was $308.9 million, a 3.8% decrease from $321.0 million in 2022[31] Adjusted EBITDA and Margin - Adjusted EBITDA in Q4 2023 rose 46% to $36.2 million, with Adjusted EBITDA margin increasing to 43.5% from 32.4% in Q4 2022[4][7] - Adjusted EBITDA for Q4 2023 was $36.2 million, up from $24.7 million in Q4 2022, with an Adjusted EBITDA margin of 43.5% compared to 32.4% in the same period last year[26] - Full-year 2023 Adjusted EBITDA reached $118.9 million, a 17% increase from $101.6 million in 2022, with the Adjusted EBITDA margin improving to 38.5% from 31.6%[26] Net Income and Operating Income - Net income in Q4 2023 was $25.5 million, compared to a net loss of $(194.4) million in Q4 2022[7][13] - Net income for Q4 2023 was $25.5 million, a significant improvement from a net loss of $194.4 million in Q4 2022[26] - Full-year 2023 net income was $100.4 million, compared to a net loss of $234.0 million in 2022[26] - Operating income for Q4 2023 was $35.6 million, a substantial improvement from an operating loss of $245.2 million in Q4 2022[31] Operating Expenses and Goodwill Impairment - Operating expenses in Q4 2023 decreased 85% to $47.5 million, primarily due to the absence of a $269.9 million goodwill impairment charge from Q4 2022[7][12] ARPDAU and Revenue per Payer - ARPDAU for social casino/free-to-play games increased 26% to $1.24 in Q4 2023 compared to Q4 2022[4][7] - Average monthly revenue per payer for social casino/free-to-play games increased 23% to $279 in Q4 2023 compared to Q4 2022[4][7] Cash and Cash Equivalents - Cash and cash equivalents plus short-term investments net of current borrowing stood at $235 million at the end of 2023[6] - Cash and cash equivalents stood at $206.9 million as of December 31, 2023, down from $217.4 million at the end of 2022[29] Net Cash Flows from Operating Activities - Net cash flows from operating activities in Q4 2023 were $29.7 million, compared to $(20.9) million in Q4 2022[15] Acquisitions and Market Expansion - The company acquired SuprNation in Q4 2023, contributing $4.3 million in revenue over 61 days and marking its entry into the European iGaming market[2][5] Total Assets and Liabilities - Total assets increased to $801.6 million in 2023 from $792.1 million in 2022, while total liabilities decreased significantly to $74.3 million from $165.8 million[29] Retained Earnings - The company's retained earnings increased to $326.8 million in 2023 from $226.4 million in 2022[29]

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $73.0 million, down 3% sequentially from Q2 2023 and down from $78.8 million in Q3 2022 [24][31] - Adjusted EBITDA for Q3 2023 was $29.7 million, an increase from $25.0 million in the prior-year quarter, with an adjusted EBITDA margin of 40.7%, up from 31.7% in Q3 2022 [32][33] - Net income for Q3 2023 was $26.9 million or $10.87 per diluted share, compared to a net loss of $24.0 million in Q3 2022 [31] Business Line Data and Key Metrics Changes - Average revenue per daily active user (ARPDAU) increased to $1.06 in Q3 2023 from $0.96 in Q3 2022 [25] - Payer conversion ratio improved to 5.9% in Q3 2023 from 5.2% in Q3 2022 [25] - Average monthly revenue per payer increased 9% from $225 in Q3 2022 to $245 in Q3 2023 [25] Market Data and Key Metrics Changes - SuprNation's revenue rose approximately 5% for the first nine months of 2023 compared to the same period a year ago, with a focus on the U.K. and Sweden markets [15][55] - The European online gambling market is estimated to reach $48 billion in 2023, presenting significant growth opportunities for SuprNation [22] Company Strategy and Development Direction - The company aims to leverage its expertise in game development and marketing to enhance SuprNation's operations and accelerate growth [21][27] - Future marketing investments will depend on the ability to forecast improvements in ROI for acquiring new players and retaining existing ones [20] - The company is exploring additional high-growth gaming categories, including casual mobile games, to support its long-term growth strategy [23] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer behavior remains cautious due to the global economic environment and inflationary pressures, but they have seen encouraging trends since early October [24] - The company is optimistic about the fourth quarter, which is historically a seasonally positive period [24] Other Important Information - The company had $271.2 million in cash and short-term investments as of September 30, 2023, with total debt of $37.2 million [34] - The acquisition of SuprNation was completed for $36.5 million, and the company is positioned to explore further M&A opportunities [36] Q&A Session Summary Question: What is the expected EBITDA contribution from SuprNation for 2024? - Management expects SuprNation to become EBITDA positive towards the back half of 2024, focusing on scaling the business and acquiring more players [29][45] Question: How will resources be allocated between SuprNation and the legacy social casino portfolio? - The company will lean into SuprNation for marketing while maintaining focus on the core social casino business, which remains the largest part of the company [46] Question: How has SuprNation performed year-to-date relative to its 2022 revenue? - SuprNation has been making good progress in its key markets, with revenue up about 5% for the first nine months of 2023 compared to the previous year [55]

[Condensed Consolidated Financial Statements](index=1&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's interim financial statements, including income, balance sheet, equity, and cash flow, along with detailed explanatory notes [Condensed Consolidated Statements of Income and Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) The company reported a significant turnaround to net income in 2023, primarily due to the absence of a large loss contingency expense from the prior year, despite a slight revenue decline Q3 Financial Performance (Three months ended September 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $72,983 | $78,801 | -7.4% | | Operating Income (Loss) | $29,680 | $(45,339) | N/A | | Net Income (Loss) | $26,930 | $(23,999) | N/A | | Diluted EPS | $10.87 | $(9.69) | N/A | Year-to-Date Financial Performance (Nine months ended September 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $225,766 | $244,857 | -7.8% | | Operating Income (Loss) | $82,594 | $(68,639) | N/A | | Net Income (Loss) | $74,959 | $(39,561) | N/A | | Diluted EPS | $30.25 | $(15.97) | N/A | - The significant improvement in profitability in 2023 is primarily due to the absence of the 'Loss Contingency' expense, which amounted to **$70.25 million** in Q3 2022 and **$141.75 million** for the first nine months of 2022[2](index=2&type=chunk) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's financial position strengthened with increased shareholders' equity and a significant reduction in liabilities due to a loss contingency settlement Key Balance Sheet Items (in thousands) | Account | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $233,936 | $217,352 | +7.6% | | Total Assets | $760,583 | $792,052 | -4.0% | | Loss contingency | $0 | $95,250 | -100% | | Total Liabilities | $62,723 | $165,826 | -62.2% | | Total Shareholders' Equity | $697,860 | $626,226 | +11.4% | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased significantly, primarily driven by net income, partially offset by other comprehensive loss from foreign currency translation Shareholders' Equity Reconciliation (Nine months ended Sep 30, 2023, in thousands) | Item | Amount (in thousands) | | :--- | :--- | | Balance as of Jan 1, 2023 | $626,226 | | Net income | $74,959 | | Other comprehensive loss | $(3,324) | | **Balance as of Sep 30, 2023** | **$697,860** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow shifted to an outflow due to a significant loss contingency payment, while investing activities generated cash Cash Flow Summary (Nine months ended September 30, in thousands) | Cash Flow Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash from operating activities | $(8,881) | $71,696 | | Net cash from investing activities | $26,909 | $(296) | | Net cash from financing activities | $0 | $0 | | **Net increase in cash** | **$16,584** | **$68,408** | - The significant decrease in operating cash flow in 2023 was driven by a **$95.25 million** payment for a Loss Contingency, which offset the reported net income of **$75.0 million**[6](index=6&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, revenue recognition, debt, legal contingencies, and a significant subsequent acquisition event [Note 1: Description of business](index=6&type=section&id=Note%201%3A%20Description%20of%20business) DDI is an interactive entertainment company, a subsidiary of DoubleU Games, with its primary revenue entity DDI-US based in Seattle - DDI is a subsidiary of DoubleU Games Co., Ltd. ("DUG"), a Korean company that holds **67.1%** of outstanding shares[8](index=8&type=chunk) - The primary revenue-generating entity is DDI-US, located in Seattle, which was acquired from IGT in 2017[8](index=8&type=chunk) [Note 2: Revenue from Contracts with Customers](index=7&type=section&id=Note%202%3A%20Revenue%20from%20Contracts%20with%20Customers) Revenue is generated from virtual currency sales on a free-to-play model, with significant concentration on major platforms and a shift from web to mobile Revenue Concentration (Nine months ended Sep 30, 2023) | Platform | Revenue % | | :--- | :--- | | Apple | 55.7% | | Facebook | 17.2% | | Google | 18.6% | Revenue by Platform (Nine months ended Sep 30, in thousands) | Platform | 2023 (in thousands) | 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Mobile | $186,928 | $184,033 | +1.6% | | Web | $38,838 | $60,824 | -36.1% | Revenue by Geography (Nine months ended Sep 30, in thousands) | Region | 2023 (in thousands) | 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | U.S. | $197,551 | $214,394 | -7.9% | | International | $28,215 | $30,463 | -7.4% | [Note 4: Goodwill and intangible assets](index=9&type=section&id=Note%204%3A%20Goodwill%20and%20intangible%20assets) No goodwill impairment occurred in 2023, following a significant impairment charge recognized in the prior year - The company recognized an aggregate **$269.9 million** impairment of goodwill and intangibles in 2022, with no further impairment in the first nine months of 2023[33](index=33&type=chunk) [Note 5: Debt](index=9&type=section&id=Note%205%3A%20Debt) The company's debt comprises **$37.2 million** in 4.60% Senior Notes due to its parent, maturing in May 2024 - The company has **$37.18 million** in 4.60% Senior Notes due to a related party, with the full amount maturing on May 27, 2024[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 11: Commitments and contingencies](index=12&type=section&id=Note%2011%3A%20Commitments%20and%20contingencies) The company settled the Benson class-action lawsuit, clearing a significant liability, and maintains ongoing license and royalty agreements - The Benson class-action lawsuit was settled, with the final contribution to the settlement fund made in June 2023. The company's accrual of **$95.25 million** as of December 31, 2022, was cleared by this payment[51](index=51&type=chunk) - For the nine months ended September 30, 2023, costs related to the IGT agreement totaled **$5.4 million**, recognized as part of the cost of revenue[53](index=53&type=chunk) [Note 12: Related party transactions](index=13&type=section&id=Note%2012%3A%20Related%20party%20transactions) The company conducts significant related party transactions with its parent, DUG, including royalty, interest, and rent expenses, and outstanding debt Expenses Charged by Parent, DoubleU Games (Nine months ended Sep 30, 2023, in thousands) | Expense Type | Amount (in thousands) | | :--- | :--- | | Royalty expense | $1,963 | | Interest expense | $1,323 | | Rent expense | $932 | Amounts Due to Parent, DUG (At Sep 30, 2023, in thousands) | Liability | Amount (in thousands) | | :--- | :--- | | 4.6% Senior Notes | $37,180 | | Accrued interest on Notes | $8,679 | [Note 14: Subsequent Event](index=13&type=section&id=Note%2014%3A%20Subsequent%20Event) Post-quarter, the company acquired iGaming operator SuprNation AB for **$36.5 million**, diversifying its portfolio into real-money gaming - On October 31, 2023, the company acquired SuprNation AB for approximately **$36.5 million** (€34.3 million) in cash[56](index=56&type=chunk) - The acquisition adds three real-money iGaming sites in Western Europe to the company's portfolio[56](index=56&type=chunk)