DoubleDown Interactive(DDI) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2022 decreased by 13.5% to $80.6 million from $93.2 million in Q2 2021 [20] - Adjusted EBITDA for Q2 2022 was $26.1 million, down from $31.1 million in Q2 2021, with an adjusted EBITDA margin of 32.4%, down from 33.4% [30] - Net income for Q2 2022 reflected a loss of $34.1 million, compared to net income of $18.4 million in Q2 2021 [28] - Cash flow from operations was $21.1 million, slightly down from $21.8 million in Q2 2021 [33] - Cash and cash equivalents at the end of Q2 2022 were $284.4 million, up from $268.2 million at the end of Q1 2022 [34] Business Line Data and Key Metrics Changes - Average revenue per daily active user (ARPDAU) was $0.95 in Q2 2022, down from $0.99 in Q2 2021 [22] - Average monthly revenue per payer increased to $226 in Q2 2022 from $218 in Q2 2021 [22] - Payer conversion rate decreased to 5.2% in Q2 2022 from 5.8% in Q2 2021 [23] Market Data and Key Metrics Changes - Revenue in the first half of 2022 exceeded 2019 levels by over 20% [10] - The company noted that global inflation and economic slowdown concerns are impacting user spending [12] Company Strategy and Development Direction - The company plans to diversify revenue and growth opportunities by developing new titles outside the social casino segment [18] - Focus on acquiring new players outside North America, particularly in the Android market [14] - The company is targeting strategic M&A opportunities to augment its business [38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that inflation and economic concerns are affecting player spending but noted that engaged players continue to invest [50] - The company remains optimistic about the opportunities in the M&A market due to more reasonable valuations [60] - Management emphasized the flexibility of their business model to adapt to changing industry and macroeconomic conditions [36] Other Important Information - Total operating expenses for Q2 2022 increased by 71% to $128.6 million, primarily due to a non-cash accrual related to legal proceedings [23] - The company has a low capital obligation and minimal debt, which supports its strong cash flow position [37] Q&A Session Summary Question: Inquiry about the Benson legal case and reserve amounts - Management clarified that they cannot comment on IGT's reserve decisions and noted that they are co-defendants in the complaint [42][44] Question: M&A strategy and target categories - Management indicated they are open to various categories, particularly in hyper-casual gaming and iGaming [46][48] Question: Impact of inflation on player spending - Management noted that inflation concerns are affecting lower-value payers more than engaged players, who continue to spend [64] Question: Trends throughout the quarter - Management stated that trends were consistent throughout the quarter, with typical seasonality observed [63]