DoubleDown Interactive(DDI) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $83.5 million for Q1 2025, a decline from $88.1 million in Q1 2024, reflecting a 12% decrease in social casino revenues and a 59% increase in iGaming revenues [6][12][14] - Adjusted EBITDA for Q1 2025 was $30.8 million, down from $32.7 million in the prior year, with an adjusted EBITDA margin of 36.9% compared to 37.1% in Q1 2024 [16] - Cash flow from operations increased to $41.1 million, up from $35.7 million in Q1 2024, indicating strong cash flow conversion [7][17] Business Line Data and Key Metrics Changes - Social casino free-to-play games generated $70.3 million in revenue, while iGaming business Super Nation generated $13.2 million, marking the highest quarterly performance since its acquisition [6][9][12] - Key monetization metrics for the social casino business improved, with ARPDAU increasing to $1.29 and payer conversion rate rising to 6.9% [8][13] Market Data and Key Metrics Changes - Super Nation's revenue growth was driven by increased investments in new player acquisition, particularly in the UK and Sweden [9][24] - The company noted that the competitive landscape for user acquisition costs has intensified due to increased spending by competitors in the sweepstakes gaming sector [41] Company Strategy and Development Direction - The company aims to maintain capital efficiency while focusing on product improvements and live operations enhancements in Double Down Casino [18] - There is an ongoing strategy to explore potential acquisitions to diversify revenue and cash flow sources [10][30] - The company has decided not to launch a new match-three style game after extensive testing, emphasizing a cautious approach to new game development [10][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the first half of 2025 presents tough comparisons due to strong performance in the prior year, but expects easier comparisons in the second half [39] - The company remains optimistic about the potential for iGaming businesses to become highly profitable at scale, with plans to continue investing in player acquisition [18][36] Other Important Information - The company transitioned to reporting financial results in accordance with IFRS, which has minor implications for financial statements compared to GAAP [4][11] - As of March 31, 2025, the company had $455.7 million in cash and short-term investments, with a net cash position of approximately $422 million [17] Q&A Session Summary Question: Trends in Super Nation's markets and major sporting events - Management noted strong returns on investment in player acquisition and highlighted the rapid payback from marketing efforts in Sweden and the UK, but indicated that there are no major event-based revenue drivers [24][27] Question: Update on M&A opportunities - The company continues to see a flow of opportunities in both iGaming and mobile gaming, with no significant changes in interest or opportunities despite macroeconomic uncertainties [30] Question: Expectations for Super Nation's growth and sales/marketing spending - Management expressed confidence in maintaining or increasing current levels of investment in player acquisition, expecting continued revenue growth from Super Nation [36] Question: Social casino business decline expectations - Management acknowledged the challenges in growing the social casino business year-over-year but indicated that comparisons will improve in the second half of the year [39] Question: User acquisition costs and competition - Management noted that user acquisition costs have risen due to competition from sweepstakes games, but it is difficult to quantify player losses to these competitors [41]