DoubleDown Interactive(DDI) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $95.8 million for Q3 2025, compared to $83.0 million in Q3 2024, reflecting a year-over-year increase of approximately 15% [12][16] - Adjusted EBITDA for Q3 2025 was $37.5 million, slightly up from $36.5 million in Q3 2024, with an adjusted EBITDA margin of 39.1% [15][16] - Cash flow from operations was $33.4 million in Q3 2025, compared to $32.1 million in Q3 2024, indicating a positive trend in cash generation [16] Business Line Data and Key Metrics Changes - Social casino operations generated $79.6 million in revenue for Q3 2025, growing nearly 6% from Q3 2024 and nearly 15% sequentially [12][13] - Super Nation, the iGaming business, reported revenue of $16.2 million, marking a 108% increase from Q3 2024 and the highest quarterly performance since its acquisition [9][12] - The average revenue per daily active user (ARPDAU) increased to $1.39 in Q3 2025, up from $1.30 in Q3 2024 [7][14] Market Data and Key Metrics Changes - The company noted that the growth potential in the international social casino market is greater than in the U.S., particularly following the acquisition of Wow Games [8][10] - The payer conversion rate rose to 7.8% in Q3 2025, compared to 6.8% in Q3 2024, indicating improved monetization [14] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through investments in both organic growth and acquisitions, such as the recent acquisition of Wow Games [6][10] - There is a commitment to increasing direct-to-consumer (DTC) revenue, with a goal of achieving over 20% of social casino revenue from DTC purchases [8][41] - The company plans to launch a new iGaming casino brand, Las Vegas Sites, to drive scalability and better ROI [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of Super Nation and the potential for further success in player acquisition [9][20] - The company is optimistic about the integration of Wow Games and its contribution to growth in the European market [13][21] - Management highlighted the importance of monitoring return on ad spend (ROAS) for new player acquisitions to ensure profitability [20][21] Other Important Information - The company transitioned to reporting financial results in accordance with IFRS starting Q4 2024, with minimal implications for financial statements [4][11] - As of September 30, 2025, the company had $439.2 million in cash and short-term investments, reflecting a strong balance sheet [16] Q&A Session Summary Question: Thoughts on balancing investment for growth versus profitability in Super Nation - Management believes there is capacity in Super Nation to add users profitably, with a payback period for acquiring new users of about six months [19][20] Question: Roadmap for Wow Games acquisition - The focus is on acquiring players and enhancing product development, particularly in the European social casino sector [26][27] Question: Update on M&A pipeline - The M&A pipeline remains busy, with opportunities across various gaming genres being evaluated [30][31] Question: Revenue contribution from Wow Games for the quarter - Revenue from Wow Games has not been separately broken out as it is integrated into the social casino segment [33] Question: Impact of regulatory changes on player acquisition costs - It is too early to determine the impact of recent regulatory changes on advertising costs, but management is optimistic about potential benefits [34][35] Question: Direct-to-consumer revenue goals and timeframe - The goal is to exit Q4 with a run rate of over 20% DTC revenue, with potential for higher achievement [40][41] Question: Geographic expansion plans for Super Nation - Management continues to evaluate new markets but sees significant growth potential in existing markets before expanding [45]