DoubleDown Interactive(DDI) - 2023 Q3 - Earnings Call Transcript

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]