DoubleDown Interactive(DDI) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q1 2024 revenue was $88.1 million, up from $77.6 million in Q1 2023, with social casino free-to-play games contributing $79.8 million and SuprNation contributing $8.3 million [11][20] - Adjusted EBITDA for Q1 2024 rose 26% year-over-year to $31.9 million, with an adjusted EBITDA margin of 36.2%, up from 32.8% in Q1 2023 [27][28] - Net income for Q1 2024 was $30.4 million, or $12.23 per diluted share, representing a 28.3% increase compared to $23.7 million, or $9.55 per diluted share, in Q1 2023 [13][28] - Cash flow from operations was $35 million for Q1 2024, compared to $19.2 million in the prior-year period [7][46] Business Line Data and Key Metrics Changes - Payer conversion ratio increased to 6.4% in Q1 2024 from 5.8% in Q1 2023, while average monthly revenue per payer rose 27% to $281 from $221 [12][25] - Average revenue per daily active user (ARPDAU) increased to $1.26 in Q1 2024 from $1.03 in Q1 2023, marking a 22% increase [25] - SuprNation's Q1 revenue contribution was $8.3 million, marking its first full quarter of operation [22] Market Data and Key Metrics Changes - The iGaming sector is viewed as a significant growth opportunity, with plans for continued improvement and scaling in the UK and Sweden markets [9][30] - Sales and marketing expenses for Q1 2024 were $14.8 million, down 8% year-over-year but up nearly 50% sequentially due to the inclusion of SuprNation's expenses [26][44] Company Strategy and Development Direction - The company aims to enhance DoubleDown Casino through ongoing product development and marketing initiatives, focusing on capital efficiency to drive engagement and monetization [29][41] - The acquisition of SuprNation is seen as a step towards diversifying into new gaming categories with high market potential, with ongoing evaluations for further M&A opportunities [42][55] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the strong start of the iGaming business and the overall performance momentum in the core social casino business [47][50] - There is a focus on enhancing margins by increasing direct consumer payment volume and expanding options for players to purchase chips [48] Other Important Information - As of March 31, 2024, the company had $310 million in cash and short-term investments, with a net cash position of approximately $272 million [28] Q&A Session Summary Question: Performance expectations for SuprNation - Management was pleased with SuprNation's Q1 performance, indicating it exceeded expectations and expressed optimism for continued momentum throughout the year [50][51] Question: Core business performance drivers - The increase in core business revenue was attributed to product differentiation and the introduction of new features that enhance player engagement and monetization [52][53] Question: Future cash utilization and buybacks - The board believes the best use of cash is in potential acquisitions and M&A activities, with ongoing evaluations for growth opportunities [55][56]