DoubleDown Interactive Co., Ltd. (DDI) Q2 2026 Earnings Report, Transcript and Summary

Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the Second Quarter Ended June 30, 2026. My name is Liz, and I will be your operator this afternoon. Prior to this call, Double Down issued its financial results for the second quarter of 26 in a press release, a copy of which is available in the Investor Relations section of the company's website at www.doubledowninteractive.com. You can find a link to the investor relations section at the top of the home page. Joining us on today's call are Double Down's CEO, Mr. In Keuk Kim and its CFO, Mr. Joseph A. Sigrist. Following their remarks, we will open the call for questions. Before we begin, Joe Jaffoni, the company's Investor Relations Advisor, will make a brief introductory statement Mr. Jaffoni?

Thank you, Liz. Before management begins their formal remarks, we need to remind everyone that some of management's comments today will be forward looking statements within the meaning of Section 27A of the Securities Act of 1.93 thousand as amended and Section 21E of the Securities Exchange Act of 1.93 thousand as amended. And we hereby claim the protection of the safe harbor provisions of the Private Securities Litigation Reform Act of 2 thousand. Forward looking statements are statements about future events and include the expectations and projections, not present or historical facts, and can be identified by the use of words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate, or other such similar terms. Forward looking statements include and are not limited to those regarding the company's future plans, mergers and acquisition strategy, strategic and financial objectives, expected performance, and financial outlook. Forward looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on them. We refer you to Double Down's annual report on form 20 f filed with the SEC on 03/31/2026 and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. These forward looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligation to update or alter the forward looking statements whether as a result of new information, future events or otherwise, except as required by law. During today's call, management will discuss non-IFRS financial measures, which management believes to be useful in evaluating the company's operating performance. These measures should not be considered superior to in isolation or as a substitute for the financial results prepared in accordance with IFRS. Full reconciliation of these measures to the most directly comparable IFRS measure is available in the earnings release issued this afternoon. In addition, on April 29, 2026, Double Down issued a press release acknowledging the receipt of a nonbinding expression of interest from WGames. Its controlling shareholder, to acquire all the outstanding double down common shares, including ADRs not currently owned by them, at a price of $11.25 per ADS in cash. As noted in that press release, the company has formed a special committee to evaluate and negotiate with the controlling shareholder and determine the next steps that would be in the best interest of the company and its unaffiliated shareholders. As a result of this ongoing process, the company has no additional updates or further comments to discuss on today's call. I would like to remind everyone that today's call is being recorded and will be made available for replay via a link in the Investor Relations section of Double Down's website. Thank you for your patience with that, and it is now my pleasure to turn the call over to Double Down's CEO In Keuk Kim.

Please go ahead.

Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today. To discuss DoubleDown Interactive second quarter 2026 results Key highlights include delivering revenue consistency and resiliency as we execute on our growth and geographical diversification strategies. Marked by solid contributions across both social casino and iGaming. Delivering a record contribution of over 50% of our total social casino revenue from direct to consumer payer activity and delivering another quarter of strong profitability and significant free cash flow generation. These results further reinforce our confidence in our business model as we drive operational excellence across our portfolio. Let's start with the financial results. This afternoon, we reported second quarter consolidated revenue of $94.3 million up approximately 11% year over year. This top line growth helped drive second quarter adjusted EBITDA of $39.3 million marking 17% year over year growth. In Q2, we extended our track record of driving a high conversion of revenue to profit and cash flow. Net cash flow from operations was $24.6 million in the quarter, up 25% from the same period 1 year ago. As a result, we generated total of $71 million in net cash flow from operations. For the first half of 2026. Our social casino segment remains the primary engine of Double Down's profit and cash flow generation. In the second quarter, social casino revenue grew 11.5% year over year to $77.3 million driven by the contribution from WHOW Games, as well as the strong performance of the DoubleDown Traditional social casino business. A key highlight this quarter is the continued growth of our direct to consumer or DTC component a major contributor to our strong growth in profitability. In the second quarter, DTC accounted for 52% of total social casino revenue compared to just over 15% in second quarter of 2025. and 44% in the first quarter of 2026. At the same time, industry analysts at Eilers recently forecast that the global social casino market will decline over 5% in 2026. That said, our focus continues to be on outperforming the overall market through precise execution of our product development initiatives around player and pay retention. Optimization of marketing and live ops activity, to maximize payer conversion and purchasing activity. And continued maximization of the direct to consumer opportunity. Turning to our iGaming business. SuprNation's Q2 2026 revenue was $17 million an increase of 10% year over year. Our newest iGaming casino title Las Vegas, again contributed to the strong SuprNation result in the quarter. During the second quarter, the SuprNation team did an excellent job in managing around the recently introduced higher UK gambling tax rate through a combination of product changes, marketing adjustment, and efficient controls. This allowed our iGaming business to effectively mitigate much of the impact of the tax increase. Our second quarter results highlight how prudent targeted investments are uncovering growth opportunities, which is enabling Double Down to extend our long-term record, our strong profitability, and cash flow generation. We are successfully integrating previous acquisitions while optimizing our core double down business. M&A remains a strategic priority as we continue to evaluate opportunities in online gaming and mobile entertainment that meet our criteria to enhance long-term shareholder value. Now I will turn the call over to our CFO, Joe Sigrist, to walk us through the financials before providing my closing remarks. Joe?

Thank you, IK, and good afternoon, everyone. To review revenues for the second quarter of 2026, were $94.3 million This compares to total company revenues of $84.8 million in the second quarter of 2025 and $94.1 million in Q1 of 2026. Our social casino segment grew 11.5% from the second quarter 25 to $77.3 million reflecting the inclusion of revenue from WHOW Games, we acquired in July of last year. IGaming revenues grew by $1.5 million or 10% year over year to $17 million. Regarding our overall social casino KPIs, we previously mentioned that the metrics from WHOW Games are somewhat different from those of Double Down Casino. Specifically, WHOW Games experiences a higher pair conversion rate and lower average monthly revenue per payer. With this in mind, overall social casino KPI highlights for the second quarter include the payer conversion rate, which is the percentage of players who pay within the social casino apps, increased to 9.4% in Q2 2026 compared to 7.0% in Q2 2025. The average revenue per daily active user or ARPDAU of $1.42 up from $1.33 in Q2 2025. And an average monthly revenue per payer at $218 in Q2 2026, down from $286 in the prior year period. In the second quarter of 2026, operating expenses were $57.8 million compared to $52.4 million in the second quarter of 2025. The increase primarily reflects the inclusion of WHOW Games expenses. Sales and marketing expenses for the second quarter of 26 were $13.9 million compared to $13.1 million in the second quarter of 2025, which again, did not include WHOW Games. Conversely, sales and marketing expenses in the second quarter were down from Q1 2026, primarily due to a reduction in player acquisition spending at SuprNation in light of the revised iGaming tax rate in The UK. Profit excluding noncontrolling interest for the second quarter of 26 increased 50% to $32.9 million or earnings per fully diluted common share of $13.27 or $0.66 per ADS. In the second quarter of 26 compared to profit for the interim period of $21.8 million or earnings per fully diluted common share of $8.82 or $0.44 per ADS in Q2 2025. The increase primarily reflects higher revenue, the lower cost of revenue attributable to a higher proportion of DTC revenue, and a higher unrealized gain on foreign currency, partially offset by higher overall operating expenses primarily due to the inclusion of WHOW Games and increased costs associated with revenue growth from SuprNation. Adjusted EBITDA for the second quarter of 26 rose to $39.3 million compared to $33.5 million for the second quarter of 2025 and $38.2 million for Q1 26. Adjusted EBITDA margin was 41.6% for Q2 26, as compared to 39.5% in Q2 25 and 40.6% in Q1 26. Net cash flows provided by operating activities in Q2 26 were $24.6 million compared to $19.7 million in Q2 25 due to higher profit and lower income tax paid. And as IK mentioned, net cash flows provided by operations $71 million for the first half of 2026. In light of Q2 2026's meaningful cash generation, at quarter's end, we had $554 million in cash equivalents, and short term investments with a net cash position of approximately $521 million or approximately $10.52 per ADS. Now I will turn the call back to IK for closing remarks.

Thank you, Joe. DoubleDown Interactive powered by our core social casino and iGaming businesses. Delivered another quarter of strong profitability and cash flow. Building on our solid first half of 2026, we remain committed to innovation and disciplined, high ROI investments. And to drive DTC revenues, which collectively optimize social casino margin Finally, our strong balance sheet and cash position provide us the financial flexibility to pursue strategic growth opportunities. As well as additional value building initiatives and transactions for our shareholders. We are now happy to take your questions. Liz?

If you would like to ask a question at this time, please and wait for your name to be announced. Our first question comes from Eric Handler with ROTH Capital.

Hey, guys. This is Jack Weissberger on for Eric. Thanks for taking our question. I want to focus on iGaming. Is there anything in particular that drove down the quarter over quarter decline could have been related to user acquisition costs, maybe The UK tax changes, anything on that would be helpful.

Yeah. Sure, Jack. that is fine. I mean, essentially, Q2 was down very slightly. Essentially flat from Q1. And we certainly in Q1, as IK, you know, earlier expressed you know, had to, as we started Q2, deal with the significant increase in the in the tax rate starting on April 1. In The UK. And so we made certain product adjustments and marking adjustments as I think I mentioned, we spent significantly less in player acquisition investment in Q2 as we wanted to see how the various competitive larger competitors played out as they also dealt with The UK tax change. And so all that put together you know, kind of moderated our certainly moderated our sequential growth in revenue. But at the same time, you know, we are quite pleased with you know, the impact on player retention and, you know, how we remained, I think, you know, very cost conscious during the quarter you know, recognizing the increase in the tax rate, so that, I think, was earlier mentioned, you know, we were able to mitigate at least on the expense side and certainly on the profit side, the impact of the tax increase.

That all makes sense. Then also on free cash flow, you had nice year over year improvement in the first half. I know you mentioned some income tax timing or maybe there is some seasonality as well. Should we see more of a headwind due to that income tax timing year over year in 2H? Should we think about free cash flow for the year?

Yeah. I mean, Q2, generally is when we have tax payments due. So it really is guess, you could call it seasonality. I mean, we have seen this over the last you know, few years that from a cash flow generation standpoint because of tax payment timing, Q2 tends to be kind of a low watermark when it comes to quarterly cash flow. Got it. Thank you very much, guys. Thanks, Jeff.

Our next question comes from Aaron Lee with Macquarie.

Hey, guys. Good afternoon. Thanks for taking the question. I am curious to hear more about The UK tax increase Can you just talk bit about how trends were post the tax increase as you layered on your mitigation there been any change in how you are thinking about mitigation? And maybe to tie it all together, how should we be thinking about the trajectory of SuprNation going forward in terms of both revenues and profits? Thank you.

Yeah, Aaron. No. it is really important to understand that we are trying to balance with a significant change essentially increase in the cost of doing business in The UK, trying to balance you know, revenue growth with you know, profit. And with you know, returns on, you know, the business that we, you know, purchase a few years ago. And so, you know, as we look you know, over the last well, now it is been, what, 4.5 months since the tax increase occurred. And since we are able to observe what again, some of our larger iGaming competitors are doing in the market. We feel like we have struck a good balance between revenue and profit. And, you know, we do not wanna lose sight of you know, the fact that, you know, we are going to still invest in acquiring players but we are also going to, you know, make sure that we, you know, appropriately you know, spend the money to get the returns that we need relative to that investment. And, make the right product adjustments, whether it be you know, RTP, bonus rates, those kinds of things, to also kind of balance the revenue and profit equation.

Okay. Got it. That makes sense. And then with regard to marketing, especially with for SuprNation marketing, you expect to stay at these reduced marketing levels, or do you see opportunities to kind of increase that in the back half? And just any general thoughts on how you are thinking about marketing the second half of the year would be helpful.

Yeah. I mean, you know, if you look at our marketing spend over the last few quarters, it is really been, you know, fairly constant. And, you know, we are as a company, And, you know, we see that being true for the rest of the year at least. And we are looking, again, to kind of balance we need to invest on our iGaming side versus on the social casino side. And, you know, recognizing that, you know, we have to invest you know, to acquire new players in both businesses. And, you know, a lot of what we as I have mentioned in the past, what we do is make real literally, you know, real time adjustments based on the, you know, the ROIs that we are seeing from various markets with various agencies. Etcetera, etcetera. You know, but I do think that, you know, our kind of more recent run rate is pretty much where we are going to be for the rest of the year. Perfect. Thank you very much.

Our next question comes from Josh Nichols with B. Riley.

Yes. Thanks for taking my question. You know, the direct to consumer crossing, the 50% threshold stood out that is well excess of where you thought you would be. At this time of the year. Is there I guess, a realistic ceiling in place or a point where you think? some of those additional gains may stop dropping to the to the margin line? Or what is your expectation for where that could wind up by, say, year end?

Hi, Josh. Let me take the question. Our 50% ratio share is already an industry benchmark. But we have seen more room for further growth Our consistent strategy is to-- migrate, actually, migrate valued users step by step to our own platform while maintaining a healthy balance across mobile app store by combining strong in house DTC related technology with real time targeted features, We are not just reducing fees, but deepening user trust. So we have been proactively investing in our DTC capability. Particularly in owned channel, direct CRM, and payment infrastructure, which allow us to communicate and transact with valued players more efficiently outside of traditional platform constraints. We are not just reducing fees but deepening user trust. I expect this focus on DTC integration to drive steady incremental growth and sustain our leadership. in the market. Hope this helps. Thanks. No, that thanks for the granularity. There.

Can you break out, you touched on a little bit, but like what is the organic social casino growth if we strip out Wow. I know you did mention, like, E and K. it is projecting social casino revenue generally to be, like, down 5% this year, but also that you noted that you expect to outperform that. Are you currently trending, you know, in line with the industry expectations or a little bit better, or how should we think about that?

Yeah. I mean, without quantifying it directly, I mean, listen. We are really quite happy with the first half of the year. On the social casino side. And where you know, both on the traditional double down side as well as on the wow side, you know, we have we have pretty much been able to more than hold our own relative to what is a declining market. I will say and so yeah. I think, you know, obviously, the market is contracting based on you know, both what Eilers & Krejcik say, but also what some of our competitors have already publicly reported. But, you know, we have been able to do incrementally better at least in the so far in the first half of the year. that is good to hear.

And then last question for me. I know you are not going to give any commentary on some of the reviews for the special committee, but is there anything you could say about the timeline? I mean, is there a potential resolution expected before, like, the next earnings report?

Yeah. As, you know, Joe mentioned upfront, you know, we just have nothing to report regarding the work of the special committee on the WGames proposal. You know, the special committee is working diligently, and we certainly look forward you know, to hearing from them when progress has been made. And there is, you know, certainly, we are committed, obviously, with the special committee to communicate any and all progress you know, when it is appropriate. Thanks. I will jump back in the queue. Yeah. Thanks, Josh.

Our next question comes from David Bain with Texas Capital Bank.

Great. Thank you. First, IK and Joe, great execution for the quarter. Maybe first to follow-up on Aaron's question, As you saw in 2Q, the industry leader plan to curtail some spend in the back half in terms of promotions. So I am just wondering if that is a sign that you know, the industry generally is becoming more rational or is it reactive to some sort of new consumer indicator And I know, Joe, you mentioned the run rate for you guys will likely stay the same. But just given the environment, you know, could that be beneficial? You know? And can you lean into that potentially in the back half to acquire users?

I am I am sorry, David. Do you meant on the iGaming side or Social Casino?

No. On the Social Casino side.

The Social Casino side. Yeah. I mean, you know, we have been spending within a certain fairly narrow range on the social casino side for, I think, quite some time. I think I mentioned on the last call that towards the end of Q1, we started to see ROAS at our ROI on acquiring new players. it is getting better. And so we leaned into it a bit. You know, that mitigated a bit in as we got into the rest, you know, Q2, and so we pulled back a bit. I mean, you know, I do not think there is a huge variation from quarter to quarter in social casino, at least from our perspective. In how we view what we do in acquiring new players because as I said, it is all based on real near real time calculation of returns. Right? For 21 day returns on acquiring new players, and that informs our spending. I would say that I think in general, we have all we pride ourselves in being quite disciplined in that. I will not compare us to competitors, but I will say that we have we have always been, I think, know, very judicious as it relates to acquiring new players, and we will continue know, to be that way.

Okay. Great. And then and then a follow-up on the D2C comments. Obviously, again, in social, obviously, you know, you guys are higher than the high that has been reported in the past. I am just wondering if you could speak to sort of any sort of balancing act with D2C you know, and revenue growth. I mean, we have seen some checks citing smaller operators outperforming larger for the first time in a in a long time in social. And I was wondering if maybe that was, you know, some of that leaning into D2C by the bigger players or is it not are you not seeing any sort of revenue balancing that needs to occur at this point?

Yeah. I mean, to be honest, to be, I mean, it is a good question. Right? To be honest, we have we, and IK had mentioned this. Right? You know, our growth in DTC, which has been quite dramatic, frankly, is not on the back of just getting more benefits. And, you know, we are very have always been very sensitive to you know, not wanting to overly inflate our economy or you know, you know, be too generous in an inappropriate way relative to the offers that we give. And that includes in the incentives that we give for direct to consumer. A lot of what we have done is we think in order to get this kind of growth that we have seen is to implement DTC really well and to reduce or even near eliminate the friction of the alternative pay path payment path, if you will. And, yes, there is some, you know, some additional benefits for the payer, but it is it is nothing that we think has to directly answer your question, really impact negatively impacted our revenue? Okay. Awesome. Thank you. Thanks, David.

Thank you. This concludes today's conference call. Thank you for joining us today. You may now disconnect.