DoubleDown Interactive Q3 2026 Earnings Call Transcript

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Provided by Quartr
November 11, 2026

Key Takeaways

  • Positive Sentiment: Direct-to-consumer sales reached 58% of social casino revenue, up from 52% in Q2 2026 and about 21% a year earlier. Management said the shift supports higher Adjusted EBITDA and margins, though future gains may become harder.
  • Negative Sentiment: Consolidated revenue declined 1.6% year over year to $94.3 million, as social casino revenue fell 3.5% amid a maturing market. Management cited fewer players and said it is focusing on retention and monetization.
  • Positive Sentiment: iGaming revenue rose 7.4% to $17.4 million, driven mainly by the Los Vegas brand. SuprNation also used product, marketing, and cost adjustments to offset much of the impact of a higher U.K. gambling tax rate.
  • Positive Sentiment: Adjusted EBITDA increased 7.2% to $40.2 million, with margin rising to 42.7%, helped by lower costs associated with the higher DTC mix. The company ended the quarter with $582.1 million in cash and short-term investments and about $545.3 million in net cash.
  • Neutral Sentiment: DoubleU Games, DoubleDown’s controlling shareholder, has launched a conditional tender offer for remaining ADSs at $16.25 per ADS in cash; the board recommends holders accept. Completion is not assured and depends on offer conditions, including minimum-tender and majority-of-the-minority requirements.
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Earnings Conference Call
DoubleDown Interactive Q3 2026
00:00 / 00:00

Transcript Sections

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Operator

Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the third quarter ended September 30th, 2026. My name is Victor, and I will be your operator this afternoon. Prior to this call, DoubleDown issued its financial results for the third quarter of 2026 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 the link to the Investor Relations section at the top of the homepage. Joining us on today's call are DoubleDown CEO, Mr. In Keuk Kim, and its CFO, Mr. Joe Sigrist. Following their remarks, we will open up the call for questions. Before we begin, Joe Jaffoni, the company's investor relations advisor, will make a brief introductory statement. Mr. Jaffoni?

Joe Jaffoni
Investor Relations Advisor at JCIR

Thank you, Victor, and good afternoon, everyone. 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 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we hereby claim the protection of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future events and include expectations and projections, not present or historical facts, and can be identified by the use of the words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate, or other similar terms. Forward-looking statements include, and are not limited to, those regarding the company's future plans, merger and acquisition strategy, strategic and financial objectives, expected performance, and financial outlook.

Joe Jaffoni
Investor Relations Advisor at JCIR

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, including risks related to the non-binding proposal from our controlling shareholder described below. Therefore, you should exercise caution in interpreting and relying upon them. We refer you to DoubleDown's annual report on Form 20-F filed with the SEC on March 31st, 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 today's 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.

Joe Jaffoni
Investor Relations Advisor at JCIR

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. A full reconciliation of these measures to the most directly comparable IFRS measure is available in the earnings release issued this afternoon. In addition, as previously announced on November 9th, 2026, the company entered into a tender offer and post-offer cooperation agreement with DoubleU Games Co., Ltd., the company's controlling shareholder. Pursuant to the agreement, DoubleU Games Co., Ltd. has commenced a tender offer to acquire all the outstanding ADSs of the company not owned by DoubleU Games Co., Ltd.

Joe Jaffoni
Investor Relations Advisor at JCIR

and its affiliate at a price of $16.25 per ADS in cash, without interest unless any applicable withholding taxes. The company's board of directors, following the recommendation of a special committee of independent and disinterested directors, has unanimously approved the agreement and the transactions contemplated thereby and determined to recommend that holders of the ADSs accept the offer and tender their ADSs. The offer is subject to various conditions, including a minimum tender condition and a majority-of-the-minority condition, as described in the offer documents. There can be no assurance that the offer or the transactions contemplated by the agreement will be completed. For further information, please refer to the company's report on Form 6-K and solicitation recommendation statement on Schedule 14D-9 filed with the SEC on November 10th, 2026.

Joe Jaffoni
Investor Relations Advisor at JCIR

Meanwhile, the company continues to conduct its business and operations in the ordinary course. Given this development, management will not be taking questions this afternoon regarding DoubleU's tender offer, and we refer you to the tender offer agreement and tender offer filings for additional details. 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 on DoubleDown's website. Thank you for your patience with that. It is now my pleasure to turn the call over to DoubleDown CEO, In Keuk Kim. Please go ahead.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss DoubleDown Interactive's third quarter 2026 results. Key highlights include solid contributions across our social casino and iGaming segments as we continue delivering revenue consistency and resiliency by executing on our growth and geographical diversification strategies, delivering a record contribution of 58% of our total social casino revenue from direct-to-consumer payer activity, and delivering another quarter of strong operating profit and significant free cash flow generation. These results again reinforce our confidence in our business model as we continue to benefit from operational excellence across our portfolio. Let us start with the financial results. This afternoon, we reported third quarter consolidated revenue of $94.3 million, down approximately 1.6% year-over-year. Despite this modest top-line decline, we delivered third quarter Adjusted EBITDA of $40.2 million, marking 7.2% year-over-year growth.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

In Q3, net cash flow from operations was $23.6 million. In the first nine months of 2026, we generated $94.7 million in net cash flow from operations. In the third quarter, social casino revenue declined 3.5% year-over-year to $76.8 million, reflecting the continued decline in the overall social casino market. Our social casino segment remains the primary engine of DoubleDown's profit and cash flow generation, and the third quarter marked the anniversary of our acquisition of WHOW Games, which closed on July 14th, 2025. A key highlight of DoubleDown's third quarter was the continued growth of our direct consumer, or DTC channel, a major contributor to the increase in Adjusted EBITDA. In the third quarter, DTC accounted for 58% of total social casino revenue compared to approximately 21% in the third quarter of 2025, and approximately 52% in the second quarter of 2026.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

Our product enhancement initiatives focused on messaging and promotion on DTC, especially in our flagship DoubleDown Casino app, continue to support our successful DTC transition. Given the ongoing maturation of the social casino gaming segment, industry analysts at Eilers & Krejcik recently forecast that the global social casino market will decline almost 7% in 2026. That said, our focus continues to be on outperforming the overall market through execution of our product development initiatives around player and payer retention, optimization of our marketing and live ops activities to maximize payer conversion and purchasing activity, and continued maximization of the direct-to-consumer opportunity. Turning to our iGaming business, SuprNation's Q3 2026 revenue was $17.4 million, an increase of 7.4% year-over-year, primarily as a result of the continued success of our newest brand, Los Vegas.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

During the third quarter, the SuprNation team again did an excellent job managing around the higher U.K. gambling tax rate through a combination of product changes, marketing adjustment, and expense control. This allowed our iGaming business to effectively mitigate much of the impact of the tax increase in the third quarter. Our third quarter results highlight how present targeted investments combined with precise operating execution are enabling DoubleDown to extend our long-term record of strong operating profit and cash flow generation. We are successfully integrating previous acquisitions while optimizing our core DoubleDown business through consistent DTC conversion. 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?

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Thank you, IK, and good afternoon, everyone. To review, revenues for the third quarter of 2026 were $94.3 million. This compares to total company revenues of $95.8 million in the third quarter of 2025 and $94.3 million in Q2 of 2026. You will recall that the revenue of WHOW Games, which was acquired on July 14th, 2025, was included in Q3 2025 for all but two weeks of the year-ago period. Our social casino segment declined 3.5% from the third quarter of 2025 to $76.8 million, while iGaming revenues grew by $1.2 million, or 7.4% year-over-year, to $17.4 million. Regarding our overall social casino KPIs, we previously highlighted that the metrics from WHOW Games are somewhat different than those from DoubleDown Casino. Specifically, the WHOW Games business experiences a higher payer conversion rate and lower average monthly revenue per payer.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

As a reminder, and for comparison purposes, WHOW Games metrics were included in overall social casino metrics starting in Q4 of 2025, not in Q3 2025. With all this in mind, overall social casino KPI highlights for the third quarter include the payer conversion rate, which is the percentage of players who pay within the social casino apps. Increased to 9.5% in Q3 2026, compared to 7.8% in Q3 2025. The average revenue per daily active user, or ARPDAU, of $1.44, up from $1.39 in Q3 of 2025. And an average monthly revenue per payer at $216 in Q3 2026, down from $272 in the prior year period. In the third quarter of 2026, operating expenses were $56.8 million, compared to $60.9 million in the third quarter of 2025.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Sales and marketing expenses for the third quarter of 2026 were $15.1 million, compared to $15.7 million in the third quarter of 2025. Sales and marketing expenses in the third quarter were up approximately $1.2 million from $13.9 million in Q2 of 2026. Profit excluding non-controlling interest for the third quarter of 2026 decreased 43.9% to $18.4 million, or earnings per fully diluted common share of $7.41, $0.37 per ADS in the third quarter of 2026, compared to profit excluding non-controlling interest of $32.7 million, or earnings per fully diluted common share of $13.21, or $0.66 per ADS in Q3 of 2025.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

The decrease primarily reflects net foreign currency losses recognized in the third quarter of 2026, mainly unrealized and realized losses on the U.S. dollar-denominated financial assets, partially offset by higher operating profit, which increased to $37.5 million from $35.0 million, driven by lower cost of revenue attributed to the higher proportion of DTC revenue. Adjusted EBITDA for the third quarter of 2026 rose 7.2% to $40.2 million, compared to $37.5 million for the third quarter of 2025, and $39.3 million for Q2 2026. Adjusted EBITDA margin was 42.7% for Q3 2026, as compared to 39.1% in Q3 2025, and 41.6% in Q2 of 2026.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Net cash flows provided by operating activities in Q3 2026 were $23.6 million, compared to $33.4 million in Q3 2025, with the decrease primarily due to higher income taxes paid in the quarter. As IK mentioned, net cash flows provided by operations were $94.7 million for the first nine months of 2026, slightly higher than the $94.1 million for the first nine months of 2025. At quarter's end, we had $582.1 million in cash equivalents, and short-term investments, with a net cash position of approximately $545.3 million, representing cash equivalents, and short-term investments, less borrowings from our controlling shareholder of $36.8 million. I will now turn the call back to IK for closing remarks.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

Thank you, Joe. DoubleDown Interactive, powered by our core social casino and iGaming businesses, delivered another quarter of strong Adjusted EBITDA and cash flow. Building on solid results delivered in the first nine months of 2026, we remain committed to innovation and disciplined high-ROI investments, and to driving DTC revenues, which collectively optimize social casino margins. Finally, our strong balances 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. Victor.

Operator

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of David Bain from Texas Capital Bank. Your line is open.

David Bain
Analyst at Texas Capital Bank

Awesome. Thank you, IK and Joe. Nice execution once again. I guess the question, the first one I had was, this is now the pure leader in DTC mix. What do you think the practical, sustainable direct-to-consumer run rate ceiling is, and how much incremental margin flow-through can we think about as you kind of increase it from here?

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Yeah, thanks, Dave, and thanks for joining. Good question. I mean, it's a question that we've been considering, and I think you and others have been asking over this journey that we've been on for two-plus years. As you'll recall, I think it was at the beginning of 2024, we were at less than 5% of social casino revenue as DTC, and now we're nearing 60%. The limit will occur at some point. I think we're really executing well. I don't know of anyone else in the industry who's approaching what we've done here more recently.

David Bain
Analyst at Texas Capital Bank

Right.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

I can't give you a number, but I can tell you that it's an important part. It has been, over the last two-plus years, an important part of our strategy, and it's really helped relative to EBITDA dollars and EBITDA margins. We continue to optimize the incentives, whether it be product-based incentives, communication and messaging incentives. Just in the last quarter, what we gained from 52% in Q2 to 58% in Q3, and I don't think we're finished, but obviously, it's going to be harder to make gains as we get higher and higher.

David Bain
Analyst at Texas Capital Bank

Oh, that is great. Okay. I guess the second one would be, if you can maybe, and maybe IK, for you on this one, if you could review the AI across live ops, whether it is dynamic pricing or personalizing gaming economies, whatever, the coin package pricing. If there has been a measurable lift that you have seen in ARPDAU from AI initiatives to date, and what we can think about as we look into 2027 from AI.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

Yeah. Good question, Dave. At DDI, our AI strategy centers on driving measurable capital and operating efficiencies across three core pillars. The first one is content velocity, accelerating 2D and 3D asset pipelines, localization, and prototyping to bring meta features to market faster. The second one is, yeah, your relative question, actually, player monetization, utilizing behavioral predictive models to dynamically tune in-game economies, personalized offers, and retention mechanics. Yeah, it is easier for us to maximize those leverage using AI tools, our internal server side. Number three is actually targeting precision, automating at creative iteration and spend allocation to safeguard our UA margins and improve ROAS. Overall, AI is already embedded into our day-to-day workflows. In 2027,—

David Bain
Analyst at Texas Capital Bank

Correct.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

—we, yeah, we will to, yeah, leverage our AI skills more. Hope this helps.

David Bain
Analyst at Texas Capital Bank

Definitely. Okay. Thanks, guys. Thank you.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Thanks, Dave.

Operator

Thank you. Our next question will come from the line of Aaron Lee from Macquarie. Your line is open.

Aaron Lee
Aaron Lee
Analyst at Macquarie

Hey, guys. Thanks for taking my question. As you noted in the prepared remarks, Eilers is pointing to a deceleration in the social casino market, but you guys seem to have done better than that. Was that because you were able to deploy more marketing spend in the quarter, or was that more related to the product roadmap? More broadly, can you just share any thoughts on how you view the environment for social casino currently and whether there's been any notable changes in trends there? Thank you.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Yeah. Thanks. We're very proud of what we've done over the last few quarters. There's obviously a lot of headwinds associated with social casino, given the maturity aspect of the industry. We have benefited, and we don't take this for granted, and we also lean into the advantage we think we have for having really passionate, committed, loyal players. There's others out there that have that, but I would say that DoubleDown Casino, with a mix of its content, our history of how we treat players with great meta features that have been added over the years, has a stickiness that I would put up against anyone else's app in social casino.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

That being said, it's definitely true that we have fewer players today than we've had in the past. We are continuing to try to optimize the monetization of those players and continue to give them great experiences, recognizing that we are going to have to hold onto them as long as we can.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

Yeah. Let me add a bit. DDC actually continues to deliver new features, not only in meta content, but also slot content every week to enhance player satisfaction. For example, the new slot launches every week, and the new linked jackpot system are designed to amplify the fun of slot gameplay that our users have enjoyed for a long time. Over time, as Joe mentioned, as we introduced multiple layers of meta content, the UX/UI experience has become somewhat complex. Nowadays, we have newer mobile lobby is being developed to provide more seamless and simplified player journey. That allow slot contents and meta content to reinforce each other more effectively and ultimately drive stronger engagement. Hope this helps.

Aaron Lee
Aaron Lee
Analyst at Macquarie

Yeah. Got it. Thank you. That's very helpful. Then with regard to SuprNation and the Los Vegas brand, can you just talk about what's driving the success there? Is it acting as an effective funnel for an incremental player base? Is it attracting higher-spending players? Any color there would be helpful. Thanks.

In Keuk Kim
In Keuk Kim
CEO at DoubleDown Interactive Co

Yeah. Let me take that question first. Los Vegas differentiated itself by blending traditional casino nostalgia with a modern user experience. While our previous brands, three brands, focused on niche themes, Los Vegas was designed for broader appeal, which has been the key driver behind its rapid early success. On the operational side, we've leveraged real-time data analytics to optimize user acquisition costs and enhance retention. While we are mindful of the evolving regulatory and tax landscape in the U.K., our strategy is to mitigate these headwinds through portfolio expansion. By launching our fifth and sixth brands, we will further diversify our revenue streams.

Aaron Lee
Aaron Lee
Analyst at Macquarie

Thank you. Appreciate the color.

Joe Sigrist
Joe Sigrist
CFO at DoubleDown Interactive Co

Thanks, Aaron. Appreciate it.

Operator

Thank you. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Executives
    • In Keuk Kim
      In Keuk Kim
      CEO
    • Joe Sigrist
      Joe Sigrist
      CFO
Analysts
    • Joe Jaffoni
      Investor Relations Advisor at JCIR
    • David Bain
      Analyst at Texas Capital Bank
    • Aaron Lee
      Analyst at Macquarie
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