Prepared remarks
Good afternoon, and welcome to DoubleDown Interactive's Earnings Conference Call for the First Quarter Ended March 31, 2026. My name is Latif, and I will be your operator this afternoon. Prior to this call, DoubleDown issued its financial results for 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 in the Investor Relations section at the top of the home page. Joining us on today's call are DoubleDown 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, Joseph N. Jaffoni, the company's Investor Relations Advisor, will make a brief introductory statement. Mr. Jaffoni?
And thank you, Latif. 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 use of 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.
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 DoubleDown'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 IFRS financial results prepared in accordance with IFRS. A full reconciliation of these measures to the most directly comparable IFRS measures is available in the earnings release issued this afternoon. I would like to remind everyone that this call is being recorded and will be made available for replay by the link in the Investor Relations section on DoubleDown's website. Thank you for your patience with that, and it is now my pleasure to turn the call over to DoubleDown's CEO, In Keuk Kim. In Keuk Kim, please go ahead.
Thank you, Joe. Good afternoon, everyone. We are delighted to be with you today to discuss DoubleDown Interactive's First Quarter 2026 results. Key highlights include overall financial results reflecting a solid start to 2026, the highest quarterly revenue for SuprNation since our acquisition of the business back in 2023, significant continued growth of our direct-to-consumer social casino revenue, and another quarter of delivering consistent profitability and significant free cash flow. We believe these results validate our strategy and demonstrate our ability to drive operational excellence across our portfolio. Let's start with the financial results. This afternoon, we reported first quarter consolidated revenue of $94.1 million, up nearly 13% year over year, along with adjusted EBITDA of $38.2 million, up 24% year over year. In Q1, we again delivered on our priority to drive a high conversion of revenue to profit and cash flow.
Net cash flow from operations was $46.4 million in the quarter. We delivered these strong profit and cash flow results even as we invested in new player acquisition activities at SuprNation, specifically in support of its recently launched fourth gaming brand, Las Vegas, which has met with a strong player response. Our social casino segment remains the primary engine of DoubleDown's profit and cash flow generation. In the first quarter, social casino revenue grew 9.5% year over year to $76.9 million, driven by the contribution from WHOW Games, which was acquired in the third quarter of last year. The direct-to-consumer, or DTC, aspect of our social casino business remains a driving force behind our continued strong profitability. As mentioned on our last conference call, WHOW Games already benefits from a relatively large DTC component due to its strong web-based history. Over the last few quarters, we have made significant progress in ramping up DTC purchases made in our flagship social casino, DoubleDown Casino.
In 2026, this direct-to-consumer transition accelerated as the DTC component of DoubleDown Casino revenue exceeded 40%. As a result, DTC revenue in the first quarter was 44% of total social casino revenue, up sequentially from 33% in Q4 2025. We plan to remain focused on optimizing the contribution of DTC revenue as a percentage of our overall social casino revenue throughout 2026, recognizing that the global social casino market is estimated to be in secular decline. Our priorities in this business segment remain precise execution of our product development initiatives around player acquisition and player retention; focus on marketing and live ops activities to maximize payer conversion and purchasing activity; and continued focus on the direct-to-consumer transition. Turning to our iGaming business, SuprNation's Q1 2026 revenue was $17.2 million, an increase of 30% year over year and up 6% from Q4 2025.
The recent introduction of our first iGaming casino title, Las Vegas, contributed to the strong SuprNation results in the first quarter. Going forward, we look to leverage this early positive result as we continue to acquire new players through marketing and advertising investments. At SuprNation, we are also focused on continuing to find offsets to the recently introduced higher UK gambling tax rate through product adjustments, such as reducing bonusing rates. I am pleased to report the early result of this action to be positive. Our first quarter results highlight how prudent targeted investments are uncovering growth opportunities while sustaining our track record of strong profitability and cash flow generation. We are successfully integrating acquisitions and optimizing our core DoubleDown business. M&A remain a strategic priority as we evaluate opportunities in online gaming and mobile entertainment to drive long-term shareholder value. Now I will turn the call over to our CFO, Joseph A. Sigrist, to walk us through the financials before I provide my closing remarks.
Thank you, In Keuk Kim, and good afternoon, everyone. To review, revenues for Q1 2026 were $94.1 million. This compares to total company revenues of $83.5 million in Q1 2025. Our social casino segment grew approximately 9% from Q1 2025 to $76.9 million, boosted by the inclusion of revenue from WHOW Games. As you will recall, the WHOW Games acquisition closed in July. iGaming revenues grew by $4 million, or 30% year over year, to $17.2 million and were up over $1 million from Q4 2025. Regarding our overall social casino KPIs, we mentioned last quarter that the metrics from WHOW Games are somewhat different from those from DoubleDown Casino. Specifically, the WHOW Games business experiences a higher payer conversion rate and lower average monthly revenue per payer. With this in mind, overall social casino KPI highlights for the first quarter include the payer conversion rate, which is the percentage of players who pay within the social casino apps, increasing to 9.7% in Q1 2026 compared to 6.9% in Q1 2025.
The average revenue per daily active user, or ARPDAU, was $1.34, up from $1.29 in Q1 2025. Average monthly revenue per payer was $207 in Q1 2026, down from $276 in the prior year period. In 2026, operating expenses were $58.7 million compared to $53.9 million in Q1 2025. The increase is primarily due to the addition of WHOW Games expenses. Sales and marketing expenses for Q1 2026 were $17.4 million compared to $14.1 million in Q1 2025, which, again, did not include WHOW Games. In addition, as IK mentioned earlier, in Q1 we invested to acquire new players through SuprNation's recently announced fourth brand in the fourth quarter, and in the first quarter we also saw an opportunity to increase advertising investment in DoubleDown Casino, based on recent positive ROI trends. Profit excluding noncontrolling interest for Q1 2026 increased 48% to $35.4 million, or earnings per fully diluted common share of $14.28, or $0.71 per American depositary share in Q1 2026, compared to profit for the interim period of $23.8 million, or earnings per fully diluted share of $9.62, or $0.48 per ADS in Q1 2025.
The increase primarily reflects higher revenue and higher unrealized gain on foreign currency, partially offset by higher overall operating expenses, which was due to the inclusion of WHOW Games and increased costs associated with the revenue growth from SuprNation. Adjusted EBITDA for Q1 2026 rose to $38.2 million compared to $30.8 million for Q1 2025 and $40.6 million for Q4 2025. Adjusted EBITDA margin was 40.6% for Q1 2026 as compared to 36.9% in Q1 2025 and 42.4% in Q4 2025. Net cash flows provided by operating activities in Q1 2026 were $46.4 million compared to $41.1 million in Q1 2025, due to higher profit and lower income tax paid. In Q1 2026, with meaningful cash generation, we had $533 million in cash, cash equivalents, and short-term investments, with a net cash position on 03/31/2026 of approximately $500 million, or approximately $10.10 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 segments, delivered another quarter of strong profitability and cash flow. Building on this solid start to 2026, we remain committed to innovation and disciplined high-ROI investments and to driving DTC revenue to optimize social casino margins. Finally, our strong balance sheet and cash position provide the flexibility to pursue strategic M&A, a core pillar of our strategy to enhance long-term shareholder value. We are now happy to take your questions.
Questions and answers
Thank you. To ask a question, please press *1 on your telephone. To remove yourself from the queue, you may press *1 again. Our first question comes from the line of David Bain of Texas Capital Bank. Your line is open, David.
Great. Thank you. I did read the press release where you are not going to be answering too much around the expression of interest. With that being stated, rather than asking about potential outcome or some of the nuances with that offer, is there any way you could help shareholders or potential ones or us just to review the process and the related structure from here? Any detail around that would be helpful—maybe, the independent committee who may be on it, the timing of some of the voting logistics—anything that you think you could share would be helpful.
Yes, Dave. It is really not possible to say anything more than what has already been publicly disclosed. We formed a special committee; the board voted to form a special committee of independent, disinterested directors just after receiving the proposal. Their objective is to review, evaluate, and determine the next steps that would be in the interests of the company and its unaffiliated shareholders. Other than that, there is not anything else the company can comment on.
Okay. I understand. And then, I guess, let me just add two fundamental ones then because that first one I did not get much. The incremental or the increased visibility into SuprNation EBITDA contribution this time around relative to last time? Are we seeing the endpoint on that inflection broadly this year? You know, we sort of still breakeven with that business line? Great question. So as we have been looking to get beyond breakeven even with SuprNation since we purchased them. And by the way, SuprNation had a very strong quarter. So with Q1, not yet including the increased tax burden from the increase in the UK, we saw that they actually were able to reach breakeven and even turn a bit of a profit. The tailwind of the growth of the business, the fourth brand that was recently launched, were all very positive. Of course, the headwind now, starting April 1, is the increased UK tax amount.
But as IK mentioned, the actions that we are taking have been, at least so far, early days, and look good as they relate to trying to mitigate some of the expenses on the business. It is a little too early to tell just based on the fact that we are only a little over a month into the new tax regimen, but we are still very focused on getting that business to be profitable and to grow the profit over time. Okay. Awesome. And then if I could just have one more follow-up. You did mention, Joe, the KPI nuances between WHOW and DoubleDown. But if you could bifurcate perhaps DTC growth or the mix with the two. I mean, we are getting here at, like, 44%—we were kind of 20-plus percent, I would think, by now, with DoubleDown. Can we get to 50%+? I am trying to understand where we are in terms of the company DTC mix.
Well, I think, as IK mentioned, DoubleDown Casino by itself was over 40% DTC in Q1. So the growth essentially sequentially from 33% DTC total in social casino in Q4 to 44% in Q1 was primarily based on the growth of DTC in DoubleDown Casino. It is a great question how far it can go for both DoubleDown Casino as well as WHOW. It is hard to predict. We have made incredible progress over the last two years, and it is hard to handicap it, but we are really pleased with the results so far.
Okay. Great. Thanks, guys.
Thank you. Our next question comes from the line of Eric Handler of Roth Capital. Your line is open, Eric.
Thank you very much. I am going to beat the horse to death here with the question on the offer. But when you look at potential acquisitions, is that on hold for the moment until the offer has been evaluated, or are you still actively looking for potential deals?
Thanks, Eric. From an operating perspective, the management team at DoubleDown continues to operate business as usual. We are continuing not only to run the current business we have, but to evaluate and analyze M&A opportunities because that has certainly been a big part of what we have been focused on. It is a big part of our growth strategy, and so we are continuing to look at opportunities.
Okay. And then, as a follow-up, you did give a little bit of comment on the higher UK casino tax or iGaming tax. What are you doing to sort of mitigate the impact? Are you passing some of that along to the consumer? And what is happening to user acquisition costs in the last, I guess, 40 days?
I can talk a little bit about CPIs and user acquisition costs. There has been moderation in the expense; I would not say a dramatic reduction, but certainly some of the increases that we saw in the iGaming space and gaming as a whole have moderated. I mentioned that we leaned in a bit more even on the social casino side with DoubleDown Casino in the last quarter because we are seeing some opportunities to spend more when the ROI is attractive. Relative to the situation with iGaming in the UK, it is still very early days. We are keen to continue to observe what our much larger competitors are doing in that space. We are trying to be as flexible as we can because we remain very focused on getting the profitability up in the iGaming business. IK, do you want to talk a little bit about some of the things we are doing at SuprNation?
Yeah. On the marketing and operational side, we are leveraging real-time data analytics to optimize user acquisition cost and enhance retention. While we are mindful of the evolving regulatory and tax landscape in the UK, we are seeing decreasing CPI costs in some channels, but it will depend on budget and channel mix. Our strategy is to mitigate these headwinds through portfolio expansion, and we are testing ramp-ups right now. It is early, but we believe it will go better.
Thanks, Eric.
Thank you. Next question comes from the line of Aaron Lee of Macquarie. Your question, please, Aaron.
Hey, good afternoon. Thanks for taking my question. Maybe to start just building off the earlier question on M&A. Can you just update us on what the M&A environment looks like today? Are you still seeing deals across your desk? And what has been the gating factor so far? Are these deals just too small to move the needle, or are seller expectations misaligned? Any color on the M&A picture would be helpful. Thank you.
Yeah, sure, Aaron. There are still deals out there. Valuation expectations are down compared to the recent past, which, as a buyer, is positive. There are a number of deals that are smaller, which, to your point, for us we have been looking to continue to ratchet up. Our first deal with SuprNation was in the $30 million to $40 million range. Our next deal was WHOW, which was around $65 million and added something on the order of $40 million to $50 million in annual revenue. We would expect the next deal to be a step up as well, but it is hard to predict when that will be. Deals are out there, and we are continuing to use our disciplined approach to analyzing them.
Okay. Thanks for that. I also wanted to ask about your comment about the opportunity you saw during the quarter to increase the advertising investment in DoubleDown Casino. Is there any more detail you can provide on what you saw in the market as you moved through the quarter? And do you have visibility into whether those trends are sustainable in the coming quarters? Thank you.
Good question. We were pleased to see CPIs looked a little better for us in Q1 versus Q4, which is often a seasonally easier comparison. The ROI is the most important factor—can you monetize quickly from new player acquisition—and we were able to see favorable cohort economics. Not only was there good news on CPI, but we were also able to translate that into payer engagement. That is why we increased spend modestly. As to sustainability, it is difficult to tell, but we analyze new player cohorts on a daily and weekly basis, and we will lean into acquiring new players when the economics make sense.
Awesome. Thanks, Joe.
Thank you. Once again, to ask a question, please press *1 on your telephone. Again, that is *1 on your telephone to ask a question. Our next question comes from the line of Josh Nichols of B. Riley. Your line is open, Josh.
Yeah. Thanks for taking my question. Just to touch on the social casino business. We have seen some improvement there. What was the organic growth rate ex-WHOW? I am just curious how we should be thinking about that trajectory as we lap the WHOW acquisition in July and move into the second half.
Yeah. Social casino is a very mature category and is estimated to be in secular decline, so there is a headwind when it comes to growing the existing business, whether DoubleDown Casino or WHOW. If you look at our results compared to industry estimates, we think we did more than hold our own in the first quarter. The business remains incredibly cash generative and profitable. Given the maturity of the category, our strategy is focused on optimizing profitability through DTC, leaning into player acquisition when ROI makes sense, and pursuing M&A opportunities to expand the top line.
Thanks. And last question for me: there have been a couple questions on it, obviously. I would not expect you to comment on a proposal itself, but anything you could say about the timing around forming a special committee or how long until the process could reach a decision?
The special committee has been formed; we sent out a press release a couple weeks ago on that. They have been enabled to do their job. As far as the process or timeline, it is not something that we have visibility into at the company beyond what has been publicly disclosed.
Got it. Thank you.
That does conclude the Q&A portion of our call and our conference for today. Thank you for participating. You may now disconnect.