DoubleDown’s DTC Surge Drives Social Casino Growth

Date of Call: Feb 11, 2026

Financials Results

• Revenue: $95.8 million, up 17% year-over-year
• EPS: $0.49 per ADS, down from $0.72 per ADS in Q4 2024

Business Commentary:

Revenue and Profitability Growth:

• DoubleDown Interactive reported revenue of $95.8 million for Q4 2025, up 17% year-over-year, with an adjusted EBITDA of $40.6 million, up 16% year-over-year.
• The growth was driven by continued year-over-year growth in SuprNation, the first full-quarter contribution from WHOW Games, and a significant increase in direct-to-consumer revenue.

Social Casino Business Performance:

• The Social Casino segment grew 9% from Q4 2024 to $79.7 million, with a payer conversion rate increase to 9.6% from 6.9% in the previous year.
• This growth was due to the contribution from WHOW Games and increased direct-to-consumer purchases, despite lower average monthly revenue per payer.

iGaming Segment Growth:

• SuprNation's Q4 2025 revenue was $16.1 million, up 78% year-over-year.
• The significant growth was attributed to successful player acquisition and product innovations, including the launch of the first iGaming casino title in the UK market.

Cash Flow and Strategic Investments:

• Net cash flows from operations in Q4 2025 were $42.6 million, contributing to a total of $136.8 million for the full year 2025.
• The company continues to invest in new player acquisition for SuprNation while maintaining strong profitability, supported by a strong balance sheet and cash position.

Direct-to-Consumer Revenue Strategy:

• Direct-to-consumer revenue exceeded 30% of total Social Casino revenue in Q4 2025.
• The increase was driven by product features and purchase offers focused on DTC, with a plan to further optimize and grow this revenue stream in 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'continued year-over-year growth', 'first full-quarter contribution' from WHOW Games, 'significant growth' in direct-to-consumer revenue, and 'continued strong profitability'. The CEO stated the company is 'delighted to be with you today' and that they 'continue to demonstrate our ability to deliver strong adjusted EBITDA and drive high levels of cash flow'.

Q&A:

• Question from David Bain (Texas Capital Bank): Could you bifurcate DoubleDown Casino and WHOW revenue contribution and growth? Could you also comment on DTC mix gains for both?
  Response: Management will no longer formally quantify WHOW vs. traditional DoubleDown Social Casino revenue but noted both businesses held their own. WHOW has a high existing DTC mix, but traditional DoubleDown saw a significant increase in DTC purchases, which was the largest contributor overall.

• Question from David Bain (Texas Capital Bank): What is DoubleDown doing with AI and automation? And what is the broader promotional landscape like for the sector?
  Response: AI is being integrated across content production, live operations personalization, and marketing optimization to improve efficiency, speed, and decision quality. On promotions, the focus is on disciplined efficiency and ROI measurement, as the industry has matured.

• Question from Aaron Lee (Macquarie Research): Is moderating customer acquisition spend at SuprNation temporary or a shift towards profitability? What is the long-term margin structure?
  Response: The moderation is a reaction to staying disciplined on ROI thresholds; marketing spend was flat sequentially. For 2026, the company will manage marketing investment mindful of upcoming gaming tax changes and new brand launches, balancing growth and profitability.

• Question from Aaron Lee (Macquarie Research): Any updated thoughts on where direct-to-consumer revenue can go over the next few quarters?
  Response: Management sees significant remaining potential to ramp DTC revenue as a percentage of overall Social Casino revenue, especially on the traditional DoubleDown Casino side, and will continue to optimize product and messaging.

• Question from Eric Handler (ROTH Capital Partners): Given strong free cash flow and being overcapitalized, what prevents a buyback or dividend? What would signal readiness to return capital?
  Response: While M&A is the current focus for long-term shareholder value, a large cash balance is always on the minds of management and the Board. There is no specific trigger, but the company continually evaluates ways to create shareholder value beyond just M&A.

• Question from Eric Handler (ROTH Capital Partners): What caused the SuprNation impairment charge?
  Response: The impairment is a result of annual goodwill valuations by third-party experts, as required. It is a noncash charge that does not affect EBITDA and is not indicative of the business's growth, which has been robust.

• Question from Josh Nichols (B. Riley Securities): For iGaming, how should we think about 2026 dynamics between sequential growth and profitability? Are you leaning more on growth or profitability?
  Response: The focus remains on disciplined player acquisition; marketing spend will not be pulled back but the level of increase will be managed based on real-time LTV and payback period algorithms.

• Question from Josh Nichols (B. Riley Securities): Are you seeing any easing of marketing pressure due to legislative changes like sweepstakes bans in California?
  Response: The intense pressure from sweepstakes marketing costs has lessened to some extent, but overall player acquisition costs remain a persistent challenge across gaming sectors.

• Question from Eric Gregg (Four Tree Island Advisory LLC): What was the magnitude of the SuprNation goodwill write-down, and why was it necessary given robust growth?
  Response: The write-down was approximately $8 million on a $35 million upfront acquisition. It was driven by third-party valuation experts' conclusions based on various methods like comparables and WACC, which informed the adjustment to the goodwill balance.

• Question from Eric Gregg (Four Tree Island Advisory LLC): Given the negative enterprise value, why has the company not considered a stock buyback? Is there a cultural issue?
  Response: The focus remains on growth to create long-term shareholder value. The sale of STIC shares increased the public float, which is a positive step. Management is not opposed to buybacks but sees M&A as the primary strategy for leveraging its strong balance sheet.

Contradiction Point 1

Strategy and Rationale for Moderating Marketing Spend

Conflicting reasons given for moderating player acquisition spending.

Is the moderation in customer acquisition spend temporary or a shift toward profitability, and what is the long-term margin structure? - Aaron Lee (Macquarie Research)

2025Q4: The moderation is a reaction to disciplined ROI measurement. The company is bumping up against the payback threshold, so it's moderating increases. - Joseph A. Sigrist(CFO)

How should SuprNation balance investments in growth versus profitability moving forward? - Aaron Lee (Macquarie)

20251111-2025 Q3: Adding new players to SuprNation continues to meet ROI targets for return on ad spend (ROAS). The payback period for acquiring new users is about 6 months. The company will continue to add players as long as these targets are met or exceeded... - Joseph A. Sigrist(CFO)

Contradiction Point 2

The Primary Focus for Capital Returns

Contradiction on whether M&A is the only or primary focus for returning capital to shareholders.

What prevents a buyback or dividend despite high free cash flow and a large cash base, and what would signal readiness to return capital? - Eric Handler (ROTH Capital Partners, LLC, Research Division)

2025Q4: Long-term shareholder value and capital returns are top of mind. The consensus is that M&A strategy creates the most value to address the mature Social Casino business. - Joseph A. Sigrist(CFO)

Have recent regulatory changes reduced player acquisition costs, freeing up capital for deployment? - Josh Nichols (B. Riley Securities, Inc., Research Division)

20251111-2025 Q3: It is too early to determine if these actions have lowered cost-per-install (CPI). However, any regulatory pressure on sweepstakes is viewed as beneficial. The company is monitoring the situation but not seeing a material impact yet. - Joseph A. Sigrist(CFO)

Contradiction Point 3

Direct-to-Consumer (DTC) Growth Target and Timeline

Contradiction on achieving a 20%+ DTC run rate target.

What is the latest outlook for DTC growth over the next few quarters? - Aaron Lee (Macquarie Research)

2025Q4: They are not at a plateau yet and will continue to increase DTC revenue as a percentage... They are not at a plateau yet. - Joseph A. Sigrist(CFO)

What is the timeframe for Direct-to-Consumer (D2C) to reach 20%, given it exceeded 15% in Q3? - David Bain (B. Riley Securities)

2025Q3: The goal is to exit Q4 (the current quarter) with a D2C run rate of over 20%. - Joseph A. Sigrist(CFO) & In Keuk Kim(CEO)

Contradiction Point 4

iGaming Business (SuprNation) Growth Trajectory and Profitability

Contradiction on whether current high growth is sustainable and the timeline for achieving profitability.

Is SuprNation's reduced customer acquisition spend temporary or a shift toward profitability, and what are the long-term margin expectations? - Aaron Lee (Macquarie Research)

2025Q4: The moderation is a reaction to disciplined ROI measurement... In 2026, they will manage marketing spend mindfully... and investing in a new brand. - Joseph A. Sigrist(CFO)

Is the current high growth rate in the iGaming business sustainable, and will it contribute positively to EBITDA as it scales next year? - Josh Nichols (B. Riley Securities, Inc., Research Division)

2025Q2: SuprNation's current marketing investments are accretive, not dilutive, to profitability. The priority is scaling the iGaming business. Once sufficient scale is achieved, the company believes SuprNation can deliver a profit margin of over 2 digits. - In Keuk Kim(CEO)

Contradiction Point 5

Capital Return Strategy and Shareholder Value Focus

Contradiction on the primary method for returning capital to shareholders.

What factors prevent buybacks or dividends despite high free cash flow and a large cash base? What would signal readiness to return capital? - Eric Handler (ROTH Capital Partners, LLC, Research Division)

2025Q4: Long-term shareholder value and capital returns are top of mind. The consensus is that M&A strategy creates the most value to address the mature Social Casino business. - Joseph A. Sigrist(CFO)

What are the high-level thoughts on the parent's return of capital activity versus DoubleDown's approach, considering valuation differences and any potential differential view? - David Bain (Axis Capital Bank)

2025Q2: The company cannot comment on the actions or capital return activities of DoubleU, as it is a separate company and the controlling shareholder. - Joseph A. Sigrist(CFO)