Good afternoon, everyone. Thank you for joining us at the Needham TMT Conference. My name is Bernie McTernan, the internet analyst here. My pleasure to introduce Joe Sigrist, CFO of DoubleDown Interactive. He's gonna walk through a presentation. I'll pop in at the end to go through some questions. If in the audience you have any questions, please type them into the portal, and we'll be sure to get to them. With that, I'll turn it over to Joe, and I'll pop back for Q&A. Great, Bernie. Thank you so much. Good, good afternoon, everyone. I'm on the West Coast, so for those of you more west, good morning. Look forward to taking about 20 minutes, running through a few slides to describe the DoubleDown Interactive story and look forward to taking your questions after that as well. DoubleDown is a gaming company, a mobile gaming company that has been around for about 12 years. Our mission is pretty aggressive, but certainly one we think is very appropriate given our leadership position. It's to become one of the world's leading global gaming companies by delivering differentiated content and playing experiences to our players. I think one of the key words here that I'll highlight, and we'll talk a little bit more in a minute, is this idea of content or differentiated content. Which for us means casino-style games, at least in our core social casino business. That specifically means slot games that our players enjoy playing. That's the starting point or the core of our business, at least today. Just the tale of the tape here on the numbers. We have one of the top five social casino games, DoubleDown Casino, which has been in the top five for a number of years. We offer within the DoubleDown Casino app and a couple of other smaller casino apps, over 300 separate casino game titles, specifically slot games, although we also have bingo and roulette and blackjack and a few other card and table games as well. We have a very high-value user base. High value you'll see in a few minutes, recognizing how much our people who play, who do pay us on a regular basis. That base has over two million DAU. I also will highlight something in a slide in a minute about the stickiness of our players, given how much players that were acquired in previous periods contribute to current revenue, which is a significant stat that I'd love for you to remember going forward. We have great we're a free-to-play model, as you probably know. Social casino is free to play. we have really great monetization metrics within the free-to-play category. average revenue per daily active user in our last reported quarter was over $1. I mentioned the high value of our payers. in our last reported quarter, if you were a payer, active payer in that quarter, you paid us over $220 per month. that's just, you know, off the charts relative to a free-to-play model and the contribution of each payer to a company's revenue. our payer conversion is an important number, almost 6%. We were at 5.8% in Q1 of 2023, which, as you know, in the free-to-play model is a very important stat to track. We have a great financial profile. Our LTM, and, you know, last 12 month revenue, over $310 million, about $100 million in adjusted EBITDA. We're always proud of our EBITDA margin, which is 30+ LTM at 32% most recently. What is social casino? If you're not familiar with social casino, again, it's a free-to-play game, meaning I don't have to pay to play. I download the app. The app, and the app, in our case is a casino. It's a virtual casino that allows people to play all kinds of different casino-style games. It's like walking into a casino. Most of those games are slot games, and most in the category of social casino games that people play are slot games, and they play with virtual currency, monopoly money that we provide to the players on a very regular basis, free. You log in every day, you get free tranches of this virtual currency, this monopoly money. If you like us on Facebook, we'll give you more. If you do a number of things that you would, you know, do, you know, in a social environment, we'll give you free chips. Of course, given the conversion rate, as I said, last quarter, 5.8% of those players also purchased chips. That's how we generate revenue in this business. Why do people play and why do people pay? It's because they love these games. They love casino-style content, specifically slot games. This is a form of entertainment for them. They might go to a casino, they might play slot games, you know, at the Wynn or at some casino in their local Native American casino. They also love to just kick back on their phone or you know, on their computer at home and play these games as well. These games, you know, are always available because they're available on their phone or again, on their computer. Although you don't, you know, have to pay, if you do pay, it's very reasonable if you want more chips. You know, you get many, many, many chips for a very low cost. Even if you are a payer, the entertainment value or the entertainment cost per minute or whatever that you're playing is very reasonable. How do we make money? Well, the way we make money ultimately is at the bottom of this inverted triangle, which is people purchase chips. We start with engaging our players. We spend a significant amount of money in marketing. In fact, that's our largest discretionary category of spend. We advertise, and people will see these ads, and they'll do a click-through, they'll download the app. Again, as I said before, we'll give them free chips if you sign up for our app. I, very much if you haven't already put DoubleDown Casino on your phone, I very much would like you to. When you do that the first time, we'll give you one million free virtual chips. You play, over time, you likely will have that balance get smaller. That's the way these games work. You can either wait till the next period of time we'll give you free chips. Maybe wait till tomorrow to get more free chips, or you can purchase chips, and you go to our paywall, and you purchase chips. Again, 5.8% most recently of the people who play do in fact make purchases. If you make purchase, as I said, made a purchase during the last quarter, on average, you were paying us over $220 per month. Again, it's really a virtuous circle of monetization. We give chips. We offer great slot games and casino-style games to these players. They play those games. They desire, as a player, more chips. Again, they either wait or they purchase additional chips. Okay, a few quick investment highlights, I'll go through each of these very quickly. It's a large market. When I say it, I mean both the social casino market, $7 billion annual global market, as well as the larger set of markets and market opportunity that we have, specifically the casual mobile game market. We are very much a social casino company, but we are very focused on expanding the business both through organic development of our, of our own, through our own development resources and through M&A activities to expand into the larger casual mobile gaming market, which is a significant factor, larger even than social casino and growing quite quickly as well. We're looking to, again, maximize our benefit in the gray category, as well as expand greater into the light blue, which of course fits into the larger mobile gaming market. We were a pioneer in social casino there right at the very beginning, founded in 2010. We launched DoubleDown Casino on Facebook, which was kind of pre-mobile, if I can use that term, back then, in the same year. In 2012, we acquired by a company at the time was the largest slot machine manufacturer in the world, IGT. We were able to take great IGT slot games like Cleopatra and Da Vinci Diamonds, and launch those within the social casino environment of DoubleDown Casino. That really helped fuel our growth between 2012 and then 2017, when IGT sold us to another social casino company based in Korea called DoubleU Games. We were acquired by DoubleU in 2017. If you fast-forward to today, we have three social casino apps, the largest by far, which is our what we call all-in-one app, which is DoubleDown Casino. We are launching and testing new apps primarily outside of social casino, as I mentioned, with our organic development activities as well. Content, I mentioned earlier, is very important to our business. This is great slot games because not only do we have lots of slot games today in DoubleDown Casino, but every one and a half to two weeks, we launch a new slot game. We have that as part of the marketing activities that we have to acquire new players. Our players, existing players also expect that from us. They expect, just like when you walk into a real casino, that you'll see a new slot game every so often. We have three sources of this ongoing new, newly launched slot game content. The first is with our previous owner, IGT. IGT, as I said before, had given us lots of great slot games that they've developed, and they continue to give us great slot games. We have a licensing agreement with them, where we're able to take advantage of bringing the new games they develop, if we so choose, into our social casino business. Secondly, our controlling shareholder and partner, DoubleU Games, they also provide slot games to us through a licensing agreement that we have with them because they are in the same business that we are. They've given us so far of the 3,300+ slot titles they have in their library, we've taken probably somewhere in the range of 35-40 of those games over the last few years. Finally, we develop our own content. We have our own slot development studios in Seoul, in Korea, and we've developed over 50 titles for our own business. As the CFO, I like these games the best, because we don't pay a royalty on games obviously we develop ourselves, and we do pay royalties to both IGT and DoubleU Games for the games that we use of theirs. I mentioned this, the stickiness of our, of our players. I just want to show this chart, which shows the contribution in revenue that we generated over the last five years from players who we've acquired over the history of the company. You can see based on the thickness of the strata in this, in this slide, how much revenue, even go back to 2010 or certainly a great year, 2011, where in the last few years, players that we acquired over 10 years ago still contribute significantly to the revenue of the company today. In fact, the stat that I've highlighted here on the right is that 92% of the revenue we generated last year in 2022 were generated by players that we acquired back in previous years. From a growth standpoint, we have a three-part strategy here that starts with maximizing the leadership position we have in social casino, and that includes not only revenue, but also great profit and cash flow generation. I'll talk about that in a minute. While social casino is a fairly mature category in mobile free-to-play gaming, it definitely is a powerful one in the sense of monetization and cash flow generation for our business. It's literally the flywheel of our company and how we continue to have great financial results. The second prong of our strategy is our own development of category games that are non-social casino. In casual gaming or RPG style gaming. We have continued to develop and test and launch new games in this in the non-social casino category that we've developed ourselves. We haven't yet had a hit. We're early in the process of developing these games. We've only tested two or three of these games, but we have a great pipeline, a roadmap of games that we're continuing to test and launch, and that we will continue to do that with resources that we have both in Seoul as well as in Seattle, which is where our U.S. operations is based. M&A, inorganic growth. We have a significantly strong balance sheet, so we continue to look at M&A opportunities. We pulled the trigger on our first acquisition. We announced in January of this year the acquisition of a B2C iGaming company called SuprNation, that's based in Western Europe and have their operations in a few countries in Western Europe where online gambling for slot with slot content is legal. We will be closing this acquisition as soon as the regulators in the appropriate countries approve the acquisition. We look forward to, you know, to that. We continue to look at other acquisitions as well, again, both in casual and even hyper-casual style mobile gaming, as well as in the iGaming space. Just quick on SuprNation, as I said, we announced it in January of this year. Acquisition price around $35 million in cash. They have some significantly exciting and powerful brands in slot-based gambling, online gambling, including Duelz, which is a product and a brand that is significantly exciting in the marketplace. Just a few highlights here. About 50 employees. Their annual run rate in revenue is around $24 million-$25 million. Most of their business comes from either Sweden or Great Britain, at least today as they look to expand in other markets. You know, that will obviously evolve. The iGaming market just in Europe is significant. Certainly, we are excited about their expansion and ability to grow just within Western Europe, you know, first and foremost. You know, I mentioned the power of some of their product, especially the Duelz product and brand. We believe, given our experience with our business, that we can bring significant synergies to SuprNation, both on the product side, through, you know, games, slot games that we have already developed, through engineering and the engineering talent that we have in technology. On the marketing side, their efforts to acquire new players like ours in our social casino business is significant. We believe that across these categories, we can bring significant synergies. Very quickly on the financial side, let me just highlight first the most recently reported quarter, so Q1 of 2023. Revenue just under $78 million. Net income just under $24 million. We continue to generate significant adjusted EBITDA, $25 million, and 33% Adjusted EBITDA margin, very consistent with what we have done, as you may know, if you know our story over the many years of our existence. Average revenue per DAU, just over $1, one of the key metrics in the free-to-play mobile model. Then, as I said, highlight this most interesting stat, which is the average monthly revenue per active payer, which in Q1 was about $221 per month, which we believe to be industry-leading across all free-to-play categories. This is our annual revenue. You can see we continue to benefit from ongoing contribution of the social casino market. We had a significant bump in our revenues. Look at our quarterly flow of revenue in 2021. I mean, COVID was definitely a tailwind for us. Since COVID has kind of dissipated as a tailwind, we've seen a revenue decline somewhat, but we were very excited in our last reported quarter that sequentially, for the first time since our COVID bump, if you will, sequentially we actually grew revenue. We look to now continue that trend going forward, both through growth of our social casino business and as well as we add new categories of mobile gaming. Just quickly on the monetization side, these are the ARPDAU figures. We continue to improve monetization over the last four years. As I said, in Q1 of 2023, we actually had ARPDAU at over $1. Monthly average revenue per payer, there's that stat again, which has continued to grow, and was at $221 in Q1 of 2023. Our conversion rate has always been over 5%, which is a great conversion rate for any free-to-play company. Certainly in Q1 of 2023, we were excited to be at 5.8%. We're a very efficient, profitable company. Expense efficient, expense efficiency is shown here, where you can see the various breakdown of our operating expenses. I'll certainly, you know, highlight the fact that we continue to, you know, be mindful of our marketing spend. Over the last 2-3 years, we've been in the low 20s percent of revenue and marketing. One of the things that is very important for everyone to understand about DoubleDown is that we continue as we spend money in marketing, advertising primarily to get new players. We're always looking to be justifying that spend and measuring the return on investment in the investment in advertising. We continue to have models that we apply to measure the efficacy of that advertising spend as a whole, but also more importantly on a per advertising agency and advertising outlet standpoint. Just finally here, quick view of our profitability. As I said, significant both profit and cash generation. We generated about $100 million in cash last year with our $102 million in adjusted EBITDA, which was not quite 32% Adjusted EBITDA margin. In Q1 of 2023, we were over 32% in Adjusted EBITDA margin. Okay, I'm done. Great. Well, thanks, Joe. That was great. Just a reminder, if anyone has any questions, please type them in the portal. Maybe just wanted to start with the SuprNation acquisition. Maybe just going further into the thought process behind the deal, because I think in the past we've spoken, I think you guys were unclear about, you know, if your players really convert into iGaming. How much is that conversion from social casino to real money gaming part of the logic for this acquisition? Yeah, no, it's a good question. I mean, when we went public, we had talked about our M&A strategy, and we talked about casual mobile gaming and hyper-casual games as well. Didn't really talk a lot about iGaming. Over the period of time since we, you know, we looked at iGaming and honestly, the synergies that we thought we could bring to a company in that category, plus the growth opportunities that we, you know, observe and what the market can bring, made us more and more interested in the category. You know, as a result, given of course also the valuation, I mean, we're paying less than one and a half times revenue for this company. From a valuation standpoint, you know, it also made sense. I mean, the investment thesis is less about taking our existing social casino players and bringing them over into iGaming. It's really more about this business. First and foremost, this business being a good business in a category or in a market that's growing strongly. The fact that we can bring the synergies to bear, like our slot game content, like our engineering and technology back-end, like our marketing and data science skill. For us, you know, those things were really kind of the leverage points. Understood. This is a European acquisition, right? Is your player base skewed towards Europe or is it North America? No. social casino as a whole. I mean, if you look at the whole $7 billion annual category that I mentioned. Yeah. It's about 75% North America, and that's because it's mostly slots, and slots are very much a North America thing. At least, you know, from a preponderance of gambling. We have a small market of players in Western Europe. You know, certainly this helps us, you could argue, diversify our revenue from a geographic standpoint, although that's more of a product or result. It really wasn't a, you know, a key driver of this. Again, I think that as a business, this is a really good business. You know, people ask me, by the way, "Well, can you come to North America?" You know, "Can you talk to us? That was the follow-up question. Sorry, I preempted. Yeah. You know, and at some point down the road, sure. But first and foremost, we're focused on them growing their revenue, their business in the countries they already have licenses in Western Europe. In Sweden and U.K. In both cases, they have small markets, I'm sorry, small market share, so they can grow there. To expand, secondly, in other countries, getting licenses in other countries in Western Europe, like, you know, Italy for instance. That's a second-order opportunity. Third order is, sure, come to North America. The costs there are significant. I mean, it's interesting to cite the reality, which is in the United States, there's still only six states where you can gamble online for slot, for, you know, on slot games. You know, everyone's very excited about sportsbook, you know, online sportsbooks, you know, more. Yeah, down the road, that could be an opportunity, but certainly that's, you know, that's not the primary near or medium-term objective. Got it. You mentioned a few times that, you know, it's a good business, so, you know, you guys already have 30% EBITDA margins. How is adding SuprNation to the mix gonna impact that? Yeah. Currently, they're about at break even, you know, EBITDA break even. Our goal with these synergy opportunities is to, you know, quite quickly add to, you know, the top line, but also the efficiency in some of the expense areas to be able to drive profit out of the company. I mean, it's still a fairly small revenue run rate, at least today, compared to ours, less than 10%. You know, we definitely think there's opportunity to grow that to ultimately be additive and to get them to the, you know, the same or even greater EBITDA margin percentage as our company, you know, is currently at. Got it. Okay. Maybe going back to the core DoubleDown business or social casino business. You mentioned it, a little bit with, you know, where ARPU is and how much you're spending on with, or sales and marketing as a key cost line. Would love to just get your thoughts on LTV to CAC and what's the, you know, right amount to be spending to, you know, acquire these customers. Yeah. I mean, there's no question that CAC or CPI is going up. I mean, I think that one of the things that's interesting about advertisers is they realize how well social casino players monetize. As a result, they're trying to, you know, get as much as they can from us as we acquire new players. That's why we're very mindful with our models and how we look at, you know, day 1 monetization, day seven monetization, et cetera, how well we are getting the return. We, you know, we're very mindful of that, and we moderate our spend in total as well as our spend in any one, you know, through any one source, based on what our models tell us. You can tell that, you know, if you look at our sales and marketing over the last several quarters, things have moderated as far as how much money we are willing to spend. I mean, we spent around $16 million in marketing in Q1 of this year. That compares to almost $20 million of marketing spend back in Q1 of 2022. You know, we're always just using the science and using the numbers to inform, you know, how much we are willing to spend in acquiring new players. Competition. Can you tell us, you know, what you think will drive a player to spend time on your app versus, you know, Playtika or someone else? How do you think you differentiate yourself in the market? Sure, yeah. I mean, one of the interesting things about social casino is it's a, it's a fairly entrenched set of players. You know, if you look at the top five apps in social casino, the, you know, as measured by third parties, they've pretty much been the same ones over the last, you know, many quarters. Slotomania from Playtika, you know, Gamer II from SidePlay, DoubleDown Casino, et cetera. You know, I think from quarter to quarter, we're always mostly focused on bringing new games, new content. This launch of new slot games every week and a half to two weeks, to make those be the best, most interesting, most exciting new slot games, both for our existing players to spend more time and ultimately more money with us, but also to excite new players to come in. Also then new kind of what we call meta features. These are features that wrap around the slot content, that get people to stay in the casino as a whole longer. You know, little journey opportunities or quests. You know, play five games, spend, you know, 10 times across these X number of games, and then we'll give you some more free chips or, you know, whatever. Jackpot features, you know, high limit room, features. All these things are other ways that we work to differentiate ourselves from the competition. Again, both to keep our existing players-Playing and paying and to, you know, incent new players to come in. Understood. Okay. The, the free chips, like, one of the things that we talk a lot in the sports betting industry is just how promos are, you know, I think increasingly they're getting more customized and more personalized. Are you guys there yet or is like the daily or weekly refresh of free chips more of a shotgun approach? Oh, no. It's very tailored. The tailoring is done on an offer perspective. There is the general, you know, come back every day, spin a wheel, see, you know, and the wheel will decide how many free chips you get. In your email or certainly even in-app, you will also be given offers associated with purchase opportunities that are very tailored. The discount on my paywall when I purchase can be very different than the discount or offer that you would get, depending on, you know, have I ever paid before? When's the last time I paid? You know, how much on average have I paid over the last year? All those things are very tailored based on, you know, based on my primarily my purchase history. You know. We're very focused on tailoring those offers. Got it. Sorry if I missed it in the presentation, but did you say what breakdown of your either, you know, time spent or basically games on your own platform that you created versus that you're, you know, renting from someone else? Well, if you're talking about I think maybe the question is games that we develop ourselves versus. Right. -Maybe like IGT games or games Exactly. Yeah. Yeah, yeah. You know, it's interesting. That's definitely evolved over time. I mean, when IGT sold us back in 2017, almost every single slot game was an IGT game. Day one, that converted, you know, after the acquisition in 2017, we were paying a royalty on all play on our casino. You fast-forward to today, well over half of the new games we launch are from our own development studios. That has helped us specifically lower our royalty rate. If you look at the cost of revenue in that chart that I showed, if I can maybe I can go back to it even. Yeah. If you look at our cost of revenue here from 2018 to 2022, the bottom of the stacked bar, you'll see that it's dropped from 39% to 34%. 30 points of that is the App Store. The App Store is many of you know. Oh, right. Okay. -Take. The delta is primarily our royalty expense, and our royalty expense has come down, primarily because we're using less and less royalty-bearing content. At least our players are playing less and less royalty-bearing content based on what we've launched. Now, IGT content is still very important. I mean, the IGT iconic games that we have, from 2013, 2012, whatever, Cleopatra, Da Vinci Diamonds, Golden Goddess, those our players still love to play and still play. As far as new games that we launch, a lot of those, in fact, the majority of those are now from our own studios. Interesting. Okay. Just looking at 'cause one thing, the financials look good, and so I was just checking out, you know, 'cause you guys you had been GAAP positive on earnings. There's the goodwill impairment this year that's impacting it. You know, thinking about free cash or, you know, EBITDA dropping down to either, you know, EPS or free cash flow, what's the best way for investors to think about it? Well, to a great extent, our EBIT is our cash flow. I mean, we have very little CapEx. You know, we're very efficient from that standpoint. I mean, we generally, over the last several quarters, you know, on average, we generate around $25 million a quarter in cash. $100 million in, roughly, in cash from operations annually. You know, continuing to, you know, be on that trend. Great. Well, Joe, let's leave it there. Thank you for participating again in our conference. It's always a great discussion. Thanks for everyone who joined via the webcast. I appreciate the time. Great. Thanks, Bernie. Thanks for the opportunity.