Good morning, and thank you all analysts, investors, both domestic and international for joining our earnings conference call for the fourth quarter of 2025. This earnings presentation has been prepared based on the preliminary financial statement for the fourth quarter of 2025. While it has been prepared with reference to objective standards, it contains certain forward-looking statements and projections. Please note that the actual results may differ, depending on future changes in the business environment. Today's presentation will be conducted as follow. Vice President Jaeyoung Choi will provide an overview of our 2026 business operation direction and lead the Q&A session. Before that, the main earnings presentation will be delivered by Youngjoo Shin, who is the Head of IR.
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Good morning. This is Youngjoo Shin from IR Division. Today's presentation will cover our full year 2025 result, fourth quarter performance, revenue trends by business segment, consolidated expenses, business updates, and our business operation direction for 2026. Then we will proceed with a Q&A session.
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The key highlights of our full year 2025 performance were achieving record high revenue and maintaining strong profitability. On a consolidated basis, revenue for 2025 reached KRW 719.9 billion , representing a 13.6% YoY increase and marking an all-time high on an annual basis. Building on the stable revenue base of our social casino business, iGaming and casual games began to contribute meaningful growth, resulting in a more diversified revenue structure. Annual EBITDA totaled KRW 252.2 billion with an EBITDA margin of 35%. The expansion of our DTC channel helped ease the burden of platform fees, contributing to improvements in our cost structure.
This, in turn, supported the preservation of annual profitability and led to record quarterly result in the fourth quarter. Overall, 2025 was a year in which we achieved both top line growth and sustained profitability, and it marked a period where structural changes, including portfolio diversification and cost structure improvements, were clearly reflected in our financial performance.
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There are two key highlights in our fourth quarter consolidated performance. First, fourth quarter consolidated revenue reached KRW 199.8 billion , marking the highest quarterly revenue in our history. Revenue increased by 28.3% YoY and 7.3% QoQ, extending our growth trend for five consecutive quarters. This level exceeded the peak revenue recorded during the COVID-19 pandemic, demonstrating that our structural growth foundation has been clearly reflected in our performance.
Second, fourth quarter EBITDA amounted to KRW 70.5 billion , increasing for three consecutive quarters, while the EBITDA margin rose to 35.3%, maintaining an upward trend. EBITDA increased by 11% YoY and 7.9% QoQ, reflecting improved marketing efficiency and the expansion of our DTC channel. This quarter represents a successful outcome where our growth focus strategy throughout 2025 translated directly into improved profitability.
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Next, I will walk you through revenue trends by business segment. Building on the stable revenue base of our social casino business, both iGaming and casual games continue to expand, further diversifying our growth structure. In particular, fourth quarter casual revenue reached KRW 19.2 billion , increasing 55% QoQ, and has emerged as a key growth driver for our new business expansion. Social casino revenue recorded KRW 157.3 billion , maintaining its role as a stable foundation of our overall performance.
Meanwhile, iGaming generated KRW 23.3 billion , continuing its stable operation centered on the U.K. market. The fourth new brand, Los Vegas, which was launched late last year, is expected to begin making a meaningful contribution to our results starting in the first quarter of 2026. As of the fourth quarter, the proportion of revenue generated outside of the social casino segment expanded to 21%. This development helps mitigate concentration risk in social casino, while enabling us to build a more balanced revenue structure that enhances investment and cost efficiency based on segment-specific KPIs.
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Our fourth quarter consolidated cost structure reflects a balanced approach between growth investment and efficiency improvements. First, variable costs. With expansion of our DTC revenue mix, our payment structure improved, which helped ease the burden of platform fees and directly contributed to profitability improvements. In the fourth quarter, variable costs declined to 27% of revenue, and platform fees amounted to KRW 41.0 billion , which is down 3.5% QoQ, confirming an overall improvement in company-wide margins. Next is fixed costs. Fixed costs increased to 41% of revenue, primarily driven by expanded marketing activities focused on casual games. Market expenses totaled KRW 44.7 billion , which is up 34% QoQ, and these investments are directly contributing to revenue growth. In the casual genre, marketing investments are typically recovered within approximately three months.
As a result, revenue is reflected quickly following the investment, followed by profit generation, which is then reinvested, creating a stable virtuous cycle. Merge genre games and Wiggle Escape are representative examples of this model, and both titles have already entered the monetization phase. Meanwhile, the social casino segment maintained ROI-focused execution rather than pursuing short-term expansion, and iGaming continued to operate under strict profitability management principles, strengthening its stable growth foundation. Personnel expenses amounted to KRW 21.0 billion, decreasing 10.7% QoQ. This decline was mainly due to a temporary impact related to the valuation of stock-based compensation at DoubleDown Interactive. As of the end of December, our consolidated headcount stood at approximately 690 employees. Amortization expenses increased as a result of portfolio expansion through M&A.
In the fourth quarter, amortization of tangible and intangible assets totaled KRW 6.6 billion, which includes non-cash expenses such as lease asset amortization and acquisition-related purchase price allocation or PPA. Overall, our fourth quarter cost structure remained well managed despite increased growth investment, and the foundation for mid to long-term profitability improvement has been further strengthened.
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Next, I will provide an update on our social casino business. In the fourth quarter, the social casino segment recorded solid growth supported by seasonal peak effects and consolidation of WHOW Games. Revenue reached KRW 157.3 billion, increasing 9.8% YoY and 4.0% QoQ. In addition to the stable operation of our existing franchises, the full quarter contribution from WHOW Games supported our top-line expansion. This demonstrates that the portfolio integration effect is becoming increasingly visible in our financial performance.
In the fourth quarter, the DTC revenue mix for the social casino segment expanded to 26.6%, representing an increase of 18.4 percentage points YoY and 9.0 percentage points QoQ. There are two main drivers behind the expansion of our DTC mix. First, we have seen accumulated improvements in payment conversion rates through web store UX and UI optimization and expanded user exposure to payment channels. Second, the consolidation of WHOW Games has contributed to a revenue structure with a higher proportion of web-based payments, which has been reflected in our consolidated results. Looking ahead, the outlook remains positive.
First, major platform operators, including Google and Apple, continue to move toward allowing external payment options, creating a structurally favorable environment for DTC expansion. Second, considering that leading global social casino companies are targeting DTC mixes exceeding 40%, our current level of approximately 26% provides substantial room for further expansion. We believe that increasing the DTC mix will serve as a key driver of mid to long-term margin improvements.
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The casual genre is emerging as our next key growth driver. Centered on Paxie Games, we are building on our proven Merge-2 genres while focusing on launching new AI-based games through a time to market strategy that allows us to quickly test market response. In the fourth quarter, casual revenue reached KRW 19.2 billion , with AI-driven new titles accounting for 49% of total casual revenue and leading the overall growth of the segment. While we concentrated our marketing investment on new AI-based titles, revenue from existing merge games remained stable. Achieving growth in both scale and structure represents a meaningful milestone for the business. Our AI Lab game lineup is operated under a three-stage framework, which are launch, scale, and monetize. In the casual segment, the payback period for marketing investment is relatively short.
As a result, after initial investment, revenue is reflected quickly, margins are generated, and profits are reinvested, enabling a stable virtuous cycle. We do not view AI simply as a tool for faster game development. Rather, we utilize AI to enhance content direction and creative quality by incorporating evolving market trends and user preferences while also improving operational efficiency. As more titles enter the monetization phase and gradually accumulate, their profit contribution is expanding. Based on this structure, we aim to further enhance the visibility of our mid to long term growth trajectory.
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Now, I'd like to elaborate on page nine. Good morning. I am Jaeyoung Choi. For 2026, I'd like to explain our growth strategy across two pillars, which are organic and inorganic growth. For both strategies, our guiding principle is to execute investments based on the competitive strengths we have already established, and only after validating investment feasibility through data. In other words, we determine where each dollar can generate the greatest increase in revenue and profit, and we allocate capital accordingly based on data-driven analysis. First, on the organic side, we plan to operate our existing businesses with greater precision under this framework. For social casino, we aim to reduce platform dependency and improve margins by expanding our DTC channel while strengthening stable cash flow through efficiency-driven operations. For iGaming, we will accelerate growth within disciplined profitability management through brand expansion and more refined ROAS management.
Lastly, for casual games, the virtuous cycle structure is the core driver. Following initial investment, marketing costs are recovered quickly, which is then followed by rapid revenue recognition and margin generation. This cycle has already been demonstrated through titles such as Merge Studio and Wiggle Escape. In this context, AI is not simply a tool for faster development. Rather, it is a means to more accurately reflect market trends and user responses, thereby increasing hit potential and improving operational efficiency. Titles with proven performance will be scaled up quickly, and we will concentrate resources only on validated opportunities. Next, our inorganic strategy, which is M&A, follows the same principle. Rather than pursuing acquisitions solely for scale, we will focus on synergy-driven investments that strengthen our existing portfolio and maximize integration benefits. Our criteria are clear.
We will pursue only deals that demonstrate strong growth potential and which can contribute to profitability on a consolidated basis within a short time frame, and to provide clear visibility into investment paybacks. From a geographic perspective, we will prioritize markets where we have already accumulated operational capabilities and networks, enabling us to accelerate integration and scaling. In 2026, we will further strengthen its high-growth casual portfolio on the foundation of our stable social casino business, leveraging our global business coverage across both the U.S. and Europe, as well as our broad user base spanning from players in their 20s to those in their 40s and 50s. Management will make every effort to position the company as one of the most effective adopters of AI within the gaming industry.
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This concludes our presentation of the fourth quarter results through slide nine, and we will now proceed to the Q&A session.
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Now Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone.
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The first question will be provided by Seung-hoon Lee from IBK Investment & Securities. Please go ahead with your question.
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Thank you for giving me this opportunity. I have two questions. First of all, you have explained about your future business operation direction. Could you please give us the guidance for the revenue and the operating profit for next year? It will be great if you can elaborate a little bit more on the organic and inorganic visions for 2026. Second question is about AI Labs. Could you please share some plans regarding the organizations or the personnel related to the AI Labs, and whether AI-related companies are also potential targets of your M&A in the future?
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Thank you for your question. I will answer the first question. Because of the fair disclosure principles, I am sorry that I cannot give you more detailed guidance about the profit or operating profit plan for the next year. But we consider the big variables of the hit ratio of that genre. However, our target is to reach the double-digit growth annually for the top-line growth. Also another target for us is to make more than 30% of the revenues outside the casino genres.
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Regarding your second question about the AI Labs, I can divide into two parts in my answer. First, about the internal strengthening of our capabilities. In the Paxie Games, regarding the AI field, we have worked with a handful of the employees in that company. We went through some trials and errors until today. For example, we focus on developing the specification to make global launching possible within three weeks with just one personnel. That is one example. But with the Paxie at the center of Turkey, we will focus on finding some ways to utilize AI for the game development and AI related investment as well as the working methods. We will do that for that.
In terms of the investment, we are reviewing some AI agent services, of course, which can give us some benefits for the sake of the game development, marketing, creative or the data analysis. But we have to consider the valuation, and we will focus more on minority investment, so their results will not be reflected directly and immediately. However, after strengthening our capabilities, we will try to find some external help from other AI related companies so that we can make more synergy effects.
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The following question will be presented by Ji Hyun Kim from Shinyoung Securities. Please go ahead with your question.
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Thank you for this opportunity. First of all, congratulations on the successful achievement of last year. My question is about the WHOW Games. Could you please elaborate on the current PMI progress and synergy effects following the acquisition of WHOW Games?
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Thank you for your question. The results of the WHOW Games are starting to be integrated into the consolidated results from July 15, the third quarter. After acquiring DDI in 2017, we went through some trials and errors. Based on the lessons that we learned from the case, we are trying to operate the PMI in a more efficient way. I can tell you two things here. First of all, when it comes to the slot games, they utilized mostly external IPs before. Nowadays, we are actively utilizing our own 500 slots, so that we can also attract the new users and then let the users play the slots very freely and then use the app performance freely as well. The proportion of our slot is about 30%. This is a short-term achievement that I can share with you.
Secondly, in terms of the long-term perspective, we acquired this company because DoubleUGames is a globally number five company, but it was about number 11 in European continent. When it comes to the U.S. market, it focused mostly on the VIP users. But in Europe, we mostly had light users and male users in the past. We believe the acquisition of this company will help us to have more marketing opportunities to expand the game users and increase the revenue and etc.
With the DDC and DUC, which work well, we will try the European market once again. It will also help us to diversify the marketing channels. We are still learning that the popular contents in Europe and the U.S. are different. We will in overall analyze this content and the result from this market so that we can target European market once again.
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The following question will be presented by Jun-ho Lee from Hana Securities. Please go ahead with your question.
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Thank you for the opportunity. I have three questions. First question is about the outlook for the iGaming and casual new business segment. Second question is about the possible contribution of the AI-driven new titles to the casual segment. You said that you have 50 now in your plan. How is the plan for the future? The third question is about the personnel issue. According to some articles that I read, there were some changes in the structure of the personnel. Do you have any plans for further changes in the future?
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Thank you for your question. I will answer question one by one. Regarding your first question, the new business for the iGaming and casual. In the fourth quarter, we focused on minimizing our operating loss as much as possible, and it contributed to improve the profitability. Our goal for 2026 is to reach 5%-10% of margin.
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About the second question related to AI. After acquiring Paxie Games in March last year, we mostly focused on Merge-2 genre in our studio. But in order to promote more diversification, we turned our eyes to the AI-based game development. However, this was not done by the game developer, but our data analysis actually utilized the AI tool and they did not use the code.
They started this activity from the second half of last year. We have structured some protocols. That is why we had about six to seven games launched in January. This year, annually, we will test over 50 games. We saw one successful case, which was Wiggle Escape. We want to have next Wiggle Escape within this year as well. Of course, there will be some marketing expenditure at first, but we will have more DDP and the margin later.
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Regarding your third question, it was not just official structuring of the company, but we wanted to make some improvements by removing some duplicated tasks. It was a voluntary separation. We don't believe that will affect temporary effect to our company than 5%-10%.
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The following question will be presented by Jinwoo Kim from CGSI. Please go ahead with your question.
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Thank you for the opportunity. I have three questions. First question is about the proportion of the TC. Do you have any plans to adopt the in-app external payment method? How about the proportion of the variable cost in 2026? Second question is about the amortization expense, which seems to increase a little bit recently. Do you believe that based on the QoQ, it will also continuously increase in 2026? Third question is about the payment amount. For the DoubleDown and DoubleU, do you see any forecast for the growth in 2026?
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Thank you for your question. I will answer one by one. Regarding your first question, the DDC in the fourth quarter of 2025 accounted for 26%, and we believe that this number will increase this year. If you see the DDC, it is mid 20%- 30%, but DUC is still at 10%. If we focus more on DUC based on the consolidated basis, we target 40% this year. For example, if 15% goes up, then the variable cost margin will decrease by 20%, which means a 3% improvement can be expected.
Regarding the in-app external payment and the user benefits, we are currently strengthening them. If we utilize more DDC, that will help us to increase not only the profitability but also the loyalty of the users. Their trust can make a shift from the platform services to our own services. That will help us to strengthen our marketing activities as well.
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Regarding the amortization expenses, it was KRW 6.6 billion by fourth quarter 2025. If there is no more M&A this year, we believe that the number will be very similar this year as well. But the number can vary depending on the time of the M&A or if there is any additional M&A, as you saw from the case of the SuprNation, which was acquired 2023.
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About your third question, the DoubleDown and DoubleU are our core businesses and we have spent the most conservative marketing expenses for them, which is under 10%. From the second half of last year, we focused on improving ROAS. This year our target is to maintain the current level, at least, or make a single-digit growth.
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Since there are no more questions, we would like to close our fourth quarter earnings presentation and Q&A session. Thank you so much for joining us, despite your busy schedule. If you have any additional questions, please do not hesitate to contact our IR team. Thank you once again.