Good morning. We would like to thank all analysts and domestic and international investors for attending the 2025 Q2 earnings conference call of DoubleUGames. Before we begin the presentation, we would like to provide a few notes. The materials presented today are based on preliminary financial statements for the second quarter of 2025 and are prepared solely for the convenience of investors.
While every effort has been made to ensure objectivity, some of the information may include forecasts, forward-looking statements or subjective interpretations. Please note that due to future environmental changes or differing data aggregation standards, the data and interpretations presented here today may not exactly match the finalized results.
Today's earnings presentation will be led by Mr. Jaeyoung Choi, CFO, who will cover the Q2 highlights and the Q&A session, while the main presentation will be delivered by Mr. Youngju Shim, who is the Head of the IR team.
Good morning. This is Jaeyoung Choi from DoubleUGames. Today's presentation will cover Q2 highlights, consolidated results, consolidated cost breakdown, business updates, and we will hold a Q&A session at the end of the presentation.
Let us begin with the highlights for Q2. The consolidated revenue for Q2 reached KRW 171.9 billion, which is up 5.4% YoY, marking the third consecutive quarter of top line growth. The DTC revenue share in the social casino segment rose to 12.8%, which is an increase of 2.4 percentage points QoQ, continuing its upward trend.
Recent developments in the U.S. allowing certain forms of third-party payments are expected to further support our DTC expansion. The completion of the Whow Games acquisition on July 15th is expected to generate three key benefits. First, our global ranking among social casino publishers will rise from fifth to fourth place.
Second, we will gain opportunities to expand European revenue for our existing social casino titles, DDC and DoubleU Casino, by leveraging the proven content of Whow Games and its marketing expertise in that region. Third, Whow Games is a profitable, high-quality asset that will have an immediate positive impact on both revenue and earnings upon consolidation.
SuprNation delivered revenue of KRW 21.8 billion in Q2, achieving a robust [100%] growth YoY, driven by balanced growth across all three brands, Duelz, VoodooDreams and NYspins. Synergies with the social casino segment and improved marketing efficiency in the U.K. were the main growth drivers. In the second half, we plan to further accelerate this momentum with the launch of a fourth brand.
[Non-English content] 2023 [Non-English content] 1,700 [Non-English content] Whow Games [Non-English content] Paxie Games [Non-English content] PPA [Non-English content] EBITDA [Non-English content] 34% [Non-English content] . Paxie Games [Non-English content] EBITDA [Non-English content] Whow Games [Non-English content] 330 [Non-English content] 19% [Non-English content] 3 [Non-English content] 1,427 [Non-English content] 6 [Non-English content] 1,356 [Non-English content] 110 [Non-English content] .
Good morning. This is Youngju Shim from the IR team at DoubleUGames and let me now walk you through our consolidated result for Q2. Consolidated revenue was KRW 171.9 billion, which is up 6.2% QoQ and 5.4% YoY, marking a significant milestone as we surpassed KRW 170 billion for the first time since Q1 2023.
Growth in new businesses drove the highest quarterly revenue since Q1 2023. Social casino revenue dropped slightly QoQ, and has rebounded since July. The consolidation of Whow Games from Q3 is expected to further accelerate growth, reinforcing our step-by-step approach to building a sustainable growth foundation.
Operating income remained stable due to PPA, the purchase price allocation amortization related to the Paxie Games acquisition, while EBITDA rose slightly to KRW 58.6 billion with a margin of 34%.
Although amortization expenses increased from the Paxie Games acquisition, improved EBITDA demonstrates our ability to maintain stable profitability. Starting in Q3, we expect Whow Games to contribute positively to operating income. Net income was KRW 33 billion with a 19% margin.
The decline reflects foreign exchange evaluation losses resulting from the Korean won U.S. dollar rate moving from 1,467 at the end of March to 1,356 at the end of June, which is a 7.5% drop. This was a non-cash, one-off accounting effect on our U.S. dollar-denominated assets with no actual cash outflow. Recently, the exchange rate has rebounded to 1,400 range, standing in the high 1,300s as of August 11th.
[Non-English content] 2 [Non-English content] 30% [Non-English content] DTC [Non-English content]
[Non-English content] SuprNation [Non-English content] 224 [Non-English content] Paxie Games [Non-English content] 6 [Non-English content] 640 [Non-English content] 470 [Non-English content] 50 [Non-English content] 80 [Non-English content] 40 [Non-English content]
[Non-English content] 43 [Non-English content] 32 [Non-English content] Paxie Games [Non-English content] PPA [Non-English content] 11 [Non-English content]
Let me now explain our Q2 cost structure. From this quarter, we are presenting operating expenses by variable and fixed cost to better illustrate the cost structure linked to revenue. Variable cost comprising platform fees, royalties, gaming taxes, and other revenue-linked items remained in the 30% range of revenue. The proportion of platform fees continues to decline with the expansion of DTC. Fixed costs include marketing expenses, personnel costs, other operating expenses, and amortization.
Marketing expenses were KRW 31.9 billion, which is up from 15% of revenue in Q1 to 19% in Q2, driven by strategic investments in SuprNation's additional growth and market share expansion in the fast-growing Merge 2 market. In particular, the Merge 2 market offers significant expansion opportunities given its lower CPI and broader user base compared to social casino, making this an opportune time to strengthen our position through active marketing.
Personnel expenses were KRW 22.4 billion, which is down 5.3% QOQ despite the addition of Paxie Games staff members reflecting efficient cost management. As of the end of June, our total headcount consolidated was 640, comprising 470 in Korea, 50 in the U.S., 80 in Malta, and 40 in Turkey.
There are no large-scale hiring plans yet, and we will continue to operate efficiently with the current team. Depreciation and amortization totaled KRW 4.3 billion, consisting of KRW 3.2 billion in lease-related amortization for office space and KRW 1.1 billion in PPA amortization from the Paxie Games acquisition.
[Non-English content] 9% [Non-English content] 30, 40 [Non-English content] AI [Non-English content] GPO [Non-English content]
[Non-English content] DoubleDown Casino, DoubleU Casino, Whow Games [Non-English content]
Let me turn to Social Casino market trends and outlook on the next page. Marketing expenses for the Social Casino segment remained efficient at about 9% of revenue. While marketing expenditure rose slightly in Q1, further optimization was carried out in Q2. On a U.S. dollar basis, payment volume increased slightly, but revenue in Korean won terms declined marginally QOQ due to foreign exchange effects.
We are targeting new users in their 30s and 40s through multi-channel marketing and enhancing efficiency by applying AI to creative production and marketing optimization. We are also strengthening re-engagement efforts for churned users and offering mission-based content for returning users, contributing to improved KPIs and revenue growth. Looking ahead, we plan to expand our Social Casino business from the U.S. into the European market.
While the U.S. is a mature market with a VIP-driven monetization model, Europe offers a broader user base with a lower payment per user. Our European expansion strategies will benefit from both the geographical diversification and reduced platform fees, enhancing both growth and profitability. We will strategically focus on DoubleDown Casino, DoubleU Casino, and Whow Games to drive European Social Casino revenue growth.
[Non-English content] 2.4% [Non-English content] 12.8% [Non-English content] . VIP [Non-English content] DTC [Non-English content] Playtika [Non-English content] 30% [Non-English content] . Whow Games [Non-English content] DTC [Non-English content] Google [Non-English content] Epic Games [Non-English content] DTC [Non-English content] DTC [Non-English content]
Let me discuss our DTC strategies for the social casino business. DTC revenue share rose 2.4 percentage points QOQ to 12.8%. We continue to drive DTC conversion among VIP users. With competitor Playtika at around 30%, we believe there is ample room for further growth. The Whow Games acquisition is expected to further boost the DTC contributions.
Changes in the market environment, such as the outcome of the Google versus Epic Games lawsuit, are also expected to be favorable for DTC expansion. In the growing European market, even outside DTC channels, reduced platform fees will help improve profitability. We will continue to expand our DTC platform across various user segments to further strengthen our revenue base.
8 [Non-English content] . SuprNation [Non-English content] 100% [Non-English content] 218 [Non-English content] . iGaming [Non-English content] iGaming [Non-English content] Games [Non-English content] 2 [Non-English content] 120 [Non-English content] 208% [Non-English content] Merge Studio [Non-English content]
AppLovin [Non-English content] 30 [Non-English content] in-app [Non-English content]
The next topic is the new business achievement on page 8. SuprNation recorded KRW 21.8 billion in revenue, which is up 100% YOY, as its service portfolio diversification strategy took hold and all three brands achieved a balanced growth. Marketing remains focused on the U.K. market with optimized channel efficiency and enhanced brand positioning, driving continuous market share gains.
The efficient marketing structure inherent to iGaming has enabled a quick ROI, which is a key growth driver. Our social casino expertise has been successfully applied to improve product quality and user experience, increasing play time and reducing churn, thereby strengthening competitiveness in the iGaming segment. Paxie Games delivered KRW 12 billion in revenue in Q2, which is up 208% YOY. Merge Studio continues to grow strongly in the U.S. market, supported by systematic optimization in key marketing channels such as AppLovin.
With average U.S. play time exceeding 30 minutes, the game leverages both in-app purchase and in-app advertising revenue models to quickly recoup marketing investments, driving steady and sustainable growth.
[Non-English content] . Paxie Games [Non-English content] Paxie Games [Non-English content] Merge Studio [Non-English content] 2 [Non-English content] Paxie Games [Non-English content] Paxie Games [Non-English content] DoubleUGames [Non-English content] Paxie Games [Non-English content]
[Non-English content] Jewelry Jam: Color Slide [Non-English content] 40%, D1 ROAS 15% [Non-English content]
Let me now explain about our new games on page 9. Paxie Games is developing a new building-themed Merge 2 game. Merge Studio has already proven success in the makeover-based Merge 2 genre, and our new title aims to appeal to both male and female users by combining proven core gameplay with building elements.
This approach is expected to significantly lower user acquisition costs while broadening our target audience and systematically expanding revenue. It positions us to secure a larger share in the fast-growing Merge market. We plan to further strengthen our new game development capabilities through synergies with Paxie Games.
Leveraging Paxie's deep expertise and extensive experience in the casual gaming market, our collaboration has proven highly effective. DoubleUGames internal studios and Paxie Games are working closely and systematically to develop creative new titles with strong market competitiveness.
This collaborative framework enables us to combine the unique strengths of each organization, establishing a solid foundation for developing even more innovative and commercially viable games.
Recently, we also launched a new synergy model in which games developed by DoubleUGames headquarters are published by Paxie Games. The first successful case, Jewelry Jam: Color Slide, achieved impressive early metrics with a D1 retention rate of 40% and a D1 ROAS of 15%, clearly demonstrating the potential of this collaboration model.
[Non-English content] 7,000 [Non-English content] 78% [Non-English content] DDI [Non-English content] DoubleUGames [Non-English content] 22% [Non-English content] 238억 [Non-English content] 350 [Non-English content] 588 [Non-English content] [Non-English content] 80% [Non-English content] Whow Games [Non-English content] 1.2 [Non-English content] PMI [Non-English content] . M&A [Non-English content] Synergy Investment [Non-English content] [Non-English content] Gaming, [Non-English content]
Turning to page 10. Now let me explain our shareholder value enhancement and cash utilization. As of the earnings release date, our consolidated cash balance was approximately 700 billion KRW, with about 78% held by subsidiaries including DoubleDown Interactive, and the remaining 22% at DoubleUGames headquarters.
At the standalone level, our cash is primarily allocated to shareholder returns. To date, we have approved 58.8 billion KRW in shareholder returns, 23.8 billion KRW in dividends, and 35 billion KRW in share buybacks, representing about 80% of last year's standalone net income.
We plan to retire treasury shares in Q4, with the total annual shareholder returns expected to exceed 100% of standalone net income. Since listing, we have invested a total of 1.2 trillion KRW, including the Whow Games acquisition.
We have successfully completed four PMI processes for overseas game companies, which is an uncommon track record in this industry. Our M&A strategy focuses on synergy investment.
In the post-acquisition integration process, we first maximize revenue and profit contributions from a financial perspective, and second, create synergies by concentrating investments in highly relevant business areas.
Leveraging our proven expertise from data-driven and systematic target selection to post-acquisition integration, we will continue to pursue strategic acquisitions centered on social casino, iGaming, and casual gaming.
[Non-English content] Q&A [Non-English content]
That concludes our Q2 2025 earnings presentation, and we will now move on to the Q&A session.
[Non-English content]
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.
[Non-English content] .
The first question will be provided by Dong Kim from Kyobo Securities. Please go ahead with your question.
[Non-English content] . Whow Games [Non-English content]
[Non-English content] Whow Games [Non-English content] Whow Games [Non-English content] PU Ratio [Non-English content] Whow Games [Non-English content] Whow Games [Non-English content]
[Non-English content] Whow [Non-English content] Whow [Non-English content] flexibility [Non-English content] Whow [Non-English content] One Source Multi-Use [Non-English content] [Non-English content] DoubleU Casino, DoubleDown Casino [Non-English content]
Thank you for giving me this opportunity to ask question. I have two questions. First, after acquisition of Whow Games, how is the payment related revenue and sales are expected to grow in the European market? Second question is about the significant expansion of the DTC. What are the major drivers and how much you expect it to grow in the future? The answer is, thank you for your question.
We have completed the acquisition of Whow Games in July, and we are currently making up our synergy plans. We can say that the European and the U.S. market differs in user behavior. In Europe, increasing PU, the paying user conversion rate is key, while in the U.S., increasing ARPPU is more important. For Europe, we plan to introduce seasonal passes and various in-game meta features to drive early conversion.
In addition, because of the Whow Games, the P/E ratio is successfully settled to over 10% as of now. We are currently planning some of the strategies to expand in this market. Together, in Europe, Whow Games is mostly growing revenue in Germany, but we are developing strategies to grow revenue beyond Germany into other key European markets, incorporating our proprietary slot content into the Whow platforms.
We are targeting some European markets like the U.K., France, or other markets that use the language of German. They are depending on the third party slot mostly right now. Our goal is to use more of our own slots to further push our sales together.
And then Whow provides the level system, so for the beginner users, they give the slot with the higher winning possibilities, and then various winning possibility for the higher level users. But they are using the third-party system, so the flexibility is not as high as we expect. So once we start to collaborate more, we expect that we will be able to increase this flexibility, and then that will also contribute to the sales related to the Whow Games, and then that will also give us an opportunity to use the One Source Multi-Use system.
We are currently making up our plans and strategies to get these two goals together, and then we will do our best to show the result in the Q3 or Q4 performance. Direct-to-customer. Social casino. HTML5. DTC. Playtika. Now let me explain my answer to the second question.
We are currently seeing some of the expansion of the DTC, the direct-to-customer strategies in our company. When it comes to social casino genre, it gives easier access to play out in various platforms. For example, it is easy to play on the mobile app, like HTML5. So it is really more convenient to expand the DTC for this social casino segment. Because of that, we are currently optimizing UI/UX to induce more users to DTC system.
Especially, we are trying to give the confidence to the VIP users, so that they can recognize that our website is safe to make payments. When we see some legal lawsuit cases in the U.S., for example, Epic versus Google, we expect that Epic would win the case in the near future, and that is working in a very favorable way to us.
Because of such external environmental changes, we believe that the Google and Apple dominated structures will not be able to maintain for longer time. So DTC expansion is our main focus. When Playtika has about 30% of the DTC and they also announce that they are trying to increase this number to 40% in the near future, we believe the DTC expansion is our way, and that our goal is to increase the DTC ratio to 20% for the social casino segment.
This will help us to create a new driving force, and then not damage our profitability, and then offset some of the concerns about the reduction of the operating income that exists in the market. We are trying to strike a balance while pushing our DTC expansion.
[Non-English content]
[Non-English content]
The following question will be presented by Uhyun Chung from Eugene Investment & Securities. Please go ahead with your question.
[Non-English content] 2 [Non-English content] Whow Games [Non-English content] 3 [Non-English content] Whow Games [Non-English content]
[Non-English content] Whow [Non-English content] G&A [Non-English content]
I have two questions. The first question is about the one-time out cost that was incurred because of the acquisition of Whow Games. The second question is about the expected performance to be reflected from the third quarter, which is related to Whow Games. If you can give the guidance for the second half of this year and next year, can you break down into the sales and operating income?
The answer to the first question is that we actually did not use any acquisition-related advisors for the completion of the acquisition of Whow Games. There was no significant or no one-time cost. There were slight costs related to accounting or the legal due diligence, but it was not reflected the G&A.
[Non-English content] Whow [Non-English content] 8 [Non-English content] , 9 [Non-English content] 3 [Non-English content] . 8, 9 [Non-English content] 100 [Non-English content] 50 [Non-English content] 25% [Non-English content] 30% [Non-English content] Whow [Non-English content] DDC [Non-English content] DTC [Non-English content]
Regarding your second question, the acquisition of Whow Games was completed on July 14, and we are currently discussing with outside auditors when to reflect the performance to our consolidated result. Our expectation is to consolidate it from July 15. From the conservative perspective, they might be included from August or September. When that happens, we believe that the sales will be about KRW 10 billion, and monthly will be KRW 5 billion.
The operating income margin stands about 25%-30% as of now. Regarding the guidance, we will be able to give you more detailed numbers once we complete the reviews and the execution regarding our trial to expand into the other markets and expand to the DDC and DoubleU Casino.
[Non-English content]
[Non-English content]
The following question will be presented by Donghwan Oh from Samsung Securities. Please go ahead with your question.
[Non-English content] SuprNation [Non-English content] SuprNation [Non-English content]
Thank you for the opportunity. I have two questions. First, about SuprNation. Its sales have been really good. Do you think that this trend will continue in the second half of this year as well as July and August? The second question is about the marketing cost. How is the marketing cost compared to the revenue for the SuprNation? When do you expect that that will contribute to the overall income?
[Non-English content] SuprNation [Non-English content] 2 [Non-English content] QoQ [Non-English content] 7 [Non-English content] , 8 [Non-English content] 15 [Non-English content] , 20 [Non-English content] ROI [Non-English content]
Thank you for your question. Regarding your first question, we saw good growth in the sales for Q2, and we are also seeing some growth for July and August quarter-over-quarter, the third quarter, because we see that in the U.K. and Sweden market, the payback period was reduced by 15 to 20 days, so it shows good ROI as well as good payment retention of the existing users. In order to continue this trend, we currently have three brands.
However, we believe that the marketing expenses that can be paid per brand are limited. So we will focus on product enhancement, including the launch of the fourth brand and a mobile-only app launch in order to strengthen our global positioning and secure a sustainable growth space.
[Non-English content] SuprNation [Non-English content] 30 [Non-English content] 35% [Non-English content] BEP [Non-English content] 5% [Non-English content] 2026 [Non-English content] 10 [Non-English content] [Non-English content] M&A [Non-English content]
For the second question, SuprNation's marketing spend is around 30% to 35% of revenue, and it recently reached a monthly break even. We believe that reaching the scale of economy will be very important, and the payback period should be shortened maybe by one month. Therefore, we are looking forward to having one more brand for the marketing purpose.
Our target of the operating income in the second half of this year is 5%. We are currently reviewing some strategies to secure the profitability of 10% to 15% throughout the year 2026. In order to save cost, we are focusing on developing our own slot and internalizing the payment service. In order to reduce the common cost horizontally, we are considering acquiring other brands.
Vertically, we are considering small scale M&As of some technical related companies like PSP or module companies. So we are confident about scaling up and growth for the SuprNation brand. However, to our understanding, the most important thing for the company is making money by making profitability. So we will concentrate more on making bigger confront profitability in the future.
[Non-English content] .
[Non-English content]
The following question will be presented by Jihyun Kim from Shinyoung Securities. Please go ahead with your question.
[Non-English content] Paxie [Non-English content] , Paxie Games [Non-English content] Paxie [Non-English content]
Thank you for giving me an opportunity. My question is related to Paxie. What is driving Paxie's rapid revenue growth? You mentioned the AI-based marketing, but what would be the marketing strategies for the Paxie?
[Non-English content] Paxie Games [Non-English content] Merge Studi [Non-English content] 100% IAP, [Non-English content] . Paxie [Non-English content] 60% [Non-English content]
[Non-English content] 6 [Non-English content] 7 [Non-English content] 3 [Non-English content] 4 [Non-English content] , 4 [Non-English content] 5 [Non-English content]
Thank you for your question. Paxie Games was kind of new to us, because it's a hybrid casual game. We are operating this business while learning about this genre. Continued marketing investment in our flagship title, Merge Studio, has steadily increased our revenue. Social Casino gets revenues 100% from the in-app purchase.
For this one, over 60% of revenue comes from advertising, not from the simple banners, but mostly from the reward advertisement. Users will need to choose between make payments or get reward to play more.
We are trying to strike a balance between the user play time and pushing the advertisement together. We believe that increasing the play time as well as the sales should go together. Play time and play sessions are all important for some games like Paxie.
We are currently running the A/B test to make more interesting content and updating so that the users will play more on our games. We are working on this because we believe that users these days do not like complicated games.
They prefer simpler games, which they can get access to six or seven times a day and play for three to five minutes every time. We believe that we have to make these kinds of games. The advertisement revenue and in-app purchase will be the key drivers for this kind of genre.
[Non-English content] Paxie [Non-English content] AI [Non-English content] $10 [Non-English content] 20 [Non-English content] 60 [Non-English content] $2 [Non-English content] $3 [Non-English content]
[Non-English content] 3 [Non-English content] AI [Non-English content] ROI [Non-English content] 50 [Non-English content] D7, D14 [Non-English content] [Non-English content]
For the Paxie Games, we have adopted and actively are using AI to speed up the development of the games and see whether our marketing creative works in the market or not, so that we can make faster decision on go or kill. Once something is exposed as marketing purpose, then it will immediately incur cost.
It's important to make fast decision to whether we should go with this or kill this. That is why we are actively using AI to improve efficiency. There are some benefits of the hybrid casual games, because when it comes to the social casino, the CPI is around $10, and we have to be really careful because our target was high income, like female users in the U.S. market.
But for the hybrid casual games and Merge games, we can target every age and every gender, like from 20- 60s and both men and women. The CPI is around $2 - $3 and we can scale up more easily. Then we can try many different options. These days, as I said, users prefer simpler rules, simpler games more than ever.
Even though we have the same Merge category, the Merge 3 did not work very much in the market because we believe that users prefer simpler games, relatively. That is why we are focusing on using AI to push automated marketing creative as well as ROI management.
Currently, we have about 50 marketing channels in our portfolio. Then when we reach D7 or D14, we can forecast ROI. So we will not spend the marketing expenditure if it cannot contribute to our profitability.
So this is how we manage our profitability. Then as this is not making much profit yet, we are considering many different ways to collaborate also with our team in Turkey, how to speed up the development and how to make more payable assets. So we will actively work together in the second half of this year. If there's no more question, we'd like to conclude our presentation for the second quarter.
We will do our best to show continuous growth in the third and fourth quarter. Then by improving efficiency in the social casino, we will utilize the margin to make more investment in the new game so that we can create more top lines. Then there might be some concerns related to the reduction in the operating income.
But we will do our best to push our profitability and growth trends at the same time so that we can relieve such concerns in the market. If you have any questions, please feel free to contact our IR team and we will do our best to give as much answers as possible. Then if any institutional investors would like to have a meeting with us, please let us know. We will visit you and then we will try to give you as much answers as possible. Thank you.