Good morning and good evening. We'd like to thank the analysts and domestic and foreign investors who are attending the Q2 2024 earnings presentation conference call of DoubleU Games. Prior to the presentation, I'd like to pass along a few requests. The performance data is prepared for the convenience of investors based on the provisional financial statements for the Q2 2024.
This data was written with reference to objective standards. However, please be aware that some predictions, forecasts, or expressions based on subjective judgment may be included, and numbers and interpretations that do not match this data may be derived due to changes in the future environment, different data aggregation standards, and etc. Today's earnings presentation will be conducted by our CFO, Mr. Jaeyoung Choi.
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Good morning. I am Jaeyoung Choi from DoubleU Games. We'd like to thank all of you for attending the Q2 2024 earnings presentation conference call of DoubleU Games today. As shown on page three, today's presentation will be in the following order. Q2 highlights, earnings summary, revenue analysis, cost analysis, and business updates. After the earnings presentation, we will have a Q&A session.
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I will discuss the keywords in the order of Q2 highlight, growth, profitability, and cash generation. First, Q2 2024 revenue reached KRW 163.1 billion, achieving 13.3% YoY and 1.6% QoQ growth. Following Q1, we once again recorded our highest revenue performance since Q1 2021. Second, profitability in Q2 recorded operating income of KRW 67.1 billion, EBITDA of KRW 70.2 billion, and net income of KRW 64.2 billion.
All three profitability metrics grew by more than 30% year on year. We achieved the profit growth due to cost efficiency in addition to sales, resulting in the largest profitability in our history. Finally, our strong cash generation is demonstrated by the highest EBITDA in our history. As of the end of Q2, we had net cash of KRW 640 billion, with which we aim to utilize to secure growth through new businesses and M&A, and to fund our shareholder return roadmap. We plan to continue to pursue new businesses and M&A that prioritize our financial growth and shareholder value.
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I'd like to turn to page five, the Q2 consolidated earnings summary. In Q2 2024, consolidated operating income was KRW 163.1 billion, which was up 13.3% YoY. This was the third consecutive quarter of revenue growth, driven by social casino revenue growth and iGaming revenue from SuprNation. Operating income was KRW 67.1 billion, with a margin of 41.1%, up 33.4% YoY. EBITDA was KRW 70.2 billion, with a margin of 43.0%, up 34.5% YoY. Operating income and EBITDA exceeded KRW 60 billion for the third consecutive quarter, for the first time since the company's inception, and EBITDA exceeded KRW 70 billion for the first time, all demonstrating our growing profitability.
Net income was KRW 64.2 billion with a margin of 39.3%, up 44.5% YoY, exceeding KRW 60 billion for the second consecutive quarter and achieving the largest net income ever. In Q2, we achieved the highest revenue performance in the last 13 quarters due to growth in social casino revenue through improved app performance and the inclusion of iGaming revenue. In addition, through efficient marketing and predictable cost management, we achieved operating income of more than KRW 60 billion for the third consecutive quarter, leading to further growth in profitability.
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I'd like to turn to page six, our revenue analysis. In Q2 2024, consolidated revenue was KRW 163.1 billion. By business unit, social casino and casual games accounted for KRW 152.3 billion, with 83.6% of revenue coming from mobile. iGaming was KRW 10.8 billion, a slight decrease from the previous quarter. This is due to the seasonality of Q2 and the fact that we are testing the ROI A/B of our various marketing investments after the acquisition. Despite spending and reducing marketing expenses at a level that resulted in plus EBITDA in Q2, we recorded revenue at a similar level to Q1.
We have once again confirmed that we have a higher level of visibility of return on marketing investments compared to social casinos, and we are planning to grow the top line through marketing investments in the second half of the year when growth is high. Franchise games DoubleDown Casino and DoubleU Casino accounted for 91% of total revenue, while SuprNation's iGaming accounted for 7% of total revenue, showing progress in revenue diversification. Revenue by game increased by 4.0% QoQ to KRW 108 billion for DoubleDown Casino, and decreased by 2.7% QoQ to KRW 40.3 billion for DoubleU Casino. iGaming's revenue was KRW 10.8 billion, which was down 2.7% QoQ. Total revenue was KRW 163.1 billion, which was up 1.6% QoQ and up 13.3% YoY.
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On page seven, I will explain about the Q2 consolidated cost analysis. Platform fee was KRW 44.4 billion, which was the variable cost of paying 30% of revenue to platform companies such as Google and Apple. Marketing cost was KRW 15.9 billion, down 24.3% QoQ, and down 35.6% YoY, and 9.7% of revenue. Efficiency improvement in marketing expenses in Q2 was driven by social casino, new games, and iGaming. As we mentioned last quarter, we are making additional investments in new lineups only when the initial marketing ROI and gain metrics meet our thresholds.
In this way, we plan to maintain our current growth and profitability regardless of the launching of the new games. Personnel expenses increased 13.5% QoQ to KRW 21.8 billion. It returned to the level of the previous fourth quarter as the effects of the one-time expense reduction, due to the revision of the executive severance pay rules normalized. The total number of employees on a consolidated basis was approximately 600, comprising 360 at DoubleU Games, 180 at DoubleDown Interactive, and 60 at SuprNation.
Royalties amounted to KRW 2.7 billion, and this reflects royalties from IGT and fees for the use of iGaming's external slot IPs. Intangible amortization expenses amounted to KRW 3.1 billion, down 6.1% QoQ. Approximately KRW 2.0 billion was due to amortization of office rents under lease accounting and PPA accounting expenses of approximately KRW 1 billion related to the acquisition of SuprNation.
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Now I will explain about page eight. Our operating cost control remains very stable, and our operating margin continues to grow. Of these, we focus on marketing and labor costs as they have the most direct impact on our operating margin. In response to Apple's marketing IDFA policy change in the past and subsequent changes in the mobile marketing market, we started to streamline our marketing in Q1 2023. Since then, the proportion of marketing expenses has decreased to 9.7% of revenue, and we have been conducting efficient marketing.
The focus on efficient marketing channels and optimization through A/B testing has been the key and has resulted in three consecutive quarters of revenue growth despite marketing reductions. The reduction in marketing has resulted in revenue growth for the last three consecutive quarters. The acquisition of SuprNation resulted in a slight increase in labor cost, but we believe the impact on our cost structure is limited. Our headcount remains at around 600 on a consolidated basis, and we continue to see cost stabilization.
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Now please turn to page nine, the business update. The social casino market recorded a QoQ growth rate of -2.7% in Q2 due to seasonality and other factors. Despite these market conditions, DoubleDown Casino outperformed the market, and DoubleU Casino was able to achieve results in line with the market growth rate. In order to outperform the market, we are continuously strengthening our collection and competitive content. Among them, VIP Race is driving increased play time among existing users, especially core users.
This increase in user metrics is translating into stable revenue even in a limited marketing environment. In the iGaming segment, we operated marketing investments conservatively in Q2 due to seasonality, and analyzed the data of the users that came in during Q1 and we focus on efficient marketing strategies and PMI. As a result, the revenue decreased slightly, but EBITDA generated plus, and we confirm that profitability can be secured in the future when a certain amount of revenue is achieved.
However, from Q3, we are aiming to grow revenue by increasing marketing investment again, focusing on the U.K. Due to the nature of the iGaming business, the sales conversion rate and payback period for marketing investment is short. So we plan to proceed with A/B testing on the scale of marketing investment and operating strategies that can achieve optimal ROI.
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Now, I'd like to explain about casual games as shown on page 10. A total of five games are being developed and soft launched through our internal studios. Divine Match is a match-3 puzzle game with an overall concept change from the previous Super Match. In-game difficulty is being optimized for each stage using generative AI, and out-game content is being developed as a different match-3 game with the rooting genre like Coin Master at its core. The game launched on the Android market on Monday, August 12, and will be soft launched in six countries, including Canada, the U.K. and New Zealand.
Let's Brick is a triple match game genre where players collect and clear three puzzles. It was updated to the Android market in early August and is in the early stages of soft launching. Bingo Haven has been in soft launch since April this year, focusing on the U.S., U.K. and Canada. Playability testing is underway with initial retention and ROI metrics being checked. Jackpot Smash was developed as a new style of social casino game that emphasizes casual elements in a more intuitive form based on our past experience in operating [punctuated] slot services. It is currently undergoing soft launch from July this year and initial retention and ROI metrics are being checked.
We are Friends! is a casual RPG game genre with a unique gameplay that combines table-biting game elements and RPG and is in development with the goal of soft launching in the second half of the year. We are making every effort to create new growth engines through the development and launching of new games. As mentioned earlier, marketing investment for new games is subject to initial retention and payment metrics, and we will only decide to invest further if a certain level of profitability is secure.
We do not expect a sharp decline in profitability due to this. Unlike the past, the game portfolio is not concentrated on social casino or bingo games, but more popular games such as match-3 and puzzle games that can be marketed to a larger user demographic and countries. We will provide investors with more details on the launch and development of future games at the appropriate time.
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On page 11, I will discuss our cash generating power. Consolidated EBITDA in the first half of the year increased 35% YoY to KRW 135.2 billion. EBITDA and margins are increasing with costs continuing to stabilize. We are also demonstrating our ability to generate cash with net cash reserves rising to KRW 640 billion as of the end of the first half of 2024. We aim to utilize it to secure growth, including new businesses and M&A, and to finance our shareholder return roadmap. We will continue to focus on cash generation from social casinos as a cash cow, and plan to secure growth through new businesses and M&A.
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This concludes our Q2 earnings presentation up to page 11. We will now open for questions.
[Non-English content] The first question will be presented by Donghwan Oh from Samsung Securities.
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Thank you for this opportunity to ask a question. I have two questions. First question is about marketing. You have decreased the marketing spending while the revenues have shown very good results, especially social casino. Is it because of the changes in the marketing and advertisement market, or as you said, you improved the efficiency in marketing spending, but how did you achieve this? Did you change the channel or any method?
Could you specify that? And then if you believe that you can improve the efficiency in marketing spending additionally, can you say to which scale you can maximize the efficiency of the marketing in the future? And the second question is about M&A. Have you specified the areas of the businesses that you plan to proceed with M&A in the future? And then we have only a few months left until the end of this year. What's the possibility of the M&A within this year?
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Thank you so much for your question. I will answer the first question. It's not that the CPI or the new users related figures are going down or whether the advertisement market environment is getting better. It's not like that. However, as you know, the DoubleDown Casino and DoubleU Casino have been in service for 12- 14 years.
There are some users who have downloaded our games and then have left for a certain time. We are trying to make them return so that we can improve the retention, and we are improving our marketing on this retention activity. We are also strengthening our advertisement and marketing creative so that these users can return to our games. We have focused on collecting and recruiting new users in the past, but we are more focusing on retention to improve our marketing efficiency.
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Regarding your second question, I want to categorize into games and non-games areas. First of all, for the game area, we are reviewing any M&A candidates for the game area. However, the lifetime values or IP have been shortened, and then after the end of the COVID-19 pandemic, the game companies are seeing some decrease in their revenues. We see some limitations when it comes to the available candidates for M&A or whether any M&A deals are well completed in the market. However, we are actively reviewing some rising stars in some countries like Türkiye and Israel, and also the Match-3 and puzzle games that are internally being developed are underway.
I believe that it is also valid that we may proceed with M&A for these kinds of games in the future as well. We are actively reviewing the possibility. For the non-game area, we are also reviewing some B2C apps. For example, fitness or wellness related applications, which are subscription based. If there are any apps that are based on the subscription and which have a very high possibility of profitability through advisors, we are having many different meetings to seek such possibilities. We are making efforts to bring some results by the end of this year. Our investment principle will focus on the North American market and game industries, as we have done so far.
[Non-English content] The next question will be presented by [Non-English content] from Shinhan Investment & Securities.
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We have three questions. First question is about the unit cost of advertisement in the Europe online casino market. Do you believe that their unit cost of advertisement will not go down, just like we see some phenomenons in the North American market? Second question is about the app fee that we need to pay Google and Apple. There is a movement that they might decrease this app fee in the future. How will it impact our business? Third question is about SuprNation's profitability. Can you tell us when we can expect the effect from the external growth and as well as the leverage for SuprNation?
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Thank you for your question. First question. I believe that we see some differences between the general game market and iGaming market in Europe. In the case of general games, we don't see much differences from the display or Google search market that we see in the U.S. In the case of the iGaming market, we promote advertisement and marketing through some verified and certified websites or sites. The unit price may go up, but we don't see that steep increase of the unit price compared to the CPI of the U.S.
We believe that the unit price may go up for the iGaming as well, but we are promoting marketing activities while securing some certain level of profitability. About the second question related to the app fee of the Google and Apple. In the case of Apple, when we reach a certain level of revenue in Europe, we could receive some discount in the fee from Apple in the case of the European market. However, it did not impact that significantly to our financial statement.
Because of the monopoly issues of the Facebook or Google, I believe that if we apply for this fee reduction promotion, I believe that we may enjoy the opportunities in the future as well. For the third question regarding SuprNation, we need the scale of economy, and when we reach the revenue, and when we increase the revenue by at least 1.5 times compared to the current level, I'm sure that we will be able to achieve the double-digit margin for EBITDA or operating income.
[Non-English content] The next question will be presented by [inaudible] from Kiwoom Securities.
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Thank you for the opportunity to ask this question. I have a question about DoubleU Casino. I see some slowdown in the revenue growth of the DoubleU Casino. How do you see the future? Do you think the revenue will increase in the future for the DoubleU Casino? We have spent almost half of August already. How do you forecast the Q3 expectation for SuprNation? You say that you will focus on the marketing spend for SuprNation. Do you believe that you will be able to see the increase in the revenue for SuprNation in Q3? My next question is about the app development. After the development and soft launching, you see the current status, and then you will decide on the marketing activities. How do you see regarding this app development?
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Regarding the DoubleU Casino's slowdown in revenue, as you may well know, DoubleDown Casino is outperforming the market. We are currently benchmarking this game to apply to DoubleU Casino as well. The scale of DoubleU Casino is smaller than DoubleDown Casino, so it is smoother and easier to apply and update the new features in DoubleU Casino to make improvements. We will also simplify the content and features in the second half of this year. We are currently A/B testing this, and we will adopt some meta features as well, so we can make a rebound in the second half of this year.
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Regarding SuprNation and Q3, currently Europe is on summer break as it is mid-August, and that's why we see some similar level as we saw in Q2. After mid-August, we will hopefully launch our marketing on SuprNation, and our marketing and data experts will make a visit to Malta to promote the optimization of marketing and data related activities. Regarding the app launching, it will be different from that of social casino or casual games that you saw before. Rather than focusing on ROI and retention only, we will focus more on users cross-selling as well as adding these iGaming content to the already verified market. We will add to the NYspins as well, so we will focus more on brand awareness increase for this new app development.
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If there is no more question for today, we will close the session here. But if you have any additional question, please feel free to reach our IR team or our company. We will do our best to provide you with the best answers. Thank you for joining us once again, and we will now conclude our Q2 earnings.