Ladies and gentlemen, thank you for standing by, and I would like to welcome you to the Full Year and Fourth Quarter 2025 Earnings Call of Huuuge Games. The speakers today are Wojciech Wronowski, the CEO, and Maciej Hebda, EVP of Finance. The call will start with a presentation from the company, followed by a Q&A. For the Q&A session, we'll be joined by Erik Duindam, the COO. The presentation will be available for download on our website after the call. You're also welcome to type in the questions in the chat box while the presenters are speaking. With that, I'll pass the line over to Wojciech to start the presentation. Please go ahead, sir.
Hello, everyone, and thank you for joining today's call. Wojciech Wronowski speaking, CEO of Huuuge, joined by Maciej Hebda, our Treasurer and EVP of Finance. We'll begin by summarizing our operational and financial performance for the fourth quarter of 2025, followed by our outlook for 2026. As always, we'll conclude with a Q&A session. Let's turn to the full year and fourth quarter 2025 highlights. Revenue for the year was $236 million, down 6.1% year-over-year. However, on a net revenue basis, performance was broadly stable, reflecting clear stabilization trends in the business after prior periods of decline. This was supported by continued strength in our product and monetization, as well as exceptional results of our direct-to-consumer channel.
This channel reached another record high, accounting for 37% of revenue in Q4 and further expanding to approximately 41% in February 2026. This channel remains a key structural driver of margin expansion and strengthens our direct relationship with players. Adjusted EBITDA increased to $96 million, up 10% year-over-year with a record high margin of 41%, up 6.1 percentage points. This reflects continued cost discipline and the benefits of our strategic focus on high return areas of the business. Finally, cash generation remains strong, with $73 million of free cash flow in 2025. This supports our capital allocation framework with a clear commitment to returning 50%-100% of annual free cash flow to shareholders.
Overall, 2025 was defined by stabilization of the top line, continued expansion of D2C and record profitability, reinforcing the long-term cash generative strength of our model. Let's move to our 2026 strategic priorities. Our first priority remains the core business. The focus here is longevity. We are prioritizing player retention over short-term monetization, while continuing to double down on the features that have proven to extend lifetime and strengthen engagement. The business has stabilized and with improving monetization and growing D2C contribution, we are reinforcing the engine that consistently generates strong margin and cash. Our second priority is entering new markets through M&A. We are actively pursuing a strategic entry into the iGaming market with the ambition to build a meaningful new business vertical for Huuuge.
We are doubling down on M&A and strategic partnerships, focusing on D2C operators, where we can leverage our core strengths in product, marketing, content and infrastructure. Our approach remains disciplined, targeting opportunities that align with our capabilities and support the long-term growth of the combined business. Finally, capital distribution. With strong cash generation and clear visibility in our investment needs, we remain committed to our policy of returning 50%-100% of annual free cash flow to shareholders. This provides a predictable and disciplined framework, balancing reinvestments into business with consistent capital returns. Overall, there are no structural changes to our priorities. The focus is on execution, discipline, and long-term value creation. Let me turn to our core business update. On this slide, let me walk you through the performance of our core franchises. Our results in the fourth quarter continue to reflect broader market dynamics.
The social casino market remains under pressure, and we are seeing that in our top line and user metrics. Daily active users declined year-over-year and sequentially. At the same time, monetization remains strong. Average revenue per daily active user and average revenue per paying user both increased year-over-year, which continues to validate the strength of our player base and durability of our monetization model. This is consistent with what we have seen throughout 2025, where DAU fluctuations were offset by stable and improving monetization. As communicated in the last earnings call, the most impactful elements of our roadmap were concentrated in the second half of the year, and we delivered against that plan. We rolled out one of the economy update alongside the launch of the Huuuge Dash, a new engagement layer building on the success of Huuuge Pass.
It is important to connect this to what we saw last year. The combination of Huuuge Pass and economy updates introduced in Q4 2024 created a stable foundation that supported performance throughout 2025. We hope that the current set of releases to play a similar role, reinforcing engagement and monetization over the long term. On marketing, there are no structural changes. We continue to operate with a strict payback discipline, keeping spend aligned with the product performance. As new features scale and demonstrate returns, we'll adjust investment accordingly. Overall, the priority remains unchanged, protecting long-term profitability while systematically strengthening the core product to ensure durable performance. Let's turn to our direct-to-consumer channel, which continues to be one of the most important drivers of our financial profile. D2C reached 26% of total revenue for the full year 2025.
Importantly, this momentum accelerated in the fourth quarter, where the share exceeded 37% and continued into early 2026, reaching approximately 41% in February. At these levels, we are now among the leading gaming companies in terms of D2C share. This is not just growth, but structural improvement in how we monetize. The expansion has been driven by both product execution and platform changes. Following the Huuuge Pay iOS launch in September and Android in November, we significantly increased accessibility and conversion across key markets. Looking forward, as D2C is not fully penetrated across our player base, our objective remains clear. We'll continue increasing the D2C share in a disciplined way, optimizing both player experience and economics, while remaining responsive to changes in the platform policies and regulations.
This growth directly translates into margin expansion and stronger cash generation, which was visible in our 2025 results, where we delivered over 40% EBITDA margin and very high cash conversion. Now, I will hand it over to Maciej Hebda, our EVP of Finance, who will walk you through the financial update.
Thanks, Wojciech, and hello, everyone. I'll now cover our financials as well as our outlook for 2026. Next slide, please. Our Q4 revenue reached almost $59 million, a 5% decline year- on- year and a 5% improvement quarter- on- quarter. Our gross profit recorded a 2% year-on-year growth and an even more pronounced 8% quarter-on-quarter increase, reflecting continuous progress with our D2C channel expansion. Sales and marketing expenses increased both year-on-year and quarter-on-quarter, reflecting similar trends as observed in Q3, scaling of our UA expenses in light of satisfactory paybacks. R&D costs decreased by 28% year- on- year and 3% quarter- on- quarter, reflecting the impact of restructuring. R&D costs dropped by 20% year- on- year on a full year basis.
G&A expenses for the quarter remained flattish, both year-on-year and quarter-on-quarter, having dropped by 9% year-on-year on a full year basis. Turning to what we believe to be the highlight of our P&L, operating result, net result and Adjusted EBITDA recorded double-digit improvement year-on-year on a full year basis. In Q4 alone, Adjusted EBITDA exceeded $25 million, marking a 2% year-onr-year and a 14% quarter-on-quarter growth. Now let's move on to cash flows. Next slide, please. Strong cash generation continued throughout Q4, bringing the total net operating cash flow for the year to over $78 million. Free cash flow for 2025, as defined by our capital distribution policy, amounted to $73.3 million. We ended the year with a cash balance slightly over $100 million.
We remain committed to our policy of returning 50%-100% of annual free cash flow to shareholders. Given our robust cash generation, we are confident that we can balance both objectives, namely to fund our growth and to keep distributing cash to our shareholders. I will now go through the 2026 outlook and our high-level guidance. Next slide, please. Starting with the top line, we expect revenue to decline slightly year-on-year and the dynamics in net revenue terms, so accounting for platform fees and our progress with D2C, should be in line with the broader social casino market trends. Marketing spend is expected to slightly increase on a year-on-year basis, and as percentage of our revenue, it should remain around the mid-teens level. We continue to closely monitor the paybacks and cohort performance, the key drivers of spend volatility on a quarterly basis.
Operating expenses, excluding user acquisition spend, should slightly decline year-on-year as we are committed to running lean operations. Adjusted EBITDA is expected to decline slightly year-on-year, but Adjusted EBITDA margin should remain flat as we remain focused on our long-term profitability. With that, I am turning to Wojciech for his closing remarks.
Thank you, Maciej, and thanks to everyone for tuning in and for your continued support. Let me leave you with four key takeaways from today's presentation. First, our net revenue remained almost flat year-over-year, with stabilizing trends and the D2C expansion positively impacting overall profitability. Second, our direct-to-consumer channel continues its record-breaking trajectory, accounting for 37% of sales in Q4 2025 and scaling further to approximately 41% in February 2026. Third, we achieved a 10% year-over-year increase in Adjusted EBITDA, reaching a record high margin. Fourth, we've managed to maintain strong cash flow with $73 million free cash flow in 2025 and an industry-leading cash conversion rate. This concludes today's earnings presentation. Thank you again for joining us. Let's now move on to the Q&A.
Thank you. We'll now move to the question and answer section. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you are dialed in by the web, you can type your question in the box provided or request to ask a voice question. We already have received some text questions, so I'm gonna read the first one. Could you share an update on iGaming, particularly in the context of your M&A efforts? Do you still lean more toward entering this market through M&A rather than through organic expansion?
I'll take this question. I'm Erik. Entering iGaming is still one of our strategic priorities and we are mainly focused on M&A and potentially strategic partnerships. This is correct. We have a dedicated team evaluating many potential targets and partners, and ultimately, we are looking for the right target and not just any target, as we wanna ensure that the entry to iGaming sets us up with the best chance of a sustainably growing iGaming business. This is where we are. It's still a priority. A lot of work being done, but we'll update you when we can tell you more about it.
Okay. Thank you. Another text question from Krzysztof Tkocz from Erste. Are you considering any measures to reduce headcount in 2026?
Krzysztof, are you here? Good. I can answer the question. Right now we are just forecasting, foreseeing just stable headcount other than adjusting to the according to the regular operational needs.
Okay. Thank you. Thank you very much. I'm gonna move over to the next question also from Krzysztof. What level of UA bookings should we expect in Q1 2026 and in the following quarters of 2026?
Maybe I'll take this one, Maciej here. We don't give guidance for UA on a quarterly basis. You know, there will always be some volatility between the quarters as you also saw in the past. For the full year, we expect the UA to bookings ratio to be in the mid-teens percentage.
Okay. Thank you. Thank you very much. The next question is, in the worst-case scenario, how could the situation in the Middle East or Israel affect your business?
I'll take this question. In terms of business continuity, we're fully secured, and we have ensured that our critical talent and know-how are distributed across multiple locations. Our technology infrastructure continues to operate on cloud-based systems, there are no critical systems or any systems located in the Middle East or affected by it. We feel that we're in a good position, no matter what the outcome would be.
Okay. Thank you. Another last question from Krzysztof. Is the current geopolitical situation having any impact on CPI?
We haven't seen any particular volatility or increases or decreases in CPI, so right now everything looks stable.
Okay. The next text question comes from Jimmy, Fold Equity. In the strategy section, you mention opportunities in expanding your presence in markets adjacent to the social casino space. What do you really mean by that? Are you thinking about making more social casino games or more about moving into nearby areas?
What we meant by this statement in the report is simply our entry into iGaming space, nothing else.
Okay. Thank you. Are you still planning to launch an iGaming product around 2027? Would that mainly be through an acquisition to get licenses and everything set up?
Yes, we're still planning this, and we're prioritizing our entry to iGaming, and we would like to enter as soon as we find the right M&A target or the right partner to work with. In terms of acquisition, we're mainly looking to acquire an already sustainable business where we also see a lot of synergies with our existing USPs. For example, our product capabilities, our slots portfolio, our performance marketing expertise and systems, potentially the Huuuge brand and our lapsed player base. We're not looking to just acquire licenses, but we're definitely looking to ideally acquire a business or partner with a business where we know it will be sustainable.
Okay, thank you. Next question from Jimmy. We've recently seen countries like Brazil and the Netherlands move towards stricter rules around things like retention tools and social betting features. How do you view that direction for regulated iGaming, especially given what Huuuge is doing today?
Yes. We are aware of these changes happening, and we're keeping track of regulatory developments in all the potential markets that could be interesting for us. Generally, in iGaming, regulatory changes are a key part of the market and the key risk that you'll have to adapt to and potentially diversify across regions depending on the risks. We have pretty good understanding right now in terms of what's possible with more social-like features in various countries that we're looking at, and we're taking this into account with any acquisitions or partnerships. We also believe that when you look at our non-social USPs around slots and marketing, for example, that we will be able to create an impact regardless of these regulatory changes, other than taxes obviously that can happen, that we're also tracking.
Ultimately, like I said earlier, we are looking for sustainable businesses in the first place that don't entirely depend on synergies alone. This is how we view it.
Okay, thank you. Next question from Jimmy. How do you think about keeping profitability high over the next few years? For example, if the core games keep declining, would you look into cutting costs to maintain margins in the future? Since the iGaming push will likely require some investment, how do you balance that against profitability in the near long term?
Okay. I'll take this one. Maciej here. First of all, regarding our core business, we remain committed to running lean operations in our core social casino business. Basically, we are constantly looking at our cost structure and reviewing it. In terms of the iGaming push, in a scenario of a potential acquisition, we are looking for targets that are profitable on a standalone basis. That's one point. The second point is that as a sector, iGaming has typically lower profitability than the social casino gaming business, mostly because of taxes. In the long run, this is something that will impact our blended profitability.
Okay. Another question from Jimmy. When are you planning to distribute the cash under the new policy for the past year?
I'll take this one also. As we said, we are committed to sharing between 50%-100% of last year's free cash flow this year. Having said that, management has not yet proposed a specific timeline or size of a potential distribution to the board. We continue to evaluate capital allocation options, including the M&A opportunities. That's all we can say for now.
Okay. Thank you. Thank you very much. Another question from Jimmy. There's been some talk in the industry that higher profitability in DTC could end up pushing up the UA costs, with the net effect being more or less neutral for developers while the ad platforms are the ones really benefiting. How do you see that dynamic?
I'll take this. I had some connection issues. It's Wojciech here. We usually do not comment on rumors, but we are not seeing any dynamics like this on our end, and we haven't seen any correlation between the D2C growth or CPIs. Thanks.
Okay. Thank you. Thank you very much. Next question comes from Michał Wojciechowski, IPOPEMA Securities. What is your current target for DTC share and mix at the end of 2026?
Without giving a specific number, we are still hoping to grow our D2C channel. Our roadmap is still quite long, and we are quite excited about this. The growth is definitely a subject of platform changes.
Okay. Thank you. Another question from Michał. What kind of OpEx savings you expect to happen this year?
I'll take this one, Maciej here. Again, reiterating Wojciech's phrase, we won't give you a specific number, but in terms of the direction, we expect the OpEx, excluding the UA spend, to slightly decline year-on-year on a full year basis.
Okay. Perfect. Thank you very much. Our next question from Piotr Poniatowski. Could you say more about the factors shaping ETR in Q4?
Yes. I'll take this one. First of all, I would suggest looking at the ETR on a full year basis as a better guideline for the effective taxes that we're paying. In Q4 specifically, it was lower because we have utilized the IP Box tax relief in Poland and an R&D super deduction relief in Cyprus. Also a reminder that it was actually unusually high in Q3, so in the previous quarter, because of a reversal of a deferred tax asset. All in all, I would suggest looking at it on a full year basis.
Okay. Thank you. Next question, can you say more about the current status of the M&A processes you're involved in? Has anything changed since the last conference? Are the talks and processes more advanced?
I will say that our M&A team is very active, and we have a strong pipeline of opportunities. We will not comment on specific targets or details until a transaction is ready to be reported to the market. Overall, we feel that the pipeline is very strong.
Okay. Thank you very much. Next question is, have you seen already some impact of reduced Google commission on your businesses?
Hey, it's Wojciech. The updated fees will be rolled out by Google on the staggered schedule, starting in Europe, United Kingdom and the U.S., I think by June 30th. The company is not affected by the changes yet. In terms of this, those new platform fees, we expect a net positive effect, but in terms of impact on the D2C, it's quite early to comment yet. Yeah. Thanks.
Okay. Thank you. Our next question from Grzegorz Balcerski, Trigon. Has the attractiveness of the iGaming market changed in any way in recent months in light of regulatory or market changes?
No, our view is still the same. There are regions that have changed, in particular the U.K. with their significant tax increase, but it hasn't changed our overall perspective on the entire market or the outlook of what we are trying to do. In the grand scheme of things, we still look at it the same way.
Okay. Thank you. Have you started the process to acquire the iGaming license on your own?
No, we haven't, and we're not necessarily planning to. Right now, we see enough opportunities through M&A and partnerships that would allow us to enter faster and with a higher level of conviction.
Okay. Thank you. Maybe just a quick reminder to the participants. If you are joined via phone, please press star two on your phone keypad and wait for your name to be prompted. If you are dialed in via the web, you can also request to ask a voice question or send your question as a text. Our next question comes from Aakash Vanchi Nath from P&R Investment Management. Given that you should see a gross margin benefit in 2026 through D2C, what is the reason for guiding for flat year-on-year EBITDA margin?
I'll take this one. Maciej here. We should see a gross margin benefit in 2026. At the same time, we are guiding for slightly higher marketing expenses, which again, it should also translate into higher expenses as percentage of revenue, taking away a few percentage of the margin. Overall, yeah, that would be the primary driver, I would say. We would still expect the EBITDA margin to be flat or flattish for the full year.
Okay. Thank you. Thank you very much. We have received another text question from Michał Stopka. What are the biggest opportunities in 2026?
Maybe I'll just comment on this very quickly, yeah. We are very excited, definitely about D2C and the continuous growth here, and obviously the iGaming entry are probably two biggest opportunities for this year.
Okay. Thank you. Maybe just a final reminder, if you're connected via the phone and you want to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. If you are connected via the web, you can also request to ask a voice question or send your question as a text. I'll just give a moment or so for any additional questions to come in. Okay. We have another text question from Piotr Poniatowski from mBank. What are the biggest challenges in 2026?
I'll comment similarly, as short as possible. In terms of challenges, definitely there are platform regulations in terms of D2C. Finding the right agent for iGaming is definitely something that we need to be very mindful about. There is a weakening environment around social casinos that continues to decline. I guess these are the three biggest challenges for 2026.
Okay. Thank you. Thank you very much. I'm not seeing any more questions from the audience, so I will pass the line back to the management. Apologies. We have received just another text question from Aakash Vanchi Nath from P&R Investment Management. Given your valuation, I would imagine you would be getting a lot of inbound interest from PE, et cetera. Could you comment on such situations?
I'll take it. Maciej here. In short, we cannot really comment on such a situation given the market abuse regulations that we need to follow. Cannot really speak to the inbound interest.
Okay. Thank you. We are not seeing any other questions at the moment, so I'm gonna pass the line to the management team for their closing remarks.
Okay. Wojciech here. Thank you all for your time and engagement. As usual, we are quite confident in the direction we are heading and look forward to updating you on the progress next quarter. Thank you very much and have a great day.
Thank you. This concludes the call for today. We are now closing all the lines. Goodbye.