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Operator: Good afternoon and welcome to DoubleDown Interactive's Earnings Conference Call for the First Quarter Ended March 31, 2024. My name is Brianna and I will be your operator this afternoon. Prior to this call, DoubleDown issued its financial results for the first quarter of 2024 in a press release, a copy of which has been furnished in a report on Form 6-K filed with SEC and is available in the Investor Relations section of the company's website at www.doubledowninteractive.com. You can find the link to the Investor Relations section at the top of the home page. Joining us on today's call are DoubleDown CEO, Mr. In Keuk Kim, and CFO, Mr. Joe Sigrist. Following the remarks, we will open the call for questions. Before management begins their formal remarks, we need to remind everyone that some of the management's comments today will be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended, and the company hereby claims the protection of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements about future events and include expectations and projections, not present or historical facts, and can be identified by the use of words such as may, might, will, expect, assume, believe, intend, estimate, continue, should, anticipate, or other similar terms. Forward-looking statements include, and are not limited to, those regarding the company's future plans, mergers, acquisition, strategies, strategic and financial objectives, expected performance, and financial outlook. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially and adversely from what the company expects. Therefore, you should exercise caution in interpreting and relying on them.
We refer you to DoubleDown's annual report on Form 20-F filed with SEC on March 28, 2024, and other SEC filings for a more detailed discussion of the risks that could impact future operating results and financial condition. These forward-looking statements are made only as of the date of this call. The company does not undertake and expressly disclaims any obligations to update or alter the forward-looking statements whether as a result of new information, future events, or otherwise, except as required by law. During the call, management will discuss non-GAAP measures which are believed by management to be useful in evaluating the company's operating performance. These measures should not be considered superior to, in isolation, or as a substitute for, the financial results prepared in accordance with GAAP.
A full reconciliation of these measures to the most directly comparable GAAP measure is available in the earnings release and on DoubleDown's Form 6-K filed with the SEC prior to this call. I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section of DoubleDown's website. It's now my pleasure to turn the call over to DoubleDown's CEO, In Keuk Kim.
In Keuk Kim : Thank you, Brianna. Good afternoon, everyone. Thank you for joining us on our 2024 first quarter earnings call. Today, we announced that total Q1 revenue was $88.1 million, with $79.8 million generated by our social casino free-to-play games, and $8.3 million coming from the operations of SuprNation, our recent iGaming acquisition. Q1 revenue from our social casino free-to-play games was up 1% on a quarterly sequential basis and up 3% compared to Q1 2023. And we continue to do an excellent job in converting revenue to profit and cash flow with adjusted EBITDA for the first quarter, rising 26% year-over-year to $31.9 million and cash flow from operations at $35 million. Our first social casino game, DoubleDown Casino or DDC, continues to be the driver of our strong results as we generated year-over-year increases in our some of our most important KPIs, including average monthly revenue per payer and payer conversion rate.
More specifically, we are growing monetization with our core paying players as they continue to recognize the great entertainment experience and compelling value that we offer. We believe our revenue growth reflects the benefits we are seeing from the introduction of new meta features within DoubleDown Casino. These features, such as Lucky Orbs & Flame Power, which I mentioned during last quarter's call, add to the fun of playing DDC, thereby driving player engagement and retention, and we believe leading to higher overall monetization. In addition, during this second quarter, we plan to launch Mission Pass, which offers players daily, weekly, and monthly quests alongside their casino game play. Our strategy in the social casino is to continue enhancing the entertainment value of DDC, while remaining disciplined in user acquisition and R&D spending to drive strong profitability and free cash flow.
Turning to SuprNation, Q1 represented our first full quarter of operation of this iGaming business. Our focus at this early stage is to scale the business, and we were pleased with the results so far with SuprNation's Q1 revenue contribution of $8.3 million. The iGaming sector represents an exciting growth opportunity for DoubleDown, and we are very pleased to be off to such a strong start with plans for continued improvement. The SuprNation acquisition is just an initial step in our goal to diversify our business into new gaming categories that have highly addressable market opportunities. Given our excellent financial foundation, we continue to evaluate ways to expand into these markets, both organically and through M&A. As we execute on this strategy, we will apply the same capital discipline we have exhibited over the years.
As an example, on our first quarter call, I highlighted the launch of our first game in the skill-based gaming category. However, after ramping up marketing investment to acquire players in Q1, its performance metrics did not meet our requirements, and as such, we have decided not to proceed with additional user acquisition activities going forward. We are continuing to invest in new internally developed mobile games, including those we expect to launch in 2024. But our overriding principle, when we undertake these new game launches, it is to ensure we are deploying our capital and expertise in a manner that creates additional value for shareholders. If that approach is not to be the case, we have demonstrated that we will quickly move on. Now I will turn it over to our CFO, Joe Sigrist, to walk us through our financials before providing my closing remarks.
A student enthusiastically playing the DoubleDown Classic on their laptop in a library.
Joe?
Joseph Sigrist : So thank you, IK. And good afternoon, everyone. Our revenues for the first quarter of 2024 were $88.1 million comprised of $79.8 million in revenues from our social casino free-to-play games and $8.3 million of revenues from SuprNation. This compares to total company revenues of $77.6 million in Q1 2023. As IK mentioned, social casino free-to-play revenue in the first quarter of 2024 was up 1% sequentially from the fourth quarter of 2023 and 3% year-over-year. In the first quarter, several KPI metrics for our social casino business again improved compared to the year-ago period, including average revenue per daily active user or ARPDAU increased to $1.26. in Q1 2024 from $1.03 in Q1 2023, marking a 22% increase.
Payer conversion ratio, which is the percentage of players who pay within the social casino apps, increased to 6.4% in Q1 of 2024 compared to 5.8% in Q1 of 2023. And average monthly revenue per payer at $281 in the first quarter of 2024 increased 27% from $221 in Q1 of 2023. Operating expenses rose on both a year-over-year and quarterly sequential basis to $57.1 million compared to $52.2 million in the first quarter of 2023 and $47.5 million in the fourth quarter of 2023. The OpEx increase in Q1 was primarily due to the inclusion of SuprNation's operating expenses, as this was the first full quarter consolidation of its financial results into those of DoubleDown. Sales and marketing expenses for the first quarter of 2024 were $14.8 million, a decline of 8% compared to Q1 2023 and up nearly 50% on a quarterly sequential basis.
The sequential increase was comprised of the first time full quarter inclusion of SuprNation sales and marketing expenses, as well as the acquisition of players for the skill-based gaming app IK noted earlier. Sales and marketing costs directed at acquiring new social casino players continued to reflect our focus on spending to ensure we deliver the best return on this investment. For the next several quarters, we anticipate that overall sales and marketing expenses for the company will stay relatively close to or below the Q1 level. Net income for the first quarter of 2024 was $30.4 million or $12.23 per diluted share and $0.61 per ADS, a rise of 28.3% to 28.1% and 27.1%, respectively, compared to the net income of $23.7 million or $9.55 per diluted share and $0.48 per ADS in the first quarter of 2023.
Adjusted EBITDA for the first quarter of 2024 increased 26% to $31.9 million compared to $25.4 million for the prior-year quarter. Adjusted EBITDA margin was 36.2% for Q1 2024, representing an improvement from 32.8% in Q1 2023. Net cash flows from operations were $34.9 million for the first quarter of 2024 compared to net cash flow from operations of $19.2 million in the prior-year period. Finally, turning to our balance sheet, as of March 31st, 2024, we had $310 million in cash, cash equivalents and short-term investments with a net cash position at quarter-end of approximately $272 million or approximately $5.50 per ADS, excluding the outstanding loans with our controlling shareholder, WGAMES. That completes my financial summary. Now I'll turn the call over to IK for closing remarks.
In Keuk Kim : Thank you, Joe. We began 2024 demonstrating our ability to further expand the operating and financial performance momentum of the company with strong Q1 results in our core social casino business and an excellent start to our new iGaming business. In our core social casino business, we will continue enhancing and improving DoubleDown Casino through ongoing product development, marketing initiatives, and live-ops efforts. We see this as a capital efficient way to continue driving engagement and monetization that also delivers high cash flow. As we mentioned during last quarter's call, we also are focused on enhancing our already strong margins by increasing our direct consumer payment volume. While it is early days with this initiative, we are beginning to expand the options that players have to purchase chips for DoubleDown Casino.
In the near term at SuprNation, our focus is to invest to grow the player base in both the UK and Sweden. We look forward to the continued positive impact of these efforts to scale the business. And we will continue to pursue growth through participation in adjacent categories of gaming through both our organic efforts and as we continue to evaluate M&A opportunities. We're now happy to take your questions. Brianna?
Operator: [Operator Instructions]. Our first question comes from Aaron Lee of Macquarie.