DoubleDown Interactive (NASDAQ:DDI) reported higher third-quarter adjusted earnings despite a modest decline in revenue, as a growing share of direct-to-consumer social casino sales helped reduce costs.
The company also discussed its controlling shareholder’s offer to acquire the outstanding American depositary shares it does not already own. Management said it would not take questions about the offer during the earnings call.
Revenue for the quarter ended September 30, 2026, fell 1.6% from a year earlier to $94.3 million. Adjusted EBITDA rose 7.2% to $40.2 million, while the adjusted EBITDA margin expanded to 42.7% from 39.1%.
Direct Sales Support Margins
CEO In Keuk Kim said direct-to-consumer activity accounted for a record 58% of social casino revenue, up from approximately 52% in the second quarter and 21% a year earlier. He said enhancements to messaging and promotions, particularly in the flagship DoubleDown Casino app, supported the shift.
CFO Joe Sigrist said the higher proportion of direct-to-consumer revenue lowered the cost of revenue and helped lift operating profit to $37.5 million from $35.0 million a year earlier.
Asked about a potential ceiling for direct-to-consumer sales as a share of revenue, Sigrist said he could not provide a number. “I don’t think we’re finished, but obviously, it’s going to be harder to make gains as we get higher and higher,” he said.
Social casino revenue declined 3.5% year over year to $76.8 million. Kim cited an Eilers & Krejcik forecast that the global social casino market would shrink almost 7% in 2026 and said DoubleDown was focused on retention, marketing and direct-to-consumer sales to outperform the market.
Sigrist said DoubleDown has fewer players than it had in the past but is working to retain and better monetize its remaining audience. Kim said the company releases new slot content weekly and is developing a more streamlined mobile lobby.
Profit Falls on Currency Losses
Profit excluding non-controlling interest fell 43.9% to $18.4 million, or $0.37 per ADS, from $32.7 million, or $0.66 per ADS, a year earlier. Sigrist said the decrease primarily reflected foreign currency losses, mainly unrealized and realized losses on U.S. dollar-denominated financial assets.
Operating expenses declined to $56.8 million from $60.9 million. Sales and marketing expenses were $15.1 million, down from $15.7 million a year earlier but up from $13.9 million in the second quarter.
Net cash provided by operating activities fell to $23.6 million from $33.4 million, primarily because of higher income taxes paid during the quarter, Sigrist said. For the first nine months of 2026, operating cash flow was $94.7 million, compared with $94.1 million a year earlier.
DoubleDown ended the quarter with $582.1 million in cash equivalents and short-term investments. Its net cash position was approximately $545.3 million after deducting $36.8 million in borrowings from its controlling shareholder.
iGaming Growth and Product Plans
Revenue from SuprNation, DoubleDown’s iGaming business, rose 7.4% to $17.4 million. Kim attributed the increase primarily to the success of its newer Los Vegas brand. He said product changes, marketing adjustments and expense controls helped mitigate much of the impact of a higher U.K. gambling tax rate.
Kim said Los Vegas was designed for broader appeal than SuprNation’s earlier niche-themed brands. He added that the company plans to launch a fifth and sixth brand to diversify revenue.
In response to an analyst’s question about artificial intelligence, Kim said the company uses AI in content production, player monetization and advertising targeting. He did not quantify its effect on revenue per daily active user.
Social casino payer conversion rose to 9.5% from 7.8% a year earlier, while average revenue per daily active user increased to $1.44 from $1.39. Average monthly revenue per payer fell to $216 from $272. Sigrist cautioned that metrics from WHOW Games, acquired in July 2025, were included in the overall social casino figures starting in the fourth quarter of 2025, but not in the prior-year third quarter.
Controlling Shareholder’s Tender Offer
Investor relations adviser Joe Jaffoni said DoubleU Games has commenced a cash tender offer at $16.25 per ADS for outstanding DoubleDown ADSs not owned by DoubleU Games and its affiliate. DoubleDown’s board unanimously approved the agreement and recommended that holders tender their shares, following a special committee’s recommendation.
Jaffoni said the offer is subject to conditions, including minimum tender and majority-of-the-minority conditions, and that completion is not assured. He added that DoubleDown continues to operate in the ordinary course.
About DoubleDown Interactive (NASDAQ:DDI)
DoubleDown Interactive is a digital gaming company focused on developing and publishing social casino games for mobile devices and online platforms. Its flagship title, DoubleDown Casino, offers virtual slot machines and other casino-style games for entertainment, using virtual currency rather than real-money wagering. The company’s portfolio also includes other free-to-play casino games, which combine casino-style play with features such as in-game rewards and social interaction. Its games are distributed through app stores and web platforms and reach players in North America and other international markets.
