Good afternoon, ladies and gentlemen and welcome to DoubleDown's Earnings Conference Call for the Financial Results for the First Quarter Ended March 31, 2022. My name is Olivia and I'll be your conference operator this afternoon. Prior to this call, DoubleDown issued unaudited financial results for the first quarter 2022 in a press release, a copy of which has been furnished in a report on Form 6-K filed with the SEC and is available on the Investor Relations section of the company's website at www.doubledowninteractive.com. You can find a 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 its CFO; Mr. Joe Sigrist. Following their remarks, we will open the call for questions. Before we begin, Mr. Grampp, the company outside Investor Relations Advisers, will make a brief introductory statement. Mr. Grampp?

Thank you. Before management begins their formal remarks, we need to remind everyone that some of 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 we hereby claim 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 they 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 our future plans, mergers and acquisition strategy, 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 we expect. 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 the SEC on April 4, 2022 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 obligation 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 measures is available in the earnings release and on our 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 available in the investor relations section of DoubleDown’s website. Now, I would like to turn the call over to DoubleDown’s CEO, Mr. In Keuk Kim.

Thank you, Jeff. Good afternoon, everyone. Thank you for joining us on the earnings call for our first quarter 2022 results. Our first quarter results for 2022 continue to demonstrate the attractiveness of our business model while revenue was down sequentially from the fourth quarter of 2021. This was primarily due to our decision to scale back sales and marketing costs for our first nonsocial casino app, Hero Survival, as we make certain product changes to improve the app's monetization metrics. This reduction in sales and marketing costs led to a corresponding decrease in revenue generated from Undead World during the period. Despite the revenue decrease, our adjusted EBITDA and adjusted EBITDA margin improved sequentially with a reduction in cost, illustrating the adaptability of our business model to varying industry and macroeconomic conditions. We also continued to generate positive operating cash flow, ending the quarter with a cash equivalent balance of $268 million and hope to continue generating positive operating cash flows in the future. Our decision to scale down sales and marketing costs for Undead World in the near term also demonstrates our commitment to being a good source of capital. While we continue to focus on growing our business, we will not sacrifice or overlook the importance of generating returns on our investment for our shareholders for the sole purpose of achieving goals. By scaling back our investment for Undead World in the near time to revisit our monetization strategy for the app, we have been able to introduce better tests of several improvements for the app. If the monetization KPIs for the game trend positively, we may increase marketing spending for Undead World during the current second quarter and beyond. As a leader in the social casino network through our flagship title DoubleDown Casino, we believe that we have the team in place for a successful monetization strategy for gaming apps adjacent to social casino. Now I will turn it over to our CFO, Joe Sigrist, to walk you through our financials before providing my closing remarks. Joe?

Thank you, I.K. and good afternoon, everyone. Let me start with revenues. Revenues for the first quarter of 2022 decreased 11.6% to $85.5 million from $96.7 million for the first quarter of 2021. It is important to note that the prior year period benefited from the continuation of stay-at-home or work-from-home COVID prevention initiatives, which have significantly abated since then. Compared to the fourth quarter of 2021, revenue in the first quarter of 2022 declined by only 0.9%, primarily due to a decrease in Undead World revenue, based on our intentional reduction in user acquisition spending for the app. Our key monetization metrics for the first quarter of 2022 include average revenue per daily active user, or ARPDAU, of $0.97, down slightly from $0.99 in the first quarter of 2021, and up sequentially from $0.96 for the fourth quarter of 2021. Average monthly revenue per payer was $225 in the first quarter, a year-over-year increase from $212 in the first quarter of 2021, and up sequentially from $216 in the fourth quarter of 2021. Lastly, payer conversion, which is the percentage of players who pay DoubleDown, was 5.5% in the first quarter compared to 5.7% in the first quarter of 2021 and remained stable sequentially. Operating expenses in total for the first quarter of 2022 decreased 14.4% to $60.8 million from $71.0 million for the first quarter of 2021. The decrease was primarily due to decreases in cost of revenue, sales and marketing expenses, and depreciation and amortization expenses. Of note, sales and marketing expenses in the first quarter of 2022 were $19.8 million, essentially flat over the first quarter of 2021, but representing an over $2 million sequential decrease compared to the fourth quarter of 2021. This sequential reduction was primarily due to the aforementioned decrease in sales and marketing spending for Undead World: Hero Survival. Going forward, we expect our overall sales and marketing expenses to rise incrementally as we increase investment in acquiring and retaining players in our new apps as well as for DoubleDown Casino. It is also worth noting that depreciation and amortization expenses in the first quarter of 2022 were $2.2 million compared to $7.5 million in the first quarter of 2021 and essentially flat sequentially. The decrease from the year-ago quarter was due to the completed amortization of certain identifiable intangible assets for which we used purchase price allocation at the time of the 2017 DoubleDown Interactive acquisition. Net income for the first quarter of 2022 decreased to $18.5 million or $7.46 per diluted common share compared to $19.4 million or $8.77 per diluted common share in the first quarter of 2021. Next, I want to discuss adjusted EBITDA. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures, which we believe are useful in evaluating our operating performance. A full reconciliation of these measures to the most directly comparable GAAP measure is available in the earnings release. Adjusted EBITDA for the first quarter of 2022 was $26.9 million compared to $33.1 million in the first quarter of 2021. Adjusted EBITDA margin for the first quarter of 2022 was 31.5%, lower than the adjusted EBITDA margin of 34.2% for the first quarter of 2021. The year-over-year decline in adjusted EBITDA and adjusted EBITDA margin is primarily attributable to the lower revenue in the first quarter of 2021, which I previously discussed. I'll note that as I.K. mentioned earlier, adjusted EBITDA increased sequentially from $25.8 million in the fourth quarter of 2021 to $26.9 million in the first quarter of 2022, and adjusted EBITDA margin also increased sequentially, from 22.9% in the fourth quarter of 2021 to 31.5% in the first quarter of 2022, primarily due to the reduction in sales and marketing costs. The overall reduction in our operating costs compared to the first quarter of 2021 illustrates the variable and discretionary cost structure we have. Our most significant costs are cost of revenue, which is comprised mostly of platform fees and royalties that are directly correlated to our revenue, and sales and marketing costs, which are to a great extent discretionary. This gives us a highly adaptable business model that can generate relatively consistent adjusted EBITDA and cash inflows across many different industry and macroeconomic cycles. Cash flow from operations for the first quarter of 2022 was $28.4 million compared to $22.0 million for the first quarter of 2021. We did not incur any material capital expenditures during the first quarter. Finally, turning to our balance sheet. At the end of the first quarter of 2022, we had $268.2 million of cash and cash equivalents and short-term investments compared to $242.1 million of cash and cash equivalents at the end of 2021. Our total debt at the end of the first quarter of 2022 was $41.3 million, compared to $42.2 million at the end of the 2021 full year. Our cash position continued to improve as we continue to generate positive cash flows from operations. This completes my financial summary. Now, I'll turn the call back over to I.K. for closing remarks.

Thank you, Joe. As we move forward in 2022, the priority for DoubleDown is the profitable growth of our business. This starts with our continuous effort to improve the performance of DoubleDown Casino through a combination of product enhancements, marketing, and live optimization. The social casino gaming business is still the backbone of our company, and hence whether we are able to implement and realize such improvements remains crucial for our success. We also see opportunities to grow our business outside of the traditional social casino network. As such, we expect that introducing adjacent mobile gaming apps remains a high priority. In addition to the introduction of Undead World: Hero Survival in 2021, we are planning to launch additional nonsocial casino games this year. For example, we have been working very hard on a new hyper-casual game called Save My Zombies, which just began open beta in April 2022. Also, as previously discussed, we have been working on Spinning in Space, which has both casino and non-casino elements that we think can be attractive to both our existing social casino demographic and new demographics that may be more aligned with non-casino casual gaming. Spinning in Space remains on track to start its open beta this summer. We will continue to work on having a robust pipeline of new games to launch, and it is also important to note that these new games are being developed using our existing R&D budget. We backed by our strong balance sheet position, of course, have also considered pursuing growth through potential M&A opportunities. In this regard, we will continue to look at potential acquisition targets using our key assessment criteria. These criteria include: the strength of our target gaming and creative assets; our ability to create synergies using our product development, marketing, and live app capabilities; and having an attractive pro forma financial model. We are now happy to take your questions. Operator?

Thank you. The first question is from Greg Gibas from Northland Securities. Your line is open.

Hi. Good afternoon, I.K. and Joe. Thanks for taking the questions. I was just wondering if you could discuss your expectations for the remainder of the year and when you would expect to see a return to year-over-year growth out of the core portfolio.

Yes, Greg, thanks for joining us. Thanks for the question. As we all know, the impact of the reduction in people staying at home and staying away from work has meant that the comparisons associated with our quarters have been difficult, and they will continue to be difficult if you look at year-over-year comparisons for the next couple of quarters. As we look forward, I mean, the social casino business is, as we've discussed, a fairly flat or very low growth business as a whole. And that is why it's so very important for us to not only optimize the presence we have in social casino with DoubleDown Casino, but also most importantly to expand with nonsocial casino apps. So our expectation is that the ability for us to grow is really tied to our ability to have success with the non-social casino apps. That obviously starts with Undead World but also with the new Hyper Casual Games, Save My Zombies, that I.K. just mentioned, as well as Spinning in Space and the other games that we have in our portfolio, and that's where the growth will really come from if we look at the comparisons to previous year-over-year quarters. And that's also finally why the M&A work that we're doing and our evaluation of targets is so very important as well.

Got it. Very helpful. Yes. I was just going to ask if you could discuss those upcoming titles, but I think I.K. and thanks for going over them again. But it sounds like the Save My Zombies April is when that beta begins then I think you said Spinning in Space, the open beta was this summer. Are you anticipating additional launches, I guess, in the second half of the year? Just trying to kind of get a sense of the slate for the remainder of the year.

Yeah. We have some games in the pipeline beyond Save My Zombies and Spinning in Space. But at this point, I think those are the two that we're tracking most closely as far as being launched this year or at least transitioning from beta to full release. And certainly, as we have more progress in getting closer to at least open beta with other games in the pipeline, we'll keep you updated.

Okay. Perfect. And just going back to Undead World. What enhancements, I guess, specifically are you going to be making to the game? You said trying to improve the monetization. And maybe when would you expect those to be completed?

I'm sorry Greg, could you repeat?

Yes sorry. The enhancements I think you were making to Undead World, I think primarily on the monetization front. I was just wondering if you could discuss what those are and maybe when they would be completed.

Yeah, sure. So, I can start, and if I.K. wants to provide some detail, I'll let him give some specifics. But it's really around payer retention. I mean, we were quite happy with player retention. As we said from the beginning of our discussion about the app last fall, we were quite happy with player retention. And then, of course, as monetization continued to ramp, we were very interested in payer retention and of course, how much each payer pays as well. But we have been more recently, as we've added enhancements to the app, been very focused first and foremost on payer retention. And I.K., I don't know if you want to give an example of the kind of enhancements that we've been adding to the app.

Yes right. For example, you have seen season pass features and some kind of new shows ability, and it's still very helpful for player retention increase.

Yes. And so, if you look at the season pass enhancements, which obviously provide benefits to players and payers, assuming that they opt for the season pass feature, we started those enhancements several weeks ago and we're very closely watching the impact on payer retention KPIs, and that's one of the most important things that we're observing as we determine when and how much to increase our marketing investment.

Got it. Very helpful. And I guess just the last one for me. I'm not sure how much you can share, but I was just hoping for an update on those potential M&A opportunities that you are seeing. Any sense of timing whether things are getting close and maybe what multiples you expect to pay?

I'll begin with the last question. The most notable topic is valuations. We are currently exploring various opportunities in the gaming sector. As public market valuations have decreased, it seems that expectations among private companies have also adjusted. However, this trend does not apply uniformly across all gaming categories. Some segments still display relatively high valuations based on the feedback we've received. We'll continue to evaluate these opportunities to determine what aligns with our goals. Regarding timing, we are very much engaged in this process and prioritize growth outside of social casino.

Understood. Thanks, guys.

Thanks, Greg.

Our next question is coming from David Bain with B. Riley. Your line is open.

Great. Thanks. I mean my primary question was just asked on the valuations that you're seeing, particularly in the private markets. Maybe building on Greg's question, can you provide kind of the mix that you're looking at private versus public? And what's the dynamic generally speaking when you look at synergies, taking out public costs, I'm sure you're balancing a lot of different factors there. I'm just trying to understand size and really what you're seeing out there generally. If you can give a little bit more detail since that's a big piece of the thesis it looks like.

Certainly, thanks, David. I hope you're doing well. As you might expect, most of the companies we are considering are private. Regarding size and our approach, we are not hesitant. If we identify a private or public opportunity that we find transformative, like DoubleDown, and it aligns with our goals, we will pursue it. However, it must be beneficial for us. This includes our confidence in bringing synergies to any acquisition. Often, we leverage parts of our existing company to enhance DoubleDown, such as our technology platform, skilled engineering and product development teams in Korea, and our user acquisition capabilities. Our sales and marketing strategies, partnerships, and the insights we've gained in improving user acquisition metrics for DoubleDown Casino are also crucial. We utilize our business intelligence and data analytics to assess potential targets, and these are the strengths we aim to enhance in any business we consider.

Okay. Awesome. That was really helpful. I guess the other one I would ask would be, on the last call, you and I.K. kind of teased us with blockchain and any kind of opportunity there. Are you ready to give us a little bit more detail on what you could be working on or looking at at this point?

At this point, I can't provide any additional details on that. Certainly, it's part of the criteria we consider when evaluating companies, and it's definitely something we're very interested in. I think that's all I can share at this time.

Okay. Fair enough. Thanks so much.

Our next question is coming from the line of an indiscernible caller. Your line is open.

Hi, good afternoon. Congrats on another very strong quarter of free cash flow generation. So my question is on the return of capital to shareholders. If my math is correct, more than half of your market cap is in cash, and you have a wonderful business that doesn't require much capital expenditures. So if you back the cash out, you're probably trading at a 60% free cash flow yield, which makes me believe that the market isn't really appreciating what's going on and the strong free cash flow characteristics of this business. So while you're considering acquisitions, what is your strategy in terms of maybe accelerated buyback, tender offers or dividends that could return some of this capital to shareholders that have been there? Just curious about that. Thank you.

Great. Thanks so much for the question. And thanks for the well, I guess, first acknowledgment which is the incredible cash generative nature of our business. And certainly, it's something that we continue to promote as we talk to investors. I will I guess reiterate what we have said on at least the last couple of earnings calls, which is, while we are certainly focused on M&A and what we do with our cash, the ability to maximize shareholder value is our top priority. And first and foremost, we believe that doing that means, to create growth for the company. And that's where the focus of our strong balance sheet is currently. That said, assuming that that strategy is delayed and/or is not something that we're able to pursue in the short-to-medium-term, we definitely will look at other alternatives and other ways to use our balance sheet.

Thank you for your answer. I strongly encourage you to do that. And maybe there is a way to do both, because every day that passes you generate more cash, and maybe there is a way to acquire synergistic companies, but also provide an exit to people that don't really understand your business in a very accretive way for those that stand with you. Thank you.

Great. Thank you.

And at this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Sigrist for any closing remarks.

Thanks, Olivia. And thank you all for joining our call today and your interest in DoubleDown. We look forward to sharing future updates with you as we continue to innovate and grow within the global digital gaming industry. Have a great rest of your evening.

Ladies and gentlemen, thank you for joining us today for DoubleDown's earnings conference call. You may now disconnect.