Negative Points

• The global social casino market is projected to decline over 5% in 2026, creating a challenging environment for growth and requiring constant outperformance to maintain revenue levels.

• The iGaming business faced a significant headwind from the newly introduced higher UK gambling tax rate, which forced the company to reduce player acquisition spending and moderate sequential revenue growth in Q2 2026.

• Average monthly revenue per payer in Social Casino declined to $218 in Q2 2026 from $286 in Q2 2025, reflecting a shift in revenue mix due to WHOW Games and DTC, which may indicate lower spending per user.

• Operating expenses increased to $57.8 million in Q2 2026 from $52.4 million in Q2 2025, primarily due to the inclusion of WHOW Games expenses and higher costs associated with SuprNation's revenue growth.

• The company is in the midst of an ongoing evaluation of a nonbinding expression of interest from its controlling shareholder, DoubleU Games, to acquire all outstanding shares at $11.25 per ADS, creating uncertainty for unaffiliated shareholders.

• Sales and marketing expenses were reduced at SuprNation in response to the UK tax increase, which could limit future player acquisition and growth potential in the iGaming segment.

Q & A Highlights

Q: Can you break out the organic Social Casino growth if we strip out WHOW? Are you currently trending in line with the industry expectations (which project a decline of over 5% in 2026) or a little bit better? A: CFO Joe Sigrist stated that without quantifying it directly, the company is "really quite happy" with the first half of the year on the Social Casino side. Both the traditional DoubleDown business and the WHOW side have been able to "more than hold their own" relative to a declining market, performing incrementally better than the industry so far in the first half of the year.

Q: The direct-to-consumer (DTC) crossing the 50% threshold stood out. Is there a realistic ceiling in place, or what is your expectation for where that could wind up by year-end? A: CEO In Keuk Kim stated that the 50% DTC share is already an industry benchmark, but the company sees more room for further growth. The strategy is to migrate valued users step-by-step to their own platform while maintaining a healthy balance across mobile app stores. He emphasized they are "not just reducing fees, but deepening users' trust" through investments in owned channels, direct CRM, and payment infrastructure, expecting this focus to drive steady, incremental growth.

Q: Can you talk about how trends were post the UK tax increase as you layered on your mitigation? How should we be thinking about the trajectory of SuprNation going forward in terms of both revenues and profits? A: CFO Joe Sigrist explained that they are trying to balance revenue growth with profit and returns in light of the significant increase in the cost of doing business in the UK. After observing larger iGaming competitors over the past 4.5 months, they feel they have "struck a good balance between revenue and profit." They will continue to invest in acquiring players but will make appropriate product adjustments, such as RTP and bonus rates, to balance the revenue and profit equation.

Q: With regard to marketing, especially for SuprNation, do you expect to stay at these reduced marketing levels? Or do you see opportunities to increase that in the back half? A: CFO Joe Sigrist stated that marketing spend over the last two quarters has been "fairly constant" and expects that to be true for the rest of the year. He noted they make real-time adjustments based on ROIs from various markets, but believes the recent run rate is pretty much where they will be for the remainder of the year.

Q: Is there anything in particular that drove the quarter-over-quarter decline in iGaming? Could it be related to user acquisition costs or the UK tax changes? A: CFO Joe Sigrist clarified that Q2 was down very slightly, essentially flat from Q1. The company had to deal with a significant increase in the UK tax rate starting April 1, prompting product and marketing adjustments. They spent significantly less on player acquisition in Q2 to see how larger competitors dealt with the tax change, which moderated sequential revenue growth, but they were pleased with player retention and cost consciousness, mitigating the impact of the tax increase on the profit side.

Q: You had a nice year-over-year improvement in free cash flow in the first half. Should we see more of a headwind due to income tax timing in 2H? How should we think about free cash flow for the year? A: CFO Joe Sigrist explained that Q2 generally is when tax payments are due, so it is a form of seasonality. He noted that over the last few years, Q2 tends to be a "low watermark" for quarterly cash flow due to tax payment timing.

Q: As you saw in 2Q, the industry leader plans to curtail some spend in the back half in terms of promotions. Is that a sign that the industry is becoming more rational? And given the environment, could that be beneficial for you to lean into acquiring users? A: CFO Joe Sigrist stated that the company has been spending within a fairly narrow range on the Social Casino side for quite some time. He noted they saw better ROAS at the end of Q1 and leaned into it, but pulled back in Q2 as it mitigated. He emphasized the company prides itself on being "quite disciplined" in acquiring new players, using near real-time calculations of returns (3-, 7-, 21-day) to inform spending, and will continue to be judicious.

Q: Can you speak to any balancing act with D2C in revenue growth? We've seen some checks citing smaller operators outperforming larger ones. Is that some of that leaning into D2C by the bigger players? A: CFO Joe Sigrist stated that the dramatic growth in DTC is not on the back of just giving more benefits. The company is very sensitive to not wanting to overly inflate the economy or be too generous with offers and incentives. A lot of what they have done is to implement DTC well and reduce or nearly eliminate the friction of the alternative payment path. While there is some additional benefit to the payer, it has not negatively impacted revenue.

Q: I know you're not going to give any commentary on the reviews for the special committee, but is there anything you'd say about the timeline? Is there a potential resolution expected before the next earnings report? A: IR adviser Joseph Jaffoni reiterated that there is nothing to report regarding the work of the special committee on the DoubleU Games proposal. The special committee is working diligently, and the company is committed to communicating any and all progress when it is appropriate.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .