David Bain

David Bain asked for a bifurcation of DoubleDown Casino and WHOW Games' revenue contribution and growth, specifically inquiring about the direct-to-consumer (DTC) mix for both entities. He also sought an update on DoubleDown's adoption of AI and automation, and an assessment of the broader promotional landscape in the social casino sector.

Answer

Joseph Sigrist (CFO) stated that while specific quantification of WHOW Games versus traditional DoubleDown social casino business would not be formally reported going forward, both segments performed well in a mature market. He confirmed WHOW Games' naturally high DTC component due to its web-based history but highlighted the significant increase in DTC revenue from the traditional DoubleDown Casino, which was the largest contributor to overall DTC growth. In Keuk Kim (CEO) detailed DoubleDown's AI integration, noting its role in accelerating content production, personalizing player experiences in live operations, and optimizing marketing for stronger ROI. Joseph Sigrist added that the industry's promotional landscape has shifted towards efficiency and disciplined player acquisition spending, with AI being a key enabler.

David Bain followed up by asking for an update on DoubleDown and WHOW's use of AI and automation, and whether the broader promotional landscape in the social casino sector is rational, elevated, or benign, considering industry trends like Aristocrat's divestitures.

Answer

CFO Joseph Sigrist discussed the social casino business's focus on efficiency and disciplined player acquisition spending. CEO In Keuk Kim detailed AI's role in accelerating content production, personalizing player experience in live operations, and optimizing marketing for stronger ROI. Joseph Sigrist added that while the pressure on marketing costs from sweepstakes growth has lessened, acquisition costs generally do not decrease.

David Bain from B. Riley Securities asked about the M&A process for Wow Games, questioning if it was opportunistic and how it impacts future M&A strategy. He also inquired about any observed player shifts from regulatory actions against sweepstakes casinos and the parent company's capital return policy.

Answer

CFO Joseph Sigrist characterized the Wow Games acquisition as an opportunistic move that leverages their core strengths without altering their broader M&A search criteria or timeline. He stated there has been no quantifiable positive impact from regulatory actions against sweepstakes competitors and declined to comment on the capital return activities of their parent company, W.

David Bain of B. Riley Securities inquired about the company's direct-to-consumer (D2C) strategy, its impact on cost of revenue, the current D2C revenue mix, and how the company mitigates player friction while pursuing this initiative.

Answer

CFO Joseph A. Sigrist confirmed that D2C efforts are a key strategic focus and have contributed to improved gross margins. He emphasized that the company is proceeding cautiously to avoid creating player friction, given their high-value player base, and is prioritizing a smooth transition over speed to avoid negatively impacting revenue.

David Bain of B. Riley Securities asked about the typical recovery time from past Google algorithm changes and for key performance indicators (KPIs) to better understand the growth in the OddsJam and OpticOdds businesses.

Answer

Co-Founder and CEO Charles Gillespie estimated a typical recovery from Google updates takes one to three months. For the data businesses, he explained that OddsJam (B2C) growth is driven by a meaningful increase in average revenue per user, while OpticOdds (B2B) is signing new clients and increasing revenue per client. He also noted the broad customer base for OpticOdds, which extends beyond just operators.

David Bain from B. Riley Securities inquired about the 2025 outlook, noting that consensus estimates seem low given numerous growth drivers like the William Hill contract, Interactive growth, and Hybrid Dealer. He also asked about the company's capital allocation priorities between M&A and potential share repurchases.

Answer

Executive A. Weil acknowledged the positive catalysts but stated that while the company is comfortable with the current 2025 consensus, he would not provide more explicit guidance at this time. Regarding capital allocation, Weil explained that potential acquisitions could be debt-financed, meaning M&A and share buybacks are not necessarily in conflict with one another.

David Bain from B. Riley Securities sought clarification on the drivers behind the expected Q4 margin stability, asked about the impact of comparing against last year's F1 and Super Bowl events, and later followed up on potential tavern expansion outside Nevada.

Answer

Charles Protell, President and CFO, explained that most assets are expected to see stabilization in revenues and costs, with the STRAT being the main exception due to its new culinary union contract. Blake Sartini, Founder, Chairman and CEO, noted that the company is better positioned for F1 this year from a cost perspective but acknowledged the Super Bowl presents a tough Q1 comp. On tavern expansion, Sartini confirmed it is a potential opportunity and that there is a path for the company to operate brick-and-mortar taverns in other states, though nothing is imminent.

David Bain asked for insights into the expected margin ramp for the Chamonix property in 2025 and questioned the effectiveness of recent marketing initiatives, seeking details on repeat business from new players.

Answer

Executive Daniel Lee explained that Chamonix's revenue has significant room to grow against a relatively fixed cost base, which should drive margin expansion over the next 2-3 years, comparing its potential to half of Monarch's performance. He detailed the trial-and-error process of direct mail campaigns and the hiring of a new VP of Advertising to optimize future spend. Executive Lewis Fanger added that new room product and local events should help mitigate historical winter seasonality, and noted that customer reaction and repeat visitation trends are strong.

Questioned if the termination of the stock repurchase program signals confidence in the merger's closure and asked if there have been discussions with IGT systems customers about accelerating cashless adoption post-merger.

Answer

The repurchase program was terminated not to signal confidence but to preserve cash for a potential special dividend to shareholders, a priority over buybacks. While they believe the merger creates opportunities for smoother cashless integration with IGT systems, they have not had specific discussions with customers yet as they must operate independently pre-close.