DoubleDown overcomes revenue dip to post net profit in 2023
The decline in revenue will be of some disappointment for DoubleDown. However, other developments in 2023, including its recent acquisition of SuprNation, place it in a good position moving forward.
DoubleDown completed its acquisition of online casino business SuprNation for $36.5m in November. The deal, announced in January 2023, marks the expansion of DoubleDown into real-money gaming.
Keuk Kim, CEO of DoubleDown, says the business is already utilising the acquisition to seek out new opportunities. Kim says work is ongoing in key European igaming markets such as the UK and Sweden.
“The acquisition marked our entrance into the European igaming market,” Kim said. “We are moving quickly on a range of initiatives to scale the business which will be our initial focus before we turn to optimising the cash flow generated by this business.
“These initiatives include increasing marketing investment and leveraging our legacy of marketing and product expertise to grow SuprNation’s market share in its core UK and Sweden markets.”
Changing behaviour hits revenue at DoubleDown
Taking a closer look at the 2023 results, revenue fell 3.8% from $321.0m in the previous year. Full-year revenue included the 61 days SuprNation was operating as part of DoubleDown. Without this, revenue for the year amounted to $304.6m.
DoubleDown put the decline down to changes in player behaviour relating to inflation and the global economy. It also noted the impact of the normalisation of player activities after the lifting of Covid-19 restrictions around the world.
This was reflected in average monthly active users (MAUs), which fell 22.1% to 2.2 million, while average daily active users (DAUs) also dropped 16.0% to 772,000. However, average monthly revenue per player was up 7.0% to $245.
Lower spending helps net profit recover
Turning to costs, operating expenses were significantly lower. Total operating spend for the year was $190.7m, down 70.0%. This was due to the fact that 2023 included $269.9m worth of impairment costs and $14.8m in loss contingency, whereas this year, no such charges were noted.
DoubleDown also benefitted from $13.0m in net additional income, primarily from interest. As such, pre-tax profit stood at $131.1m, in contrast to the $305.2m loss reported in 2022.
The business paid $30.7m in tax, while also accounting for $597,000 in costs from pension adjustments and $1.2m in foreign currency translation gain. This left a €101.1m net profit, compared to the previous year’s $237.7m loss.
In addition, adjusted EBITDA jumped 17.0% to $118.9m, with a margin of 38.5%.
DoubleDown ends 2023 on a high with positive Q4
As for the final quarter of 2023, Q4 results made for similar reading. Revenue was 9.1% up to $83.1m, driven by increased engagement of the existing player base.
Operating costs plummeted by 85.2% to $47.5m, due to the lack of impairment costs. An additional $1.5m financial spend was noted, leaving a pre-tax profit of $34.1m, compared to a $254.7m loss in 2022.
DoubleDown paid $8.6m and reported $441,000 in pension-related costs, although foreign currency translation gain for Q4 hit €4.4m. This resulted in a net profit of $29.4m, in contrast to a $186.8m loss in the previous year.
As for adjusted EBITDA, this jumped 46.6% to $36.2m, with a margin of 43.5%.
“We place a primary focus on being capital efficient as reflected in our strong adjusted EBITDA margins and free cash flow generation,” Kim says.
“Our strong net cash position and consistent ability to generate attractive free cash flow provides the company with significant flexibility to evaluate further opportunities to deploy capital that would continue to expand our business in gaming categories with attractive addressable markets and where our operating discipline would ultimately deliver additional free cash flow and create new value for our shareholders.”