Revenue for DoubleDown was down 9.4% year-on-year from $87m to $78.8m compared to Q3 2021. Quarter-on-quarter, revenue was down by 2.2% from $80.6m.
Operating costs meanwhile increased 109.6% from $59.2m in Q3 2021 to $124.1m. This is primarily the result of a $70.3m settlement the business paid for a Washington class-action complaint.
DoubleDown, which was formally an IGT subsidiary, paid the settlement as part of the conclusion to the wider $415m lawsuit that involved its former parent company. IGT itself also paid out a large settlement. The case was regarding the offering of social casino with purchasable chips in Washington state in violation of local laws.
The company says that while the case is resolved in principal, it is still awaiting final court approval. If this is forthcoming, then the charge will not appear on the business’ books in future.
When removing this one-time charge, operating expenses fell 9% to $53.9m from $59.2m. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 22.4% from $30.2 to $25m. The business made a loss of $24m, compared to a $22.8m net income in Q3 2021.
“DoubleDown generated solid results in the third quarter of 2022, with another quarter of positive free cash flow and adjusted EBITDA margin being above 30%, demonstrating the stickiness of our customer base and long-term engagement by our players,” said DoubleDown CEO In Keuk Kim. “Revenue in the third quarter of 2022 was 14% higher than the third quarter of 2019, the most recent comparable period prior to the Covid-19 pandemic, which we believe validates our success in capturing and retaining growth in our customer base and player spending over the past few years.”
DoubleDown looking forward
Kim outlined the company’s development strategy in the short to medium term.
“Looking ahead, we plan to launch our newest title, Spinning in Space, before year-end, while simultaneously developing additional new titles for 2023 and innovating our flagship DoubleDown Casino title as we look to grow our business,” he said.
Additionally, without future charges from the Washington case on the company’s books Kim stated that the company was in a relatively strong position to seek potential M&A targets.
“We will also continue to evaluate potential strategic M&A transactions that may offer opportunities to leverage our core capabilities and diversify our revenue stream. With $130 million of cash and equivalents, net of debt and Benson case accrual, we believe that we remain in a strong financial position.”
In the business’ earnings call company CFO Joe Sigrist stated that the M&A evaluation process continued, as the business attempts to use the opportunity to complement its long-term strategy of diversifying its revenue streams away from social products.
“We’ve gone through a process which continues, which we think is very thoughtful and complete in the sense of evaluating not only what sellers want and what their desires are – but also what we believe we can do with the business relative to synergy and what we can do in terms of augmenting our current strategy – especially around internal development of non-social apps. So, I wouldn’t say that things have changed, we’re continuing through a pretty rigorous process that’s thoughtful and that continues forward.”