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DoubleDown eyes high-growth opportunities to build on Q3 success

| By Robert Fletcher
DoubleDown Interactive says it plans to use its recent acquisition of SuprNation to build on its success in Q2 and pursue “high-growth” opportunities in markets around the world.
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While revenue was down 7.4% to $73.0m (£59.4m/€68.2m) during the three months to 30 September, lower costs at DoubleDown led to a net profit. Q2 last year saw the social games developer post a net loss, whereas this year it was in the black and also reported higher earnings.  

The headline revenue figure may have been down, but other figures suggest growth within the DoubleDown business. Both average revenue per daily active user and average monthly revenue per payer increased year-on-year.

Then there is the acquisition of SuprNation, which completed after the end of Q2. This deal, CEO In Keuk Kim says, will allow DoubleDown to expand into high-growth gaming categories, creating more value for shareholders.

“We are excited to have completed the SuprNation acquisition as it marks our entrance into the European igaming market,” Kim said. “We believe this is a high-growth gaming category that is complementary to our core operations. 

“We are confident we can leverage our game development expertise and marketing platform to profitably scale SuprNation. 

“With this acquisition completed, we are continuing to evaluate opportunities to deploy capital to further expand our business into high-growth gaming categories with attractive addressable markets to create new value for our shareholders.”

Inflation and economic concerns hit revenue in Q3

As to why revenue declined in Q3, DoubleDown highlighted changes in player behaviour due to inflation and global economic concerns. It also noted the impact of its reduced marketing activities to attract a higher user base.

However, in terms of player statistics, DoubleDown reported growth. Average revenue per daily active user (ARPDAU) increased from $0.96 to $1.06. Average monthly revenue per payer was also 10.2% higher at $245.

On the flip side, monthly active users fell 26.1% to 1.8 million and daily active users slipped 17.4% to 749,000.

DoubleDown also noted a payer conversion rate of 5.9% in Q3, compared to 5.2% in the previous year.

Lower costs lead to net profit at DoubleDown

Turning to spending, operating costs were significantly lower at $43.3m during Q3. This was down 65.1%, mainly because last year’s figures including costs related to the Washington class action case

DoubleDown also reported $2.7m in net interest expenses. This left a pre-tax profit for Q3 of $34.7m, in contrast to last year’s $28.9m loss.

The developer paid $7.8m in tax and also reported a negative foreign currency transaction impact of $2.3m. This meant it ended Q3 with a net profit of $26.9m, compared to a $24.0m loss in 2022. 

In addition, adjusted EBITDA increased 18.8% year-on-year to $29.7m in Q3.

Year-to-date: DoubleDown in the black despite revenue dip

Looking at the nine-month period to 30 September, group revenue at DoubleDown was 7.8% lower at $225.8m. However, this was coupled with a 54.2% drop in operating expenses to $143.5m.

After including $9.2m in net interest costs, pre-tax profit for the period hit $97.1m, in stark contrast to the $50.5m loss posted at the same point last year.

Tax payments totalled $22.1m and there was also a negative foreign currency transaction of $5.4m. This left DoubleDown with a net profit of $75.0m, a significant improvement on the $39.6m loss in 2022.

DoubleDown also noted an increase in adjusted EBITDA, which was 7.7% higher at $82.8m.

“We generated solid Q3 results including a nearly 19% year-over-year increase in adjusted EBITDA to $29.7m,” Kim said. “Payer engagement remains strong, in particular for our flagship social casino game DoubleDown Casino, as ARPDAU and average monthly revenue per payer rose 10% and 9%, respectively, compared to the third quarter of 2022. 

“Our business model and prudent management of operating expenses continues to deliver strong adjusted EBITDA margins which, through the first nine months of 2023, is up 530 basis points compared to the same period in 2022.”

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