• DoubleDown Interactive Reports Third Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 10 Nov 2021 15:05:03   America/Chicago

    SEATTLE, Nov. 10, 2021 (GLOBE NEWSWIRE) -- DoubleDown Interactive (NASDAQ: DDI) (“DoubleDown” or the “Company”), a leading developer and publisher of digital social casino games, today reported its financial results for the third quarter ended September 30, 2021.

    Third Quarter 2021 Highlights vs. Third Quarter 2020

    • Revenues decreased 6% to $87.0 million.
    • Adjusted EBITDA increased 4% to $30.2 million. Adjusted EBITDA margin of 34.7% improved by approximately 330 basis points.
    • Net income increased to $22.8 million, or $9.91 per common share on a fully diluted basis ($0.50 on an ADS basis), compared to net income of $8.3 million, or $3.75 per common share on a fully diluted basis ($0.19 on an ADS basis). Note each ADS represents 0.05 of a common share.
    • Average Revenue Per Daily Active User (“ARPDAU”) increased 12% to $0.96.
    • Average monthly revenue per payer increased 14% to $224.
    • Payer conversion of 5.7%, compared to 5.4%. Payer conversion represents the percentage of monthly active users that made at least one purchase in a month during the respective quarters.

    “We are pleased with the results from our first quarter as a public company, including year-over-year Adjusted EBITDA growth, another record for average monthly revenue per payer, and the recent release of our first non-social casino gaming app, ‘Undead World: Hero Survival’,” said In Keuk Kim, Chief Executive Officer of DoubleDown. “We generated $33.7 million in net cash flows provided by operations and ended the quarter with a cash and cash equivalents balance of $223.1 million, providing us with a strong financial position. Looking ahead, we will continue to focus on growing our paying customer base with an emphasis on optimizing our monetization metrics.”

    Initial Public Offering

    On September 2, 2021, DoubleDown closed its initial public offering (the “IPO”) of 6,316,000 American Depositary Shares (“ADS”), each representing 0.05 of a common share, at a price of $18.00 per ADS. DoubleDown sold 5,263,000 ADSs and STIC Special Situation Diamond Limited sold 1,053,000 ADSs in the IPO. DoubleDown received net proceeds of $86.5 million after deducting underwriting discounts and commissions and the offering expenses from the IPO.

    Summary Operating Results for DoubleDown Interactive

     Three Months Ended September 30,
      2021  2020
        
        
    Revenue ($ MM)$87.0  $92.2 
    Total operating expenses ($ MM)$59.2  $71.3 
    Adjusted EBITDA ($ MM)$30.2  $28.9 
    Net income ($ MM)$22.8  $8.3 
    Net income margin 26.2%  9.0%
    Adjusted EBITDA margin 34.7%  31.4%
        
    Non-financial performance metrics   
    Average MAUs (000s) 2,255   2,894 
    Average DAUs (000s) 986   1,169 
    ARPDAU$0.96  $0.86 
    Average monthly revenue per payer$224  $196 
    Payer conversion 5.7%  5.4%

    Third Quarter 2021 Financial Results

    Revenue in the third quarter was $87.0 million, down 5.6% from the same year-ago quarter mainly due to the easing of stay-at-home initiatives compared to the height of COVID-19 prevention measures in the prior year.

    Operating expenses in the third quarter were $59.2 million, down 16.9% from the same year-ago quarter. The decrease was primarily due to decreases in sales & marketing costs and depreciation & amortization expenses from the same quarter in 2020.  

    Net income in the third quarter increased to $22.8 million, or $9.91 per common share on a fully diluted basis ($0.50 on an ADS basis), compared to net income of $8.3 million, or $3.75 per common share on a fully diluted basis ($0.19 on an ADS basis), in the same year-ago quarter. Note each ADS represents 0.05 of a common share.

    Adjusted EBITDA in the third quarter increased to $30.2 million compared to $28.9 million in the same year-ago quarter.

    Net cash flows provided by operating activities for the three months ended September 30, 2021 was $33.7 million compared to $22.7 million in the same year-ago quarter.

    Conference Call

    DoubleDown will hold a conference call today (November 10, 2021) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss these results. A question-and-answer session will follow management's presentation.

    To participate, please dial the number below at least five minutes prior to the start time and ask for the DoubleDown Interactive conference call.

    U.S. dial-in number: 1-888-705-0418
    International number: 1-929-517-9007
    Conference ID: 2667354

    The conference call will broadcast live and be available for replay here or at the below dial in.

    Toll-free replay number: 1-855-859-2056
    International replay number: 1-404-537-3406
    Conference ID: 2667354
    A replay of the call will be available after 8:00 p.m. Eastern Time through December 10, 2021 at 8:00 p.m. Eastern Time.

    About DoubleDown Interactive

    DoubleDown Interactive, Co. Ltd. is a leading developer and publisher of digital games on mobile and web-based platforms. We are the creators of multi-format interactive entertainment experiences for casual players, bringing authentic Vegas entertainment to players around the world through an online social casino experience. Our flagship title, DoubleDown Casino, has been a fan-favorite game on leading social and mobile platforms for years, entertaining millions of players worldwide with a lineup of classic and modern games.

    Safe Harbor Statement

    Certain statements contained in this press release are “forward-looking statements” about future events and expectations for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our beliefs, assumptions, and expectations of industry trends, our future financial and operating performance, and our growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Therefore, you should not place undue reliance on such statements. Words such as “anticipates,” believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” potential,” “near-term,” long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will,” and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors. We assume no obligation to update or revise any forward-looking statements for any reason or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

    Use and Reconciliation of Non-GAAP Financial Measures

    In addition to our results determined in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), we believe the following non-GAAP financial measure is useful in evaluating our operating performance. We present “adjusted earnings before interest, taxes, depreciation and amortization” (“Adjusted EBITDA”) because we believe it assists investors and analysts by facilitating comparison of period-to-period operational performance on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. The items excluded from the Adjusted EBITDA may have a material impact on our financial results. Certain of those items are non-recurring, while others are non-cash in nature. Accordingly, the Adjusted EBITDA is presented as supplemental disclosure and should not be considered in isolation of, as a substitute for, or superior to, the financial information prepared in accordance with GAAP, and should be read in conjunction with the financial statements furnished in our Form 6-K to be filed with the SEC.

    In our reconciliation from our reported GAAP “net income before provision for taxes” to our Adjusted EBITDA, we eliminate the impact of the following fourline items: (i) remeasurement gains; (ii) acquisition expenses; (iii) amortization expenses related to intangible assets acquired; and (iv) depreciation expense. The below table sets forth the full reconciliation of our non-GAAP measures:

     Three Months EndedNine Months Ended
    Reconciliation of non-GAAP measuresSeptember 30,September 30,
    (in millions, except percentages) 2021 2020 2021 2020
    Net income$22.8 $8.3 $60.7 $38.2 
    Income tax expense 7.2  5.8  16.7  16.5 
    Income before tax 30.0  14.1  77.4  54.7 
         
    Adjustments for:    
    Depreciation and amortization 2.4  8.0  15.7  23.9 
    Loss contingency -  -  3.5  - 
    Interest expense 0.5  0.7  1.5  10.1 
    Foreign currency transaction/remeasurement (gain) loss (0.8) 0.7  (1.4) (3.4)
    Other income (expense), net 1.9  (5.4) 2.4  (5.1)
    Adjusted EBITDA$30.2 $28.9 $94.3 $90.4 
    Adjusted EBITDA margin 34.7% 31.4% 34.0% 33.9%

    We encourage investors and others to review our financial information in its entirety and not to rely on any single financial measure.

    Company Contact:
    Joe Sigrist
    ir@doubledown.com
    +1 (206) 773-2266
    Chief Financial Officer
    https://www.doubledowninteractive.com

    Investor Relations Contact:
    Cody Slach or Jeff Grampp, CFA
    Gateway Group
    1-949-574-3860
    DDI@gatewayir.com


    DoubleDown Interactive
    Condensed Balance Sheets

     September 30, 2021December 31, 2020
    Assets  
    Current assets:  
    Cash and cash equivalents$223,062 $63,188 
    Accounts receivable, net 20,247  23,299 
    Prepaid expenses, and other assets 11,013  4,020 
    Total current assets 254,322  90,507 
    Property and equipment, net 342  377 
    Operating lease right-of-use assets, net 7,644  9,987 
    Intangible assets, net 55,801  71,364 
    Goodwill 633,965  633,965 
    Deferred tax asset 2,724  560 
    Other non-current assets 72  71 
    Total assets$954,870 $806,831 
       
    Liabilities and Shareholders’ Equity  
    Accounts payable and accrued expenses$14,090 $16,646 
    Short-term operating lease liabilities 3,036  3,033 
    Income taxes payable 375  2,838 
    Contract liabilities 1,546  2,415 
    Other current liabilities 2702  717 
    Total current liabilities 21,749  25,649 
    Long-term borrowings with related party 42,198  45,956 
    Long-term operating lease liabilities 5,410  7,831 
    Deferred tax liabilities, net 25,993  20,154 
    Other non-current liabilities 12,592  7,730 
    Total liabilities 107,942  107,320 
    Shareholders’ equity  
    Common stock 21,198  18,924 
    Additional paid-in-capital 672,242  588,064 
    Accumulated other comprehensive income 23,109  22,815 
    Retained earnings 130,379  69,708 
    Total shareholders’ equity 846,928  699,511 
    Total liabilities and shareholders’ equity$954,870 $806,831 


    DoubleDown Interactive
    Condensed Statement of Operations
    (Unaudited)

     Three Months EndedNine Months Ended
     September 30,September 30,
      2021 2020 2021 2020
    Revenue$87,007 $92,166 $276,902 $267,305 
    Operating expenses:    
    Cost of revenue(1) 30,485  32,648  96,823  94,345 
    Sales and marketing(1) 17,161  20,905  56,913  53,688 
    Research and development(1) 4,537  4,635  14,635  13,847 
    General and administrative(1) 4,674  5,103  17,684  14,983 
    Depreciation and amortization 2,359  7,978  15,704  23,938 
    Total operating expenses 59,216  71,269  201,759  200,801 
    Operating income 27,791  20,897  75,143  66,504 
    Other income (expense):    
    Interest expense (500) (719) (1,521) (10,142)
    Interest income 25  18  108  189 
    Gain on foreign currency transactions 634  558  1,040  3,167 
    Gain (loss) on foreign currency remeasurement of intercompany items 215  (1,251) 353  233 
    Other, net 1,853  (5,437) 2,261  (5,262)
    Total other expense, net 2,227  (6,831) 2,241  (11,815)
    Income before income tax 30,018  14,066  77,384  54,689 
    Income tax expense (7,185) (5,768) (16,713) (16,539)
    Net income$22,833 $8,298 $60,671 $38,150 
    Other comprehensive income (expense):    
    Pension adjustments, net of tax (81) (20) (121) (211)
    Gain on foreign currency translation (800) (657) 415  15,869 
    Comprehensive income$21,952 $7,621 $60,965 $53,808 
         
    Earnings per share:    
    Basic$9.91 $3.75 $27.03 $22.83 
    Diluted$9.91 $3.75 $27.03 $17.30 
    Weighted average shares outstanding:    
    Basic 2,303,192  2,214,522  2,244,404  1,670,715 
    Diluted 2,303,192  2,214,522  2,244,404  2,360,310 
    (1) Excluding depreciation and amortization    


    DoubleDown Interactive
    Condensed Statement of Cash Flows
    (Unaudited)

     Nine months ended Nine months ended
     September 30,September 30,
      2021 2020
    Cash flow from operating activities:  
    Net Income$60,671 $38,150 
    Adjustments to reconcile net income to net cash from operating activities:  
    Depreciation and amortization 15,704  23,938 
    Gain(Loss) on foreign currency remeasurement of intercompany item (353) (233)
    Deferred taxes 3,524  4,477 
    Non-cash interest expense -  5,015 
    Working capital adjustments:  
    Accounts receivable 2,006  (12,443)
    Prepaid expenses, other current and non-current assets (2,628) (487)
    Accounts payable, accrued expenses and other payables (795) 5,170 
    Contract liabilities (868) (187)
    Income tax payable (7,035) 1,232 
    Other current and non-current liabilities 7,359  (851)
    Net cash flows provided by operating activities 77,584  63,781 
    Cash flow from (used in) investing activities:  
    Acquisition of Double8 Games Co., Ltd. -  (1,952)
    Acquisition of property, plant and equipments (116) 
    Acquisition of intangible assets (12) - 
    Purchases of intangible assets -  (5)
    Purchases of property and equipment -  (194)
    Disposals of property and equipment 3  - 
    Net cash flows from (used in) investing activities (125) (2,151)
    Cash flows from (used in) financing activities:  
    Repayments of long-term borrowings with related party -  (41,641)
    Isssuance of new shares-IPO 86,452  
    Repayments of short-term senior note -  (33,313)
    Net cash flows used in financing activities 86,452  (74,954)
    Net foreign exchange difference on cash and cash equivalents (4,035) (3,082)
    Net increase (decrease) in cash and cash equivalents 159,875  (16,406)
    Cash and cash equivalents at beginning of period 63,188  42,418 
    Cash and cash equivalents at end of period$223,062 $26,012 
       


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