• DoubleDown Interactive Reports First Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 10 May 2022 16:05:02   America/New_York

    SEATTLE, May 10, 2022 (GLOBE NEWSWIRE) -- DoubleDown Interactive (NASDAQ: DDI) (“DoubleDown” or the “Company”), a leading developer and publisher of digital social casino games, today reported its unaudited financial results for the first quarter ended March 31, 2022.

    First Quarter 2022 Summary vs. First Quarter 2021

    • Revenues decreased from $96.7 million in the first quarter of 2021 to $85.5 million in the first quarter of 2022.
    • Adjusted EBITDA decreased from $33.1 million for the first quarter of 2021 to $26.9 million for the first quarter of 2022, resulting in an Adjusted EBITDA margin of 31.5% for the first quarter of 2022, compared to an Adjusted EBITDA margin of 34.2% for the first quarter of 2021.
    • Net income decreased to $18.5 million, or $7.46 per common share on a fully diluted basis ($0.37 per American Depository Share (“ADS”)) in the first quarter of 2022, compared to net income of $19.4 million, or $8.77 per common share on a fully diluted basis ($0.44 per ADS) in the first quarter of 2021. Note each ADS represents 0.05 share of a common share.
    • Average Revenue Per Daily Active User (“ARPDAU”) slightly decreased from $0.99 in the first quarter of 2021 to $0.97 in the first quarter of 2022.
    • Average monthly revenue per payer increased from $212 in the first quarter of 2021 to $225 in the first quarter of 2022.
    • Payer conversion decreased from 5.7% in the first quarter of 2021 to 5.5% in the first quarter of 2022. Payer conversion represents the percentage of monthly active users that made at least one purchase in a month during the quarter.

    “Our business model remains resilient with a flexible cost structure as we generated $28 million in net cash flows provided by operations in the first quarter of 2022 and ended the quarter with a total of $268 million in cash and cash equivalents and short-term investments, providing us with a strong financial position,” said In Keuk Kim, Chief Executive Officer of DoubleDown. “Our Adjusted EBITDA grew sequentially in the first quarter of 2022 compared to the fourth quarter of 2021, as we intentionally scaled back our sales and marketing costs for 'Undead World: Hero Survival’ to optimize our monetization strategy for the title, which also contributed to lower revenue sequentially. Looking ahead, we plan to add enhancements to ‘Undead World: Hero Survival’ with a focus on improved monetization metrics, while also building towards the release of additional non-social casino titles and continuing to evaluate potential M&A opportunities.”

    Summary Operating Results for DoubleDown Interactive (Unaudited)

    Summary Operating Results for DoubleDown Interactive  
        
     Three Months Ended March 31,
      2022   2021 
    Revenue ($ MM)$85.5  $96.7 
    Total operating expenses ($ MM)$60.8  $71.0 
    Adjusted EBITDA ($ MM)$26.9  $33.1 
    Net income ($ MM)$18.5  $19.4 
    Net income margin 21.6%  20.1%
    Adjusted EBITDA margin 31.5%  34.2%
        
    Non-financial performance metrics   
    Average MAUs (000s) 2,309   2,647 
    Average DAUs (000s) 975   1,082 
    ARPDAU$0.97  $0.99 
    Average monthly revenue per payer$225  $212 
    Payer conversion 5.5%  5.7%

    First Quarter 2022 Financial Results

    Revenue in the first quarter of 2022 was $85.5 million, down 11.6% from the first quarter of 2021. The decrease was primarily due to the lifting of stay-at-home orders and other COVID-related restrictions in the first quarter of 2022 compared to the prior year.

    Operating expenses in the first quarter of 2022 were $60.8 million, down 14.4% from the first quarter of 2021. The decrease was primarily due to decreases in cost of revenues, sales and marketing expenses, and depreciation and amortization expenses.  

    Net income in the first quarter of 2022 decreased to $18.5 million, or $7.46 per common share ($0.37 per ADS) on a fully diluted basis, compared to net income of $19.4 million, or $8.77 per common share ($0.44 per ADS) on a fully diluted basis, in the first quarter of 2021. Note each ADS represents 0.05 share of a common share.

    Adjusted EBITDA in the first quarter of 2022 decreased to $26.9 million compared to $33.1 million in the first quarter of 2021. The decrease was primarily due to the decrease in revenue.

    Net cash flows provided by operating activities for the first quarter of 2022 was $28.4 million, compared to $22.0 million in the first quarter of 2021. The increase was primarily due to the decrease in accounts receivable.

    Conference Call

    DoubleDown will hold a conference call today (May 10, 2022) 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: 6589864

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

    A replay of the call will be available after 8:00pm Eastern Time through May 24, 2022 at 8:00pm Eastern Time.

    Toll-free replay number: 1-855-859-2056
    International replay number: 1-404-537-3406
    Conference ID: 6589864

    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 four line 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:

    DOUBLEDOWN DOWN INTERACTIVE
    RECONCILIATION OF NET INCOME ATTRIBUTABLE TO DOUBLEDOWN TO AEBITDA
    (Unaudited, in millions)
       
       
    Reconciliation of non-GAAP measuresThree Months Ended March 31,
    (in millions, except percentages) 2022   2021 
    Net income$18.5  $19.4 
    Income tax expense 6.0   6.7 
    Income before tax 24.5   26.1 
       
    Adjustments for:  
    Depreciation and amortization 2.2   7.5 
    Interest expense 0.5   0.5 
    Foreign currency transaction/remeasurement (gain) loss (1.9)  (0.3)
    Short-term investments (gain) loss 1.8   - 
    Other income (expense), net (0.2)  0.7 
    Adjusted EBITDA$26.9  $33.1 
    Adjusted EBITDA margin 31.5%  34.2%
       

    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 Co., Ltd.  
    Condensed Consolidated Balance Sheets  
    (In thousands of U.S. dollars, except share and per share amounts) (unaudited) 
       
     March 31, December 31,
      2022  2021
    Assets  
    Current assets:  
    Cash and cash equivalents$174,915 $242,060
    Short-term investments 93,290  -
    Accounts receivable, net 20,863  21,875
    Prepaid expenses, and other assets 3,447  6,817
    Total current assets 292,515  270,752
    Property and equipment, net 408  384
    Operating lease right-of-use assets, net 6,078  6,830
    Intangible assets, net 51,511  53,679
    Goodwill 633,965  633,965
    Deferred tax asset 2,184  2,616
    Other non-current assets 1,528  1,582
    Total assets$988,189 $969,808
       
    Liabilities and Shareholders' Equity  
    Accounts payable and accrued expenses$13,584 $14,752
    Short-term operating lease liabilities 3,089  3,076
    Income taxes payable 1,739  -
    Contract liabilities 1,573  2,246
    Other current liabilities 683  730
    Total current liabilities 20,668  20,804
    Long-term borrowings with related party 41,295  42,176
    Long-term operating lease liabilities 3,855  4,688
    Deferred tax liabilities, net 30,880  28,309
    Other non-current liabilities 11,090  9,953
    Total liabilities 107,788  105,930
    Shareholders' equity  
    Common stock, KRW 10,000 par value - 200,000,000 Shares authorized; 
    2,477,672 issued and outstanding 21,198  21,198
    Additional paid-in-capital 671,831  671,831
    Accumulated other comprehensive income 21,061  23,033
    Retained earnings 166,311  147,816
    Total shareholders' equity 880,401  863,878
    Total liabilities and shareholders' equity$988,189 $969,808
       


    DoubleDown Interactive Co., Ltd.  
    Condensed Consolidated Statement of Income and Comprehensive Income
    (In thousands of U.S. dollars, except share and per share amounts) (unaudited) 
      
     Three Months Ended March 31,
      2022   2021 
    Revenue$85,486  $96,667 
    Operating expenses:  
    Cost of revenue(1) 28,848   33,848 
    Sales and marketing(1) 19,791   19,728 
    Research and development(1) 4,680   5,691 
    General and administrative(1) 5,270   4,304 
    Depreciation and amortization 2,212   7,476 
    Total operating expenses 60,801   71,047 
    Operating income 24,685   25,620 
    Other income (expense):  
    Interest expense (470)  (509)
    Interest income 208   51 
    Gain on foreign currency transactions 121   243 
    Gain (loss) on foreign currency remeasurement 1,769   45 
    Gain (loss) on short-term investments (1,761)  - 
    Other, net (35)  657 
    Total other income (expense), net (168)  487 
    Income before income tax 24,517   26,107 
    Income tax expense (6,022)  (6,691)
    Net income$18,495  $19,416 
    Other comprehensive income (expense):  
    Pension adjustments, net of tax (526)  (55)
    Gain (loss) on foreign currency translation (1,446)  1,329 
    Comprehensive income$16,523  $20,690 
       
    Earnings per share:  
    Basic$7.46  $8.77 
    Diluted$7.46  $8.77 
    Weighted average shares outstanding:  
    Basic 2,477,672   2,214,522 
    Diluted 2,477,672   2,214,522 
    (1) Excluding depreciation and amortization  
       

    DoubleDown Interactive Co., Ltd.
    Condensed Consolidated Statement of Cash Flows
    (Unaudited)

    DoubleDown Interactive Co., Ltd  
    Condensed Consolidated Statement of Cash Flows  
    (In thousands of U.S. dollars, except share and per share amounts) (unaudited) 
      
     Three months ended March 31,
      2022   2021 
    Cash flow from (used in) operating activities:  
    Net Income$18,495  $19,416 
    Adjustments to reconcile net income to net cash from operating activities: 
    Depreciation and amortization 2,212   7,476 
    (Gain)Loss on foreign currency remeasurement (1,769)  (45)
    (Gain)Loss on short-term investments 1,762   - 
    Deferred taxes 2,950   1,925 
    Working capital adjustments:  
    Accounts receivable (332)  (11,583)
    Prepaid expenses, other current and non-current assets 3,398   1,694 
    Accounts payable, accrued expenses and other payables (175)  (962)
    Contract liabilities (673)  (446)
    Income tax payable 1,739   3,777 
    Other current and non-current liabilities 775   780 
    Net cash flows from (used in) operating activities 28,382   22,032 
    Cash flow from (used in) investing activities:  
    Purchases of intangible assets (2)  - 
    Purchases of property and equipment (72)  (34)
    Purchases of short-term investments (98,971)  - 
    Sales of short-term investments 5,226   - 
    Net cash flows from (used in) investing activities (93,819)  (34)
    Cash flow from (used in) financing activities:  
    Net cash flows from (used in) financing activities: -   - 
    Net foreign exchange difference on cash and cash equivalents (1,708)  (750)
    Net increase (decrease) in cash and cash equivalents (67,145)  21,248 
    Cash and cash equivalents at beginning of period 242,060   63,188 
    Cash and cash equivalents at end of period$174,915  $84,436 

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