In what might be seen as a challenging year for gaming entities, DoubleDown Interactive has demonstrated resilience and strategic foresight, managing to overturn a potential downturn into a profitable fiscal year. Despite confronting a dip in revenue, the online gaming company has shown optimistic developments, which include a notable acquisition that has positioned it for future growth.
In a bold move that underscores DoubleDown’s commitment to expansion and diversification, the company finalized the acquisition of the online casino business SuprNation for $36.5 million in November. This strategic deal, which was first announced in January 2023, marks DoubleDown’s ambitious foray into real-money gaming—a significant leap from its traditional offerings.
Keuk Kim, the CEO of DoubleDown, has conveyed a palpable excitement about the recent acquisition, stating that the company is actively hunting for new opportunities. According to Kim, there is substantial work underway in key European igaming markets, including the UK and Sweden. The acquisition of SuprNation is not merely an expansion but a concerted effort to quickly scale the business and optimize cash flow in the foreseeable future.
“The acquisition marked our entrance into the European igaming market,” Kim highlighted. “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 a significant increase in marketing investment and capitalizing on DoubleDown’s extensive experience in marketing and product development to bolster SuprNation’s presence in the critical UK and Sweden markets.
The financial outcomes for 2023 do reflect the turbulence that the gaming industry has faced. DoubleDown’s revenue dipped by 3.8% from $321.0m in the prior year to $304.6 million. This figure includes revenue from SuprNation for the 61 days since the acquisition. Notwithstanding this decline, which is attributed to changing player behavior amid inflation and a shifting global economy, DoubleDown managed to register a net profit.
There was also a noticeable change in the number of monthly active users (MAUs) that fell by 22.1% to 2.2 million, and daily active users (DAUs) decreased by 16.0% to 772,000. However, revenue per player increased by 7.0% to $245, indicating a higher spending per user.
In contrast to the decline in revenue, DoubleDown’s cost management was particularly effective. Operating expenses for 2023 dropped dramatically to $190.7 million, which is a 70.0% decrease from the previous year. This is mainly due to the absence of impairment costs and loss contingencies that were present in the past year.
The company also enjoyed $13.0 million in net additional income, primarily from interest earnings—leading to a pre-tax profit of $131.1 million, in stark contrast to the substantial $305.2 million loss reported in the previous fiscal year. After accounting for tax payments of $30.7 million, along with minor adjustments for pensions and foreign currency translations, DoubleDown announced a net profit of $101.1 million, a striking recovery from the $237.7 million loss in the preceding year.
Additionally, DoubleDown’s adjusted EBITDA saw a significant boost of 17.0% reaching, $118.9 million, with an impressive margin of 38.5%.
Quarterly results mirrored the annual performance. The final quarter displayed a 9.1% rise in revenue to $83.1 million, credited to increased engagement from existing players. Operating costs during the quarter saw an 85.2% decrease to $47.5 million, due to the lack of prior year’s impairment costs, and led to a pre-tax profit of $34.1 million.
The trend was positive across the board, with Q4 showing a net profit of $29.4 million and adjusted EBITDA surging by 46.6% to $36.2 million, corresponding to a 43.5% margin.
CEO Keuk Kim expressed pride in the company’s capital efficiency and strong adjusted EBITDA margins, as well as its capacity to generate free cash flow. Kim emphasized that DoubleDown’s robust net cash position and consistent free cash flow generation provide the flexibility needed to evaluate and deploy capital in ways that expand the business and create shareholder value.
In essence, despite revenue challenges, DoubleDown’s strategic acquisitions and disciplined focus on cost management have allowed it to emerge from 2023 not just unscathed, but profitable—an indicator of strength and adaptability in an unpredictable market.
