DoubleDown slips to loss after Benson settlement and impairment costs

DoubleDown Interactive posted a net loss of $237.7m for its 2022 financial year following one-off charges related to a legal settlement in Washington and impairment of goodwill.

In August, DoubleDown and former parent company International Game Technology (IGT) reached an agreement in principle to pay $415.0m to settle a class action complaint in Washington state.

The Benson v DoubleDown Interactive LLC et al lawsuit was filed in 2018, with plaintiffs who had lost money through the Washington-based group’s games claiming its range of social casino products that use virtual chips constitute illegal gambling enterprises under state law.

IGT and DoubleDown, which it sold to DoubleU Diamond in June 2017, agreed to settle the lawsuit, with IGT to contribute $269.8m and DoubleDown $145.25m, the latter of which was accounted for in DoubleDown’s full-year results.

DoubleDown also noted almost $270.0m worth of one-off impairment of goodwill costs, which widened net loss for the year.

However, chief executive Keuk Kim was optimistic about the wider performance of the group in 2022, highlighting the recent agreement to acquire SuprNation and expand into real-money gaming in particular.

“Our full-year 2022 revenue of $321.0m represents growth of over 17% compared to full-year 2019, the most recent comparable period prior to the Covid-10 pandemic, which we believe illustrates the stickiness of the customer base we have retained over the past several years,” Kim said.

“While global inflationary pressures and recession concerns may be moderately impacting discretionary spending broadly, we believe our compelling gaming options and player loyalty provide us with an advantageous position to remain a leading gaming company.

“Looking ahead, we are excited about the potential of our recently announced acquisition of SuprNation, which allows us to enter the igaming market and expand our international presence, particularly in the regulated markets of Europe.

“We expect to close this transaction in the coming months and quickly initiate projects to capture synergy opportunities once the transaction is closed.”

Revenue was 11.6% lower year-on-year at $321.0m, down from $363.2m in 2021, which the operator put down to further normalization of player activities after the lifting of stay-at-home orders and other pandemic-related restrictions compared to the prior year, as well as changes in player behaviors relating to inflation and global economic concerns in 2022.

Operating expenses were 140.0% higher at $634.9m, primarily due to the $145.25m legal settlement cost and a further $269.9m related to the impairment of goodwill. Costs were reduced year-on-year in other areas of the business including sales and marketing and cost of revenue.

DoubleDown noted $8.7m worth of financial income for the year, but posted a pre-tax loss of $305.2m, compared to a $100.6m profit in the previous year.

The operator received a tax benefit of $71.2m, but after also accounting for a $3.5m loss on foreign currency translation, this left a net loss of $237.7m for the year, in contrast to the $78.3m net profit posted in 2021.

“We continue to plan for new organic gaming additions, most near-term with Spinning in Space, which recently began its soft launch period,” Kim said. “We also plan for additional launches of new games in 2023.

“Further, we remain in a strong cash position of over $150.0m, including cash, cash equivalents and short-term investments, net of debt and the accrual on our balance sheet associated with our Benson class action settlement, at the end of 2022.”

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