DoubleDown Interactive Co., Ltd 6-K, filed Feb 9, 2022
DoubleDown Interactive Co., Ltd. (DDI)
About this 6-K
DoubleDown Interactive Co., Ltd filed this 6-K on February 9, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2022
Commission File Number 001-39349
DoubleDown Interactive Co., Ltd.
(Exact name of registrant as specified in its charter)
Joseph A. Sigrist, Chief Financial Officer
c/o DoubleDown Interactive, LLC
605 5th Avenue, Suite 300
Seattle, WA 98104
+1-206-408-4545
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
☒ Form 20-F ☐ Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Issuance of Press Release; Financial Condition and Results of Operations
On February 8, 2022, DoubleDown Interactive Co., Ltd. (the “Company”) issued a press release (the “Press Release”) announcing its preliminary financial results for the fourth quarter and fiscal year ended December 31, 2021.
The Press Release is being furnished in this report on Form 6-K as Exhibit 99.1, pursuant to General Instruction B to the Form 6-K, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release of the Company, dated February 8, 2022 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DoubleDown Interactive Co., Ltd. | ||||||
| Date: February 9, 2022
|
By: | /s/ Joseph A. Sigrist | ||||
| Name: Joseph A. Sigrist | ||||||
| Title: Chief Financial Officer | ||||||
Exhibit 99.1
DoubleDown Interactive Reports Fourth Quarter and Full Year 2021 Results
SEATTLE, WASHINGTON – February 8, 2022 — DoubleDown Interactive Co., Ltd. (NASDAQ: DDI) (“DoubleDown” or the “Company”), a leading developer and publisher of digital social casino games, today reported its financial results for the fourth quarter and year ended December 31, 2021.
Fourth Quarter 2021 Summary vs. Fourth Quarter 2020
| • | Revenues decreased from $91.0 million for the fourth quarter of 2020 to $86.3 million for the fourth quarter of 2021. |
| • | Adjusted EBITDA decreased from $29.9 million for the fourth quarter of 2020 to $25.8 million for the fourth quarter of 2021, resulting in an Adjusted EBITDA margin of 29.9%. |
| • | Net income increased to $17.5 million for the fourth quarter of 2021, or $7.08 per common share on a fully diluted basis ($0.35 per ADS), compared to net income of $15.5 million, for the fourth quarter of 2020, or $6.99 per common share on a fully diluted basis ($0.35 per ADS). Note each American Depositary Share, or ADS, represents 0.05 of a common share of the Company. |
| • | Average Revenue Per Daily Active User (“ARPDAU”) increased from $0.88 for the fourth quarter of 2020 to $0.96 for the fourth quarter of 2021. |
| • | Average monthly revenue per payer increased from $205 for the fourth quarter of 2020 to $216 for the fourth quarter of 2021. |
| • | Payer conversion remained stable at 5.5%. Payer conversion represents the percentage of monthly active users that made at least one purchase in a month during the respective quarters. |
Full Year 2021 Summary vs. Full Year 2020
| • | Revenues increased from $358.3 million for the 12 months ended December 31, 2020 to $363.2 million for the 12 months ended December 31, 2021. |
| • | Adjusted EBITDA of $120.1 million remained stable in 2021 compared to 2020, with an Adjusted EBITDA margin of 33.1%. |
| • | Net income increased to $78.2 million for the 12 months ended December 31, 2021, or $33.96 per common share on a fully diluted basis ($1.70 per ADS), compared to net income of $53.6 million for the 12 months ended December 31, 2020, or $26.20 per common share on a fully diluted basis ($1.31 per ADS). |
| • | ARPDAU increased from $0.83 for the 12 months ended December 31, 2020 to $0.97 for the 12 months ended December 31, 2021. |
| • | Average monthly revenue per payer increased from $191 for the 12 months ended December 31, 2020 to $218 for the 12 months ended December 31, 2021. |
| • | Payer conversion increased from 5.3% for the 12 months ended December 31, 2020 to 5.7% for the 12 months ended December 31, 2021. |
“Our 2021 results demonstrate the strength of our business model as we achieved another year of revenue growth, while delivering continued healthy Adjusted EBITDA margins and positive operating cash flow,” said In Keuk Kim, Chief Executive Officer of DoubleDown. “During 2021, we generated over $96 million in net cash flows provided by operations and ended the year with a cash and cash equivalents balance of $242 million, providing us with a strong financial position.”
Summary Operating Results for DoubleDown Interactive Co., Ltd
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue ($ MM) |
$ | 86.3 | $ | 91.0 | $ | 363.2 | $ | 358.3 | ||||||||
| Total operating expenses |
$ | 62.7 | $ | 68.8 | $ | 264.5 | $ | 269.6 | ||||||||
| Adjusted EBITDA ($ MM) |
$ | 25.8 | $ | 29.9 | $ | 120.1 | $ | 120.4 | ||||||||
| Net income ($ MM) |
$ | 17.5 | $ | 15.5 | $ | 78.2 | $ | 53.6 | ||||||||
| Net income margin |
20.3 | % | 17.0 | % | 21.5 | % | 15.0 | % | ||||||||
| Adjusted EBITDA margin |
29.9 | % | 32.9 | % | 33.1 | % | 33.6 | % | ||||||||
|
Non-financial performance metrics |
||||||||||||||||
| Average MAUs (000s) |
2,433 | 2,704 | 2,444 | 2,921 | ||||||||||||
| Average DAUs (000s) |
987 | 1,131 | 1,022 | 1,184 | ||||||||||||
| ARPDAU |
$ | 0.96 | $ | 0.88 | $ | 0.97 | $ | 0.83 | ||||||||
| Average monthly revenue per payer |
$ | 216.27 | $ | 204.71 | $ | 217.50 | $ | 191.40 | ||||||||
| Payer conversion |
5.5 | % | 5.5 | % | 5.7 | % | 5.3 | % | ||||||||
Fourth Quarter 2021 Financial Results
Revenue in the fourth quarter 2021 was $86.3 million, down 5.2% from the fourth quarter of 2020, mainly due to the easing of stay-at-home measures in 2021 compared to the prior year.
Operating expenses in the fourth quarter of 2021 were $62.7 million, down 8.8% from the comparable quarter in 2020. The decrease was primarily due to lower cost of revenues, general & administrative costs, and depreciation & amortization expenses compared to the same quarter in 2020.
Net income in the fourth quarter of 2021 increased to $17.5 million, or $7.08 per common share on a fully diluted basis ($0.35 per ADS), compared to net income of $15.5 million in the fourth quarter of 2020, or $6.99 per common share on a fully diluted basis ($0.35 per ADS), in the fourth quarter of 2020.
Adjusted EBITDA in the fourth quarter of 2021 decreased to $25.8 million compared to $29.9 million in the comparable quarter in 2020.
Net cash flows provided by operating activities for the fourth quarter of 2021 was $20.4 million compared to $36.1 million in the fourth quarter of 2020.
Full Year 2021 Financial Results
Revenue for the 12 months ended December 31, 2021 was $363.2 million, up 1.4% from the prior year mainly due to the comparative influence of COVID-19 prevention measures in the respective years.
Operating expenses for the 12 months ended December 31, 2021 were $264.5 million, down 1.9% from the prior year. The decrease was primarily due to lower depreciation & amortization expenses in 2020.
Net income for the 12 months ended December 31, 2021 increased to $78.2 million, or $33.96 per common share on a fully diluted basis ($1.70 per ADS), compared to net income of $53.6 million for 2020, or $26.20 per common share on a fully diluted basis ($1.31 per ADS).
Adjusted EBITDA for 2021 decreased to $120.1 million compared to $120.4 million for 2020.
Net cash flows provided by operating activities for the year ended December 31, 2021 were $96.1 million compared to $99.9 million in the year ended December 31, 2020.
Conference Call
DoubleDown will hold a conference call today (February 8, 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: 9683396
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: 9683396
A replay of the call will be available after 8:00 p.m. Eastern Time through March 8, 2022 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 Ended | Twelve Months Ended | |||||||||||||||
| Reconciliation of non-GAAP measures | December 31, | December 31, | ||||||||||||||
| (in millions, except percentages) |
2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net income |
$ | 17.5 | $ | 15.5 | $ | 78.2 | $ | 53.6 | ||||||||
| Income tax expense |
5.8 | 5.1 | 22.5 | 21.6 | ||||||||||||
| Income before tax |
23.3 | 20.6 | 100.7 | 75.2 | ||||||||||||
| Adjustments for: |
||||||||||||||||
| Depreciation and amortization |
2.2 | 7.6 | 17.9 | 31.6 | ||||||||||||
| Loss contingency |
— | — | 3.5 | — | ||||||||||||
| Interest expense |
0.5 | 0.6 | 2.0 | 10.8 | ||||||||||||
| Foreign currency transaction/remeasurement (gain) loss |
(1.6 | ) | 1.3 | (3.0 | ) | (2.1 | ) | |||||||||
| Other income (expense), net |
1.4 | (0.2 | ) | (1.0 | ) | 4.9 | ||||||||||
| Adjusted EBITDA |
$ | 25.8 | $ | 29.9 | $ | 120.1 | $ | 120.4 | ||||||||
| Adjusted EBITDA margin |
29.9 | % | 32.9 | % | 33.1 | % | 33.6 | % | ||||||||
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 Balance Sheets
(Unaudited)
| December 31, 2021 | December 31, 2020 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 242,060 | $ | 63,188 | ||||
| Accounts receivable, net |
21,875 | 23,299 | ||||||
| Prepaid expenses, and other assets |
6,817 | 4,020 | ||||||
|
|
|
|
|
|||||
| Total current assets |
270,752 | 90,507 | ||||||
| Property and equipment, net |
384 | 377 | ||||||
|
Operating lease right-of-use assets, net |
6,938 | 9,987 | ||||||
| Intangible assets, net |
53,679 | 71,364 | ||||||
| Goodwill |
633,965 | 633,965 | ||||||
| Deferred tax asset |
2,616 | 560 | ||||||
| Other non-current assets |
1,582 | 71 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 969,916 | $ | 806,831 | ||||
|
|
|
|
|
|||||
| Liabilities and Shareholders’ Equity |
||||||||
| Accounts payable and accrued expenses |
$ | 14,752 | $ | 16,646 | ||||
|
Short-term operating lease liabilities |
3,076 | 3,033 | ||||||
| Income taxes payable |
— | 2,838 | ||||||
| Contract liabilities |
2,246 | 2,415 | ||||||
| Other current liabilities |
730 | 717 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
20,804 | 25,649 | ||||||
|
Long-term borrowings with related party |
42,176 | 45,956 | ||||||
|
Long-term operating lease liabilities |
4,688 | 7,831 | ||||||
| Deferred tax liabilities, net |
28,309 | 20,154 | ||||||
| Other non-current liabilities |
9,953 | 7,730 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
105,930 | 107,320 | ||||||
| Shareholders’ equity |
||||||||
| Common stock |
21,198 | 18,924 | ||||||
|
Additional paid-in-capital |
671,831 | 588,064 | ||||||
| Accumulated other comprehensive income |
23,029 | 22,815 | ||||||
| Retained earnings |
147,928 | 69,708 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
863,986 | 699,511 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
969,916 | $ | 806,831 | |||||
|
|
|
|
|
|||||
DoubleDown Interactive Co., Ltd
Condensed Statement of Operations
(Unaudited)
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue |
$ | 86,303 | $ | 91,037 | $ | 363,205 | $ | 358,342 | ||||||||
| Operating expenses: |
||||||||||||||||
| Cost of revenue(1) |
29,789 | 31,911 | 126,612 | 126,255 | ||||||||||||
| Sales and marketing(1) |
21,908 | 17,536 | 78,821 | 71,225 | ||||||||||||
| Research and development(1) |
3,855 | 4,937 | 18,490 | 18,784 | ||||||||||||
| General and administrative(1) |
4,947 | 6,738 | 22,631 | 21,721 | ||||||||||||
| Depreciation and amortization |
2,214 | 7,636 | 17,918 | 31,574 | ||||||||||||
|
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|
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|
|
|
|||||||||
| Total operating expenses |
62,713 | 68,758 | 264,472 | 269,559 | ||||||||||||
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|
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|
|
|
|
|||||||||
| Operating income |
23,590 | 22,279 | 98,733 | 88,783 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
(490 | ) | (644 | ) | (2,011 | ) | (10,786 | ) | ||||||||
| Interest income |
100 | 8 | 208 | 197 | ||||||||||||
| Gain on foreign currency transactions |
70 | (820 | ) | 1,110 | 2,347 | |||||||||||
| Gain (loss) on foreign currency remeasurement |
1,567 | (477 | ) | 1,920 | (244 | ) | ||||||||||
| Other, net |
(1,495 | ) | 182 | 766 | (5,080 | ) | ||||||||||
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|||||||||
| Total other expense, net |
(248 | ) | (1,751 | ) | 1,993 | (13,566 | ) | |||||||||
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|
|
|
|
|
|
|||||||||
| Income before income tax |
23,342 | 20,528 | 100,726 | 75,217 | ||||||||||||
| Income tax expense |
(5,793 | ) | (5,055 | ) | (22,506 | ) | (21,594 | ) | ||||||||
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|
|||||||||
| Net income |
$ | 17,549 | $ | 15,473 | $ | 78,220 | $ | 53,623 | ||||||||
| Other comprehensive income (expense): |
||||||||||||||||
| Pension adjustments, net of tax |
(165 | ) | (83 | ) | (286 | ) | (294 | ) | ||||||||
| Gain (loss) on foreign currency translation |
85 | (2,193 | ) | 500 | 13,676 | |||||||||||
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|
|
|
|
|||||||||
| Comprehensive income |
$ | 17,469 | $ | 13,197 | $ | 78,434 | $ | 67,005 | ||||||||
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|
|
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|
|||||||||
| Basic |
$ | 7.08 | $ | 6.99 | $ | 33.96 | $ | 29.67 | ||||||||
| Diluted |
$ | 7.08 | $ | 6.99 | $ | 33.96 | $ | 26.20 | ||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
2,477,672 | 2,214,522 | 2,303,200 | 1,807,410 | ||||||||||||
| Diluted |
2,477,672 | 2,214,522 | 2,303,200 | 2,149,114 | ||||||||||||
| (1) | Excluding depreciation and amortization |
DoubleDown Interactive Co., Ltd
Condensed Statement of Cash Flows
(Unaudited)
| Twelve Months ended | ||||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Cash flow from operating activities: |
||||||||
| Net Income |
$ | 78,220 | $ | 53,623 | ||||
|
Adjustments to reconcile net income to net cash from operating activities: |
||||||||
| Depreciation and amortization |
17,918 | 31,574 | ||||||
| Gain(Loss) on foreign currency remeasurement |
(2,082 | ) | 244 | |||||
| Deferred taxes |
5,976 | 4,422 | ||||||
| Non-cash interest expense |
23 | 5,103 | ||||||
| Working capital adjustments: |
||||||||
| Accounts receivable |
1,638 | (4,099 | ) | |||||
|
Prepaid expenses, other current and non-current assets |
(2,950 | ) | (204 | ) | ||||
| Accounts payable, accrued expenses and other payables |
(2,052 | ) | 5,835 | |||||
| Contract liabilities |
(168 | ) | 609 | |||||
| Income tax payable |
(2,838 | ) | 2,689 | |||||
|
Other current and non-current liabilities |
2,420 | 54 | ||||||
|
|
|
|
|
|||||
| Net cash flows provided by operating activities |
96,105 | 99,850 | ||||||
| Cash flow from (used in) investing activities: |
||||||||
| Acquisition of Double8 Games Co., Ltd. |
— | (1,952 | ) | |||||
| Acquisition of financial assets (investments) |
(1,541 | ) | — | |||||
| Purchases of intangible assets |
(61 | ) | (6 | ) | ||||
| Purchases of property and equipment |
(207 | ) | (217 | ) | ||||
| Disposals of property and equipment |
3 | — | ||||||
|
|
|
|
|
|||||
|
Net cash flows from (used in) investing activities |
(1,806 | ) | (2,175 | ) | ||||
| Cash flows from (used in) financing activities: |
||||||||
|
Repayments of long-term borrowings with related party |
— | (42,371 | ) | |||||
|
Isssuance of new shares-IPO, net of IPO cost |
86,041 | — | ||||||
|
Repayments of short-term senior note |
— | (33,897 | ) | |||||
|
|
|
|
|
|||||
| Net cash flows used in financing activities |
86,041 | (76,268 | ) | |||||
|
Net foreign exchange difference on cash and cash equivalents |
(1,468 | ) | (637 | ) | ||||
|
|
|
|
|
|||||
|
Net increase (decrease) in cash and cash equivalents |
178,872 | 20,770 | ||||||
| Cash and cash equivalents at beginning of period |
63,188 | 42,418 | ||||||
| Cash and cash equivalents at end of period |
242,060 | $ | 63,188 | |||||