Social casino publisher DoubleDown Interactive reported its unaudited financial results for the third quarter of 2022, posting a loss of $24 million as revenue fell and operating expenses more than doubled due to the Benson class action settlement’s quarterly incremental charge.
Revenue Impacted by Rising Inflation
DoubleDown Interactive posted for the three months ended September 30, 2022, revenue of $78.8 million, registering a 9% decrease to the respective three-month period in the year prior. The company attributed the decrease to the lifting of stay-at-home orders and other pandemic-related restrictions, as well as changes in player behavior in respect of the rising price of living and global economic concerns.
“Revenue in the third quarter of 2022 was 14% higher than the third quarter of 2019, the most recent comparable period prior to the COVID pandemic, which we believe validates our success in capturing and retaining growth in our customer base and player spending over the past few years,” said Keuk Kim, chief executive officer of DoubleDown.
The drop in quarterly revenue was paired with a year-over-year increase of 110% to $124.1 million in operating expenses due to a charge of $70.25 million in the general and administrative expenses associated with the incremental charge in relation to the Benson class action settlement under which DoubleDown will contribute $145.25 million to the settlement fund subject to court approval. The third-quarter incremental charge is added to the amount accrued in previous quarters, $75 million.
Incremental Charge on the Benson Class Action
As a result of the decrease in revenue and increase in expenses, net income in the third quarter came as a loss of $24 million reversing the net income of $22.8 million in the previous comparable period in 2021.
Adjusted EBITDA in the quarter was $25 million, down from $30.2 million in Q3 2021. DoubleDown attributed the decrease in adjusted EBITDA primarily to the lower revenue registered in Q3 2022.
Net cash flows in the third quarter also decreased and stood at $22.2 million at the end of the quarter, down 34% from $33.7 million at the end of Q3 2021. The company attributed the decrease in net cash flows to the decline in operating income.
As for the company’s future outlook, Kim outlined the upcoming before the year-end launch of a new title, Spinning in Space, the commitment to come up with new titles in 2023 and innovate the company’s flagship DoubleDown Casino titles, as well as potential strategic m&a transactions.
“With $130 million of cash and equivalents, net of debt and Benson case accrual, we believe that we remain in a strong financial position,” he concluded.