Doubledown Interactive Co (DDI) AI Stock Analysis

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Doubledown Interactive Co

(NASDAQ:DDI)

72Outperform

Doubledown Interactive Co's overall stock score reflects its robust financial performance and strong cash flow management, offset by challenges in the social casino market and recent bearish technical indicators. It is currently undervalued based on its P/E ratio, which provides a potential investment opportunity despite the lack of a dividend yield. The company's strategic growth initiatives and monetization improvements add to the positive outlook, but market headwinds require cautious optimism.

Positive Factors

Acquisition Synergy

The company is generating additional top-line growth from the synergistic acquisition of SuprNation with its European-based real-money gaming platform.

Business Model

DoubleDown operates a very profitable capital-light business, with robust profitability and FCF generation supported by high player retention.

Monetization

The company's ability to monetize its base, converting nearly 7% of its active users into active payers, is impressive, tracking at over 3x the industry average.

Negative Factors

Market Valuation

DDI shares trade at what is viewed as an excessively pessimistic <1x 2025E EV/EBITDA compared with social casino gaming peers at 5x.

Topline Performance

Topline missed expectations on declining user metrics, but EBITDA beat.

User Metrics

Management optimized gross margin and marketing expenditures to balance against declining user metrics, achieving profitability expectations.

Doubledown Interactive Co (DDI) vs. S&P 500 (SPY)

Market Cap

$485.87M

Dividend YieldN/A

Average Volume (3M)25.52K

Price to Earnings (P/E)3.9

Beta (1Y)0.68

Revenue Growth10.71%

EPS Growth21.74%

CountryUS

Employees281

SectorCommunication Services

Sector Strength79

IndustryElectronic Gaming & Multimedia

Share Statistics

EPS (TTM)2.50

Shares Outstanding49,553,440

10 Day Avg. Volume29,344

30 Day Avg. Volume25,521

Financial Highlights & Ratios

PEG Ratio0.18

Price to Book (P/B)N/A

Price to Sales (P/S)5.99

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$20.67

Price Target Upside110.92% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

Doubledown Interactive Co Business Overview & Revenue Model

Company DescriptionDoubledown Interactive Co (DDI) is a leading developer and publisher of digital games, primarily focusing on the social casino gaming sector. The company is known for its flagship product, DoubleDown Casino, which provides players with a virtual casino experience featuring a variety of slot machines, poker, and other classic casino games. DDI operates primarily in the mobile gaming and social media platforms, offering users engaging and interactive gaming experiences.

How the Company Makes MoneyDoubledown Interactive Co generates revenue primarily through the sale of virtual currency within its games. Players purchase these in-game currencies to enhance their gaming experience, allowing them to play longer or access special features. The company's freemium model attracts a wide user base who can play for free but are incentivized to make in-app purchases for additional benefits. Key revenue streams include microtransactions, in-game advertisements, and partnerships with social media and mobile platforms to reach a broader audience. Additionally, the company may benefit from collaborations with other gaming developers and platforms to expand its market presence and introduce new games.

Doubledown Interactive Co Financial Statement Overview

Summary

Doubledown Interactive Co demonstrates strong financial performance across all verticals. The company has successfully increased profitability and maintains a solid balance sheet with low leverage. Cash flow management is a notable strength, ensuring financial resilience and flexibility. While past revenue fluctuations pose a potential risk, the overall financial health is commendable.

Income Statement

Very Positive

Doubledown Interactive Co shows strong profitability with a consistent increase in net income and EBIT margins over recent years. The 2024 figures highlight a gross profit margin of 69.7% and a net profit margin of 36.3%, both indicating robust profitability. The revenue growth rate from 2023 to 2024 was 10.5%, showcasing a healthy upward trend. However, past fluctuations in revenue and profit margins indicate some degree of volatility.

Balance Sheet

Positive

The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.05 in 2024, reflecting conservative leverage. The equity ratio stands strong at 92.9%, indicating a high level of financial stability. However, the company has shown a decrease in total assets over time, which could signal potential risks if this trend continues.

Cash Flow

Very Positive

The cash flow statement reveals impressive improvements, with a remarkable free cash flow growth rate of 416.9% from 2023 to 2024. The operating cash flow to net income ratio of 1.20 suggests efficient cash generation from operations. Free cash flow consistently exceeds net income, highlighting strong cash flow management. These factors contribute to a robust cash position, enhancing financial flexibility.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
341.33M	308.86M	321.03M	363.20M	358.34M
	Gross Profit
237.79M	282.93M	211.72M	236.59M	232.09M
	EBIT
137.01M	124.34M	102.64M	98.73M	88.78M
	EBITDA
141.87M	136.72M	-263.64M	120.54M	117.58M
	Net Income Common Stockholders
124.02M	100.89M	-233.98M	78.11M	53.62M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
414.85M	274.99M	285.24M	242.06M	63.19M
	Total Assets
906.16M	803.34M	792.05M	969.92M	806.83M
	Total Debt
38.69M	46.35M	44.13M	49.94M	56.82M
	Net Debt
-296.16M	-160.56M	-173.22M	-192.12M	-6.37M
	Total Liabilities
64.13M	75.45M	165.83M	105.93M	107.32M
	Stockholders Equity
841.91M	727.73M	626.23M	863.99M	699.51M
Cash Flow		Free Cash Flow
147.59M	28.53M	50.52M	94.30M	99.63M
	Operating Cash Flow
148.45M	28.71M	50.79M	96.11M	99.85M
	Investing Cash Flow
-15.61M	-30.27M	-67.83M	-1.81M	-2.17M
	Financing Cash Flow
-2.01M	0.00	-2.91M	86.04M	-76.27M

Doubledown Interactive Co Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.80

Price Trends

50DMA

9.93

Negative

100DMA

10.84

Negative

200DMA

12.24

Negative

Market Momentum

MACD

-0.04

Negative

RSI

48.75

Neutral

STOCH

47.87

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DDI, the sentiment is Negative. The current price of 9.8 is below the 20-day moving average (MA) of 9.83, below the 50-day MA of 9.93, and below the 200-day MA of 12.24, indicating a bearish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 48.75 is Neutral, neither overbought nor oversold. The STOCH value of 47.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DDI.

Doubledown Interactive Co Risk Analysis

Doubledown Interactive Co disclosed 54 risk factors in its most recent earnings report. Doubledown Interactive Co reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Doubledown Interactive Co Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GRVY	79 Outperform	$412.97M	6.79	16.74%	―	-33.07%	-43.07%
DDI	72 Outperform	$485.87M	3.93	15.08%	―	10.71%	21.74%
FVRR	63 Neutral	$880.14M	53.10	5.08%	―	8.33%	436.49%
SEAT	60 Neutral	$566.18M	41.19	5.15%	―	8.80%	-91.33%
Sector *	58 Neutral	$26.33B	3.17	-10.68%	4.33%	2.16%	-43.07%
MYPS	58 Neutral	$168.16M	―	-10.76%	―	-6.90%	-57.81%
THRY	52 Neutral	$489.66M	―	-42.46%	―	-10.12%	72.31%

* Communication Services Sector Average

Performance Comparison

DDI

Doubledown Interactive Co

9.80

0.00

0.00%

GRVY

Gravity Co

60.77

-6.66

-9.88%

FVRR

Fiverr International

25.02

4.91

24.42%

THRY

Thryv Holdings

11.38

-10.39

-47.73%

SEAT

Vivid Seats

2.83

-2.72

-49.01%

MYPS

PLAYSTUDIOS

1.34

-1.18

-46.83%

Doubledown Interactive Co Earnings Call Summary

Earnings Call Date: Feb 11, 2025 | % Change Since: -9.26% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance with growth in revenue, profitability, and cash flow, particularly driven by the acquisition and integration of SuperNation. However, challenges in maintaining growth in a declining social casino market and a slight drop in Q4 revenue were noted. Despite these challenges, the company's strategic initiatives and strong monetization metrics provide a positive outlook.

Highlights

Revenue Growth and Profitability

Full year 2024 revenue was $341.3 million, a 10% increase from $308.9 million in 2023. Adjusted EBITDA for 2024 was $141.9 million, a 16% increase from 2023.

Strong Cash Flow

The company generated over $148 million in cash flow from operations in 2024, compared to $24.1 million in 2023.

SuperNation Performance

SuperNation's Q4 2024 revenue was $9 million, more than 30% higher than the estimated quarterly run rate prior to acquisition in 2023.

Monetization Improvements

Key monetization metrics improved, including ARPDAU which increased to $1.30 in Q4 2024 from $1.24 in Q4 2023, and payer conversion ratio which rose to 6.9% from 6.4%.

Lowlights

Slight Decline in Q4 Revenue

Q4 2024 revenue was $82 million, slightly down from $83.1 million in Q4 2023.

Social Casino Market Challenges

Industry revenues for social casinos are estimated to have declined in 2024, and further declines are expected in 2025, presenting growth challenges.

Reduced Adjusted EBITDA Margin

Q4 2024 adjusted EBITDA margin was 42.8%, down from 44.5% in Q4 2023.

Company Guidance

During DoubleDown Interactive's earnings call for the fourth quarter and full year ended December 31, 2024, the company provided guidance indicating a slight year-over-year decrease in consolidated revenue to $82 million, with adjusted EBITDA at $35.1 million. The revenue was broken down into $73 million from social casino/free-to-play games and $9 million from SuperNation, their iGaming business. Despite a dip in daily and monthly active users, the company saw strong increases in monetization KPIs, such as ARPDAU, average monthly revenue per payer, and payer conversion rate. For the full year 2024, DoubleDown reported $341.3 million in total revenue, marking a 10% increase from the previous year, largely driven by the acquisition of SuperNation. Adjusted EBITDA reached $141.9 million, a 16% year-over-year rise, with a margin of 41.6%. The company generated over $148 million in cash flow from operations during the year. Looking ahead, DoubleDown plans to continue enhancing player engagement and monetization while exploring opportunities for growth through in-house development and potential M&A activities in adjacent gaming categories.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.