Strong Q2 performance drives DoubleU first half growth

28 July 2020

South Korean social gaming operator DoubleU Games saw revenue for the first half of 2020 rise 27.6% year-on-year to KRW326.2bn (£211.6m/€232.3m/$271.9m), aided by the sixth consecutive quarter of growth from DoubleDown Interactive.

After operating costs, the business’ operating profit for the six months to 30 June 2020 was up 25.4% at KRW97.7bn, while earnings before interest, tax, depreciation and amortisation was up 20.0% to KRW120.6m.

After financial costs and taxes, net profit for the period stood at KRW76.4bn, a 34.3% improvement on the prior year.

This followed a strong second quarter, in which revenue grew 45.3% year-on-year to KRW188.8bn.

Both the DoubleDown Interactive and DoubleU businesses performed strongly in the three months to 30 June, with DoubleDown’s contribution up 32.8% to KRW120.6bn - the sixth quarter in which revenue was up year-on-year. DoubleU, meanwhile, accounted for the remaining KRW68.2m, a 35.3% improvement on the prior year.

DoubleDown’s Q2 contribution came almost entirely from DoubleDown Casino, which accounted for KRW115.1bn of the total. A further KRW3.8bn came from DoubleDown Fort Knox, with the stripped-back DoubleDown Classic contributing KRW1.0bn, and KRW0.7bn coming from Ellen Slots, a branded game featuring TV host Ellen DeGeneres.

DoubleU also saw its revenue come predominantly from one title, DoubleU Casino, which accounted for KRW63.8bn. A further KRW3.9bn came from Take5, with KRW0.4bn from DoubleU Bingo and KRW0.1bn from other titles.

Operating costs for the quarter were up 44.5% year-on-year to KRW129.5bn, after which EBITDA was up 36.6% to KRW70.9bn. Once depreciation and amortisation charges of KRW11.6bn - static year-on-year - were factored in, operating profit rose 47.1% to KRW59.3bn.

After financial items such as interest payments and foreign exchange costs, plus taxes of KRW10.9bn, net profit for the quarter rose 48.3% to KRW44.2bn.

“The expansion of marketing, the successful application of new slots and meta content, and the lockdown effect due to the spread of novel coronavirus (Covid-19) in the US have greatly increased the influx and play time of users, and as a result, revenue has increased significantly,” DoubleU said.

Looking ahead to the third quarter, DoubleU said it plans to grow revenue further through a large-scale marketing campaign, advertising on channels such as TV, radio and on public transport over the three months to 30 September. This will be supported by expansion into Taiwan.

The development of new social titles, in new verticals, is also ongoing, with plans to release a new role playing game and a casual title in 2021.

However, DoubleU did not offer any update on plans to list DoubleDown Interactive on the US’ Nasdaq stock exchange. It announced plans to list the business in June, originally intending to raise up to $100m through the sale of new and existing shares, but then changed plans to issue 11m American Depositary Shares (ADS).

Earlier in July, it then announced that it would delay the listing plans, claiming that a resurgence of Covid-19 in the US had reduced investor interest in the float.