Seoul-based DoubleDown Interactive (DDI) has reported a strong start to 2024, with Q1 revenue rising 13.5% year-over-year to $88.1 million. This exceeded the $82.3 million consensus, driven in part by the acquisition of SuprNation. Additionally, DDI experienced organic growth of 2.8% due to higher engagement of its existing player base, as evidenced by improvements in key metrics such as average revenue per daily active user, payer conversion rate, and average monthly revenue per payer. Net income climbed 28% to $29.4 million, or 61 cents per ADS, beating expectations by 14 cents.
The impressive operating performance led to the generation of $34.9 million in free cash flow during the quarter. This allowed DDI to increase its net cash and short-term investment balance to $272.4 million, representing over 40% of the current stock price. Despite this positive news, DDI announced that the launch of its first skill-based game, Cash Me Out Bingo, did not meet performance requirements. As a result, the company has decided not to proceed with user acquisition activities for this game, potentially impacting revenue diversification efforts.
Although the disappointing performance of Cash Me Out Bingo poses a challenge for DDI, the company is actively rolling out new features for its DoubleDown Casino game and plans to launch Mission Pass in Q2. Furthermore, DDI has a slate of promising internally developed mobile games expected to launch later in 2024. Analysts believe that these initiatives, combined with the company’s strong operating and free cash flow performance, position DDI for continued success throughout the year. Despite currently trading at a low forward P/E of 6.1, there is optimism that the stock will see upward movement as the year progresses.
Julius Juenemann, CFA, an equity analyst and associate editor of Forbes Special Situation Survey and Forbes Investor newsletters, recommends DDI as a strong investment opportunity in the market. The stock is also a current recommendation in the Forbes Investor newsletter, which provides access to various undervalued stocks with significant upside potential. Investors interested in discovering other stocks like DDI are encouraged to try Forbes Investor for free. For more insights and updates from Julius Juenemann, follow him on LinkedIn and consider subscribing to Forbes Investor for valuable investment recommendations.
