DoubleDown Interactive Co., Ltd. (NASDAQ: DDI)

Sector: Communication Services Industry: Electronic Gaming & Multimedia CIK: 0001799567
Market Cap 428.38 Mn
P/B 0.45
P/E 4.17
P/S 1.19
ROIC (Qtr) 8.84
Div Yield % 0.00
Rev 1y % (Qtr) 16.85
Total Debt (Qtr) 39.60 Mn
Debt/Equity (Qtr) 0.04
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About

DoubleDown Interactive Co., Ltd., a prominent name in the digital gaming industry, operates under the stock symbol DDI. The company's roots trace back to 2008 when it was established as The8Games Co., Ltd. in Seoul, Korea. Following a series of acquisitions by DUG, a controlling shareholder, in 2016 and 2017, DoubleDown Interactive became a wholly-owned subsidiary. A significant milestone in the company's journey was the acquisition of DDI-US, a subsidiary of IGT, in 2017, which enabled DoubleDown Interactive to leverage IGT's extensive land-based...

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Investment thesis

Bull case

  • Strong operating cash flow of 136.77M provides robust 3.45x coverage of total debt 39.60M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 388.89M provide 10.72x coverage of short-term debt 36.29M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 534.02M provides 13.49x coverage of total debt 39.60M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 136.60M exceeds capital expenditure of 168000 by 813.11x, indicating strong organic growth funding capability.
  • Operating cash flow of 136.77M provides exceptional 19.92x coverage of interest expenses 6.87M, showing strong debt service capability.

Bear case

  • Operating cash flow of 136.77M barely covers its investment activities of (81.70M), with a coverage ratio of -1.67, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 136.77M provides thin coverage of dividend payments of (85000) with a -1609.06 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (81.70M) provide weak support for R&D spending of 11.96M, which is -6.83x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 388.89M provide limited coverage of acquisition spending of (61.59M), which is -6.31x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 136.60M represents just -107.65x of debt issuance (1.27M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments [axis] Breakdown of Revenue (2024)

Segments [axis] Breakdown of Revenue (2024)

Peer comparison

Companies in the Electronic Gaming & Multimedia
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NTES NetEase, Inc. 76.19 Bn 15.89 4.76 0.91 Bn
2 EA Electronic Arts Inc. 50.25 Bn 73.90 6.88 1.89 Bn
3 RBLX Roblox Corp 43.57 Bn -40.91 8.91 1.64 Bn
4 TTWO Take Two Interactive Software Inc 34.06 Bn -8.59 5.19 3.51 Bn
5 PLTK Playtika Holding Corp. 1.22 Bn 14.21 0.45 2.54 Bn
6 SOHU Sohu.com Ltd 0.46 Bn 1.16 0.78 0.00 Bn
7 GRVY GRAVITY Co., Ltd. 0.45 Bn 8.02 1.09 0.00 Bn
8 DDI DoubleDown Interactive Co., Ltd. 0.43 Bn 4.17 1.19 0.04 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.12 0.73
EV to Cash from Ops. EV/CFO 0.88 9.02
EV to Debt EV to Debt 3.05 42.93
EV to EBIT EV/EBIT 0.82 5.14
EV to EBITDA EV/EBITDA 0.90 -0.17
EV to Free Cash Flow [EV/FCF] EV/FCF 0.89 2.00
EV to Market Cap EV to Market Cap 0.28 0.31
EV to Revenue EV/Rev 0.34 -278.61
Price to Book Value [P/B] P/B 0.45 5.21
Price to Earnings [P/E] P/E 4.17 5.61
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1,207.68 1,143.22
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 15.62
Dividend per Basic Share Div per Share (Qtr) 0.00 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 21.95
Interest Coverage Int. cover (Qtr) 21.37 2.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 80.37 -144.92
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 16.14 2,047.52
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -15.17 10.58
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -5.39 -40.36
EBIT Growth (1y) % EBIT 1y % (Qtr) -11.72 28.44
EBT Growth (1y) % EBT 1y % (Qtr) -14.16 -25.09
EPS Growth (1y) % EPS 1y % (Qtr) -17.45 -25.14
FCF Growth (1y) % FCF 1y % (Qtr) -7.44 -203.71
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.66 977.78
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.35 0.61
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 5.71 1.98
Current Ratio Curr Ratio (Qtr) 7.74 4.93
Debt to Equity Ratio Debt/Equity (Qtr) 0.04 -1.05
Interest Cover Ratio Int Coverage (Qtr) 21.37 2.42
Times Interest Earned Times Interest Earned (Qtr) 21.37 2.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 42.80 9,395.66
EBIT Margin % EBIT Margin % (Qtr) 40.75 10,488.08
EBT Margin % EBT Margin % (Qtr) 38.85 -43,333.75
Gross Margin % Gross Margin % (Qtr) 71.80 57.20
Net Profit Margin % Net Margin % (Qtr) 28.50 -43,332.40