DoubleDown Interactive is rolling the dice on an initial public offering, hoping to raise up to $100 million on the Nasdaq stock market.
The company, which has longtime roots in Seattle, makes popular casual games such as DoubleDown Casino and DoubleDown Fort Knox. It attracted 2.9 million game players per month last year, driving $273.6 million in revenue and net income of $36.3 million, according to financial statements made public in a filing with the Securities and Exchange Commission.
DoubleDown’s profits may set it apart from other tech-oriented companies who often enter Wall Street showing losses. DoubleDown also turned a profit in 2018, reporting net income of $25.1 million. The company is also benefitting from the surge in online gaming during the coronavirus pandemic, with The New York Times recently reporting on isolated and home-bound game players boosting the time they spend playing games.
And DoubleDown is not the only mobile gaming company testing the IPO waters, with Reuters reporting Monday that Israel-based Playtika has hired Morgan Stanley to help lead a public offering that could raise $1 billion and value maker of casino-style games at around $10 billion.
DoubleDown’s headquarters is located in Seoul, while the main U.S. engineering center is located in Seattle’s International District. It employs 280 people worldwide, with 149 in Seattle and 131 in Seoul.
The original DoubleDown Interactive was founded in Seattle in 2010. It found success with its casino games on the Facebook platform before expanding into mobile gaming. Its four games — DoubleDown Casino, DoubleDown Fort Knox, DoubleDown Classic and Ellen’s Road to Riches — have been installed more than 100 million times. The company — led in Seattle at the time by Glenn Walcott, Greg Enell and Cooper DuBois — sold to Las Vegas casino giant IGT in 2012 in a deal valued at up to $500 million.
The Seoul component of the business was started in 2008 under the name The8Games Co., with that entity later selling to DoubleU Games Co. in 2016. A year later, DoubleU Games acquired DoubleDown Interactive from IGT for $825 million in cash, with a multi-year strategic partnership established between IGT and DoubleU.
Late last year, DoubleU changed its name to DoubleDown Interactive. The CEO is In Keuk Kim, who previously served as CEO of DoubleU.
DoubleDown faces legal impediments, including a class action suit filed in the U.S. District Court for the Western District of Washington in which plaintiffs argue that the company’s games violate Washington’s Recovery of Money Lost at Gambling Act and Consumer Protection Act. The plaintiffs are seeking a recovery of all money lost playing DoubleDown games, arguing that the game play and virtual chips constitutes a form of gambling.
The company explains the use of its virtual chips in the IPO filing:
We designed our games to provide free virtual chips to players at various time intervals based on our players’ playing behaviors and patterns. We generate substantially all of our revenue from the sale of additional virtual chips, which players can choose to purchase at any time to enhance their playing experience. Our virtual chips cannot be withdrawn from the game, transferred from one game to another or from one player to another, or be redeemed for monetary value.
DoubleDown’s games are free to play, and just 5.2 percent of the company’s game players pay for the virtual chips that drive its business.
“To retain paying players, we must devote significant resources so that the games they play retain their interest and motivate them to purchase virtual chips through incentives and engaging content,” the company wrote in its IPO filing.
DoubleDown plans to trade on the Nasdaq under the ticker DDI. Underwriters on the deal include J.P. Morgan, BofA Securities and Macquarie Capital. More details available in the SEC filing here.
