TIDMTBLD
RNS Number : 3036E
tinyBuild, Inc.
29 June 2023
29 June 2023
tinyBuild, Inc
("tinyBuild" or the "Company")
AGM Trading Update and Directorate Change
tinyBuild (AIM:TBLD), a premium video games publisher and
developer with global operations, provides an update on trading
ahead of its AGM later today.
Highlights
-- First-half performance below expectations due to lower
contribution from platform deals and the underperformance of Red
Cerberus and Versus Evil has resulted in a material reduction to FY
consensus revenue and a more acute reduction in Adj. EBITDA in 2023
and 2024.
-- Strong reception to new game announcements supports the
Company's refocus on building new large own-IP and the move away
from third party publishing and services.
-- Cash position at the end of December 2023 expected to be
between $10-20m, below the previous expectations of at least
$26.5m.
-- Re-evaluation of the future potential of some underperforming
back-catalogue titles may translate in asset impairments and
targeted studio reorganisation.
-- Tony Assenza, Chief Financial Officer (CFO), has resigned for
personal reasons. Giasone (Jaz) Salati to be appointed Chief
Financial Officer and Michael Schauble to be appointed Chief
Commercial Officer with immediate effect.
Current trading
As witnessed across the industry, distribution platforms have
been significantly downsizing the amount of investments in non-AAA
games. Platform deals have been an important driver of tinyBuild's
growth and profitability over the past few years, and the Board
expects this downward trend to materially impact revenues.
In addition, Versus Evil and Red Cerberus (both acquired in
November 2021) continued to underperform in H1 2023. Strategic
options are under consideration to best deliver the value of the
businesses as the Company focuses on its core strategy of
developing long lasting franchises internally.
Partly offsetting these headwinds, catalogue titles continue to
perform well, with franchise expansion (i.e. sequels), v1.0
launches and the addition of new platforms, including VR.
Furthermore, the strong reception to recent new game announcements
supports tinyBuild's decision to invest in new larger-budget own-IP
with high replayability. The Game as a Service nature of some of
these titles means the revenue contribution tends to be more evenly
distributed over a longer period of time while development costs
are concentrated in the early years.
The reduction of adjusted EBITDA in 2023 and 2024 will be more
substantial, due to a significant increase in development cost
amortisation and a slightly higher percentage of revenues paid out
to developers as royalties adding to the flow through from lower
platform deals. As a combination of the above, cash at the end of
December 2023 is expected to be between $10-20m, below the previous
expectations of at least $26.5m.
In the current macro environment, the Company is also reviewing
a number of titles, both under development and already launched, to
assess the revenue potential. The reorganisation of some studios
and impairment of certain assets may follow to achieve the optimal
cost base.
As in 2022, the release schedule for the current year is
weighted towards the second half of the year and the Company will
continue to evaluate the progress of titles currently under
development and select the best release window to maximise the
lifetime value of each IP. The Board expects to complete the
transition workstreams, including the impairment, reorganisation
and the ongoing assessment of games, by no later than the Company's
FY23 results in March 2024.
Portfolio and pipeline
In the first half of 2022, tinyBuild released Rhythm Sprout (PC
and Consoles), Farworld Pioneers (PC and Consoles), and The
Bookwalker (PC and Consoles). The Company is also investing in new
technologies having successfully launched new VR titles in the
first half, including Hello Neighbor: Search and Rescue, and Kill
it with Fire VR.
Back catalogue titles continue to perform well including
platform launches in the first half (e.g. Not For Broadcast,
Despot's Game) and new monetisable events planned in the second
half for Potion Craft, Hello Engineer, Black Skyland and Cartel
Tycoon. Punch Club 2, the anticipated sequel to one of tinyBuild's
classic games, is also scheduled to release in the second half,
adding to new titles like I am Future, a cosy survival game in a
flooded post-apocalyptic city.
t inyBuild also recently announced a record number of new titles
for future release, including Critter Cove, Slime 3K, Kill it with
Fire 2, FEROCIOUS, Level Zero and Sand, adding to the previously
announced Broken Roads, RAWMEN, Stray Souls and Pigeon
Simulator.
Board Changes and People
After a short period of leave for personal reasons, Tony
Assenza, CFO, has resigned from the Company and the Board with
immediate effect. Following a Board process, tinyBuild announces
that Giasone (Jaz) Salati has been appointed CFO with immediate
effect and he is expected to join the Board, subject to customary
due diligence checks and a further announcement will be made in due
course. Completing tinyBuild's transition to a more focused
management team, Michael Schauble, previously senior VP of Business
Development, has been appointed Chief Commercial Officer.
Jaz has over twenty years' experience as an equity research
analyst in the TMT space previously working at Credit Suisse,
Redburn and Macquarie, and was ranked #1 Stock Picker in 2019.
Alongside his career in finance, he worked on innovation and
reorganisation for the CEOs of media and tech companies, more
recently at Ascential (LSE: ASCL). Jaz read economics at La
Sorbonne and attained a master's degree in Finance from LBS.
Michael has over 18 years' experience in the video games
industry and has a track record of building successful teams. Prior
to joining tinyBuild, in August 2019, he worked at Microsoft for
four years where he helped to spearhead key initiatives such as
Game Pass, Microsoft AR/VR, and backwards compatibility programmes.
In his new senior management role as Chief Commercial Officer,
Michael will leverage his experience in building strong
relationships between tinyBuild's developers and partners and
oversee the expansion of our IP into cross-media.
tinyBuild continues to support all its staff (employees and
independent contractors) and their families affected by the war in
Ukraine and it continues to carefully monitor the situation. Having
helped staff move out of the riskiest areas, the Company is now
focusing on mental health and administrative support so everybody
can settle in their preferred location across Europe.
Outlook
As reported by other companies in the gaming sector, the market
backdrop has become increasingly challenging with distribution
platforms reducing investment. As a result of this impact and
underperformance at Versus Evil and Red Cerberus, the Board is now
expecting to be materially behind revenue market expectations in
2023 and 2024. This impact becomes more acute at the Adjusted
EBITDA level as a result of increased development costs,
amortisation charges and a less favourable revenue mix.
FY23 is expected to be a low point in terms of financial
performance and cash levels and the Board is looking forward to the
contribution of new larger budget games scheduled to launch in 2024
and 2025. Early indicators of consumer traction across the
Company's pipeline, including the reception of recently announced
games, are encouraging and bode well for the future.
As previously indicated, tinyBuild continues to carefully review
the impact of the conflict in Ukraine and the fluid macroeconomic
situation.
Alex Nichiporchik, Chief Executive Officer of tinyBuild,
commented:
"As CEO and a major shareholder, I am disappointed with the H1
performance. What fills me with confidence is that we have an
incredibly strong pipeline of new games under development with the
potential to create multiple new long-lasting franchises.
"Our diverse portfolio, strong back catalogue and financial
position will allow us to reposition the Company for growth and
capture advantageous opportunities when peers may be forced to
retrench. We are transforming the Company at speed to adapt to new
industry trends."
"On a personal note, I am sorry to see Tony leave the team and
wish him the best for the future. At the same time, I am delighted
to have Jaz as our new CFO and Michael as our CCO: their
competencies and drive will be key to accelerate growth, while
ensuring financial discipline and maintaining the positive culture
we have built at tinyBuild."
Enquiries :
tinyBuild, Inc investorrelations@tinybuild.com
Alex Nichiporchik - Chief Executive Officer
Giasone (Jaz) Salati - Chief Financial Officer
Michael Schauble - Chief Commercial Officer
Berenberg (Joint Broker and Nominated Adviser)
Mark Whitmore, Ciaran Walsh, Milo Bonser +44 (0)20 3207 7800
Numis (Joint Broker)
Hugo Rubinstein, Tejas Padalkar +44 (0)20 7260 1000
SEC Newgate (Financial PR) tinybuild@secnewgate.co.uk
Robin Tozer, Bob Huxford, Harry Handyside, +44 (0)7540 106366
Molly Gretton
About tinyBuild:
Founded in 2013, tinyBuild (AIM: TBLD) is a leading premium
AA-rated and indie video games publisher and developer. tinyBuild
strategically secures access to IP and partners with developers to
establish a stable platform on which to build multi-game and
multimedia franchises. tinyBuild has a strong portfolio of over 40
titles, and its upcoming pipeline includes over 20 new titles
currently in development.
Headquartered in Bellevue, Washington, USA, the Company has key
operations worldwide, with employees, contractors or partners in
multiple locations across five continents. tinyBuild's geographic
diversity enables it to source high-potential IP, cost-effective
development resources and a loyal customer base through innovative
grassroots marketing. tinyBuild was admitted to AIM, a market
operated by the London Stock Exchange, in March 2021.
For further information, visit: www.tinybuildinvestors.com .
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END
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