Company Announcements

30 September 2024

tinyBuild, Inc

("tinyBuild" or the "Group")

2024 Half Year Results

tinyBuild (AIM:TBLD), a premium video games publisher and developer with global operations, is pleased to announce its unaudited results for the six months ended 30 June 2024.

Financial highlights:

·      Revenue of $18.8m (H1 2023: $23.3m), 19% lower primarily due to a further drop in development service revenues and continued underperformance of Versus Evil (VE).

·      Adjusted EBITDA¹ loss of $1.9m (H1 2023: $1.2m loss), due to lower revenues and relatively stable development cost amortization.

·      Gross profit improved to $4.1m (H1 2023: $8.8m loss), due to lower impairment of development costs, while cost of sales remained broadly stable at 62% of revenues (H1 2023: 59%).

·      Cash flows from operating activities dropped to $2.0m (H1 2023: $6.6m), reflecting the flow through of lower revenues and the negative net working capital contribution.

·      Impairment of development costs $3.0m (H1 2023: $18.3m) due to lower revenue prospects for Broken Roads (VE title).

·      In January 2024, tinyBuild raised $12.3m ($11.4m net proceeds) from existing and new shareholders in a placing, subscription and open offer. Alex Nichiporchik (CEO) provided $9.7m in new funds, Atari $2m and other existing shareholders $0.6m.

·      Sale of Totally Reliable Delivery Service and Surgeon Simulation for an aggregate consideration of $3m (upfront net proceeds of $2.3m were received in H1 2024).

·      Net cash position of $9.2m as at 30 June 2024 (31 December 2023: $2.5m), after $8.7m investment in game development costs (H1 2023: $16.9m). Cash and cash equivalents remained higher than expected throughout the summer and it is anticipated to reduce towards the end of the year as the Company continues to invest in a disciplined manner in upcoming game releases.

¹ Includes amortisation of Development costs. Excludes impairment of Development costs ($3.0m) and share-based compensation expenses (see note 6).

Operational highlights:

·      Contribution from own-IP (first and second party) titles increased to 78% of Gaming revenues²  (H1 2023: 65%), primarily due to stronger performance of second-party titles.

·      Back catalogue³ sales decreased slightly to 89% of Gaming revenue² (H1 2023: 93%), due to a higher number of new titles launched in the first six months 2024 compared to 2023.

·      Release of new titles such as Lil' Guardsman, Tamarak Trail, Broken Roads and Astor: Blade of the Monolith, plus expansion of catalogue with the launch of Cartel Tycoon for consoles and Kill It With Fire 2 (early access).

·      The announcement trailer of Kingmakers collected tens of thousands views across all social networks in the first few weeks, making it one of the most successful announcements in the Group's history.

·      Among other titles already announced, Streets of Rogue 2, VOIN, FEROCIOUS, and SAND continue to track in line with expectations.

² Excludes revenues from Development Services and Events

³ Includes titles released prior to the current fiscal year

Employee Benefit Trust:

·      The Employee Benefit Trust continued to purchase ordinary shares on the market from time to time and now holds a total of 3,937,587 ordinary shares as at 27 September 2024. The EBT was set up in 2022 for the benefit of current and future employees and will continue to act independently of the Group to satisfy potential future option exercises of vested options granted.

Post-Period End highlights:

·      Released new titles Train Valley World, Level Zero: Extraction, DUCKSIDE, Rawmen and Drill Core, plus downloadable content (DLC) launches for Not for Broadcast and Punch Club 2: Fast Forward, which is now also available on iOS.

·      New trailers for season 2 of the Hello Neighbor animated series, Welcome to Raven Brooks, were well received, with a release planned in the second half of the year.

Outlook

·      The pipeline for the remainder of 2024 and beyond is strong and includes a number of larger-budget (above $1m), high-potential games alongside continuous investment in the catalogue including updates, DLCs and platform launches.

·      The implication of the conflict in Ukraine and the evolving macroeconomic situation impose caution and vigilance in the medium and long term. In particular, tinyBuild continues to carefully assess the position of its staff, its exposure in terms of revenues and any other factor that may have an impact on the business.

·      All considered, the Board remains confident the Company is on track to deliver results in line with expectations.

Alex Nichiporchik, Chief Executive Officer of tinyBuild, commented:

"In the first half of 2024 we achieved significant milestones: over 3 million wishlists across the portfolio, of which over 1 million in June alone after our new dedicated event tinyBuild Connect. Overall, our playable demos accumulated over 10 million views on YouTube with a total of 1.8 million hours played across only three games. tinyBuild currently has 4 titles on the Steam Top200 Wishlist chart, 3 of which are in the Top 100."

"In a difficult environment, our strategy of investing cautiously in higher-budget games is showing good results: we are building a diversified portfolio of own-IP, which gives us the best upside with the minimum risk. Once again, I want to thank our exceptional people for their enthusiasm and dedication - we have achieved a lot so far and we can look to the future with cautious optimism."

Enquiries:

About tinyBuild:

Founded in 2013, tinyBuild (AIM: TBLD) is a leading premium AA-rated and indie video games publisher and developer. tinyBuild has a strong portfolio of over 80 titles and it strategically secures access to IP and partners with developers to establish a stable platform on which to build multi-game and multimedia franchises.

Headquartered in Bellevue, Washington, USA, the Group 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.

OPERATIONAL REVIEW

The first half of 2024 in the gaming industry was a spillover of game cancellations and studio closures that occurred in 2023. Funding that was abundant until recently and supported ever more ambitious projects, suddenly disappeared leaving many studios struggling. Looking forward, we all need to listen to gamers first and foremost, validating our decisions as often as possible with the help of demos and real data.

Over the past few years we have refocused on products that connect with audiences, on infinitely re-playable games centred around systems: the one-thousand hour game. Over the past few months, we have started seeing the benefits of this approach. Since the beginning of the 2024 we have generated over three million wishlists across the portfolio, of which over one million wishlists in June alone. Shortly after our first dedicated showcase in May (tinyBuild Connect) we had six titles on the Steam Top200 Wishlist chart, three of which in the Top 100: Streets of Rogue 2, Kingmakers, Level Zero: Extraction, DUCKSIDE, SAND and FEROCIOUS.

We are also leaner and more efficient, with a lower and more flexible cost base. Significant effort has gone into enhancing internal processes, improving visibility and maintaining ownership of each line of budget, from the bottom up. We are improving the quality and timeliness of our internal reporting while making it more timely, which gives everyone more time to act in a fast-evolving industry.

In the first half, back catalogue and own-IP titles contributed 89% and 78% of Gaming revenue, respectively, (H1 2023: 93% and 65%), broadly in line with the average of the past five years. The pipeline of new titles has been realigned to maximise the long-term revenue and profitability potential, while maintaining a well-diversified portfolio.

In an uncertain environment, the Board is pleased with the operational reorganisation achieved to date and it is confident the Group is progressing in line with expectations for the financial year 2024.

Current portfolio and pipeline

In the first half of 2024, the release schedule included titles mostly from Versus Evil, delayed from the previous year:

·      Lil' Gardsman (PC and consoles) - A deduction adventure. Lil, an unlikely 12-year-old hero, is tasked with deciding the fate of over 100 unique characters.

·      Tamarak Trail (PC and consoles) - A deck-building roguelike, with customisable dice as players battle through randomly generated trails.

·      Broken Roads (PC and consoles) - A narrative-driven RPG set in Australia with a very distinct look.

·      Astor: Blade of the Monolith (PC and consoles) - A fast-paced action RPG where players play as Astor, a young warrior determined to unveil the secrets behind his creators' unforeseen demise.

·      Kill It With Fire 2 (Early Access, PC only) - An interdimensional action comedy game about murdering spiders. As The Exterminator, players will travel across the multiverse.

After the end of the period, tinyBuild published:

·      Train Valley World - An engrossing transport tycoon inspired by the genre classics. Build and manage efficient railroads across the globe - solo or in multiplayer.

·      Level Zero: Extraction - Tactical extraction shooter meets immersive survival horror. Play as rival mercenaries fighting for loot, or as alien monsters hunting humans. Solo or in multiplayer.

·      Rawmen (EPIC launch) - A light-hearted, third person food fighter. Players will battle alongside or against their taste buds (2-8 players), pitting average cooks with a talent for hurling fiery feasts against one another.

·      Downloadable content (DLC) for Not for Broadcast and Punch Club 2: Fast Forward.

·      Drill Core - Manage a team of miners, carriers, and guards through hazardous missions to extract minerals and power the drill platform.

·      DUCKSIDE - A persistent world survival game with player versus player, player versus environment, crafting, base building where you play as a duck wearing funny hat while wielding dangerous weapons.

Looking at the rest of 2024 and beyond, the pipeline is looking strong:

·      Streets of Rogue 2 - an immersive role-playing game (RPG) sandbox set in a vast, randomly generated open world that gives you maximum freedom to fight, sneak, hack, farm, build, steal, or talk your way to power.

·      Kingmakers - Go back in time to a war-torn medieval era with a vast arsenal of modern weapons, change the course of history, and save the future in this epic action/strategy sandbox.

·      FEROCIOUS - a survival shooter in which you will discover a lost prehistoric world full of deadly creatures under the control of hostile forces.

·      SAND - A multiplayer sandbox shooter from the developers of Secret Neighbor.

Investing and innovating for growth

In a period of uncertainty in the industry, the Group continuously reviews the quantum and allocation of investments into new higher-budget and higher-potential titles, with lower-risk investment in catalogue expansion. Since before the IPO, tinyBuild's mantra has been to build a well-diversified portfolio of own-IP that can be scaled into cross-media franchises, and we remain loyal to that while maintaining strict discipline on our investments.

Our nimble and decentralised structure is capable of handling larger projects, delivering high-quality titles across platforms on time and on budget. Recent announcements like Kingmakers and DUCKSIDE are good examples of how our sophisticated marketing strategy can attract a large audience even for a brand-new franchise.

So far in 2024, our focus has been on cash generation and financial stability. The executive team has become even more selective about signing up new titles, while we continue to take advantage of opportunities created by an uncertain macroeconomic environment.  We closed two small IP disposals and we stepped away from any potential acquisitions. We continue to invest more directly in studios we already have a good working relationship with and in titles spawned from our internal studios.

People

In late 2023, we took the difficult decision to initiate a cost action plan that led to the closure of four studios and a reorganisation of our publishing teams. These changes were not made lightly, and we understand the impact they have had on our employees. As a result, the number of employees decreased to less than 400 in June 2024.

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 Group remains focused on mental health and administrative support so they can settle in their preferred location across Europe.

Position and strategy

tinyBuild is well-positioned with a strong pipeline of new titles and a proven ability to attract, screen and market high-quality game franchises. Our balanced investment strategy aims at building a diversified portfolio of high-potential own-IP, and our multimedia franchise model allows us to extend the life of our IP, maximising our return on investment.

Our medium-term strategy is to expand our position as a leading global video games developer and publisher, focussing on IP ownership while creating long-term scalable franchises across multiple media formats. 2024 has seen significant progress towards that ambition, and I would like to thank all of our shareholders for their support.

Alex Nichiporchik

Chief Executive Officer

30 September 2024

FINANCIAL REVIEW

Results for the six months ended June 2024 were in line with expectations, and the Group closed two small IP disposals in the period to strengthen its financial position closing the period with $9.2m in cash and cash equivalents (no debt).

Revenue

In the six months to June 2024, tinyBuild revenues were $18.8m, a 19% decrease compared to the previous period (H1 2023: $23.3m), primarily attributable to the $3.8m drop in development services revenues and to continued underperformance of Versus Evil, only partly offset by tinyBuild core publishing label's retail sales. Excluding development services and events, revenues in the first half decreased 4% to $16.8m, highlighting the resilience of the portfolio. Back catalogue performed strongly in the first half, supported by over 80 titles and by well-established franchises such as Hello Neighbor, Graveyard Keeper, Potion Craft and Streets of Rogue. Revenue from events, primarily DevGAMM, were stable at $0.6m as the Group consolidated the new events in Central and Western Europe.

FINANCIAL REVIEW (continued)

Adjusted EBITDA and Operating Profit

Adjusted EBITDA is presented net of amortisation of development costs, excluding impairment of development costs, share-based compensation expenses, exceptional costs (e.g. legal costs related to M&A) and other operating income, giving a clear yet conservative picture of the business progression. Adjusted EBITDA was negative $1.9m ($1.2m loss in H1 of 2023), reflecting a significantly lower revenue base, stable amortisation of development costs ($4.5m in H1 2024 vs $5.0m in H1 2023), and a less favourable revenue mix (higher share of third- and second-party titles).

Operating profit for H1 2024 was negative $6.2m (H1 2023: $31.9m loss), after accounting for the $3.0m impairment of development costs (H1 2023: $18.3m). Excluding the impairment charges, a lower EBITDA is offset by a $0.8m gain on disposal and by lower general and administrative expenses ($11.1m in H1 2024 compared with $13.6m in H1 2023).

Finance costs and taxation

As the Group carries no debt, finance costs were immaterial in H1 2024. Taxation charges were $0.3m (H1 2023: $6.4m credit).

Impairment

In H1 2024, tinyBuild incurred $3.0m charges relating to the impairment of development costs ($18.3m in H1 2023) and no charges relating to M&A-related intangibles ($6.1m and $2.7m relating to goodwill and other intangibles in H1 2023 respectively). These non-cash charges reflect the adjustment of expectations for future revenues of Broken Roads following a disappointing launch in April 2024.

Cash Flow

Cash flows from operating activities were $2.0m ($6.6m in H1 2023), including a $1.4m decrease in net working capital (H1 2023: $4.2m increase). Software development costs, mainly consisting of developer salaries, advances, localisation and porting, decreased 48% to $8.7m ($16.9m in H1 2023), reflecting the rationalisation in investment for upcoming pipeline releases carried out towards the end of 2023.

In January 2024, tinyBuild raised $12.3m ($11.4m net proceeds) from existing and new shareholders in a placing, subscription and open offer. Alex Nichiporchik (CEO) provided $9.7m in new funds, Atari $2.0m and other existing shareholders $0.6m.

Employee incentive plan and EBT update

The Employee Benefit Trust continued to purchase ordinary shares on the market from time to time and now holds a total of 3,937,587 ordinary shares as at 27 September 2024. The EBT was set up in 2022 for the benefit of current and future employees and will continue to act independently of the Company to satisfy potential share awards, restricted stock units and future option exercises, once vested.

As previously announced, the Remuneration Committee of tinyBuild intends to utilise share awards to incentivise and retain key employees and executive directors and further announcements are expected to be made in the future. The share awards not only encourage share ownership and stakeholder alignment in the business but also serves to preserve cash resources that would otherwise be used by the Company to satisfy bonus awards.

Financial Position

The net cash position at the end of June 2024 was $9.2m ($2.5m at the end of December 2023), with the majority of the variation driven by the $11.4m net proceeds from the capital raise closed in January. tinyBuild has zero debt.

Giasone (Jaz) Salati

Chief Financial Officer

30 September 2024

TINYBUILD INC.

UNAUDITED INTERIM RESULTS

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024

TINYBUILD INC.                                                                                              

CONSOLIDATED CONDENSED INCOME STATEMENT

*Adjusted EBITDA is a non-IFRS measure and is defined as earnings after capitalised software development costs, but before interest, tax, depreciation, amortisation, share-based payments expenses, impairment and other significant one-off other income or expense items.

TINYBUILD INC.                                                                                              

CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

TINYBUILD INC.                                                                                              

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION