Tinybuild Share Discussion Threads

[disc0dave45] 31/3/2023 09:23

Overall I thought the presentation was interesting and fairly positive. What did amaze me was the mention that at a gaming conference (or some gaming event) they took on, what sounded very random, 50 new employees, just like that....they had 150 employees in 2020, they now have circa 500, no wonder admin costs have increased $20m in 12 months. Are they trying to grow too fast and is their "decentralisation strategy" a reaction to the fact they have too many staff spread all over the place that it's become unmanageable?, so let's tell employees they can manage themselves.The only other slight niggles for me are-- Luke's sudden departure, as a Co-Founder IMO a separate RNS would have given a much better signal of consent and respect rather than the way it has been done - no words either from Luke, did he jump or was he pushed?, IMO the latter seems likely given his input / role was clearly being diminished. - They said no board member is selling shares but that would now exclude Luke.-When / if Alex starts to buy that may be the signal the market wants to see?. Rule 9 waiver shouldn't take this long!.-Their future contingent considerations are unclear to me and are of significant value.

[se81] 31/3/2023 09:11

Insti continues to sell down- you can routinely buy at bid- most notable transaction is 100k buy paying over (!) which is bizarre given the supply available

[johndoe23] 31/3/2023 08:24

Well seems market didn't like the presentation

[se81] 31/3/2023 07:34

Interesting presentation on IMC last night- behind all the founder CEO enthusiasm and quirkiness and the strange world of indie games appears to be quite an impressive business (or at least one that has continued to perform well since inception)

Sounded like the CEO was planning to buy shares after a general vote (required due to his 38% shareholding)

Also interesting was the assertion that no one inside the company is selling shares and that he wasn't aware of any major shareholders selling down

I looked back on the huge turnover on Feb 9th and it appears that all the large entries (few hundred k and above) comprised of three transactions all totalling the same amount. One of each has since been deleted and you're left with what look like equal and opposites- so potential rollover trades? Thoughts?

[johndoe23] 31/3/2023 07:20

Yep, big overhang. Once cleared this could easily fly

[johndoe23] 30/3/2023 15:38

I see NT has bought in here

[gswredland] 30/3/2023 15:18

My buy is showing a s a sell on ADVFN

[se81] 30/3/2023 15:14

Quite the overhang still- some prolific buying at 50 and doesn't move!

[johndoe23] 29/3/2023 18:14

Expected a bit more of a rise today, without being too greedy.

[sev22] 29/3/2023 16:10

In the Investors Chronicle today:

TinyBuild needs to start generating real cash.

The games developer is difficult to understand because of all the adjustments to its profit.

March 29, 2023
By Arthur Sants

*Management says net cash will increase next year
*Q4 2022 “most successful quarter ever”

There is no obvious reason for TinyBuild’s (TBLD) dramatic share price decline in the past year. One broker said its failure to publish organic growth figures was limiting confidence, while another blamed the poor reviews for recent game Hello Neighbour 2. There is also the company’s tendency to capitalise its game development costs so that they don't hit the profit line.

The area that causes most concern is how quickly the company capitalises development costs. Capitalised software development rose from $15.1mn to $35.8mn due to investment in new games. Normally, these would be amortised over several years, with an exception made for products that become commercially viable very quickly. The short-term impact is to improve the profit line by not expensing those costs through the income statement, but this contributed to the net cash position falling from $48.8mn to $26mn.

TinyBuild may yet see a return on this development expenditure. After all, it said that back-catalogue sales represented 80 per cent of revenue last year, which suggests the assets have a long shelf life. Management promises that the net cash position will rise above $26.5mn by the end of December 2023.

Investors will be waiting for the day it brings in more cash than it spends. The flipside is that TinyBuild trades at a big discount to its peers – broker Numis has it on a forward price/earnings ratio of just six times. TinyBuild generated a 1.9 times return on its game releases last year and Numis thinks this can rise to over two times in 2023. At this valuation, we are happy to believe the story. BUY.

Last IC View: Buy, 110p, 27 Sep 2022.

[prince7652] 29/3/2023 15:46

All buys showing as sells at 50p including mine

[disc0dave45] 29/3/2023 11:43

They missed Rev forecast by 5% but eps by 33% due to additional development and admin costs incurred. That said IMO they could make circa 5p eps this FY, so looks good value.My only concern, as posted previously, is the increased cash burn, it was $17m in H2 (gone up threefold from H1), so given the increased RCF (up $10m) I'm guessing they could be drawing on this facility and be in net debt position at H1 this FY, but at least they've flagged lower cash in H1 then recovering to same level as end FY22.Not chasing it today and will see, been watching this for a good while and the massive sell off puts some doubt in my mind.....but that's why I miss a lot of opportunities! :)

[melody9999] 29/3/2023 10:45

thanks john. I've read the RNS this am and like the company and their approach. I worry about the cost control - especially the increase in General Admin from $14.4M to $34.4M. I assume this is explained by increased development $15m to $35.7M but the CFO should have commented on this specifically in his report.

On the flip side I am comforted by back catalogue sales representing c 80% of total revenue....so accept that, as the CEO states... on aggregate we are able to predict quite accurately our yearly revenues.

They also say "the net cash position is expected to dip lower in the first half of 2023 and to improve in the second half of 2023 to rise above $26.5m by the end of December 2023", excluding potential unannounced M&A. So it is good that they are flagging this now; and also good that they hold a $35M RCF with Bank of America.

Clearly costs have increased more than forecast....but on the other hand despite an extremely difficult year, they deliver a 21% increase in revenue, EPS up 32% and have cash to continue growing. They comment "the fourth quarter 2022 delivering our most successful quarter ever"
Meanwhile the share price has been decimated making TBLD cheap. So on balance I think this looks like a good entry point.

[johndoe23] 29/3/2023 09:59

Stocko. Had 8 cents or thereabouts. Not a big issue to me as share price has fallen so much! Forecast is at least in line which is good to hear

[melody9999] 29/3/2023 09:57

John 69 - when you say earnings below forecast, which forecast are you referring too?

[johndoe23] 29/3/2023 09:56

7p forecast earnings, could see 100p based on a Conservative 15 x forward earnings. If they deliver

[johndoe23] 29/3/2023 08:59

If they hit forecast numbers this is very under valued

[johndoe23] 29/3/2023 08:43

Yep me too

[tole] 29/3/2023 07:06

Dipped a toe in

[johndoe23] 29/3/2023 06:40

Decent set of results, revenue, earnings below forecasts but drop looks way over done.No position.

[se81] 29/3/2023 06:10

by the looks of those results think its safe to say that this has been heavily oversold and we are indeed waiting for a rather large overhang to clear....

[podgyted] 14/3/2023 19:43

Then, it'll be too late.