Tinybuild (LSE:TBLD) — Financial results for the year to 31 December 2021

0:01 Good morning, and welcome to the TINYBUILD INC investor presentation for the financial results for the year ended 12/31/2021. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a cat tab situated on the right hand corner of your screen. Simply click q and a, scroll to the bottom, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and we publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to

0:32 Alex, Tony, and Jazz of TINYBUILD. Good morning. Good morning, everyone, and welcome to the first annual results of TINYBUILD, after being a listed company. We listed on March 9, so just over a year ago, and we have had a very exciting year. The results are above what we, had set out to do, initially. And, really, the goal was to be able to create this shared incentive within the company. Right? Because being a private company, you know, we all know how that works. And then being a public company, I wanted to allow to facilitate the situation where everyone is a partner, right, so that we can share incentives both with our employees, with other founders of businesses that join us in our very bright and orange family.

1:26 I think, just, last minute, so that everyone, doesn't, fully panic. I think let's just give some context what, we do. And, can we just run the video first so that, people who are tuning in can kinda get an idea of what TINYBUILD is from a visual standpoint and what kind of games we publish? The video can be just a little bit loud, so please be prepared to adjust your volume if it's, you know, if it's a little bit too loud. So can we please run the video, and then we'll get on with the presentation? Thank you. Thank you so much. So this kinda gives you a flavor of the type of games that we work on.

2:42 We already did intro, so I'll just skip past that and go straight to the agenda where I'll just set some context here. We started out ten years ago as two guys just making video games. We had this dream of, let's make something that people will actually want to buy. Right? Because digital distribution for PC games has been going up, and it was essentially a revolution where suddenly anyone could make games and reach their customers. Then came mobile, then came console games that became a little bit more open to developers, and we were rising that wave for the past ten years. We started out as developer, then we started partnering up with other developers who were going through what we went after launching our first and commercially successful game.

3:27 And we kind of, have been a developer publisher hybrid. Right? So we have, 11 internal studios, and we have dozens and dozens of external partners whom we help bring their games to market. Now with that context in mind, you might hear my accent a little bit. It's, a combination of Latvian slash Ukrainian slash Russian. I was born in the Soviet Republic Of Latvia in 1988. And when the Soviet Union fell, the Latvian population got separated into two groups. One group got a citizen's passport, and the other, which included myself and my parents, did not. So officially, I have no citizenship in the world, which makes travel a huge hassle.

4:16 Only about 200,000 people in the world have this status, and that is a major reason why I have been having trouble over the past year of getting to The UK. And I can talk about that, you know, with the adventures I've had with my passport glitching out airport security for hours, so let's not get into that. Instead, let's talk about how our business started because the reason I mentioned my accent is, obviously, you're asking, well, what is your guys' exposure to Ukraine? So let's talk a little bit about that. Now we did start off with a lot of our development staff and our partners to use in both Russia and Ukraine. And I have personally experienced Kyiv in at the end of twenty thirteen when the so called orange revolution started.

5:08 When in the Central Square, there were explosions, gunshots, and, you know, a full on civil revolution has happened. We have been at the conference there. We heard the explosion, the gunshots, and seen that have seen it firsthand. So when in January, we started seeing a lot of buildup on the border between Ukraine and Russia, especially from the North with Belarus, I had assembled all of our senior leadership to get together and do essentially a military exercise of what would we do in a mild case, you know, if something like happens in the East Of Ukraine, to the absolute worst case of when airports get bombed, what are the logistics that you use, what happens if this bridge gets blown up, what are the more likely routes that the military would take? Where are the nearest bomb shelters, etcetera?

6:05 So doing that exercise was, extremely difficult for a lot of people because you always want to think that nothing bad is going to happen. I believe it's best to be prepared for the worst case scenario while hoping for the best one. And, a few weeks later, I had been, at the conference in, Las Vegas, and I got a code black message. Code black in our notification settings is worst case scenario is happening. So we drop everything, and we were able to very quickly execute the worst case scenario. We had all of the communication lines set up. We had an idea of where everyone was. We had all of the phone numbers, all the emergency contacts, and we executed what I believe is, for a gaming company, an unprecedented evacuation scenario where we were able to extract everyone who was able to leave out of Ukraine within the first forty eight hours. And then over the next weeks days and weeks, we were able to get everyone to the relative safety of, Lviv in Western Ukraine.

7:15 And I was just chatting last night, to one of our team leads who was finally able to make it out to Europe. Because what you need to understand is if you're male and you don't have three kids, you will and you're 60, you cannot leave Ukraine right now. And I was just chatting with a team lead that does have three kids on what his travel was like from the middle of Ukraine going through fields, going through posts set up by farmers, going through swamps, and having to bury their dog in the middle of that trip. Sorry. This is, this is an unprecedented, event that I never thought we would need to experience.

8:06 So, after, getting everyone to the relative safety of Lviv, we, also worked on people helping people who are able to get to the Ukraine passport, you are able to get to the European Union. We have set up people in Latvia and, The Netherlands. I have personally welcomed everyone to, my own real estate, there. And, right now, there are 10 people in my house in The Netherlands, and we're helping everyone get more permanent housing. We continue to monitor the situation in general, and it's very fluid. I just wanted to take this moment to thank our senior staff for putting enough faith to do that military exercise, which I believe saved some lives.

8:54 Was that out of the way? And I'm happy to take questions on that, and there are articles about this. And just follow my Twitter feed on some more details of what we're doing to help our colleagues in need. With that, let's talk about the actual full year results. In 2021, we were able to achieve record revenue and EBITDA growth. We have been able to achieve record EBITDA margins. We have over 30 tiles in our pipeline right now. Most of our revenue comes from our own IP, which then, you know, directly contributes to a higher EBITDA margin. We also did seven m and a deals that we call acqui hires. Most of them are acqui hires. That is when we take a team, take their assets, and put into a new company, hence, the word acquihire.

9:43 And right now, we have $49,000,000 in our cash war chest and an unutilized $25,000,000 credit line facility. So this was supposed to be the video slide, but I decided last minute to show the video in the very beginning. So that's why that slide was empty. Now I talked about TinyBuild's initial humble beginnings where we started out working with developers predominantly in Eastern Europe and really helping that scene thrive. Over the past ten years, though, we have significantly expand. We have studios all over the world. We have studios in Europe, in The US. And most recently, we have acquired Red Cerberus, which is a localization and quality assurance provider in South America, giving us a strategic footprint within that region.

10:36 Now localization and quality assurance is something that's when you make a game, that's a a service that you need. And most of the time, companies of our size would be outsourcing that service. Now we have noticed in the beginning of the pandemic that bringing more services in house into our studios or into something centralized is going to be vital, and that is what we believe has been, triggering a few delays in the industry that we have seen. Because it's just difficult to have good contractors during a pandemic because everyone's working remotely, and the teams that need to essentially create dynamic, micro units based on projects have trouble doing that when they're remote. And if they are able to do that, then they have a lot of clients. So we are mitigating that dependency by bringing more things in house.

11:30 Some stats here that we'll get into details, and we have over 70 games published. We have over 400 staff globally, 11 studios, and 1,500,000 social media followers. Now what we do is, we take a portfolio approach to our business, and our business is essentially selling games. Right? You, a fan or a customer gives us, let's say, between 10 and $50 and downloads our game on whichever platform. We publish on PC, we publish on consoles, and we publish on mobile. So our business model at this core is premium game sales that then is diversifying into game as a service, into mobile games, into some free to play titles that we will be announcing later this year.

12:21 But the word of the day is portfolio focused on our own IP, our own intellectual property. Because, most of the time, what happens in a publishing business, in a games publishing business is, you find a really great developer. You're the publisher. Right? You have this publisher developer relationship. And that is where we started when we started helping out a lot of developers. And what hap what can happen in that relationship is you make a hit game. It sells a lot of copies, and that is exactly what you want. That is great. But then what you also did in that transaction is you have created new IP that is becoming popular that has a potential to become a franchise. And the reason we decided to invest into our own intellectual property is that when that situation happens and we own the intellectual property, it's not a transactional relationship between the publisher and the developer. It's a relationship that is aligned to create a franchise.

13:20 So to give you a practical example, several times, and this happens across the industry. This has happened to us. When you have that transaction of publisher developer make a game that becomes popular, the developer makes a lot of money. The publisher makes a lot of money. It's all great. But then the developer may be disincentivized to continue working on what they had just released because creative people, and it's fine, it's solely normal, wants to continue creating something new. However, what we can do now when it's our own IP is we can take that IP, give that to an internal studio or one of our external partners, and continue developing. This is exactly why a little game called Hello Neighbor has become a franchise because we were able to do that. Now just looking at the diversification of our revenue streams, you can see that we are not dependent on a single tile or a single IP. We're pretty diverse, and we are driving revenues through our own IP. And I'm talking faster because my coffee just started kicking in, which I chugged right before this call.

14:24 Now, let's talk about our catalog, because it's really easy to talk about, you know, the sexy new game releases. Right? That's that's what everyone, talks about in this industry. But that's not where we focus. We actually launched more games in 2019 than we did in 2021, yet you have seen our full twenty twenty one results. So back catalog is defined by any game that has launched in the previous calendar year. So if we were to launch something in, let's say, December, then in January, it would be defined as back catalog. I didn't make this up. We started using what other peers in the industry have, and I implore everyone to try and invent a new method of defining this. And I'm sure that by the next results call, we will do so.

15:18 What happens here is, let's say a game launches, you know, a few years ago. What we do is we continue working on titles because when we launch something, the idea is not to have this spike of sales and then a drop off. The idea is to have a really, really good long tail of sales. And we're seeing this with tiles that, you know, can be two, three years old or even our very first published tile speedrunners close to ten years ago, can still be visible in our top 10. Now this just means that we have a very stable backbone of the business that continues to grow, and it's not just about new releases. New releases are great. They are easy to talk about, but the bulk of the work happens on the back catalog. Now talking about, I'll just take a quick sip of water here while I mute myself.

16:11 There we go. So talking about our innovative marketing approach, you can see that, we are above and beyond, our peers in terms of social media followers. And that's because we treat TINYBUILD as its own brand, as its own identity. And the goal there was, to directly connect with the audience on an emotional level and be where they are. So we are not necessarily investing a lot into what we call shrinking platforms, and that's Twitter and Facebook. Right? The old school social media platforms. Instead, we are constantly looking for something new. We're looking to invest into something where our audience is. So if you, want to get a prime example, just go to our TikTok channel. Just search for TikTok TINYBUILD, and you will find it.

16:59 And that will give you an idea of the levels of engagement we are having that really help drive our brand forward. Because what happens is our fans, fans of TINYBUILD, are also fans of influencers, and we know how to create content that

17:14 both influencers and our fans love. And then our fans will ask the influencers to play our games, and that is on top of direct relationships we have already built up. And that creates this symbiosis, right, where, in a symbiotic relationship, we create something. Our fans love it. Influencers love it, and our fans are influencers' fans as well. So it's kinda like this feedback loop. Now talking very briefly about our m and a execution. Most of the studios here in the front row were, studios we had an established working relationship. So between where five games, Hungry Couch, the developer of StreetSoup for Rogue, Animal, we already were working with those developers. And it was a very easy, straightforward integration.

17:59 It allowed us to build up our back, office capacity to integrate these studios with what we call light touch integrations where we help wherever needed, and, otherwise, the studios are independent. Then Bad Pixel are the developers of Deathsight, which was the first case when we, acquired the studio that we didn't work with yet, and the game was already live. And I'll talk about that in a little bit more detail because I spent over a hundred hours playing that game before we decided to start chatting. Then versus evil is our complementary publishing brand. And Red Cerberus, I already mentioned that, that is our strategic investment into getting foothold in South America. And I already mentioned our cash position and our credit line.

18:48 So let's talk about Bad Pixel, the developers of Deathsight. Now I'm a huge fan of survival games and shooters. I was actually a professional gamer in both Counter Strike and Warcraft three back in the day. I wasn't any good in either of those games, but I played in tournaments and I made money off of it. So that counts as professional gaming. That career did not turn out well for me. But what happened here is I was playing this game called Deadside by an unknown developer, and I fell in love with it. And after about one hundred hours, when I kind of burned through all of the content that I could see in the game, I was like, where are the updates? So I reached out to the developers and asked them this. Where are the updates? And they shared their story of what they are experiencing because they were a very small team that suddenly had something super special on their hands and were juggling too many things.

19:43 Community expectations were really high. We're not communicating properly. Essentially, they were going through what our other studios that have joined us years prior were going through, and we had a template that they could use. We had the infrastructure that they could use. And partnering up, them joining us, as an internal studio made a lot of sense. And, flash forward to today, in March.

20:09 On March 4, we have launched updates point two zero point 2.7, which added a brand new response system and many other things. We launched it from, by the way, Kyiv because the, team lead is was in Kyiv, and, he was, fleeing to, Alif on that day, and he really wanted to launch the update before he left. So applause to Vladimir, who is a phenomenal team lead on this project. So we launched the update, and we have more than doubled our concurrent users. And the game has been our top one selling game on PC since we did over the last few weeks. That just gives you an idea of how we can add value to studios that join us and how it is strategically cohesive.

20:57 Let me check the time. Yep. We're good on time. I will hand over the microphone briefly to Tony, our CFO, to do the financial review. Thanks, Alex. For my part, I'll go through our financial KPIs before taking a deeper dive into our financial statements. Our first financial KPI that we look at is our net gain revenues. In 2021, we we were able to achieve 51,300,000 in net game revenues. This is largely due to the strength of our back catalog as well as release of new games. Our second KPI is our adjusted EBITDA. In 2021, we were able to achieve 22,200,000 in adjusted EBITDA. This isn't only attributed to our growth in our revenue, but also this attributed to that transition from third party to first and second and the margins that come from transitioning from third party to first and second party.

21:52 Lastly, we'll look at our adjusted cash from operations. In 2021, we'll dip below a 100% in our cash from operations, And this is largely attributed to a successful holiday season, not just in terms of sales, but also in all our, revenue generating opportunities that was around that time. And we'll take a deeper look into our cash from operations and the cash flow statement. So for the next slide, we'll go through our p and l. In our p and l, the main thing to look at here is our adjusted EBITDA and the margins that come with our adjusted EBITDA. And the reason why I point this out is is because the ex the expectation going forward is whenever we release new games, this will have an effect on our adjusted EBITDA in the short term. And then in the long term, it should correct itself as as our games go into our back catalog.

22:41 Our next statement, we'll look at our cash flow, for the next slide. So in our cash flow statement, you know, as I mentioned, the the largest, essentially, difference has has been that, increased decrease in our receivables. You know, this is again largely due to a successful holiday period, as well as, not just in sales, but also in our revenue generating opportunities. It is important to note that these receivables are from blue chip companies, and there hasn't been any material risk in terms of receiving the receivables. Most of your receivables already been been received by the company. This is due to the payment terms in terms of our platforms and partners.

23:29 And for the last slide, we'll go through our balance sheet. In 2021, this was a a year of m and a for TINYBUILD, And we could see the the impact in terms of this m and a when we look at our balance sheet, when we look at our current assets and and the increase in our intellectual property, brand, software development, goodwill, and and other current assets, as well as an increase in our current liabilities all being attributed to the this m and a. With that, I'll hand it back to Alex to go through our outlook.

24:04 Thank you so much, Tony. And I just keep misclicking the arrows here, so apologies for that. I think it's important to reiterate our core strategy because I mentioned our focus on intellectual property and creating something long term, something sustainable. So at the core of our strategy, we are a developer publisher, and what we do is we focus on discovering, creating, helping develop intellectual property that we can then take and scale into franchises and take to multiple media formats. There are many pieces that go into this puzzle because the statement is simple, but then what you need to have is you need to have aligned incentives. That's why we have listed on the London Stock Exchange. We need to have internal development capacity so that we can dynamically shift projects around whenever they have a hype going for them, whenever they have that potential to become the next franchise. We need to have the capability to execute on cross media.

25:04 We need to have, internalized services so that we do not depend on external, vendors, and are able to, again, dynamically shift to what makes sense. And this is all culminating into where we are now with 2021 being a phenomenal growth year and, really great things, set out for 2022. So this, I'll just reiterate again on the portfolio approach that we have to grow. Because, when when you look at, some publishing labels, they may have, you know, a very defined, genre, right, or a focus somewhere. We have deliberately focused on several different directions to get different target audiences within different genres, was focused on different platforms. For example, Happy's Humble Burger Farm that we have launched at the end of last year, we knew that was a pure console game.

25:59 It did launch on PC. And then if you look at, for example, Steam Stats or if you look at Steam Spy, you're going to look at it and go, okay. Well, that may have not done so well. It did really well because it's a console game first. And full disclosure, the cofounder of Steam Spy is our sales director, so we have some insider information there. But when what we knew is we needed to diversify not only within different genres and platforms, We also need to diversify within publishing labels. That's why we have acquired Versus Evil as a complementary publishing label. We also knew we need to diversify within business models. So we started out by just selling games. Today, we sell games. We have free to play titles. We have, titles that have, different, in game monetization schemes, and we also work with subscription services, such as Xbox Game Pass to get, licensing fees for games and, services like that. So this portfolio approach is across the board, and it was to create a really solid backbone that is sustainable, predictable, to be able to invest into more, and bigger things.

27:10 With that, let's just take a look at PotionCraft, which is, going to be the more visible example of last year. It's a game that came out into early access, which means that it's still in active development. It's set to go towards its full release later this year. So being an early access game, it launched on Steam after, a Steam Next Festival. Steam Next Festival is, essentially a demo festival where there are a lot of playable, games available. So we launched it during that festival with a focus on one of the main KPIs that we use, which is time spent. Because, really, if you think about, we're not competing with our peers. We're competing with everything for people's time. We're competing with sleep.

27:56 I believe the Netflix CEO said that their biggest competitor is sleep. So with Potion Craft, it's a game about crafting potions, brewing them. It's a really soothing

28:05 experience that we knew people could spend dozens of hours in, and they did. This game was the top one, played game during that festival, which skyrocketed its marketing campaign to new levels. We launched it. We were, able to recoup the investment very, very fast, and we were in the top selling chart for a few sorry. The coffee is kick kicking in. We were the, top selling game in the first week, I believe. Yeah. I'll, I completely botched that, but you get what I mean. So this is for an early access launch, though. Right? So the game is not fully out. It's out only in a limited capacity on Steam. So when it launches later this year towards one point o or full release, you kinda get an idea of what to expect because it has just stopped 600,000 sales being an early access game.

29:02 So let's do a quick strategy check. We have followed this strategy ever since we listed. We have followed it for years before, and it's all about leveraging our existing IP, right, taking it to new places, expanding it, using different ways to create franchises. It's about acquiring more IP, acquiring talent, and building out this infrastructure that enables us to create more franchises and expanding those franchises to new heights.

29:34 Now the outlook, according to the board, remains confident. So the board remains confident the company is on track to deliver results at least in line with expectations plus having some accretive acquisitions. I'll just be phased out that, I did talk about m and a a lot here, and the the m and a, deals we have done were not accretive last year. Most of the revenue we had last year was organic. It's not like we listed

30:03 and then suddenly started buying EBITDA or revenue. That is not the case because the m and a deals have happened at the latter part of the year. And let's talk about the one more thing, which I'm sure you have all, been waiting for, which is Hello Neighbor two. Now I'll just preface this saying that Hello Neighbor is a big franchise for us. There is no doubt about that. But it's not the only franchise. It's just the most visible example that we are using to create a franchise, and then other games are following the blueprint we are laying out here. So Hello Neighbor two, the the game has been in development for quite some time. We have had two playable builds, release. We call it, alpha builds.

30:48 Right? There's there was alpha one point o in June, 2020 and alpha 1.5 in, October 2020. The reason, we do those is, one, to generate some marketing hype around the titles and also to gather data. We are extremely data

31:05 driven in our game design, because the design of Hello Neighbor two is something completely new. Like, there's nothing out there. There are no reference points, of that we could just say, okay. Make a game like this, but make it better. So we have been expanding the universe here. We have, other spin off products, specifically Secret Neighbor, Hello Engineer, and Hello Neighbor Hide and Seek, which are essentially accretive products to the overall brand. We have a, book series. We have novels. We have toys, etcetera. All of this is culminating in Hello Neighbor two that will be launching in preorders next week on April 7. And what the preorders will do is they will reveal the launch date of the game, first off. So that's coming on April 7, not the game, but the launch date announcement.

32:00 And whenever, fans preorder the game on PC, Xbox, or PlayStation, they will also get access to the beta of the game. And why would people play alphas or betas? Well, the way we're approaching development is, being able to play games during development is part of the game. And I have a lot of presentations. You search for my name on exactly what that means. So that is extremely exciting. I'm looking forward to April 7. And, also, slight, short announcement, I guess, is that we have moved into production on the Hello Neighbor animated series.

32:41 The original pilot for that series aired, over a year ago. It has over 20,000,000 views on our own channel. And after seeing the feedback and the expectations we set to the community, we spent, last year crafting a really, really interesting story with great writers that are well known for their craft, and those writers have been working with the development team of Hello Neighbor two so that the anime series and Hello Neighbor two tie together in a cohesive way.

33:12 That said, I'm more than happy to take questions, tell unfunny jokes, etcetera, so we have some time for that. I'm sure your jokes won't be unfunny, only mine. Look. Thank you very much indeed to all of you for the presentation. And ladies and gentlemen, do please continue to submit your questions using the q and a tab situated on the right hand corner of the screen. But just while the team take a few moments to review those questions submitted, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

33:42 I'd now like to hand you over to Jas for the Q and A session. Jas, as you can see, we've had a number of questions both pre submitted and throughout today's presentations, and thank you to all the investors for submitting those. Could I please ask you to read out the question and give responses where appropriate to do so, and I'll pick up from you at the end? Thank you. Good morning, everybody. So we received a few questions. I'm gonna start in chronological order. The first one we received over the past few days is, is for Alex. What do you think about the brand the brand expansions, plan for for TINYBUILD games and specifically with, a diversification strategy in mind, including merchandise, TV programs. You mentioned the Hello Neighbor in the past.

34:24 Yes. So, with Hello Neighbor specifically, we're building this blueprint. Right? I mentioned the animated series. Essentially, the way to think about is we have a very high margin business on digital game sales. Right? We know that business in and out, and we are using that to fuel expansions into other mediums, including merchandising, including linear media, which is live action and animations. Now in the short term, those are going to be treated as marketing initiatives, right, to expand exposure

34:56 to those brands, to elevate them to a higher level, and then drive game sales. And if we have seen anything with a very well crafted series, when the witcher came out on Netflix, there was a direct correlation with a sales uptick for the witcher three video game. So that's short term. In the long term, we all know that, technology disrupts media every decade or so. So who knows what's going to happen in ten years?

35:24 Maybe we'll have microchips in our brains, and we'll be consuming content that way. What will transition, though, is intellectual property, and that's why we're investing into it. Second question is on on the situation in Ukraine. Can you speak about the staff in in in the affected regions, including Belarus and Russia?

35:48 What is their mood? How is their how that can be impacting the release schedule for us going forward? And what are the plans if the situation was to escalate any further?

36:03 Right. So first off, there is not a single team member in TINYBUILD or Partners to use that supports the war. We are fully against it, and we do not discriminate people based on their passports. They like, much like myself, I had no choice that, you know, I got, strapped of citizenship.

36:22 What's, we are doing is, highly highly encouraging everyone to leave and supporting them in doing so. After we have, handled the immediate threat to life, in Ukraine, the second part of the plan that I did not, talk about yet was to extract as many people from, sanctioned regions, doing it in a legal way just in a very, very fast way. In practice, what that meant is, everyone who

36:53 could leave by, and by could leave had an international passport and didn't have, you know, like, a child with no passport or, like, a pet that couldn't travel or elderly parents that fully depend on them. Those people, and there are over 40 of them, were able to leave and set up in a new location that we have been working on in the Balkans within the first couple of weeks of the invasion.

37:21 So we are fully supporting and encouraging people to leave Russia and Belarus and are facilitating the logistics and supporting people financially. An important note here is while, Ukraine passport passport holders are able to freely travel through the Schengen Zone, Russian and Belarusian passport holders are not. They require a visa. Otherwise, we would have already welcomed everyone to our European locations. Right now, we're setting up in the Balkans. And from

37:51 there, we will, be doing more massive, relocations as, documentation, is available as in passports and visas. Next question is on the company profile. What are you doing to increase visibility of TINYBUILD with investors? You have a a very strong strategy on games,

38:14 innovative marketing approach, social media following way ahead of competitors. What about that with investors? Jess, do you mind if I throw that to you? Because you're our investor relations. Yes. So what we have been doing over the past twelve months and before listing is taking a long term approach. So we have engaged with media, and we we have engaged in a constructive way, in an organic way. We're building relationship, and we start seeing a much increased coverage over the last few weeks, and we expect that to continue.

38:52 Profile with investors, so we think we'll we'll rise as we deliver on performance. We like to be behind the curve. So as we have done with our results, always delivering ahead of consensus, we think we will come further and more stronger if we if we deliver ahead of expectations going forward. Next question is on on the, built up of revenues. Can you help us understanding, how much of that is one off in nature? How much of that is recurring? And attached to that, what is your visibility on revenues for the following year, specifically on 2022? Yeah. So this one is quite easy. Right? Most of our revenues comes from what we define as back catalog, and therefore, it is very predictable and sustainable revenues.

39:44 And just, again, to clarify, back catalog doesn't mean that there's no work being done on those games. There is a lot of work being done on titles that are already launched, and some titles, have their best years, sorry, have their best performances years after they launch. So I'm I've always wanted to build something that is very sustainable, that can fuel growth, right, so that you have multiple titles, multiple sources of revenue that you can then reinvest into growth. And that was a very, very difficult job for the past ten years, and I believe that right now, we are reaping the benefits of that with the portfolio approach that we have. Next question is m and a. You mentioned a good execution last is the m and a pipeline looking like now?

40:40 Do you see inflation on multiples bigger requests from potential targets? What is your strategy in general also from a geographic standpoint? Right. So from a geographic standpoint, we have a few regions that we are looking into, where it it would strategically make sense to have, you know, a studio or a subsidiary, etcetera. But then, it's all strategic. Right? It's not like we're just, you know, looking for something very, very specific. We're looking for great founders that want to join us and help make their business bigger. And now with, Deadside and then, I believe versus evil will also have that soon, we will see concrete benefits of joining a group like TINYBUILD. And the goal here is so that it's very crystal clear on who does what was in the group and that everyone helps each other in both a strategic and operational way.

41:35 So that, you know, it is very easy to start buying companies when you're publicly listed for EBITDA's sake. Right? We we don't like playing in the, I I call it the the overall sandbox, you know, where all of the other kids are playing, because, you know, it's crowded, it's hot, and, you know, it feels like there's a lot of fear of missing out. I'm I'm like, if you imagine a playground where everyone's playing, I'm going to be the quiet kid in the corner that, sits in the shade and does something else that, no one else is doing. And just you know, we do our own thing. We strongly believe in it, and, that is why historically we have not been paying huge multiples. And it's all about the long term incentive for the founders because the way I see it, we all become partners in building something bigger. It's not like, you know, someone we buy someone and they become, you know, subsidiaries and then report to other people. We are all partners in this. That was the goal of listing.

42:36 Next question is very interesting on how do you forecast the success of a new game from scratch before launch? Yeah. We use a lot of data. I've, mentioned that throughout the presentation. For example, the Steam festivals have become an integral tool, into doing that. But then before before those festivals, we would always like to give a playable build to players' hands as soon as possible. Pre pandemic, we have been doing that a lot during conventions. We invest a lot into marketing ourselves at these conventions as, you know, if you come in and you see this bright orange carnival with lights and, that's what we have been doing is we we like to create this feeling of a theme park within a video games convention. That's not something you expect, but then, every single target audience, you know, families, older gamers, younger gamers, they all love this kind of feeling, and we would do a lot of playtesting there.

43:38 Now during the online game times, we use festivals. We use AB testing and making data driven decision decisions based on KPIs within those builds, seeing what works, optimizing what works, and, then making decisions on which platform should we focus on, who is the target audience, how do we reach that target audience. And based on that, we can create a forecast. But then all of this is, I just want to reiterate, it's very, very data driven. Another question on m and a. There has been a lot of m and a also around TINYBUILD. Microsoft for Activision is a good example. How is that changing the environment for a in the games and for TinyBuild in general?

44:24 Yeah. I think if we talk if we look at the mega mergers, right, like the Activision Blizzard acquisition, that was that was more money than all of 2021 combined. Right? So that that's a crazy transaction. I think it's going to get increasingly difficult for companies to be able to buy larger developers. So I can't like, today, I will not be able to name many independent studios that are over 100 people. However, on the indie and double e front, you know, when we talk about a dozen people, maybe two dozen people, new companies spawn every day. So there is no lack of talent and, assets that are popping up there, and we were able to grow with the industry, you know, going from really small games developed by one or two people to these, you know, projects that have, close to 100 people.

45:20 So for the larger transactions, there is definitely consolidation happening. It's going to get even worse and more difficult to find assets. On our scale, where it's all decentralized in the NAA, I don't think there is a huge challenge there in the foreseeable future. Next one, on game as a service, model. You mentioned that a few times in the presentation. Can you tell us how that changes the the way of making games? Do you expect that to become bigger component of TINYBUILD, and does it come with higher or lower margins? So game as a service, in practice, what that means is when you launch a game as a service, you have your development timeline, right, and you have your development resources.

46:08 And in the old days, you would just package that up, ship it, and go to the next project. In game as a service, you have developed it, you launch it, and then your team actually grows and becomes bigger. And what we noticed is this does not work in the traditional publishing model where you're a publisher, you come to a developer, and you publish their third party IP. We have seen this fail over and over again where developers eventually get their rights back and continue operating themselves or just abandon the project. This works if you have an internal studio. And having an internal studio comes with bigger margins, and it is also coming with more sustainable and predictable revenues because you operate it as a service. You know, it's it's in the name. So I am a huge fan of this model, and we have seen different iterations of that pop up over the years. You know, we just talked about Activision Blizzard. I am a huge fan of Call of Duty Warzone, which I believe was the best decision they could do, is to provide a service to Call of Duty players.

47:09 Same with Fortnite. We've all seen that. And then if you look at the biggest games in the world, for example, Minecraft, that is also a service like game that gets continuous updates over a decade after it launched. Another question topical today. As some of your competitors, report on, increasing cost inflation and increasing, and higher guidance on, on, staff cost, What are you guys seeing? Is that gonna impact your cost line and margins going forward? Well, we historically, we have not been playing in those, you know, sandboxes that I mentioned. So there is huge inflation in The UK, in the West Coast Of The US, etcetera. So, we're not as exposed to that. We do have a lot of developers in emerging regions where the salaries are not as high, where the cost of living are much lower. And in those regions, we pay above market because we want to make sure that our team members have a good work life balance powered by, you know, their ability to, well, to have really good funding for their lives.

48:22 So we are not seeing that as much. And for our Ukrainian and Russian and Belarusian employees that we are extracting from those regions, we are setting up in the Balkans, which I mentioned, which have very comparable costs. And then I believe I forgot to mention that we are also opening up a third location within the European Union alongside our Netherlands and Latvia location where the costs are going to be much lower than in many Western European countries. So we're managing that, and we do not foresee a huge uptick there. And we have time for one final question, which which might be actually interesting for for many of many of the listeners. Question is, what do you think of the new handheld device, Steam Deck? Would you buy it for your kids?

49:18 I actually have a Steam Deck. Valve was very kind to provide one for us as a partner. And I do believe that they have something really special there. The challenge is going to be, well, making enough units, right, because of the the chip shortage that is happening in the world. So I am a firm believer in portable gaming. I have been playing on my Nintendo Switch for a long time. I play on my phone quite constantly on on my iPad. I I think that there is a large chance for disruption in the industry, and we have spent significant amount of resources over over the past few months on optimizing our back catalog to be compatible and playable on the Steam Deck. So I'm I'm quite excited about that device.

50:08 That's fantastic. Thank you very much indeed. And, Jas, thank you for hosting the questions. If there are any further questions that do come through from investors, of course, the company will be able to review those. And we publish responses where appropriate to do so on the investor meet company platform. Alex, just before redirecting investors to provide you with your with their feedback, which I know is particularly important to you and the team, can I ask you for a few closing comments, please? Mhmm. Sure. I think I'll just maybe wrap on the positive note because I I got a little bit emotional in the beginning of this presentation because, you know, of the stories that I keep on hearing. I think if you look at our company, we have had a tremendous growth during the pandemic. And, many people have been, working together remotely, not seeing each other, and, you know, you can do so much team building when the world is unpredictable in terms of travel and restrictions, etcetera.

51:02 Now during this, troubling time, despite everything, what I'm seeing is really, really significant team bonding that is happening between our employees because, you know, they're now traveling together. They're relocating. They're, getting new lives set up. And all of that is as terrible as it is, it's a once in a lifetime experience that I believe, when we are out of this terrible situation, is going to create the most resilient, and strongest, entertainment team in the world. So once again, I am grateful to, all of our investors and our team members, for supporting each other during this hard time.

51:48 That's fantastic. Alex, Tony, Jess, thank you again for updating investors today. Can I please ask investors not to close the session? It should be automatically redirected to provide your feedback in order that the team can better understand your views and expectations. This will only take a few moments to complete and will be greatly valued by the company. On behalf of the management team of TINYBUILD INC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you very much, and good morning to you all.