Tinybuild (LSE:TBLD) — Interim Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the TINYBUILD INTERM RESULTS INVESTOR PRESTATION. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish those or publish those where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you give that, your kind attention, I'm sure the company would be most grateful. It's a great pleasure to hand over to

0:32 the management team from TINYBUILD. Good afternoon to you both. Hello. Hello. Thank you so much, everyone, for being here. Welcome to the h one twenty twenty three results. The way that we usually do it is well, everyone has got the disclaimer, I hope. We are going to be presenting between the two of us. I will handle the operational strategic parts, and Jazz will handle the financial parts. I guess introduction presenting today. My name is Alex Niporschuk. I'm the CEO and cofounder of TINYBUILD. I come from a background of being in video games all of my life starting from playing them professionally and now living the dream of actually working on some of my own favorite franchise.

1:20 Jess, you wanna say a few words?

1:23 Yes. I joined TINYBUILD three years ago just before the IPO. I worked as a as a IR until recently when I was appointed CFO last June. Yep. So the structure will be that I'll do an operational review, then Jasmine will dive into the finances, and then we'll talk a little bit about strategy. So for the operational review, for those who don't know, last year has been extremely difficult for us because we had a substantial amount of people affected by the war in Ukraine. So we were in literal life saving mode. This year is a challenging year for different reasons, mostly having to do with lower than expected deals made with platforms.

2:09 And we'll talk about that a little bit more in-depth. It's a short term challenge that presents a long term opportunity, and the way that I like to frame it is in for the past few years, we had a few options and comparable with movies. With movies, you can sell them or license them to a streaming service, for example, to a platform, but that will limit your possible return on that, but it's also predictable. And you can also take the game to the box office, to the cinema, where you have potentially uncapped sales potential. So over the past few years, we've had a lot of, platforms hungry for content, for exclusive content, for license, etcetera, and that has come to a slowdown across the whole industry.

2:56 With that said, considering this, we have adjusted levels of investment to reduce our cash burn. We are doing ongoing improvements in our finance process. And for now, we have paused m and a to focus on cash generation. That said, we're still investing in new projects developed externally and internally, just that we are originating now more IP from that other than mergers and acquisitions. We're looking at more potential for efficiencies and cost savings, and we are very clearly focused on a specific type of game that we call the one thousand hour game, which I will talk about in detail in the strategy. I'm sure you've seen all of these slides, and Jazz will talk about in detail the stats that we see here. What I will want to flag is our significant amount of our revenues are coming from our own intellectual property at 65%.

3:59 This is actually a little bit lower than it used to be because our revenue mix is a little bit different this year. This is because some of our titles that are older titles, that are third party IP where we don't own the IP or the studio are performing really well in their second, third, fourth, fifth year of their timeline. And at the same time, we also have 93% of our revenue coming from back catalog. As a as a reminder, back catalog is counted based on the financial year. So if we launch a big game in December, odds are most of its revenue will become back catalog very soon because January will roll around. So from January, it will be counted as back catalog, which neatly brings us to our IP across multiple platforms.

4:50 So in 2017, we've had a fifty fifty mix. Right now, we have 65%. We expect that in the long term, this will go a little bit up because we do have a lot more own IP titles in development, which do come with a higher margin as well.

5:07 If you look at the left left slide over here and look at the last graph, h one twenty three, you can see that our revenue mix is still very diversified where we're focused on creating franchise potential. And concentration for top three went up a little bit in h one, mostly due to the good performance of Hello Neighbor two, which launched last December and became back catalog in January. But that gives a little bit of revenue concentration because the game is doing quite well. So excuse me. Been talking all day today. This brings us to our mix of back catalog and front list. And a lot of people will assume, which is natural, that games will come out, have their first, let's say, three months, and then drop off in terms of revenue generation so that, you know, you just launch and forget.

6:08 And while that is true for many types of games, what we are seeing is the opposite, is that the first three months may not be the best three months in the game's lifespan. This is because we do a lot of portfolio management, and we do focus on games where we can spend a lot of time. So just some of our top performers like Deathscythe, Piece of Rogue, Speedrunners, Oceancraft, they all have systematic elements that allow players to spend a lot of time playing those games. Think thousands of hours. Like, there was a review for a piece of Rogue on Steam. It's one of the top four reviews where the guy says, yeah. The game was okay. Time spent, three point six thousand hours. Now this is really important to us because it kinda builds the backbone of the business.

6:55 And then we are able to constantly extract additional revenue from this catalog by doing sales. We are we actually got really good this year and last year in managing our portfolio of sales, which is why wishlist as a metric become increasingly important. A wishlist is when you are a player on Steam, for example, and you see a game you might like and you add it to your wish list. And then you will get a notification whenever the game well, if it's not out yet, whenever it releases, and whenever it goes on sale, which is a really powerful marketing tool and a great KPI to track to see how well your game is doing. And I'll be talking about wishlists across this whole presentation. That said, let's take a break and talk about numbers with Jazz.

7:46 The first slide is a summary of the performance across revenues, adjusted EBITDA, and a measure of adjusted operating adjusted cash from operations, which is calculated as adjusted EBITDA minus the difference in working capital. Starting from the left hand side on revenues. Revenues in the first half were down 20% year on year, primarily function of the drop, a pretty sharp drop in platform deals. More on this in a second. Impacting on the gross margins, which is the line on that same chart, were two other factors, a less favorable revenue mix as pointed out by Alex, less heavy on first and second party and more and heavy air on third parties.

8:36 And on the other side, also a higher level of amortization of debt cost, which flows directly from the increase in debt cost investments over the past two years. Moving to the chart in the middle, adjusted EBITDA loss was 1,200,000 in the half. Also impacting EBITDA, above, and beyond what I've just mentioned on gross profit was an increase in SG and A in h one. In there, I should point out there are some one offs and some timing differences, which will show which will not show which will not affect the second half of the year. In terms of adjusted cash from operations, you can see this being positive in contrast to a negative adjusted EBITDA.

9:23 That is proof that we're still generating cash from the operations, and the the core business is sound. Let me show you a little bit more on that. Drilling into the profit and loss accounts, I want to first focus on the first two lines. It's the breakdown of revenues by game and merchandise versus development services. Game and merchandise were flat. Revenues were flat at 17,500,000 for both, half, first half this year and last year. That is our core business. That is the, unit,

10:02 games sold to, players. What really went, south in the first half was the second line development services. That's where we book platform deals with the likes of Sony, Microsoft, Meta, Google Stadia when they were live, and so on. That saw a sharp decline in in h one this year, which I'm gonna show some more evidence in a second. The other two lines I want to focus on the p and l are the impairments for development costs and intangibles. That is something which was triggered by the lower expectations in terms of in terms of revenues. So we sat down with our accountants and auditors and established the the fair value of the assets we're carrying on the balance sheet right now.

10:50 That led to negative adjusted EBITDA of 1,200,000. Moving on to the, main reason for this underperformance, which is platform deals. As I mentioned, Sony, Microsoft, Meta, and so on. Those are deals that we sign directly with the platforms. It's not when we sell a game to a a player. It's when we receive money directly from platform. We do that for a number of reasons. It could be an exclusivity. It could be, the addition of one of our games to a subscription service. It could be a a development contribution to develop a certain game for a new platform, for a new technology. Imagine VR headset. These, this part of revenues, this bucket of revenues has increased steadily from 2019 to 2022, and all of a sudden, pretty much vanished in the first half of twenty twenty three.

11:46 We can put that down to a number of factors, but we can't identify the one reason for, for this, in in the first half. It was very difficult to forecast. Is this structural or cyclical? It is most likely cyclical, and cyclical not in terms of microeconomy, but cyclical in terms of technology cycles. Every time there is a new technology, there's gonna be a new player who tries to grab share of the market. You can think about the subscription services for Microsoft. Before that, you can think about the console cycles. And right now, you can see that with VR, and you're probably still gonna see more of that with cloud gaming. So it's gonna come back, but for now, we have to conservatively exclude that from our forecasts.

12:35 We're still signing some platform deals. You can see a smaller a small part of that in the first half of the year. There would be more in the second half, but it's not gonna be anywhere close to what we posted last year. And this is the main reason for the drop in revenues and the EBITDA loss in the first half. Moving from the p and l to the cash flow. A couple of elements I want to flag here. First on, receivable and payable. The net change here is, over 4,000,000 working capital contribution. A bit of a technical, but I know many of you have this kind of knowledge. So let me let me spend just one minute on this. At the end of the year, we sell a lot of games into the Christmas season, and we book a lot of revenues for that. We book revenues as everybody does, and we receive the cash with a four to six weeks lag from when we book revenues.

13:28 That is the net working capital change you see here. Alongside revenues coming from platform, which are delayed in terms of payment by four to six weeks, we also have royalties to be paid to developers, which are equally delayed by the same in the same period, in the same fashion. So that is what caused this that is plus 4,000,000 working capital contribution in the half. Below that, software development. So this is where we invest in new games, when we invest in catalog to generate continue to continue to generate a high level of revenues from existing franchises. And we broke that down here. Here, we show software development on a month on a six monthly basis starting from h one twenty twenty and peaking in h two twenty twenty two at over 21,000,000.

14:21 This is what is having the biggest impact on our cash position. The investments in new games, which we will launch next year, the following year, and the following year again. We can stop these investments at will at every point in time. We can stop investing in games tomorrow if we want. The the decision would be would be suboptimal because it means we're giving away we're losing growth in the outer years. So the the challenge for us as a management team and for myself as a new CFO is finding the exact right balance that gives us the maximum growth potential in the outer years whilst balancing a very sound financial position in the near term. You can see on the right hand side another picture of of investments, this time including m and a. I've seen a couple of questions on that, and we will take those in terms. But m and a peaked in 2021, was already low in 2022 when we saw fewer opportunities at the right price, and was again much lower in 2023.

15:26 As said by Alex in the intro, we have paused completely m and a in terms of acquisitions. We're still in discussions with, other companies that may be interested in, some assets currently under TINYBUILD. That is particularly true for underperforming assets. Following on from the time series of development investments, how concentrated is our portfolio of investments? Well, it's not concentrated. It's very well diversified. Out of the 16,900,000 spent in h one, we are working on over 50 projects. None of these projects accounts for more than 15%, and it's actually much less than 15% at the current, in the current, year.

16:17 And we have still a fair amount of investments in new technology, media, and platform. Think about the animation series, for Hello Neighbor. Think about VR, and think about other platforms like Roblox and so on. I'm closing in on the financials with a quick look at the balance sheet. We have looked at receivables and payables, which really are the main the main changes here. We have looked at the change in intangibles. What we have left to to comment on is the net cash position moving from 26,500,000 to 14.3. And this is the bridge to explain what happened. A positive cash profit of 2,100,000.

17:03 So the p and l profit of the the negative number you see in p and l, whether you look at adjusted profit or or reported profit, is impacted by noncash amounts. The cash profit was actually positive 2.1. You have just over 4,000,000 positive contribution from working capital, and then the big investments for future games That as we said, we can dial up and down pretty quickly, and our challenge will be to find the exact balance between expected revenue potential in the near term and investments for future growth. Over to you, Alex. Thank you, Jess. So in the beginning of this year, I outlined our five year plan, and I just want to reaffirm that we are sticking with it. I strongly believe that we are in a unique position as an industry and as a company to create new IP, scale it to a franchise level, and then take it across media.

18:08 Because we've seen so many examples now between the Witcher or the League of Legends Arcane series of when a really good piece of linear media was in a gaming IP makes it to small screen or big screen, it can have a dramatic effect on the sales of the interactive part of the game. So this is what we've been doing. We've been investing into IP. We've been investing into games where people can spend thousands of hours

18:35 in games that are services and in slightly bigger titles with a goal of taking that IP and then taking them to linear media and cross media. For reference, for people who don't know, we actually have over 4,000,000 books sold based on Hello Neighbor. And we are releasing season one of the animated series based on the game this October, starting with October 7. So we're really excited about that and excited about this plan. So let's talk about the one thousand hour game. The simplest way to look at is when you look at any story driven game, for example, let's say that you have 10 levels. Each level takes one hour to beat. So you have a ten hour long game. In order to add one hour, you need to add one level, which adds 10% of that content. Then when you add level number 12, you are adding just over 9% of content, and then you get more and more diminishing returns. So making thousand hour games that are content driven is very, very difficult and expensive. That's triple a levels of investment.

19:47 Instead, we are going for systems driven design where if you have a game that has 10 systems in place and you add system number 11, which may interact with several other systems within that pack, then you may have just added 40% of content. And then you get an exponential return on that investment. So the amount of time you invest into developing the game gets an exponential return on the amount of time that people will spend it. And this applies to several subsections that we have, including user generated content. Like, one of the reasons why the original Hello Neighbor is still so popular is because users can actually modify the game with with a series of mod kits that we released where they can create their own content.

20:33 We're also investing into procedurally generated worlds and persistent worlds. We're investing into worlds where people can create their own basis to create their own personalized homes. We're investing to PvP and PvE, which is player versus player and player versus environment, multiplayer games. So for us, it's all about creating products that people will really spend every night with for years to come. And we're seeing in our portfolio that this is where the longest returns for our products are. So the games that continue to sell well are the ones that follow this pattern.

21:13 And let's do a couple of case studies while I have everyone here. So I am Future is a game that is a new IP. We released it in

21:25 we released it earlier this year. The game was a case study of our ability to launch games in a very predictable and data driven manner. So we knew that the game was gaining traction because the Steam page for it has been up since middle of twenty twenty one and was gaining good traction. So much so that we knew exactly how to amplify that traction. And long story short, we had a successful marketing campaign leading up to the Steam Next Festival, where we were able to validate a few mechanics in the playable demo that a lot of players tried. We got information on what they liked in the game, and that justified a delay in that title because we knew how to make it better.

22:13 And that delay directly resulted in phenomenal reception over 90% positive ratings for the game, 500 k in sales, and 200,000 additional wish lists that were added to the game's balance. So, essentially, think of it this way. It's a new IP. It's in early access, which means that it's an active development, and 200,000 people have this game on their wish list, which means that they're waiting for updates and or sale events. And at this space, seeing a full release, a one point o release later in the time that this game is being developed. So this is an example of a new IP that we are happy to have launched and have really good hopes for. The second, excuse me, example here is about expanding the franchise. Punch Club two launched this year

23:05 as a long, long, long development cycle that is a follow-up to twenty sixteen's Punch Club. Now Punch Club was an interesting game. It it did not get any traction whatsoever. So we knew the game was good. We knew people would like it, but we couldn't get traction at conventions, with media, with press, with influencers.

23:31 And then we kind of cut lightning in a bottle by doing a marketing stunt call called Twitch Plays Punch Club. Google that if you want to get more details. Essentially, had the Twitch chat, which is a live streaming service, play the game in a very chaotic way via the actual chat that controls the game. It was a very hectic experience where we held the game hostage on Steam saying you you as the Internet need to beat the game on Twitch before we release it. That resulted in our most most anticipated, covered, and financially successful launch of that time. And the follow-up encountered similar problems. So we knew that the game was going to be difficult to market and that we would need to do a great job by doing data driven decisions, which is exactly what we did. We have a six months plan. It was a very short time to live for the wish list where we said, okay. If wish lists are

24:32 all fresh, all generated within the last six months, they're going to convert much better on day one, which is going to generate us a lot of exposure. Long story short, the game launched to be more successful than the original, which is a testament to our ability to publish both new and existing IP. K. Now let's talk about Hello Neighbor, which is a franchise that we've been working on since 2016, the first one launched in 2017. This year, we launched the Hello Neighbor VR spin off, which is actually doing quite well. It's being developed by a steel wool, the same studio behind Five Nights at Freddy's, which is actually getting a movie this October. I hope everyone, will get to see it because it's looking really good.

25:18 And now Hello Neighbor two released last December, which means that it's already considered back catalog. But since December, we have done almost a dozen updates to Hello Neighbor two, and the community is really excited about both improving the game and also tying it into the animated series, which is starting to release on October 7. And, also, we're in the process of wrapping up key updates to consoles because remember, Hello Neighbor as a franchise is console strong. It's actually not had a lot of traction on PC. The original that released way back in 2016 2017, sorry, was a PC last game.

26:06 It means that it was prioritized to be a console game, and those were the target audiences.

26:13 And this list over here is a glimpse into our announced pipeline. I think it's really useful to see the full list and then realize that when we IPO ed, we said that we are in the business of building franchises. Right? So right now, out of the 12 announced games, Killed Was Fire two, Slime three k, and Streets of Rogue numbers four, five, and seven are parts of existing franchises. We have two sequels and one spin off. Slime three k is actually a spin off of Despots game, which is a popular game that we released a couple of years ago. So we are in the process of transitioning from working on mostly new IP to a balance of existing IP and new IP.

27:00 And with the closing remarks, I just wanna say that we've always been consistent with our story. We know exactly what we want to do, and we are on our way to do it. We want to create IP that lives across multiple media formats that will be here a decade from or two or five from now. And with that, let's jump into q and a, I think. We have a lot of questions here. That's great, Jazz. Alex, you do indeed. Let me just give you a couple of moments to review those later, Sharon. Please do continue to submit your questions using the q and a tab situated at the right hand corner of your screen. But just while the company take a couple of moments to review your questions submitted already, I'd just like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investment company dashboard.

27:48 Jazz, Alex, if I may just ask you and invite you to open up that q and a tab, and where appropriate, read out the questions, and then I'll pick up from you at the end.

27:57 Yes. I'll I'll ask you some some questions, Alex, in in in the order that have been submitted. So first one on the Unity new pricing model. Do you foresee any impact on your revenues?

28:09 No. We don't foresee any impact. They have pretty much backtracked their pricing model, and it it was already way too cheap. I've been pretty vocal about, and I was always sure that they would completely reverse their decision.

28:25 Given the cash reserves are going down, do you think the business model of acquiring other companies is beneficial, or are you trying to focus more on building your own IPs? I'll take this as a capital allocation question. We have paused m and a. So we we have deliberately put all of the m and a discussions on ice when it comes to acquisitions. We continue to have discussions on potential disposals if somebody were to offer us a good valuation for an asset that we we can't we can't for which we can't realize the same value in house, we would consider that. Other than that, definitely, the focus has been shifting since 2022 on building our own IP, which we see as higher potential because when we have own IP, we have a bigger revenue potential.

29:15 And bearing in mind how diverse is our portfolio of investments, over 50 projects currently under development, and we think it's also a lower risk compared to bigger m and a deals. Next question is what lessons has have we learned from underperforming acquisitions, and what measures are in place to avoid repeating similar mistakes. Do you wanna take it, Alex? Yeah. I think the the consistent lesson here is that m and a works much better when it's for parties you've worked with before. So when you have an established working relationship, you kinda, like, take it to the next level. M and A for companies that have not developed that chemistry prior is a risk that should be considered seriously.

30:07 Because so far, our studio integrations have been quite seamless because we have working relationships established over the years. I think this, Alex, is addressed to you and senior management in general. Do you have confidence in TINYBUILD?

30:25 If you do, will you be purchasing shares on the open market to demonstrate your confidence? I wish I could. I am blocked from buying shares because I am above the threshold for when I would need to make a a mandatory bid for the company. And I believe the threshold is 30%. I am above that. Next question is is about guidance of financial performance for next couple of years, and I I'll take that one. So the the way we're running the business is trying to maximize revenues, trying to maximize return, and minimize the risk.

31:11 Pretty simple financial concept. The way we do that is very often getting together and looking at all of the revenue opportunities. Up until six months ago, the revenue the part of opportunity to generate revenues was growing very quickly, and we were capitalizing on that. This first half is a little bit of the exception in our ten years of history, thirteen years of history, all in. And we we have learned from that that we we should never sit in our hands. We should continue to to look for for more, and we have been doing that right now. So in terms of financial performance over the next two years, first and foremost, our priority right now is to rebalance the amount of investments with the revenue opportunity we see in the market.

31:58 We have to do that with growth mentality in in in mind. So we're doing that being very selective about the projects we're investing in and being very selective about the timing, the different the the way we can develop each project, technology, which we can share in in house. And that is as much as I can say about the performance. What what you can imply from that is that our cash position is stabilizing. The cash burn is decreasing, and we'll take more action if needed to make sure that that is the case. And on the revenue side, we'll continue to look for more opportunities. Consensus is looking now at revenue growth if from a lower base into next year, and we we're fully on board with that.

32:49 Next question is on versus legal claim. What is are the claimants still actively involved in the company? And I can take, that as well. On versus evil, legal claim, two things. First of all, it's it is not a lawsuit. It is it is a notice of breach. It's the lowest lowest possible legal proceeding we could have. We have looked at that in-depth with our lawyers, with our accountants, with our auditors, and we all agreed there was no provision to be taken because we think the risk of any financial penalty there is is close to zero.

33:35 In terms of the claimants, we can't comment on specifically individuals. It would it would put people in in a difficult position. What we can say is that as it happens in this case, we're always, first and foremost, looking for an amicable solution. We we we we want to resolve this in the in the quickest possible way and and move on with running the business. Next question. What does Alex make of the share price, and will he be demonstrating his confidence, making meaningful purchase? We answer that Alex is above the 30% threshold, that prohibits him from buying additional shares.

34:22 How are the new titles performing, and how do you measure where a new title is successful or not, Alex? I assume the question is whether a new sales successful or not. Well, we look at the the the sales and the engagement. Right? It's quite clear within the first few days what to expect of the first month. But then after the first month, it's going to be quite clear what we can expect with updates for the next year or so because that's when we look at the engagement numbers. But to be honest, considering how we've been using wishlist to accurately predict the amount of sales, we kind of know leading up to a launch with exceptions here and there. Like, sometimes you'll have games that just blow up beyond their expectations or do less than your expectations.

35:14 So I'm gonna combine two questions in one. There is a one questions about buyback, whether we are considering it, and another question is about the EBT, how active is at these low levels. So on buybacks, we have a lot of investment opportunities in terms of producing new titles. And so far, that has been a very attractive employ use of capital. At this current level, of course, the the investing in in in TINYBUILD itself has become incredibly attractive. So buyback may will be considered should be considered soon.

36:00 This is no guarantee that the buyback will will happen, but it's definitely something that will will be taken into account in our capital location. And on the EBT, the EBT has been active since inception, since December. As a matter of fact, was was active recently. I can't comment on the on the day to day activity, but the EBT is buying shares at current levels. The instructions are clear. We we cannot direct purchases while we are in closed period. But just after reporting, we we we will be able to add new funds if that is appropriate. I'm just looking through the questions. So, Jas, you mentioned that the drop off in gross margin is partly due to higher amortization of dev cost.

36:52 Does revenue and amortization effectively align in terms of timing? Yes. There are small differences. Sometimes amortization come slightly earlier or slightly later than than than the the specific revenues. But in general, that is that is the rule. Bear in mind that if they align in terms of timing, they don't necessarily move hand in hand in terms of proportion. A bigger increase in revenues doesn't trigger an increase in-depth cost amortization, which is what we're paying on the way down in terms of gross margin compression, what we will enjoy on the way up when revenues will start growing again. Next question.

37:43 Regarding the drop off in platform deals, is there a pattern in terms of the type of games or specific platform where revenue have dropped off, Alex? It's across the board. I'm sure everyone has seen, like, the massive layoffs that have been happening in, West Coast tech giants. So across the board, there's just less appetite right now for new content, and we can't, like, really pinpoint to anything specific. And a follow-up to this question. If this platform revenues is indeed cyclical, as I said in the presentation, what factors would drive the next upturn? It's really a technology cycle. When we see new technologies emerging, there are typically new layers that try and take that place, sometimes successfully, sometimes not.

38:37 Google Stadia was an example of, of of this. A new technology, cloud gaming emerging, and the new player trying to enter as a platform distribution in in the video game space. Another follow-up to the same question is, are you saying that VR would likely be a driver of a platform revenue? VR is already a driver if if on a smaller scale. It's a small market of some platform deals. We we will see if adoption continues at the same pace, but the fragmentation of VR platform, VR headsets, if you want, tells you how keen each of the platform maker if each of the headset maker is to have the right content on their VR headsets so you can enjoy video games. That is driving platform deals. It's subsidizing content creation.

39:31 And the final, final take on on the same question, are you developing enough VR games to benefit from such an upturn? To you, Alex. We're we're developing VR games where it makes sense. Right? I'm personally really excited about technology and also about Apple coming into the ARVR headset space. It might just be that we're going to see a resurgence of that. At the same time, I also see how widely used the Oculus headsets are, especially with younger gamers for playing games for hours every day. So I I do see that people spend time on these platforms, and I'm happy that we do have some games in development there. On franchise expansion and, I guess, as a follow-up to the comment on the animations dropping in in ten days for for the for Hello Neighbor franchise.

40:29 Are you going to try and get a Hello Neighbor film, not just a TV series? We'll be exploring live action where it makes sense. I think the key here for us is if we weren't as protective of our rights, our IP rights, we would already have a film done by this point. We're just really careful and cautious of making any kind of deal where we may lose any rights to our IP. And this is exactly the reason why we are producing the animated series for Hello Neighbor ourselves. It's done fully independently, and we're going to release it on our own YouTube because we know that's where a lot of fans are and that that's going to help gain traction for the brand and its awareness and get a lot of new fans.

41:23 Another question on the animated series. What caused the delay in release of the animated series for Hailer Neighbor? And in the previous earnings release, it was mentioned that episode one to six would release in h '1. Has that been pushed out? Yeah. One and two did release in h '1. And the reason these four are dropping in October is because the only thing that we need to schedule where people, you know, ideally needs to be in the same space together is voice acting. Right? So as we were doing some rewrites for the episodes, we knew that we wanted to schedule everything to be properly voiced. And now that process is it has an established pipeline.

42:08 So we expect the the gap between season one, which is the first six episodes, and then season two and three, which are six episodes each to be smaller and more predictable. I should also add that you might have heard of strikes on in in The US around Hollywood, unions, and so on. Our production is not impacted by those strikes for the way it's set up. So from now on, we we look at a pretty smooth rollout of of the next few episodes. Another question, will there be a need to raise funds from shareholders? No. There will not be a need to raise funds based on our current forecast.

42:54 And if those forecasts were to change, we would adapt the business model. So let let me let me take this by by the hoards. We have a a credit facility of up to $35,000,000, but that's not something we set up to run the operations. That's something that we had set up, had we stumbled on the, unmissable m and a opportunity. That has not been the case. We run the operation on the cash we have in the bank, and we run the operation conservatively keeping a good buffer of safety in the bank. Right now, we have at the end of h one, we had over 14,000,000 of cash. We're gonna use a little bit more of that into the second half to continue investing titles, and then we're gonna stabilize the cash position.

43:41 But we are not looking at at a scenario right now, and we will not looking, similarly in the future at a scenario where we have to raise money from shareholders or or any other source. Do you plan to launch any of your upcoming service games such as Sand, Level Zero, or Ramen as a free to play? We're exploring business models. So there is a bit of confusion on Alex. The the article we had at the AGM, which would have allowed you to buy more shares.

44:30 That article was voted down by by some shareholders. So this way, making it impossible for us to to buy more shares. Would you cons would you consider to use using debt to combine the buyback and investment opportunities? No. We we think share buybacks and investment opportunities should all come out of our cash balance. Again, the the the credit facility set up was for that unmissable m and a opportunity, which hasn't materialized. Suggestion, I guess, that we could present the h one numbers for 2023 next to h one numbers for 2022.

45:25 Point taken. We have historically presented full year and and half year. We can actually add quite quite quickly, quite simply the h one comparables from the previous years. In all of the tables yeah. In all of the tables, we have actually presented the the granular details of of h one numbers last year, but it could have be could have been on the chart. Point taken. Is the company expecting to be cash flow positive in f y twenty four after investments? We we we are planning to stabilize the cash burn. So that as a as a as a as an indirect guidance response answered your your question. The uncertainty out there is that we always work on projected revenues and projected costs.

46:14 We might have we might decide to spend a little bit more on a game which is doing particularly well, or we might have revenues or or lower revenues. What we're going to do is to create a very safe boundary within which we can absorb that variability, and that's gonna be what we operate within. What percentage of is the company's issued share is in public hands, and what is free float? You have that on our website. I'm gonna point you to major shareholders tab. Alex currently holds 37.8% of the company. The other main shareholders, anything between five and eight, and you got four of them. Everything else is is free float.

47:04 Which, as I might just jump in at that point, you've answered every single question from investors. So thank you for being so diligent and generous with your time this afternoon. If any further questions do make themselves available, there are a couple of very kind comments there from attendees online. I'll make those available to you. I know investor feedback will be particularly important to you both. I'll shortly redirect those on the call to provide you with their thoughts and expectations. But if I may, Alex, just come back to you just for a few closing comments, and then I'll redirect investors to give you their feedback. I I think the point here is that even though the markets are changing and things are, you know, going crazy from one challenge to the other, we still maintain our story. We did exactly what we set out to do during IPO, and we're going to continue to go this way. And I'm really excited because we have strong data suggesting we're doing the right things, and the markets should catch up to us.

48:03 That's great. Thank you once again, Alex and Jaz, for your time this afternoon. Ladies and gentlemen, could I please ask you not to close this session as we now direct you to provide your feedback in order the company can better understand your views and expectations? This may take a few moments to complete, but I am sure will be greatly valued by the company. On behalf of the management team at TINYBUILD, I'd like to thank you for attending today's presentation, and good evening to you all. Thank you. Thanks, everyone.