07.02.2025
Capitalised at just £24.78m, tinyBuild (LON:TBLD) really is a tiny company that is building up.
Based in the States, with operations there and in Europe, the video games business publisher and developer, which floated on AIM nearly four years ago, has a catalogue of more than 70 premium titles across different genres.
With a strategy to focus on its own intellectual property to build multi-game and multimedia franchises, in partnership with developers, its geographical footprint enables it to source high-potential IP, to access cost-effective development resources, and to build a loyal customer base through its innovative grassroots marketing.
Yesterday’s Trading Update
For the year to end-December 2024 the group yesterday issued a Trading Update which guided that last year’s revenue and EBITDA will show through as expected.
Encouragingly it noted that its pipeline for 2025 is strong and that it continues to manage its cash balances carefully on a lower cost base ahead of new high-potential releases.
Current trading is being made against an industry backdrop that remains difficult with few signs of near-term improvement.
But the group is carefully managing its catalogue, while investing in high-potential new IP that is set for release this year.
The company reported that exact release dates will be set taking into account competitive launches and as is standard, risk remains around new launches and the ability to convert wishlists into revenue.
As a mitigating factor, the company remains fully focused on cost control and regularly reviews investment in new games to align with audience validation.
The Outlook
The pipeline for 2025 is strong and includes a number of larger-budget, high-potential games alongside continuous investment in the catalogue.
It continues to carefully assess its exposure in terms of revenues, while carefully managing cash resources ahead of the release of high-potential new IP in 2025.
All considered, the Board remains confident the tinyBuild is on track to deliver results in line with expectations.
Management Comment
CEO Alex Nichiporchik stated that:
"Over the past two years we rightsized the business to cope with increasingly difficult market conditions and refocused on the 1000-hour game model, while managing cash carefully.
We are looking at a strong pipeline of upcoming high-potential games scheduled for launch in 2025 and we remain excited about the future."
Analyst Views
Following yesterday’s Trading Update news, William Larwood, analyst at Berenberg, rates this group’s shares as a Buy.
He noted that the company’s net cash was in line with market expectations in low single-digit millions with the company expecting the balance to trough in the summer.
Larwood considers that the company’s ‘Kingmakers’ needs more time in development.
With a very tough new release market, Larwood states that it is crucial that the game and other highly anticipated titles are received well.
He concludes that if its titles land, with a better-capitalised balance sheet, this could lead to a material re-rating in the shares.
George O’Connor, at Progressive Research, takes the view that yesterday’s Update was reassuring.
He comments that the company’s trading was in line, while it invests in a catalogue of high-potential new IP such as ‘Kingmakers’, ‘SAND’, and ‘Streets of Rogue 2’ which are due for release this year.
His estimates for the year to end-December are for revenues of $35.3m ($44.7m), with slashed adjusted pre-tax losses of only $9.9m ($48.4m).
For the current year he goes for $36.8m sales, and a further reduction in losses to just $3.3m.
The improvement, identifying the building up to come, should start to show through in 2026, with $39.6m revenue, with just a $0.8m loss.
In My View
Yesterday’s Trading Update points toward a gradual improvement in this little group’s fortunes and its potential for real success within the next couple of years.
A re-rating of its shares, that is now underway, could well take them from the current 6.30p to 8.00p then 10.00p in due course.
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