Tiny Ltd. (TINY) Earnings Call Transcript & Summary

Good morning, and welcome to the Tiny Limited Q1 2026 Results Conference Call. [Operator Instructions] Before we start, we ask you to take a moment to read the disclaimer at the beginning of the slides that accompany this presentation as it contains important information. We'd also like to remind you that all amounts discussed on this call are denominated in Canadian dollars, unless otherwise indicated. Please note, statements made during this call may include forward-looking statements and future-orientated financial information regarding Tiny and its business and disclosure regarding possible expectations, events, conditions or results that are based on information currently available to management, which indicate management's expectation of Tiny's future growth, results of operations, business performance and opportunities. Such statements are made as of this date hereof, and Tiny assumes no obligation to update or revise them, except as required by applicable securities laws. Such statements involve significant risks, uncertainties and assumptions and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause results to differ materially from the results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements disclaimer in the slides accompanying this presentation and in the company's press release issued today for additional information. We use non-IFRS financial measures to help investors understand our operating performance. Non-IFRS financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with IFRS. I'd now like to turn the call over to Austin from Tiny for today's earnings call. Please go ahead, Austin.

Good morning, everyone. You have Austin Singhera here, and thank you for joining us. Before we get into the quarter, I want to start with a thank you to Jordan. He's been an outstanding partner to all of us over the years here at Tiny, Inc. He led Tiny's uplisting to the TSX, oversaw Serato acquisition and helped steward the WeCommerce segment from the beginning. On behalf of the Board and the team, thank you to Jordan, and we wish him the very best. I'm excited to take on the CEO role and lead Tiny into its next chapter alongside Andrew, Chris and Mike. As a brief introduction, I joined Tiny in 2020 and have held a number of roles across the organization, including leading corporate development. I've led the acquisitions of Letterboxd, Serato and MediaNet and have spent the past 5 years working closely with the management teams across the portfolio. Mike and I know these businesses well, we're both energized about the opportunity ahead. Alongside, Andrew and Chris are stepping back in to support and steward Tiny through this next chapter. They both bring a tremendous amount of value to the business, and I'm excited to have them more involved in a closer way. Looking ahead, we've got a great number of businesses and the job is to continue backing them. Across other areas of the portfolio, our focus is on improving margins and cash flow, and we're moving quickly to do so. From a capital allocation perspective, we're also widening the lens on acquisitions. The core of what we're looking for doesn't change, predictable free cash flow generating businesses with strong barriers to entry and asset-light at fair values. What's evolving is a range of sectors we're willing to look at and review opportunities with the goal of which to broaden Tiny's portfolio to become more resilient over the long term. We'll have more to share on this as we get going on the key priorities and initiatives in the coming quarters. With that said, I'll turn it over to Mike to walk through the slides and the financials.

Great. Thank you, Austin. Let me start with the highlights for Q1 2026. It was a productive quarter and demonstrated continued stability across our portfolio. Adjusted EBITDA came in at $9.2 million with a margin of 18%, reflecting our ongoing cost discipline. Recurring revenue reached $17.6 million, up 80% year-over-year, representing 34% of total revenue. The Serato acquisition has been a meaningful driver here. Our annualized recurring revenue now stands at $70.5 million. Our LTM free cash flow was $17.6 million or $0.60 per share. That's a 36% improvement over the prior LTM period. Net debt to adjusted EBITDA at the end of the quarter was 2.7x, and we remain committed to bringing back the leverage to within our 2 to 2.5x target range. I'll touch further on the portfolio highlights throughout the balance of the call. Now let's turn our attention to the financial results in more detail. Q1 2026 total revenue was $51.5 million, a 7% increase over Q1 of 2025, and that's a 12% increase on a constant currency basis. Looking at the composition of the revenue. Software and Apps stands out, largely driven by the Serato acquisition. Revenue in the segment grew from $13.3 million to $23.5 million. Digital services revenue came in at $16.7 million. This was down from $21.5 million in Q1 of 2025. It does reflect a tough comparable, but Q1 2025 was an exceptional quarter for that segment. Our current utilization and project pipeline remain strong and in line with our internal expectations. Creative Platform came in at $9.6 million versus $11 million a year ago. This reflects enterprise contract timing. A large enterprise contract engagement closed in the recent quarter, and we're looking forward to talking more about it on our next call. Dribbble had some strong results as the quarter progressed and processed $2 million in GMV during the quarter. On an LTM basis, revenue was $207.2 million. This is up 7% from $193.4 million in the comparable LTM period. Moving on to recurring revenue. Recurring revenue is a metric we track closely as a proxy for the durability and quality of our revenue base. In Q1 2026, it reached $17.6 million, which is up 80% from $9.8 million in Q1 of 2025. Serato is the primary driver here. Approximately 66% of Serato's revenue comes from subscriptions, and we are actively investing in its product road map and partnerships to sustain that growth level. On an LTM basis, recurring revenue was $65.6 million versus $39.2 million a year ago, which is a 67% increase. Our annualized recurring revenue, as I noted, stands at $70.5 million, growing 80% year-over-year. The trajectory reinforces our strategic focus. We want a larger portion of Tiny's consolidated revenue to be predictable and subscription-based. On to adjusted EBITDA. Adjusted EBITDA for Q1 2026 was $9.2 million with a margin of 18%. On an LTM basis, adjusted EBITDA was $37.4 million. This is up 11% from $33.8 million in the Q1 2025 LTM period. Performance was driven by growth in various parts of the portfolio and continued discipline -- cost discipline, excuse me, across the entirety of the portfolio. Our LTM EBITDA margin has expanded from 17% to 18%, a modest but still meaningful improvement, reflecting the work underway and cost efficiencies. Looking at the quarterly trend on the chart, you'll see that margins peaked 21% in Q4 of 2024, dipped in Q2 of 2025 as we absorbed the Serato acquisition and costs associated with it, but has stabilized in the 19% range since. We will look forward to increasing the margin profile as we move through 2026 as cost management remains a priority as we continue to focus on scale. On to free cash flow and adjusted free cash flow post debt servicing. Beginning this quarter, we've enhanced our financial disclosure framework to report free cash flow and adjusted free cash flow post debt servicing and per share figures on an attributable basis only. We believe this gives investors a clearer and more meaningful picture of the actual capital generated by our underlying portfolio, net of debt service obligations. LTM free cash flow based on this metric was $17.6 million or $0.60 per share. This compares to $10.4 million or $0.44 per share when using the same metric calculation in Q1 of 2025. This is a 36% improvement year-over-year on a per share basis. LTM adjusted free cash flow post debt servicing was $16.2 million or $0.55 per share. While Q1 stand-alone free cash flow was negative, it reflects timing of working capital and debt servicing. This is consistent with seasonal patterns and does not change our LTM trajectory. Turning to Tiny Fund I. As investors know, this is a separate vehicle from our consolidated results, and we report it on a non-audited basis to give investors visibility into the portfolio. Q1 fund revenue was $12.9 million, a 12% increase over Q1 of 2025. LTM fund revenue was $52.7 million versus $49 million when comparing to the same period a year ago. Tiny's NAV in the fund was CAD 45.4 million at March 31, 2026, which was a 2% from our recently reported year-end results. Distributions from the Tiny Fund were $1.1 million in Q1 and stand at $2.8 million on an LTM basis. Key portfolio highlights include Letterboxd being named one of TIME100 Most Influential Companies of 2026 for its work in promoting film culture. The Letterboxd platform has reached 29 million registered users, up 175% since we acquired that business in September of 2023. This is a testament to the team's product focus and the strength of the community that has been built. AeroPress launched the AeroPress Steel, an all-metal version of its iconic coffee press. This expands the product lineup and opens up an entirely new segment of the market. Early results from this product have been very strong. Mateina also continues to deliver growth through new distribution opportunities at key U.S. retailers and an overall market expansion. Lastly, we divested the Girlboss business in January of 2026 as part of our ongoing portfolio optimization. Turning to debt and cash. On the balance sheet on March 31, 2026, senior debt outstanding was $106.9 million. This was up modestly from our year-end 2025 figure. At the same time, cash was also up at $34.2 million at quarter end. Our net debt to adjusted EBITDA stands at 2.7x, which remains just slightly above our 2x to 2.5x target range. We remain committed to deleveraging as one of our primary capital allocation priorities. The chart shows steady improvement from a high of 3.8x in Q4 of 2023, with a slight uptick from last quarter just being due to timing of cash movement from subsidiaries and FX impact. We continue to remain in active discussions on refinancing the overall portfolio on an opportunistic basis, and we will update as needed on that front. We have no current or pending maturities so time -- so we can work with the balance of time to get to the right solution. On to our road map. Let me close with our strategic road map and where we stand on each priority heading into Q2. First off, I want to express my excitement for the chance to work with Austin. We are going to be a great team. We will miss Jordan immensely, as Austin noted, but I'm excited for where we're going in the future. We want to maintain profitable growth as a business. We're focused on continued improvements to both adjusted EBITDA and free cash flow. The Serato integration has gone very well, and we look forward to opportunities to deploy more capital in the coming months. The digital services businesses and creative platform businesses are executing against their plans and will be an important part of our forward-looking strategy. Capital structure optimization. Reducing leverage remains our top financial priority. As I've noted, we're actively working through those discussions, and we expect to return our target leverage to the right range in the coming quarters. That said, we are also open to deploying more capital and are looking closely at opportunities to do so, that may move leverage ratios in order to deploy appropriate amounts of capital, but we are prepared to work on both sides of the balance sheet. Tiny Fund I, NAV and revenue growth are being driven by Letterboxd's exceptional performance as well as some unique opportunities within the AeroPress business and Mateina as it continues to expand through new products and new markets, especially U.S. distribution. I've mentioned capital allocation, we're actively evaluating high-quality acquisition opportunities that fit our criteria as well as the expanded criteria that Austin touched upon today in the introduction. We would like to find durable businesses with strong recurring revenue characteristics. In summary, Q1 was a solid quarter. It demonstrates the resilient nature of our portfolio and our strategy. We will continue to seek improvements. We're well positioned heading into Q2, and we look forward to updating you on our progress next quarter. With that, it's time for questions.

[Operator Instructions] Our first question comes from Richard Baldry from ROTH Capital.

Can you talk about -- because I'm new to this and wasn't expecting it, can you talk about what led to the CEO transition?

Hi, Richard, good morning. Thanks for your question. Thanks for joining the call. I'll start and then Austin can be additive here. There's a tremendous amount of respect for all of us for Jordan. He decided that he'd like to move on. It's hard. We really care for him, and we had a great working relationship. But it was his decision. And so we're going to work with that and respect it, and we certainly wish him all the best. But this happens in the world we live in, in business, and it was his decision to start the process. And so obviously, we worked with him to support that, and that's where we're at. I mean, more importantly, Austin knows these businesses. He knows them very well. He is excited to be here and be part of this, and I know that we're going to have great success with him leading us as well.

Yes, I don't have too much more to add, but I think it's also a unique moment in time to have Andrew and Chris specifically back in close development business going forward. So we're really excited.

Right. Can you talk about thoughts now or updated thoughts on debt refinancing. The debt market is pretty hard out there right now. So is it better to just put that on the side, reengage maybe if that frees up a little bit, or what are you thinking there?

Yes. Look, we're having opportunistic discussions, as I mentioned in the prepared remarks for the call today, Richard. Again, we don't have any pending maturities right now, right? But we look, we've got also very good strong banking relationships with the groups that we already have financing our businesses. Obviously, we've explored some other opportunities to maybe potentially look at different strategies based on where the market had been, right? The market is not there now today, as you know. But at the same time, right, we've got strong relations with all of our lenders. We actually also, I think, which is important, for example, in the digital services business did just extend the maturity in that business by a year. So we can do things like that to ensure that we don't have any time pressures. But look, I think it's really important for us to maintain good active ongoing dialogue with our bank lenders and make sure that if the opportunity -- if there are opportunities that we're ready to seize them, right? And so that's part of the process. And as a company with bank financing already in place, we, like any other company, should be very active in discussions with our banking partners to ensure that when opportunities potentially come up, we're ready to take them and -- or at least ready to consider them, right? And that's really the strategy that we're employing.