Tinybeans Group Limited (TNY) Earnings Call Transcript & Summary

Well, good morning, ladies and gentlemen. My name is John Dougall. And for those who have not yet met me, I am your Non-Executive Chairman. On behalf of Tinybeans Group Limited, I welcome you to the 2022 Annual General Meeting. Now 9:00 a.m. here in Sydney. And there being a quorum present, I declare the meeting properly constituted and open for business. In attendance today, we have both our Chief Executive Officer, Eddie Geller; and Non-Executive Director, Andrea Cutright, dialing in from the United States of America; while Andrew Whitten is here with me in Sydney. We're also joined by our audit partner, Louise Worsley from Grant Thornton; and Elizabeth Spooner, our Company Secretary. I'd also like to welcome those shareholders that are joining us in person and online. Please allow me now to quickly share some voting on Q&A instructions. For the avoidance of doubt, voting today will be conducted via a poll, and only those shareholders present in the room today will be able to vote. Questions can be submitted at any time, and we'll take questions from all shareholders present, both those here in person and those attending online. To ask a question online, press on the Q&A icon. This will open a new screen. At the bottom of that screen is a section for you to type your question. Please start your question by taking your shareholder SRN or HIN number. This allows the moderator to identify you as a shareholder. And once you're finished typing, please make sure you hit Enter on your keyboard to send the question. If you'd like to ask a question verbally, type your SRN or your HIN number, and then type I'd like to speak. Once you finish typing, once again, please hit Enter on your keyboard to send the note. So please note that while you can submit questions from now on, I will not address them until a relevant time in the meeting. So kindly include the agenda item number to which your question relates. Please note that your questions may be moderated. If we receive multiple questions on one topic, then they're automated together. All questions should be addressed to me as the Chairman, and I'll deal with them personally or ask someone who is better placed to respond. We will do our best to answer any relevant questions asked. I ask them to keep your questions short and to the point so as many shareholders as possible have a chance to ask a question. During the formal business of the meeting, please keep your questions and comments to the resolution being considered at the time. Questions, which relate to the general business of the company will be collected and addressed at the conclusion of the meeting. And as I mentioned earlier, when we reached the formal business of the meeting, voting on all resolutions will be conducted by poll, and only those shareholders present in the room today will be able to vote. So turning to the agenda for today's meeting, which will be as follows: I will first provide a brief address, a copy of which was released to the Australian Stock Market prior to the commencement of today's meeting. We will then proceed to the formal matters to be considered at today's annual general meeting. And finally, there will be an opportunity for questions and discussion. So before turning to the resolution under consideration, I'd like to say a few words in relation to the last year as well as to the year ahead. Your Board worked hard to support management as they execute on our grid strategy of building out the platform that is a trusted resource when millions of parents go to raise amazing kids. At the same time, we've been pursuing an expansion of the subscription revenue business model while progressing on a path to operating cash flow breakeven. Our team has proven resilient to the demands of the past 12 to 18 months as the impact of COVID-19 finally subsided and business returned to what seemed like a normal level of activity. What quickly followed, however, has been rising interest rates and general global uncertainty. The resulting impact saw major markets falling substantially, while technology stocks in particular were the hardest hits. These headwinds saw Tinybeans' share price adversely affected despite the company and in the financial year in a strong operational position with FY 2021/'22 revenues of USD 11 million, USD 4.2 million cash in the bank and no debt. In the current environment, we continue to see further growth in consumer revenues; and likely flat, although somewhat uncertain revenues across our advertising businesses. I can report that the USD 6 million raised in late 2021 is being put to good use as we build out our new subscription model. The transformation of the company from a photo and memory app to a service of parents is underway, and we're well placed to leverage our brand trust on a monthly basis with the 3 million parents who are members and the 20 million plus followers we have on social media. I will confirm that we are committed to operating within our current cash reserves, which stood at USD 3.1 million at the end of the quarter 1, September 30. And as a trading update, we're on track to burn around USD 0.5 million this quarter. That's half what we burned in quarter 1. Based upon ongoing tight expense management and strong collections, we expect a continued reduction in our cash burn in quarter 3 and in quarter 4. As a result, the Board decided to take into consideration the wishes of our shareholders and to withdraw Resolution 3 from today's annual general meeting. Resolution 3 dealt with approval of future issues of securities under the ASX Listing Rule 7.1A. Shareholders will be aware that there have been recent changes to our Board of Directors with Kathy Mayor and Greg West stepping off as outside demands reduced their capacity to contribute to our company, and I want to thank them for their service. Andrea Cutright stands for reelection today. Andrea joined the Board 2 years ago. She's held senior roles with Yahoo!, Disney+ and now Amazon, and is greatly contributed at board and executive level to our subscription product, market intelligence and insights. She is an asset to the company, and I'm pleased to see the vote in favor of the reelection as will come to shortly. You'll also recall that I announced I would step down as non-executive chairman once an appropriately skilled and experienced successor was appointed. That is still maintained. An extensive search in the U.S.A. identified a suitable candidate some months ago. However, capacity issues and subsequent market challenges have prevented the individual from accepting the role. So with our plans for NASDAQ listing on hold for the moment, it's been decided to seek a suitable Australian candidate and a search is underway. With your support, I remain my current role, overseeing the search and stepping off the board, upon the appointment of a well-regarded successor. In closing, my thanks to my fellow directors, to our leadership team and staff for the results achieved in the past year and to, you, our existing and new shareholders for all of your support and common vision to further develop Tinybeans [indiscernible]. I'm happy to take questions at the conclusion of the formal business as set out in the notice of meeting, and we now turn to the resolution for consideration at today's annual general meeting. The notice of annual general meeting was sent to all registered members on or about the 24th of October 2022 and is taken as read. Voting on all resolutions will be conducted by poll. And for the purpose of the poll, I appoint Jordan Foster from Automic Group to act as returning officer and to conduct the poll. Automic Group is the company's share registry, who have examined and prepared summaries of the proxy forms received. As mentioned earlier, only those present in the room today are able to vote. However, all shareholders will have the opportunity to ask questions relevant to the matters that will be considered today. Those shareholders in attendance that are entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold yellow voting cards. If you're attending in more than one capacity, you have been issued with as many voting cards as you have separate capacities. If anyone believes they're entitled to vote [indiscernible] in any capacity and doesn't have a yellow voting card in respect thereof, please raise your hand now, and a member of your shareholder registry team will assist you. At the appropriate time, I'll ask you to mark your vote for the resolution on the yellow voting cards. If you are a shareholder and wish to cast all of your vote for a resolution, please place a mark in either for, against or abstain box next to that resolution. If you wish to split your votes, please write the number of the portion or the portion of votes you wish to cast in the corresponding for, against or abstain boxes. Please note that the sum of the split votes must not exceed your total holding. If you're a proxy holder, a summary of the votes to which you are entitled has been attached to the voting card. If the summary of votes includes discretionary votes, these are yours to cast at your discretion. If you wish to cast the discretionary votes, please place a mark in the corresponding for, against or abstain boxes. If your summary of votes does not have any discretionary votes, you do not need to mark your voting card, and you'll simply need to hand it to the returning officer at the end of the resolutions. After all resolutions have been read and voted, please place it in one of the ballot boxes that will be circulating in the room. Are there any questions in relation to the voting process by those present? Okay. There being no questions. The proxies have been inspected, and all those [indiscernible] have been accepted. Proxies have been received representing 26,344,827 shares, which is 43.16% of the issued capital of our company. Quite a strong result. Undirected proxies or open votes that are nominating the Chairman as their proxy, I will cast in favor of each resolution in the notice of annual general meeting. Now to allow shareholders time to vote, I now declare the poll open, and it will remain open until the poll is declared closed. Your votes must be submitted prior to poll being closed for them to count. So now moving to the matters before us. The first item of business is to receive the company's annual financial report for the year ending 30 June 2022. The financial report and the reports of the directors and the auditors are now laid before the meeting. There will be no vote on this item as it is a discussion item only. The company's auditor for the 2022 financial year, Louise Worsley from Grant Thornton, is present to take questions relevant to the conduct of the audit and the preparation and content of the independent auditor's report. Are there any questions or comments on the financial report or the reports of the directors and the auditors?

No questions received.

There being no questions received. Are there any questions or comments on the management of the company?

No questions received.

Are there any questions relative to the conduct of the audit and the preparation and content of the auditor's report to be put to the auditors?

No questions received.

Okay. There being no questions, we now proceed to the resolutions set out in the notice of meeting. Resolution 1 is as follows. To consider [indiscernible] Resolution 1, the adoption of the remuneration report as an ordinary resolution. The proxies received in relation to this resolution are on the screen. With 95.91% in favor; 0.98 against; and 3.11 discretionary, which I will vote in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No online questions received.

There are no questions on this particular resolution, so I'll now put the resolution. Please mark your voting instructions for this resolution on your yellow voting card. [Voting]

Resolution 2 is as follows. To consider and if thought fit to pass Resolution 2, the reelection of Andrea Cutright as an ordinary resolution, reelection of and to the Board of Tinybeans. The proxies received in relation to this resolution are on the screen; 95.24% in favor; 2.58% against; and I'll vote the discretionary, 2.18% in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No online questions received.

There appear to be no questions online or in the room. Notionally, congratulations to Andrea and delighted to have her continuing as a Director. I now put the motion, please mark your voting instructions for this resolution on your yellow voting card. [Voting]

Resolution 3 will not be tabled at today's meeting. It's been formally withdrawn and will not be considered, and notes that effect went out by the ASX from the company yesterday afternoon. Moving forward, Resolution 4 is as follows. To consider and if thought fit to pass Resolution 4, ratification of prior issue of shares as an ordinary resolution. Proxies received in relation to this resolution are on the screen: 92.1% in favor; 5.75% against; and I'll vote for 2.18% discretionary in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No online questions received.

There being no questions. I now put the motion. Please mark your voting [indiscernible] resolution on your yellow voting card. [Voting]

As the next resolution relates to myself, I hand the Chair over to Co-Director, Andrew Whitten. Andrew?

Thank you, John. Resolution 5 is to consider and thought fit, to pass with or without amendment Resolution 5, approval of the issue of shares to Mr. Jonathan Dougall, director of the company as an ordinary resolution. The proxies received in relation to this resolution are on the screen. We have 95.12% for, 2.68% against, and 2.2% open. If you wish to discuss this resolution, please raise your hand or submit your question by the Q&A function.

No online questions received.

Thank you. I now put the motion. Please mark your voting instruction before this resolution on your yellow voting card. I'll now hand back the Chair, Mr. Dougall. [Voting]

Thank you, Andrew. Just one point there. Andrew referred to Jonathan Dougall. I'm actually John Dougall. So I hope it's the same person.

We are sorry. Apologies, Mr. Chairman.

That's okay. Resolution 6 is as follows: to consider, and if thought fit, to pass Resolution 6, approval issue of shares to Andrea Cutright or to a nominee, a director of the company as an ordinary resolution. The proxies received in relation to the resolution are on the screen: 95.16% in favor, 2.66% against, and I vote the 2.18% discretionary in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No online questions received.

There being no online questions or questions in the room, I now put the motion. Please mark your voting instruction for this resolution on your yellow voting cards. [Voting]

Resolution 7, moving forward, is as follows: to consider and if thought fit, to pass Resolution 7, approval of issue of shares to Andrew Whitten or his nominee, a director of the company, and this is an ordinary resolution. The proxy received are on the screen with 95.15% in favor, 2.66% against and I'll vote the 2.19% discretionary in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No online questions received.

There being no online questions or questions from shareholders in the room, I now put the motion. Please mark your voting instruction for this resolution on your yellow voting cards. [Voting]

Resolution 8 is as follows: to consider and if thought fit, to pass Resolution 8, approval issue of shares to Edward Geller or his nominee, a director of the company, and once again, as an ordinary resolution. The proxies received in relation to resolution on the screen, 93.49%, in favor, 3.57% against and I vote the 2.94% discretionary in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No questions received.

No questions received in the room or online. I now put the motion. Please mark your voting instructions for this resolution on your yellow voting card. [Voting]

Resolution 9 is as follows: to consider and if thought fit, to pass Resolution 9, approval of issue of shares to Greg West or his nominee, a former director of the company, once again an ordinary resolution. The proxies received in relation to this resolution on the screen, 95.1% in favor, 2.65% against and I vote the 2.18% discretionary in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No questions received.

No questions received in the room or online. I'll now put the motion. Please mark your voting instruction for this resolution on your yellow voting card. [Voting]

Resolution 10. To consider and if thought fit, to pass Resolution 10, approval of the issue of shares to Kathy Mayor or a nominee, a former director of the company as an ordinary resolution. The proxies received in relation to this resolution are on the screen, 95.16% in favor 2.66% against, and I'll vote the 2.18% discretionary in favor. If you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No online questions received.

There being no online questions or questions from those in attendance in the room, I now put the motion. Please mark your voting instructions for this resolution on your yellow voting card. [Voting]

Moving to the final resolution to be considered in today's annual general meeting. Resolution 11 is as follows: to consider and if thought fit, to pass Resolution 11, amendment to the constitution as a special resolution. Special resolution of course requiring 75% or more of voting shares in favor. The proxies received in relation to this resolution on the screen, 73.63% in favor, 24.19% against and I vote the 2.18% discretionary votes in favor. The change to the constitution basically was intended to allow the Board to conduct hybrid meetings given the current change of circumstances coming from the worldwide crisis with COVID and what eventuated. So we need 75% plus. We got that just, and I think there may be some misunderstanding of what the intent was. Nonetheless, if you wish to discuss this resolution, please raise your hand or submit your questions via the Q&A function.

No questions received.

Okay. No questions received online or from those shareholders in the room. I now put the motion. Please mark your voting instructions for this resolution on your yellow voting card. [Voting]

So ladies and gentlemen, that concludes the resolutions to be voted on today. As noted, we are conducting a poll on all resolutions, and I note that the poll is already open. For those shareholders attending physically [indiscernible] Group to collect your voting cards. Have all persons who intend to vote submit their cards? So if there are no other comments or further questions, I declare the poll closed. The staff of Automic Group will now process the poll, and the results of the poll will be announced to the Australian Stock Market once they are available. So as this concludes the formal business of the meeting, I now declare the meeting closed at, I think, it's Sydney 9:22 a.m. I now invite shareholders to submit any general questions concerning the company by the question-and-answer capabilities. While people are considering, there were several questions that came prior, which I might just address.

So Chairman, could you give information or more information or reasons for the decline in advertising revenue in the last quarter? Look, it's true that there's been a decline in advertising across the board. All companies, large and small, have been affected by the slowdown of activity. The advertisers, we've seen, have been pulling back and delaying plans to assess how the company is performing in 2023 or how their company and the economy is performing. We rarely lose clients. And certainly, big brands and their priorities do change from time to time, but we continue to take orders in excess of USD 100,000 from individual clients and customers. Chairman, can you comment on the security of messages sent between subscribers and whether the [indiscernible] is a problem? And if so, what is the company doing about it? Look, I'm pleased to say security is always top of mind. We regularly review our security, and security checks are undertaken from all aspects of the platform to ensure secure and as robust as it possibly can be. We also partnered with Amazon Worldwide Services [indiscernible] with our hosting platform. Chairman, is there any data on customer feedback during the last quarter that would be of interest? And do you track and scale customer satisfaction? We're always seeking feedback from our customers. Currently, our Net Promoter Score, those in favor of those versus those against is a positive 50. And most particularly, the survey and feedback from customers using the app via the iOS Apple application on their phones is 4.9 out of 5. We know we've made a comment that our Android customer satisfaction is much lower than we wish. We're aware of it, and we're working very hard on a new release for the Android app to address these issues very soon. One or 2 other comments quickly. A question regarding remaining focus on achieving our positive priority and top priority of operating cash flow positive. As we stated in our quarterly results published on the 1st of September this year, we remain committed to being operational cash flow positive in the next 10 to 12 months, and we believe we're on track to achieve those goals by growing our subscription revenues and offsetting the [indiscernible] the economic climate I mentioned a moment ago. As part of that process, overall costs have been reduced on previous quarters by in excess of 20% as we reported in September, and all costs have been continually reviewed. There are no other questions from shareholders. Sorry, are there any other questions online?

No questions received.

Okay. Well, I thank all of you for your attendance. There being no further questions, as I advised earlier, the results of the poll will be announced to the ASX shortly, and thank you for your attendance. The meeting is formally closed. Thank you, Andrea. Congratulations again on your reelection. And Eddie, thank you very much for your assistance in preparing our report.

And to you, John.

Thanks so much. Thanks, everyone. We're going to end the webinar now. Thank you.