Tinybeans Group Limited (TNY) Earnings Call Transcript & Summary

[Audio Gap] For joining the call today. I'm Chantale Millard of Tinybeans, and our CEO, Zsofi Paterson will be taking you through the FY '24 results update. There will be some time at the end for some questions. So I'll now hand you over to Zsofi to run through the presentation.

Good morning, everyone. Thank you for joining the Tinybeans annual results presentation. For those of you who don't know me, I'm Zsofi and I was appointed as CEO on July last year after a decade of strategic leadership across the U.S. and Australia in consumer technology businesses. I was and still am a passionate stint and avid user of the Tinybeans app, and I'm delighted to be here presenting the results. I'm going to just jump off camera or we go through the presentation, and then I'll come back to answer some Q&A at the end if there are questions. With our private foundry photo sharing up, Tinybeans is a loved and trusted by thousands of families around the world to safely and securely save and share photos and videos. We combine technology with a deep understanding of family needs and digital proxy to make parenting more joyful, simple and meaningful. Starting with presentation with some highlights. 2024 has been a year of transition for the company with the new CEO of refreshed strategy, refreshed brand, updated mobile products, new marketing plan, team changes and a refreshed forward. Tinybeans both market-leading consumer subscription metrics with high retention, engagement and referral rates and crucially record subscription revenue growth over the year. We service a large regenerating global market with 5 million births each year and reaching currently less than 1% of these offers us massive room to grow. We have a strong board with new appointments in our key markets of the U.S. and Australia, and with a renewed focus on Australia, given the privacy thematics and ability to compete in our home market. We've demonstrated a disciplined approach to costs, reducing OpEx by 15% year-on-year, and we have plans for material costs out in 2025 as we continue to pursue a subscription less strategy. Some of our numbers and metrics on the page. As I mentioned, we grew subscription revenue by 40% year-on-year, up to $2.9 million and subscription revenue now contributes over 50% of our overall revenue. This was primarily due to higher retention, 89% of our paid subscribers over the year. We held our paid subscriber and monthly active use and others at 51,000 and others 950,000 respectively, which was no small feat given the material price increase our subscribers but for the first time. We increased our average revenue per paid sub by 42% and our customer lifetime value by 11%. We have really high engagement with our daily active over weekly active user rate around 59%, which is up there with the likes of Candycrush and Instagram. We have over 64 million memories uploaded over the year and a huge 93% recommendation rate from paid subscribers in our most recent survey. Looking a bit more specifically, while total revenue was down, subscription revenue increased by 40% year-on-year with 36% in [Qatar]. As mentioned, subscription revenue is now our major revenue line, contributing 53% of total revenue. This is in line with our go-forward strategy focused on going our subscriber base and subscription revenue as these are key to the company's valuation moving forward. The focus of the year was to stabilize the product and retain subscribers following the May 23 pricing increase, and we did this. Our average revenue per subscriber is $72 being a 43% increase over the year. And as we've talked about previously, a key indicator in a new subscribers propensity to engage and convert to be a paid subscriber is inviting and activating their family members or followers. And we have successfully seen this number grow over the last 6 months due to product and life cycle updates. On average, our active paid scribers invite 18 family members to follow their journal. So we have really strong network effect potential. All of this that sets us up really well for the year ahead. Moving on to the business update. Tinybeans caters to new parents and with over 5 million births each year in markets, we are currently acquiring less than 1% of these every year. So with a strong platform and brand and building our marketing, distribution and acquisition efforts, there is a substantial opportunity to grow market share. You just have to watch the news or read the newspapers to see the ongoing discussion about privacy and the risks and dangers of sharing kid's photos or information on social media. Tinybeans provides a solution for this, and this is key to our go-forward growth initiatives. Further, when compared against the native platforms, Tinybeans has been custom-built for multigenerational families sharing over multiple years. It's platform-agnostic with ventures design for family use and with privacy at its core. The added benefits of printed albums and relevant age and stage based content further differentiates us in market. And as a premium product, we cater both to those with and without the ability to pay for the service. In summary, we compete in a big market with a relevant and robust solution. Over the year, we have done a lot to improve the product performance and address stability and quality issues, and it shows in our ratings and reviews. Our app really is better than ever. We've uplifted the end-to-end experience, have focused on some key UA enhancements and importantly, the crucial steps of onboarding an activation, which a key for any subscription business and the strongest indicators of LTV. With a go-forward focus on growing a valuable subscription business, having a product that is stable, easy to use and seamless for family use is essential. Earlier this year, we rolled out our refreshed brand built around the value proposition of privacy, joy and connection. Whether you're using our mobile apps content on our website or engaging with the social channels, you get a seamless brand experience. This has allowed us to confidently engage in partnership conversations, attract new advertising partners, and we've seen some uplift in our marketing efforts driven by stronger web and brand experience. Timing is a high trust platform for advertisers to safely reach a desirable audience. However, with the decline in advertising revenue since 2022, we've had a lot of work to do to rethink our sales proposition, especially at a time when publishers around the world struggling. We've had some recent wins and improvements, securing campaigns from growth national and international brands, including NBCU, LEGO and Paramount. We believe that commercial revenue plays an important role for the company, but we are continuing to think about the model that makes the most sense given our go-forward strategy in our core assets. And you will have seen over the last 2 months, we've announced 2 key appointments to our Board, James Walton, the former CEO of Seven West Media in Australia; and Mike Rosman, the Founder and former CEO of [ Fill ] in the U.S. Both bring great strategic and operating experience and relationships across the media, digital and investment communities in our key markets. We've also made some key buyers in Australia or started analytics and brand and marketing, which you'll see are already having an impact in our strategy section view. I'll touch on the financials and then refer people to the presentation and our annual report for more detail. Turning to operating performance, noting that all references are in U.S. dollars. The company delivered $5.41 million in total revenue, with $2.34 million coming from advertising revenue and $2.97 million from subscription revenue, a 40% increase year-on-year. Our operating expenses were reduced by 15% year-on-year to manage the softer revenue outlook. The cash balance as at 30 June was $3.39 million following successful completion of the capital raise in May this year. Operational cash burn for the year was $3.08 million. Moving into FY '25, we are continuing to review our cost base and expect to see substantial cost reductions as we continue to rationalize our strategy and our operating model. You'll find our P&L and balance sheet on the following pages for your reference. Now turning to our strategy. While relatively small today, we have big aspirational long-term goals that drive our strategy. We are focused on growing our monthly active users substantially from $1 million to a goal of 10 million. We want to see 1 in 4 first-time parents use Tinybeans to save and share their precious moments. We want to be a global leader in digital parenting category, and we want to grow our revenue to $25 million, ensuring a concentration and most growth coming from the subscription revenue line item. Looking at our strategy. Our pillars are: number one, for a brand awareness and subscriber acquisition with a brand-centric insight-led in growth strategy focused on Australia and the U.S. and utilizing partnerships where possible for cost-effective access. Secondly, increasing subscriber activation and engagement, knowing just how important those first few interactions with the [indiscernible] for retention, growth and LTV. And thirdly, pivoting our monetization strategy, continuing to move away from a published a lab model and centered more around our core assets and first-party data. A quick look at some insights. During our capital raise, we talked about the importance of making data and analytics more central to the company. Over the last few months, with the addition of a small analytics and data team in Australia, we've begun that transformation, and we're using those insights to inform everything we do. We recently conducted a survey of our Tinybeans subscribers in which we discovered 90% site privacy is the key reason for choosing Tinybeans. A whopping 93% of subscribers have recommended Tinybeans to friends and family. And in line with that, 72% of our subscribers discovered Tinybeans from friends and family. You'll see how these insights speaks squarely into our marketing and product strategy in a moment. Further, in mining our rich behavioral data, we have confirmed over 60% of our subscribers are acquired in a baby's first 2 months. 75% of our subscribers return a second month once the following engagement tester and a subscriber's propensity to return to the material increases after foreign trout. Similarly, you'll see how these insights inform our product and life cycle strategy. Turning to our first objective, marketing and growth. Job #1 this year is to continue our transition to a full funnel marketing strategy, leveraging top and bottom funnel tactics to grow ground awareness and importantly, job subscriber acquisition. As a key to our go-forward plan, and we're seeing some early traction with our recently announced that [indiscernible] partnership in the U.S., starting to contribute highly qualified potential new subscribers. And we have many more activations with Babylist in the works just roll out this year and in 2025. We also have a pipeline of other conversations underway with the range of highly aligned brands and potential partners in the U.S. and Australia, which we will keep the market updated on. Other top of funnel new initiatives include a recently launched PR strategy to position Tinybeans solution for parents and service social media and privacy and utilization of ambassadors and social media influences to tell our story and promote our brand and using genuine 20million users as ambassadors where possible because these people really are at greatest allies. Of course, by continuing to optimize SEO, performance media, affiliate marketing for cost activity level bottom funnel activity as well as retention and life cycle marketing to nurture, engage and retain our valuable and large user base. Shooting gears to product, where our efforts are all focused on initiatives to support sustainable product-led growth. We've done a lot of work to address the stability of the product, and we remain focused on ensuring the core quota-sharing functionality is seamless. We know just how important those early activation steps are for new free subscribers. So we continue to iterate and optimize that experience, and we're seeing some nice results. We're reviewing pricing plans and product is to make sure we're finding the balance between value and offerings for families across the free and paid levers. And we're iterating our referral functionality and building out a gifting solution, which will be hopefully launching in the next month or 2. And this -- both of these things enable the organic behavior, address an offer requested customer support request and allow for registry to integrations to support broader distribution, including registering integration into baby list. And finally, looking at monetization, where we continue to shift away from publishing and towards a commercial model more focused on our core assets, being first IB dollar and the photo sharing app. We're thinking a lot about the products that sit around our digital experience, including photo books, digital frames and other photo-based opportunities to offer more value to our subscribers and increase average revenue per user. We'll take a partnership approach where we can. Further, with you about how we provide a safe, differentiated platform for brands to reach our highly engaged families in the Tinybeans free experience, including our powerful e-mail products. We're talking smart, contextual and targeted brand spots that don't or heavy content creation and published like scale. We believe that commercial revenue plays an important role for the company, and we are continuing to think about the model that makes the most sense given our go-forward strategy. To wrap up, FY '24 was a big year of transition for the company. We're pleased to have the year behind us and now to be focused on growing brand awareness and subscriber acquisition for metrics are excellent, we just see more people knowing and joining Tinybeans. Shifting our commercial strategy away from publishing and in line with core product offering and reducing our reliance on advertising revenue. We're going to be disciplined with our cash, allocating resources efficiently in areas that will generate long-term value with further cost outs expected over the year and levering the expertise of [indiscernible] board which is now staffed with great operators who can contribute meaningfully to growing the enterprise value of our company. We're excited for the year ahead and thank everyone for their support to this point.

Great. Thanks, Zsofi. And we did note that it seems there was a bit of a delay with some of the documents getting released by the ASX this morning. So -- but they did all pop up out just before the call started, which is great. We're a bit wait for a while. So, you will be able to find the document or the other announcements once you get off this call. So yes, so I think we'll open it up if there's any questions at all? No. Nothing at all [indiscernible]. Fantastic. Look, we know that it's a big day for a lot of results coming out. So, if there aren't any more questions, I just -- we'll just -- we'll wrap it up, and it has been a massive year of change and Zsofi and the team have pushed a lot through and really setting us up to that sort of the growth in FY '25 and beyond and now to really drive some of that people go through paid subscribers. So as a Board, a new board and new members as well, we're really, really excited as Zsofi and look forward to giving more updates as the year progresses and then particularly at the AGM. So, I'll just give one more shot out there, no questions at all? No. Okay. Fantastic. And of course, as always, anything a lot of you have probably got our direct e-mails and there's always the importance you got anything you think of later, please enter it through. Otherwise, we look forward to giving you more updates shortly. Thank you for attending.

Thanks, everyone.

Bye.