tinyBuild, Inc. (TBLD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the tinyBuild Interim Results investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However the company can review 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 to your kind attention, I'm sure the company would be most grateful. It gives great pleasure to hand over to the management team from tinyBuild. Good afternoon to you both.

Well, thank you so much for being here. Welcome to the H1 2023 results. The way that we usually do it is -- well, everyone has read the disclaimer, I hope. We are going to be presenting in between the two of us. I will handle the operational strategic parts and Jaz will handle the financial parts. I guess, introduction presenting today. My name is Alex Nichiporchik, I'm the CEO and Co-founder of tinyBuild. I come from a background of being in video games all of my life, starting from playing them professionally and living the dream of actually working on some of my own favorite franchise. Jaz, do you want to say a few words?

Yes, I joined tinyBuild 3 years ago, just before the IPO. I worked as I are -- until recently when I was appointed as CFO last June.

Yes. So the structure will be that I'll do an operational review, then Jaz 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 have a substantial amount of people affected by the war in Ukraine. So we were in a 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. 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 cinema where you have potentially uncapped sales potential. So over the past few years, we had a lot of platforms hungry for content, for exclusive content, [ for licenses, ] et cetera, and that has come to a slowdown across the whole industry. 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&A to focus on cash generation. That said, we are 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 in cost savings, and we are very clearly focused on a specific type of game that we call the 1,000-hour game, which I will talk about in detail in the strategy. I'm sure you've seen all of these slides, and Jaz 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%. 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 catalogue. As a reminder, back catalogue is counted based on the financial year. So if we launch a big game in December, as our most of this revenue will become back catalogue very soon because January will roll around. So from January, it will be counted as back catalogue, which nearly brings us to our IP across multiple platforms. So in 2017, we've had a 50-50 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. If you look at the left slide over here and look at the last graph, H1 '23, you can see that our revenue mix is still very diversified, where we're focused on creating franchise potential and concentration for top 3 went up a little bit in H1, mostly due to the good performance of Hello Neighbor 2, which launched last December and became back catalogue 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 to day. This brings us to our mix of back catalogue in 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 just launch and forget. 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 we can spend a lot of time. So just some of our top performers like Deadside, Streets of Rogue, SpeedRunners, Potion Craft, they all have systematic elements that allow players to spend a lot of time playing those games, think thousands of hours. Like there is a review for Streets of Rogue on Steam, it's one of the top of the reviews where the guy says, "Yes, the game is okay, time spent 3,600 hours." Now this is really important to us because it kind of builds the backbone of the business. And then we are able to constantly extract additional revenue from this catalog by doing sales. 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 wishlist. And then you will get the 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 wishlist across this whole presentation. That said, let's take a break and talk about numbers with Jaz.

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 a function of the drop -- sharp drop in platform deals, more on this in a second. Impacting on the gross margins, which is the line on that same chart where two other factors, a less favorable revenue mix, as pointed out by Alex, less heavy on first and second party and more -- and heavier on third parties. And on the other side, also a higher level of amortization of debt costs, which flows directly from the increase in debt cost investments over the past few years. Moving to the chart in the middle. Adjusted EBITDA loss was $1.2 million in the half, also impacting EBITDA above and beyond what I've just mentioned on gross profit was an increase in SG&A in H1. 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 that is proof that we're still generating cash from the operations and 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 $17.5 million for both half -- first half this year and last year. That is our core business. That is the unit gains sold to players. We 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 H1 this year, which I'm going to show some more evidence in a second. The other two lines I want to focus on the P&L are the impairments for development costs and intangibles, that is something which was triggered by the lower expectations in terms of revenues. So we sat down with our accountants and auditors and established the fair value of the assets we're carrying on the balance sheet right now. That led to a negative adjusted EBITDA of $1.2 million. 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 signed directly with the platforms. It's not when we sell a game to 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 development contribution to develop a certain game for a new platform, for a new technology, imagine VR headset. 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 2023. We can put that down to a number of factors, but we can't identify the one reason for this 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 macro economy, but cyclical in terms of technology cycles. Every time there is a new technology, there's going to 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 going to see more of that with cloud gaming. So it's going to come back. But for now, we have to conservatively exclude that from our forecasts. We're still signing some platform deals. You can see a small part of that in the first half of the year. There will be more in the second half but it's not going to 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&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 million working capital contribution, a bit of a technical, but I know many of you have this kind of knowledge. So 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 booked revenues as everybody does, and we received the cash with a 4- to 6-weeks lag from when we booked revenues. That is the net working capital change you see here. Alongside revenues coming from platform, which are delayed in terms of payment by 4 to 6 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 causes that plus $4 million 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 to continue to generate a high level of revenues from existing franchises. And we broke that down here. And here, we show software development on a month -- on a six-monthly basis, starting from H1 2020 and picking in H2 2022 at over $21 million. 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 decision would be suboptimal because it means we're giving away. We're losing growth in the after years. So 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 investments, this time, including M&A. I've seen a couple of questions on that, and we'll take those in terms. But M&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. As said by Alex and [ me too, ] we have paused completely M&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 $16.9 million spent in H1, we are working on over 50 projects. None of these projects account for more than 15% and it's actually much less than 15% in the current year. 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 changes here. We have looked at a change in intangibles. What we have left to comment on is the net cash position, moving from $26.5 million to $14.3 million. And this is the bridge to explain what happened, a positive cash profit of $2.1 million. So the P&L profit of -- the negative number you see in P&L, whether you look at adjusted profit or reported profit, is impacted by noncash amounts. The cash profit was actually positive $2.1 million. You had just over $4 million 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, Jaz. So in the beginning of this year, I outlined our 5-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 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, in games that are services and in slightly bigger titles was the 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 million books sold based on Hello Neighbor. And we are releasing Season 1 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 1,000-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 1 hour to be. So you have a 10-hour long game. In order to add in 1 hour, you need to add 1 level, which adds 10% of that content. And when you add level #12, you are adding just over 9% of content, and then get more and more diminishing returns. So making 1,000-hour games that are content driven is very, very difficult and expensive, that's AAA levels of investment. Instead, we are going for systems-driven design, where if you have a game that has some systems in place and you add system #11, which may interact with several other systems within that pack, then you may have just added 30%, 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 because users can actually modify the game with a series of markets that we released, where they can create their own content. 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 into PvP and PvE which is a 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 path. 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 -- 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 matter. So we knew that the game was gaining traction because the Steam page for it has been up since middle of 2021 and was gaining good traction. So much so that we knew exactly how to amplify that traction. And long story short, we have 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 like in the game, and that justified a delay in that title because we knew how to make it better. And that delay directly resulted in phenomenal reception over 90% positive ratings for the game, 500,000 in sales and 200,000 additional wishlists that were added to the games balance. So essentially, think of it this way. It's a new IP, it's in early access, which means there's an active development and 200,000 people have this game on their wishlist, which means that they're waiting for updates and/or sale events and of this facing a full release of 1.0 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 example here is about expanding the franchise. Punch Club 2 launched this year as a long, long, long development cycle that is a follow-up to 2016's Punch Club. Now Punch Club was an interesting game. It did not get any traction whatsoever. So we knew the game was good, we knew people would like it, but we can get traction on conventions with media, with press, with influencers and then we kind of caught lighting in the bottle, but we're doing a marketing stunt called Twitch to Play Punch Club. Google that, if you want to get more details. Essentially, we 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 [indiscernible] experience where we held the game hostage on Steam saying, you as internet need to beat the game on Twitch before we release it. That resulted in our 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 of doing data-driven decisions which is exactly what we did. We have a six-month marketing plan. It was a very short time to live for the wishlist. Where we said, okay, if wishlist are all fresh, all generally within the last six months, they're going to convert much better on day 1, which is going to generate us a lot of exposure. [ Once we assured ] the game launched to be more successful than the original, which is a testament to our ability to publish both new and existing IP. Okay. 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 spinoff, 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 in this October. I hope everyone will get to see it because it's looking really good. Now Hello Neighbor 2, released last December, which means that it's already considered back catalogue. But since December, we have done almost a dozen updates to Hello Neighbor 2. 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 count so 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. It means that it was prioritized to be a console game, and that is where the target audience is. 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, Kill It With Fire 2, Slime 3K and Streets of Rogue, numbers 4, 5 and 7 are parts of existing franchises. We have 2 sequels and 1 spin-off. Slime 3K is actually a spin-off of Despot game, which is a popular game we released a couple of years ago. So we are in the process of transitioning from working on mostly in new IP through a balance of existing IP and new IP. And with the closing remarks, I just want to 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 2 or 5 from now. And with that, let's jump into Q&A. I think, we have a lot of questions here.

That's great. Jaz, Alex, you do indeed. Let me just give you a couple of moments to review those later, on. [Operator Instructions] I'd just like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your Investor Meet company dashboard. Jaz, Alex, if I may, just ask you and invite you to open up the Q&A tab when appropriate, read out the questions, and then I'll pick up from you at the end.

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

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

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&A. So we have deliberately put all of the M&A discussions on ICE when it comes to acquisitions. We continue to have discussions on potential disposals if somebody wants to offer us a good valuation for an asset that 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. And bearing in mind how diverse is our portfolio of investments, over 50 projects currently under development. And we think it's also lower risk compared to bigger M&A deals. Next question is what lessons have we learned from underperforming acquisitions and what measures are in place to avoid repeating similar mistakes? Do you want to take that, Alex?

Yes. I think the consistent lesson here is that M&A works much better when it's for parties you've worked with before. So when you have an established working relationship, you kind of like take it to the next level. M&A for companies that have not developed that chemistry prior, is a risk that should be considered seriously 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? 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 mandatory bid for the company. And I believe the threshold is 30%, I am above that.

Next question is about guidance of financial performance for the next couple of years, and I'll take that one. So the way we're running the business is trying to maximize revenues, trying to maximize return and minimize the risk. 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 was 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 10 years of history, 13 years of history all in. And we have learned from that, that we should never sit on our hands. We should continue to look for more and we have been doing that right now. So in terms of financial performance over the next 2 years, First and foremost, our priority right now is to rebalance the amount of investments with the revenue opportunity we see in the market. We have to do that with growth mentality in mind. So we're doing that being very selective about the projects we are investing in and being very selective about the timing, the different -- the way we can develop each project, the technology, which we can share in-house. And that is as much as I can say about the performance. 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've continued to look for more opportunities. Consensus is looking now at revenue growth if from a lower base into next year, and we're fully on board with that. Next question is on Versus Evil 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 is not a lawsuit. It is a notice of breach. It's the 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 close to zero. In terms of the claimants, we can't comment on specifically individuals. It would put people in a difficult position. What we can say is that as it happens in this case, we always, first and foremost, looking for an amicable solution. We want to resolve this in the quickest possible way 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 purchases? We asked for that Alex is above the 30% threshold that prohibits him from buying additional shares. How are the new titles performing? And how do you measure where a new title is successful or not? Alex.

It seems the question is whether a new title is successful or not. Well, we look at the sales and the engagement, right? It's quite clear here within the first few days, what you expect of the first month. But then after the first month is 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 actively predict the amount of sales, we kind of know [indiscernible] up to a launch with exceptions here and there, like sometimes you have games that just blow up beyond their expectations or do less than your expectations.

I'm going to combine two questions in one. There is one question about buyback and 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 investing in tinyBuild itself has become incredibly attractive. So buyback may -- will be considered -- should be considered soon. This is not guarantee that the buyback will happen, but it's definitely something that we will be taken into account in our capital allocation. And on the [ EBT, ] the [ EBT ] has been active since inception, since December. As a matter of fact, it was active recently. I can comment on the day-to-day activity, but the EBT is buying shares at current levels. The instructions are clear, we cannot direct purchases while we are in close period. But just after reporting, we will be able to add new funds if that is appropriate. I'm just looking through the questions. So Jaz, you mentioned that the drop-off in gross margin is partly due to higher amortization of debt cost, thus revenue and amortization effectively align in terms of timing. Yes, there are small differences, sometimes amortization come slightly earlier or slightly later than the specific revenues. But in general, 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, that doesn't trigger an increase in debt 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 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 layouts that have been happening in West Coast tech giants. So across the board, there is just less appetite right now for new content, and we can't really pinpoint to anything specific.

And a follow-up to this question. If this platform revenue is indeed cyclical, as I said in the presentation, what factors will drive the next upturn? It's really a technology cycle. When we see new technologies emerging, there are typically new players that try and take that place, sometimes successfully, sometimes not. Google Stadia was an example of this, a new technology, cloud gaming emerging and the new player trying to enter as a platform distribution in the video game space. Another follow-up to the same question is are you saying that VR will likely be a driver of platform revenue? VR is already a driver if it's a smaller scale, it's a small market of some platform deals. 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. And a final take on the same question. Are you developing enough VR games to benefit from such an upturn? To you, Alex.

We're developing VR games where it makes sense, right? I'm personally really excited about technology and also about Apple coming into the AR, VR 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 everyday. So 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 10 days for Hello Neighbor franchise. Are you going to try and get Hello Neighbor film, not just the 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 animation 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 does need help gain traction for the brand and its awareness and get lot of new fans.

Another question on the animated series. What caused the delay in release of the animated series for Hello Neighbor? And in the previous earnings release, it was mentioned that Episode 1 to 6 would release in H1, has that been pushed out?

Yes. 1 and 2 did release in H1 and the reason these 4 are dropping in October is because the only thing that we need to schedule where people ideally need 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. So we expect the gap between season 1, which is the first 6 episodes and the season 2 and 3, which has 6 episodes each to be smaller and more predictable.

I should also add that you might have heard of strikes in the U.S. 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 look at a pretty smooth rollout 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. And if those forecasts were to change, we would adapt the business model. So let me take this by the [ holes ]. We have a credit facility of up to $35 million. 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&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 H1, we had over $14 million of cash. We're going to use a little bit more of that into the second half to continue to invest in titles. And then we're going to stabilize the cash position. But we are not looking 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 any other source. Do you plan to launch any of your accounting service games such as SAND, LEVEL ZERO or RAWMEN as a free-to-play?

We're exploring business models.

So there is a bit of confusion. On -- Alex, the article we had at the AGM, which would have allowed you to buy more shares, that article was voted down by some shareholders. So this way, making it impossible for Alex to buy more shares. Would you consider to using debt to combine share buyback and investment opportunities? No, we think share buybacks and investment opportunities should all come out of our cash balance. Again, the credit facility set up was for that unmissable M&A opportunity, which hasn't materialized. Suggested, I guess, that we could present the H1 numbers for 2023 next to H1 numbers for 2022. Point taken. We have historically presented full year and half year, and we can actually add quite quickly, quite simply the H1 comparables from the previous year. Yes, in all the tables, we have actually presented the granular details of H1 numbers last year, but it could have been on the chart. Point taken. Is the company expecting to be cash flow positive in FY '24 after investments? We are planning to stabilize the cash burn. So that as an indirect guidance response answer your question. The uncertainty out there is that we always work on projected revenues and projected costs. We might have -- we might decide to spend a little bit more on a game, which is doing particularly well or we might have higher revenues or lower revenues. What we're going to do is to create a very safe bundling within which we can absorb that variability. And that's going to be what we operate with it. 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 going to point you to Major Shareholders tab. Alex currently holds 37.8% of the company. The other main shareholders, anything between 5% and 8%, and you got 4 of them. Everything else is free float.

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 are 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 think the point here is that even though the markets are changing and things are going crazy from one challenge to the other, we still maintained our story. We did exactly what we set out to do during IPO. 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 that.

That's great. Thank you once again, Alex and Jaz for your time this afternoon. Ladies and gentlemen, can I please ask you not to close this session as well now, direct you to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure we'll be greatly valued by the company. On behalf of the entire team of tinyBuild, I would like to thank you for attending today's presentation, and good evening to you.

Thank you.

Thanks, everyone.