Tiny Reports First Quarter 2023 Results of Predecessor Company; Refiles December 31, 2022 Year End Audited Financial Statements and MD&A of Predecessor Company to Revise the Presentation of Certain Items
Victoria, British Columbia--(Newsfile Corp. - May 31, 2023) - Tiny Ltd. (TSXV: TINY) (formerly, WeCommerce Holdings Ltd.) ("Tiny" or "the "Company"), a leading technology holding company with a strategy of acquiring majority stakes in businesses, today announced the financial results for Tiny Capital Ltd. for the three-month period ended March 31, 2023 ("Q1 2023"). The financial results relate to Tiny Capital Ltd. prior to its merger with WeCommerce Holdings Ltd., which was completed on April 17, 2023 (the "Merger"). The Company reported the financial results for the WeCommerce group of companies for the three-month period ended March 31, 2023 ("Q1 2023") on May 11, 2023. For further details regarding the Merger, please see the Company's management information circular dated March 6, 2023, a copy of which is available under the Company's profile on SEDAR at www.sedar.com. Currency amounts are expressed in Canadian dollars unless otherwise noted.
Q1 2023 Financial Results
| For the three-month period ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | ||||||||
| Digital services revenue | 16,607,979 | 20,812,255 | ||||||
| Creative platform revenue | 16,839,931 | 9,704,343 | ||||||
| Other revenue | 2,884,038 | 3,001,501 | ||||||
| 36,331,948 | 33,518,099 | |||||||
| Earnings (loss) from operations | (1,069,841) | 9,472,267 | ||||||
| Net income (loss) | (4,080,911) | 7,032,185 | ||||||
| EBITDA 1 | (1,114,399) | 11,082,134 | ||||||
| EBITDA % 1 | ( | |||||||
| Adjusted EBITDA 1 | 3,022,202 | 12,782,732 | ||||||
| Adjusted EBITDA % 1 | |
Revenue in Q1 2023 was
$36,331,948 , an increase of8% compared to Q1 2022, driven by an increase in creative platform revenue.The increase in creative platform revenue was due to a reclassification of marketplace revenue from a net to a gross of marketplace content costs basis. This change to record marketplace revenue on a gross basis accounted for
$6.8M of the revenue increase this quarter.Adjusted EBITDA(1) for Q1 2023 amounted to
$3,022,202 , or8% of revenue, compared to$12,782,732 or38% of revenue in Q1 2022.Cash and cash equivalents at March 31, 2023 were
$26,737,377 compared to$31,201,836 on December 31, 2022. Total long-term debt outstanding at March 31, 2023 was$66,674,313 compared to$66,708,864 on December 31, 2022.Tiny Capital Ltd. had undrawn credit facilities of
$37,130,437 and Tiny Fund had uninvested but committed capital of$71,428,220 at March 31, 2023.WeCommerce Holdings Ltd. had cash and cash equivalents of
$9,129,722 and undrawn credit facilities of$27,066,000 at March 31, 2023.
Management Commentary
As the Q1 earnings season comes to a close, the broader sentiment and trends are apparent. Technology companies are continuing to adjust to higher interest rates and lower access to capital by reducing headcount and re-focusing their offerings, extending sales cycles, and reducing marketing spend. At Tiny, we see a sustained, challenging environment as a dinner bell. Now is the time to buy solid long-term businesses with competitive moats, at great prices, because others are looking elsewhere. We have a unique competitive advantage - our approach to founders, and our ability to transact quickly on terms that are founder-friendly, which we believe gives our shareholders the ability to access businesses, opportunities and long-term returns that would not otherwise be available. We aren't looking at any one quarter or even any one year. Rather, we are focused on building a portfolio of businesses that can compound returns on capital and grow shareholder value over the long-term. Our team has a proven track record of deal selection, execution and driving returns.
Tiny's Q1 results were impacted in the short-term by the broader challenges facing all companies participating in the digital services and remote hiring sectors. From an operational perspective, our digital services business has been repositioning to serve larger enterprise customers that provide more sustained long-term relationships and predictable revenue streams. This quarter, we experienced a larger magnitude of that switch that caused delays in both contracting and executing on those services. Our businesses engaged in transactional hiring services also experienced a slowdown in demand for technology jobs. We believe both of the challenges faced this quarter are short-term in nature, and we believe the work we're currently doing will position the companies stronger from a long-term perspective.
Tiny is well-positioned. We view the current environment as an opportunity to invest in our portfolio companies to support their growth and profitability, as well as to execute acquisitions at attractive valuations. Our acquisition pipeline is deep and promising and we expect to continue executing on investment opportunities that are accretive from a long-term value perspective as the year progresses.
We look forward to continuing our public market journey and sharing this success with all our shareholders.
Filing of Q1 Financial Statements
Tiny has filed the consolidated financial statements and Management's Discussion and Analysis ("MD&A") for Tiny Capital Ltd. with respect to Q1 2023 on SEDAR at www.sedar.com.
Refiling of Audited Annual Financial Statements and associated MD&A of Tiny Capital Ltd.
The Company has amended and re-filed the audited annual financial statements of Tiny Capital Ltd. for its financial year ended December 31, 2022 as well as its corresponding MD&A relating to such period, to restate the following items
- Statement of Financial Position and Statement of Changes in Equity: Reclassification of
$6.3 million of preferred shares (liability) to share capital (equity) in connection with the conversion of the preferred shares to common shares on December 1, 2022. - Statement of Cash Flows: Reclassification of
$7.7 million of cash outflow from financing activity to operating activity as the$7.7 million declared dividend was paid subsequent to year end and remained as a payable as at December 31, 2022.
There were no changes to Tiny Capital Ltd.'s Statement of Net Income and Comprehensive Income and therefore no impact to the revenue, expenses, net income or adjusted EBITDA previously reported.
Annual General Meeting
Tiny will host its Annual General Meeting and Investor Day on June 15, 2023. Management and board members will be available to answer questions.
About Tiny
Tiny is a leading technology holding company with a strategy of acquiring majority stakes in wonderful businesses. Tiny has three core business segments, Beam, WeCommerce and Dribbble, with other standalone businesses including a private equity investment fund.
Beam, and its subsidiary companies including MetaLab, helps start-ups to Fortune 500 companies to design, build and ship premium digital products for both mobile and web. The Company's capabilities as an end-to-end product partner provide clients with intimate insight into end-user behavior, allowing for a thorough, strategy-led approach to product design, engineering, brand positioning and marketing.
WeCommerce provides merchants with a suite of ecommerce software tools to start and grow their online stores. Our family of companies and brands includes Pixel Union, Out of the Sandbox, KnoCommerce, Archetype, Yopify, SuppleApps, Rehash, Foursixty and Stamped. As one of Shopify's first partners since 2010, WeCommerce is focused on building, acquiring, and investing in leading technology businesses operating in the Shopify partner ecosystem.
Dribbble is a creative network and community that design professionals use to meet, collaborate, and showcase their work. Dribbble also hosts an online marketplace for graphics, fonts, templates, and other digital assets.
Other standalone businesses include several software and internet companies and the operation of a private equity fund where the Company serves as the general partner (the "Tiny Fund"). The Tiny Fund commenced operations in August 2020 and has total committed capital of US
For more about Tiny, please visit www.tiny.com or refer to the public disclosure documents available under Tiny's SEDAR profile on SEDAR at www.sedar.com.
Company Contact:
David Charron
Chief Financial Officer
Phone: 416-418-3881
Email: david@tiny.com
Non-IFRS Financial Measures
This news release makes reference to certain non-IFRS measures and ratios, hereafter, referred to as "non-IFRS measures". These measures are not recognised measures under IFRS, and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the financial information reported under IFRS. The Company uses non-IFRS measures including "EBITDA", "EBITDA %", "Adjusted EBITDA", and "Adjusted EBITDA %". Management uses these non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. As required by Canadian securities laws, the Company defines and reconciles these non-IFRS measures below:
EBITDA and EBITDA %
EBITDA is defined as earnings (net income or loss) before finance costs, income taxes, depreciation and amortization. EBITDA is reconciled to net income (loss) from the financial statements.
EBITDA % ratio is determined by dividing EBITDA by total revenue for the year.
EBITDA and EBITDA % are frequently used to assess profitability before the impact of finance costs, income taxes, depreciation and amortization. Management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period and to prepare annual operating budgets. EBITDA and EBITDA % are measures commonly reported and widely used as a valuation metric.
Adjusted EBITDA and Adjusted EBITDA %
Adjusted EBITDA removes unusual, non-cash or non-operating items from EBITDA such as listing expenses, acquisition costs, restructuring charges, asset impairments, non-cash stock-based compensation, fair value adjustments to contingent consideration payable and foreign exchange gains and losses. The Company believes adjusted EBITDA provides improved continuity with respect to the comparison of its operating performance over a period of time. Adjusted EBITDA is reconciled to net income (loss) from the financial statements.
Adjusted EBITDA % is determined by dividing Adjusted EBITDA by total revenue for the year.
Adjusted EBITDA and Adjusted EBITDA % are frequently used by securities analysts and investors when evaluating a Company's ability to generate liquidity from the Company's core operations. It provides a consistent basis to evaluate profitability and performance trends by excluding items that the Company does not consider to be controllable activities for this purpose. Adjusted EBITDA and EBITDA % are measures commonly reported and widely used as a valuation metric.
NON-IFRS MEASURES RECONCILIATIONS
EBITDA and Adjusted EBITDA
| For the three-month period ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income (loss) | (4,080,911) | 7,032,185 | ||||||
| Income tax expense | (281,862) | 2,787,708 | ||||||
| Depreciation and amortization | 1,729,243 | 1,043,280 | ||||||
| Interest and bank charges | 1,519,131 | 218,961 | ||||||
| EBITDA | (1,114,399) | 11,082,134 | ||||||
| EBITDA Adjustments | ||||||||
| Share of gain/loss from associate | 1,180,282 | (249,996) | ||||||
| Fair value gain/loss on investments | 240,239 | (263,934) | ||||||
| Business acquisition costs | 52,461 | 73,113 | ||||||
| Share based payments | 489,538 | 1,299,762 | ||||||
| Other expense/income 2 | 562,725 | 34,000 | ||||||
| Acquisition-related compensation | 337,950 | - | ||||||
| Non-recurring project costs 3 | - | 807,653 | ||||||
| Non-recurring professional fees 4 | 834,805 | - | ||||||
| Non-recurring severance expense | 438,601 | - | ||||||
| Adjusted EBITDA | 3,022,202 | 12,782,732 | ||||||
EBITDA % and Adjusted EBITDA %
| For the three-month period ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| EBITDA | (1,114,399) | 11,082,134 | ||||||
| Revenue | 36,331,948 | 33,518,099 | ||||||
| EBITDA % | ( | |||||||
| Adjusted EBITDA | 3,022,202 | 12,782,732 | ||||||
| Revenue | 36,331,948 | 33,518,099 | ||||||
| Adjusted EBITDA % | ||||||||
Cautionary Note Regarding Forward-Looking Information
This news release contains certain forward-looking statements and forward-looking information within the meaning of Canadian securities law. Such forward-looking statements and information include, but are not limited to, statements or information with respect to: requirements for additional capital and future financing; estimated future working capital, funds available, uses of funds, future capital expenditures and other expenses for specific operations and intellectual property protection; industry demand; ability to attract and retain employees, consultants or advisors with specialized skills and knowledge; anticipated joint development programs; incurrence of costs; competitive conditions; general economic conditions; anticipated revenue growth; growth strategy; and scalability of developed technology.
Forward-looking statements and information are frequently characterized by words such as "plan", "project", "intend", "believe", "anticipate", "estimate", "expect" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although the Company's management believes that the assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that a forward-looking statement or information referenced herein will prove to be accurate. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include risks relating to reliance on the Shopify platform; the Company's limited operating history; reliance on management and key employees; conflicts of interest in relation to the Company's officers, directors, and consultants; additional financing requirements; resale of Common Shares in the publicly- traded market; market price fluctuations for the Common Shares; global financial conditions; management of growth; risks associated with the Company's strategy of growth through acquisitions; tax risks; currency fluctuations; competitive markets; uncertainty and adverse changes in the economy; unsustainability of the Company's rapid growth and inability to attract new customers, retain revenue from existing merchants, and increase sales to both new and existing customers; adverse effects on the Company's revenue growth and profitability due to the inability to attract new customers or sell additional products to existing customers; the successful integration of the Company with Tiny Capital; future results of operations being harmed due to declines in recurring revenue or contracts not being renewed; security and privacy breaches; changes in client demand; challenges to the protection of intellectual property; infringement of intellectual property; ineffective operations through mobile devices, which are increasingly being used to conduct commerce; and risks associated with internal controls over financial reporting. The Company undertakes no obligation to update forward-looking statements and information if circumstances or management's estimates should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements and information. More detailed information about potential factors that could affect results is included in the documents that may be filed from time to time with the Canadian securities regulatory authorities by the Company.
For a more detailed discussion of certain of these risk factors, see the Company's most recent MD&A described in the "Risk Factors" as well as the list of risk factors in the Company's management information circular dated March 6, 2023 available on SEDAR at www.sedar.com under the Company's profile.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE: TINY LTD.
1 Refer to "Non-IFRS Measures" for further information.
2 Other expenses / income relates to COVID-19 related government assistance, gain/loss on FX and other minor non-operating items.
3 Non-recurring project related to advertising and promotion expense for a specific project that will not continue in the future.
4 Non-recurring professional fees relates to legal fees for the go-public transaction and amalgamation with WeCommerce.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/168142
