VICTORIA, British Columbia--(BUSINESS WIRE)--Tiny Ltd. (formerly, WeCommerce Holdings Ltd.) ("Tiny" or "the "Company") (TSXV: TINY) (OTCQX: TNYZF), a leading technology holding company with a strategy of acquiring majority stakes in businesses, today announced the financial results for Tiny Ltd. for the three- and nine-months ended September 30, 2023 ("Q3 2023" and "YTD Q3 2023", respectively). Currency amounts are expressed in Canadian dollars unless otherwise noted.
Q3 2023 Financial Results
For the three-months
| For the nine-months
| |||
2023 | 2022 | 2023 | 2022 | |
Revenue | 50,522,913 | 40,914,446 | 134,327,157 | 114,829,942 |
Operating income (loss) | (3,549,129) | 8,347,486 | (15,518,331) | 24,222,904 |
Net income (loss) | (5,900,753) | 1,724,415 | 24,111,068 | 8,098,727 |
EBITDA (1) | 4,142,849 | 6,888,092 | 44,872,963 | 22,271,353 |
EBITDA % (1) | 8% | 17% | 33% | 19% |
Adjusted EBITDA (1) | 8,646,423 | 11,327,655 | 17,875,225 | 32,763,293 |
Adjusted EBITDA % (1) | 17% | 28% | 13% | 29% |
Recurring revenue (1) | 9,741,419 | 2,031,255 | 21,272,187 | 7,028,653 |
Recurring revenue % (1) | 19% | 5% | 16% | 6% |
Cash provided by operating activities | 451,830 | 8,676,531 | (6,505,390) | 19,172,355 |
Basic earnings/(loss) per share | (0.03) | 0.02 | 0.15 | 0.09 |
Diluted earnings/(loss) per share | (0.03) | 0.02 | 0.15 | 0.09 |
(1) Refer to Non-IFRS Measures for further information | ||||
- Revenue in Q3 2023 was $50,522,913, an increase of $9,608,467 or 23% compared to Q3 2022.
- Management has added a new metric to identify revenues that are stable and earned continuously: Recurring revenue (1). Recurring revenue (1) in Q3 2023 was $9,741,419 and made up 19% of total revenue, an increase of $7,710,165 or 14% of total revenue when compared to Q3 2022.
- Net loss of $5,900,753 in Q3 2023 compared to net income of $1,724,415 in Q3 2022. The biggest changes between Q3 2023 and Q3 2022 relates to depreciation and amortization, interest expense and tax expenses that were incurred as a result of the WeCommerce merger.
- Unrestricted cash on hand at September 30, 2023 was $22,643,639 compared to $31,201,836 on December 31, 2022. Total debt outstanding at September 30, 2023 was $131,639,788 compared to $69,793,864 on December 31, 2022. The increase in debt of $61,845,924 is due to including WeCommerce.
- Total assets at September 30, 2023 were $414,995,956 compared to $168,874,497 on December 31, 2022. Total intangibles and goodwill increased by $10,895,892 and $6,446,514, respectively for the quarter, as a result of the acquisition of Clean Canvas within WeCommerce. Intangibles and goodwill increased over the year as a result of acquiring $111.9 million in intangibles and $132.6 million in goodwill from the WeCommerce merger.
- Adjusted EBITDA(1) for Q3 2023 was $8,646,423 or 17% of revenue, compared to $11,327,655 or 28% of revenue in Q3 2022. Adjusted EBITDA increased by $2,230,379 from Q2 2023, which had adjusted EBITDA of $6,416,044 or 14% of revenue.
Management Commentary
In an environment where corporate spending remains compressed, the Company's revenue is up sequentially and Adjusted EBITDA margins expanding by approximately 400 basis points compared to last quarter. Entering Q4, revenue will benefit from a full quarter of Clean Canvas' results, as well as partial quarters from Jagged Pixel. We expect to see expenses benefit partially in Q4 from the targeted efficiency initiatives we announced in October, with the full run-rate savings expected to begin in Q1 of 2024.
As we approach year-end, our pipeline of opportunities continues to expand. We see this as a perfect environment to continue adding businesses to our portfolio that generate recurring revenue and cash flow with a view to accelerating financial results as the macro backdrop improves and generating long-term value for shareholders.
Financial Statements
Tiny Ltd's consolidated financial statements and Management's Discussion and Analysis ("MD&A") for Q3 2023 are available on SEDAR+ at https://www.sedarplus.ca/.
About Tiny
Tiny is a Canadian-based investment company focused primarily on acquiring majority stakes in businesses that it expects to hold over the long-term. The Company is structured to give maximum flexibility to operating management teams by maintaining a focus at the parent company level on only three areas: capital allocation, management, and incentives. This structure enables each company to run independently and focus on what they do best, within an incentive structure that is designed to drive results for both the operating business and ultimately for Tiny and its shareholders.?
Tiny currently has three principle reporting segments: Digital Services, which provides design, engineering, brand positioning and marketing services to help companies of all sizes deliver premium web and mobile products?; E-Commerce Platform, which is home to a complementary portfolio of recurring revenue software businesses that support merchants, as well as digital themes businesses that sell templates to Shopify merchants?; and Creative Platform, which is comprised primarily of Dribbble, the social network for designers and digital creatives, as well as a premier online marketplace for digital assets such as fonts and templates.?
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.sedarplus.ca.
Non-IFRS Financial Measures
This news release makes to 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", "Adjusted EBITDA %" and "recurring revenue". 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 % is 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 % is 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.
Recurring Revenue
Recurring Revenue consists of revenues generated through subscriptions that grant access to products and services with recurring billing cycles. The subscriptions are recognized on an overtime basis in accordance with IFRS 15.
Recurring Revenue is a part of total revenue disclosed in the financial statements, as determined in accordance with IFRS 15.
Recurring Revenue represents revenues that are stable and the Company expects to earn continuously. Recurring Revenue % is determined by dividing Recurring Revenue by total revenue for the year. Recurring Revenue is frequently used to determine any indicators of future revenue growth and revenue trends. Recurring Revenue and Recurring Revenue % are measures commonly reported and widely used as a valuation metric.
NON-IFRS MEASURES RECONCILIATIONS
EBITDA and Adjusted EBITDA
For the three-months
| For the nine-months
| |||
2023 | 2022 | 2023 | 2022 | |
Net income (loss) | (5,900,753) | 1,724,415 | 24,111,068 | 8,098,727 |
Income tax expense | (1,429,075) | 3,096,455 | (3,307,983) | 9,239,646 |
Depreciation and amortization | 8,906,495 | 1,148,139 | 18,109,110 | 3,407,062 |
Interest expense | 2,566,182 | 919,083 | 5,960,768 | 1,525,918 |
EBITDA | 4,142,849 | 6,888,092 | 44,872,963 | 22,271,353 |
EBITDA Adjustments | ||||
Gain on sale of intangibles | - | - | - | (2,808,336) |
Share of loss from associate | - | 1,981,352 | 1,379,679 | 7,522,652 |
Loss on disposal of subsidiary | 163,366 | - | 163,366 | - |
Gain on step acquisition | - | - | (42,083,465) | - |
Fair value (gain)/loss on investments | (1,776,782) | (213,299) | (4,023,712) | 91,665 |
Fair value on contingent consideration | 135,150 | - | 201,350 | - |
Business acquisition costs | 100,359 | 1,012 | 2,977,695 | 112,249 |
Share based payments | 657,107 | 713,476 | 3,965,405 | 2,758,922 |
Other expense(1) | 2,664,567 | 839,480 | 2,118,582 | 552,602 |
Acquisition-related compensation | 335,292 | - | 1,009,017 | - |
Non-recurring project costs(2) | 277,456 | - | 277,457 | 807,653 |
Non-recurring professional fees(3) | 363,062 | 1,117,542 | 3,482,919 | 1,454,503 |
Non-recurring severance expense | 1,583,997 | - | 3,533,969 | - |
Adjusted EBITDA | 8,646,423 | 11,327,655 | 17,875,225 | 32,763,293 |
(1) Other expenses / income relates to COVID-19 related government assistance, gain/loss on FX and other minor non-operating items | ||||
(2) Non-recurring project related to advertising and promotion expense for a specific project that will not continue in the future. | ||||
(3) Non-recurring professional fees relates to legal fees for the go-public transaction and amalgamation with WeCommerce | ||||
EBITDA % and Adjusted EBITDA %
For the three-months
| For the nine-months
| |||
2023 | 2022 | 2023 | 2022 | |
EBITDA | 4,142,849 | 6,888,092 | 44,872,963 | 22,271,353 |
Revenue | 50,522,913 | 40,914,446 | 134,327,157 | 114,829,942 |
EBITDA % | 8% | 17% | 33% | 19% |
Adjusted EBITDA | 8,646,423 | 11,327,655 | 17,875,225 | 32,763,293 |
Revenue | 50,522,913 | 40,914,446 | 134,327,157 | 114,829,942 |
Adjusted EBITDA % | 17% | 28% | 13% | 29% |
Recurring Revenue | ||||
For the three-months
| For the nine-months
| |||
2023 | 2022 | 2023 | 2022 | |
Recurring revenues | 9,741,419 | 2,031,255 | 21,272,187 | 7,028,653 |
Non-recurring revenues | 40,781,494 | 38,883,191 | 113,054,970 | 107,801,289 |
Total revenue | 50,522,913 | 40,914,446 | 134,327,157 | 114,829,942 |
Recurring revenue % of total revenue | 19% | 5% | 16% | 6% |
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 sedarplus.ca 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.
Contacts
David Charron
Chief Financial Officer
Phone: 416-418-3881
Email: david@tiny.com
