Full Year 2022 Tinybeans Group Ltd Earnings Call
Morning, obviously for the people in Australia.
A special thank you to our current shareholders and investors and support is out there and really believe in the tiny beans, future. So that would be showing a little bit about our FY 'twenty results and giving you a bit more insight as to where the company is going.
People are attending today those of you don't know them a little bit about me I'm, a data for amazing get challenging boys and teams.
Ages 11, three to 19 and as a parent I along with the rest of the team of tiny beans, or on a personal mission to create something truly compelling the old parents need.
More importantly, a platform to really help us all and help parents ramp amazing kids.
We received a bunch of questions on lead up to this but please feel free to submit questions in the Q&A box throughout the presentation and then at the end I'll get to us.
And answer any and all questions everyone would like so let's.
That's something.
So if we think about the only thing market, it's a huge market.
In the U S alone it's up.
Because the $934 billion and it's just basically it's illustrative of the market, we're in and the parents and the problem with moving to so yes, tiny being very small at present relative to this market, but it just shows you the potential of this market and just really where parents are and where they're spending today and into the future and frankly, even gotten.
Even more expensive clearly over the last 12 months of inflation has risen.
It's an important step to understand because as the business continues to evolve and launch.
A whole revenue streams, especially in consumer and as we double the atmosphere and affiliates and product revenue. This will be an important point to keep on reminding everyone in them.
The market that we're in and we're growing into.
If you think about the I guess the journey of our parents, it's long challenging an incredibly rewarding I speak to parents, all the time and I'll speak to and understand obviously that challenges and their opportunities and it's really important to understand that today, yes, we serve and new parents and yes, we serve parents up until probably the kids.
But we're really expanding that and also you know linked thing that in terms of the relationship we have within and without so basically what's important to understand is that.
As Mahmud pulse pregnant cause a huge opportunity for us to engage and retain her and then clearly you engage her and the family as the child grows and as the obviously the family develops stay tuned for a range of initiatives I think over the next 12 months, you'll start to see as we look to expand in prenatal which is something we've had a very small market and are looking to do much more of it today and into the future.
For the future as we double down on content for kids that are a little bit Aldo.
So let's jump into some of the financials. So you've probably all seen this buy now no surprises from what we shared.
I guess in the poll E and results about a month ago, but the business has had a great year in FY 'twenty two and that's the finishing on June 30. So we hit just under 11 million U S, which is a great achievement over 34% up in the same time 12 months I don't think we had great growth.
But it's an advertising and on the consumer side, the advertising business for 56% and really outpaced the industry, which is really exciting we've got to integrate the rich physical brand into the proposition and how we go out to advertisers with a single brand pull tiny beans, 12 months ago, if I sat here would be to brand and talking to them.
Talking to advertisers restaurants to go and timing of things, but really pleased with the.
The execution of that through the course of the last 12 months as I've said also earlier.
I guess about four or five months ago, we started to share with the market our intention to get to cash flow positive and that's very much a commitment. We have so that's about continuing to have more modest growth in revenue and really manage our cost I wanted to come back and talk about that was a bit more detail later on as well, but basically overall the business has done very well we've had great growth drivers.
Appetizing business clearly the subscription business has also grown dramatically we've doubled our monthly recurring revenue in the last 12 months clearly connected to the beanstalk subscription that we launched through media as a whole range of initiatives that we did.
<unk> delivered on and clearly setting ourselves up for the year ahead, another really great point, which also illustrates I guess the future health of the of the businesses around some of the contracts were closing over $100000. You can see last year was 13, we hit 19. This year that'll continue to be worked on them, obviously grown in subsequent years to come.
So let's dive into some of those metrics are a bit more color. So advertising business alone at $9 million. It was over 30% up on the same time the previous year and again it just showed earlier.
And then previously the balance of new revenue from new brands compared to existing brands is really healthy three quarters of that revenue comes from existing brands. So we're not really relying on one or two brands, but a whole host of greedy tea brands and also new brands that are coming in and realizing the value of tiny beans. So that's growing really nicely the direct business.
This was up 57%.
One important point to share what we have shared this in the past our programmatic revenue declined intentionally because as we're doubling down on growing the consumer revenue stream and a subscription product we removed some of the.
Placements for that value prop and that was the decline in our programmatic revenue stream. So it has benefited the business overall strategically and the customers really around that subscription products and the subscription business, but it has had come with an impact in terms of the core revenue around programmatic, having said that we are investing in a whole range.
Weighs on the web harmony, but looking to launch in the next couple of months actually that'll see the B pack.
No magic revenue continue to look to re baseline and grow.
It would be.
Outside of the realm of what the pay subscription product is about we continue to win some great brands I'll talk about those brands in a minute and as I mentioned before we continue to obviously, winning some of the larger contracts each year, continuing until we met with existing brands and new brands as well.
A few things that are just worth mentioning is that is that unlike many other companies that are out there in the advertising space or talking to I guess publish a et cetera. We are all about parenting. That's all we do we have a ton of value.
Customers to consumers and clearly, it's all about creating a great user experience and then using that to go out there and talk to brands about what we do for them not only about the advertising side of things, but also on the implant side of things, we talked to our consumer all the time, they're highly affluent engaged consumer and brand upon honest that much more of them is obviously getting.
One of them is obviously being able to convert transactions in and drive sales.
This plan is an important slide to understand the true extent of the.
Platform. So previously.
I've had feedback from investors that they believe sort of aware instead of the main channel of advertising revenue.
It is a channel it's not been mentioned we have many channels around the AD platform and this as this slide illustrates the extent of the AD product that we got there and talked to Brian about all over from basically implies that I just talked about to basically all sorts of ways in which we engage with them within the app and on our website on email on social.
A whole range of other things. We then we do a lot of custom campaigns custom solutions for brands et cetera. So it's pretty extensive you know when we talk to brands. It's always at the Spike idea of the spike pitch and yes, it's made up of a whole host of traditional elements that have proven successful, but it's often.
Customized packages that will talk the brands about so just important to understand the fact that it's not just about a handful of elements as lots of unique things that we can create and we do create for brands obviously.
Integrate their campaign goals and drive success.
This is always a great slide to look at them to basically demonstrate the brand's upon as we work with and some of these brands and existing brands of partnerships. Some of the brands. We've worked with in recent years and it's just a really impressive list of brands and relationships and I guess, it's just important to note that albeit.
The fact that were small and we have a relatively small audience compared to other.
Platforms and industry and clearly some of these brands I see huge value in what we do and huge value with engaging with a smaller much more targeted parents and clearly be able to drive conversion and drive engagement to their brand. So we will continue to be out there talk to new brands of disease brands and continue to win business out there.
Okay.
Moving away from the advertising business talking about the consumer business, that's growing really well also in the last 12 months.
Really it was that was predicated on.
On the subscription strategy, we launched I guess, a it's about a year ago.
Now double paid subscriptions a little over a year ago with 25001 hour 51000 paid subscribers monthly recurring revenues is also growing really well. So this consumer business, yes, it's small and it's growing really well. The last 12 months you can see 54% overall, but the there's really so much more growth to be had in the future.
This slide later and you've probably seen me if you can talk about it as well in the past around our absolute goal to get consumer revenue to be just as long as the advertising business in years to come so for us the consumer business. It's not just about paid subscriptions were also doing a whole host of investments and affiliates and driving I guess purchases.
Parents, where we.
And our transaction fees.
One important point to note, which is really exciting is that Ah trial to pay conversion over the course of the entire year at 94%. We just pretty remarkable. So for every 100 people that start a trial of <unk> for converting to a paid subscription. So our goal is to try and get as many people from clearly from download to register at the start of trials.
Obviously, many more come in thought I E.
I paid subscription in the App.
And on the website so across its about continuing to optimize for those for those metrics than clearly grow the subscription business and the overarching consumer business as well.
We thought it would be worthwhile sharing some I guess.
We're all anecdotes, we get from customers all the time and we get hundreds every week from customers and you know.
Positive and negative and constructive everything in between and he says great that you really appreciate the impact we have to our families and parents everywhere and just how much of emotion tiny beans price for them and I'm not going to get you always you can sort of.
See what they say in front of you, but like you know you.
We're using it for five years and love it recommends to the other other grandparents happiness and shine good data and a very well really.
Impactful.
Messages that really drive our team to really inspires our team to continue to build right thing, it's not always perfect out there. We know we've had challenges on the Android app in.
We plan to launch a new Android app in the Nazi against the future. For example, we definitely appreciate that it's been a challenging part of the platform, but again, it's about taking the feedback on managing the priorities and then.
Making making it a positive experience in the future, but this just we thought it would be worthwhile sharing just a few anecdotes we get from our parents everyday.
Let's talk a little bit more about the audience and our parents of course, we're definitely investing in this area.
Illustrated some of these in the <unk> presentation, we shared a little over a month ago, but we're investing quite a bit and social are quite a bit in content, we're doubling down on family travel as a key opportunity for us and a key.
Market segment, but from a brand perspective, more importantly from a consumer perspective, we've gone out and we've got a whole channel dedicated to it we have rod is dedicated to it but overall, we're really excited about the potential isn't up to our audience. So from a monthly active user perspective, we just on 3 million monthly active users, where we closed out the quarter. He was up in the previous quarter as I've shared in <unk>.
Previous.
Announcements, our organic traffic with someone who's impacted late last year, we made strides in improving that earlier this calendar year and we've seen the fruits of that we're not there yet we continue to see the results of organic search having an impact when you're searching for content tiny beans is coming much more prevalent in those results.
To see that organic search and organic traffic grow. We've also seen results from social strategies, we're employing again around engagement and we're also investing in some of the new AUM, especially networks like tiktaalik et cetera, which you haven't done much there before.
We will continue to be a great partner of ours, there's a whole host of content, we're working with them on and it's actually gone beyond that beyond the U S. You also put content on that platform across other parts of the world as well and I'll continue to be the case.
Two to drive that partnership forward and continue to drive greater engagement with parents.
Some of the product highlights over the last 12 months, there's been lots and lots of product developments in the last 12 months. So this is just really a snapshot of them. We mentioned previously we launched the new tiny beads become website, we've integrated the <unk>.
Tropical.
Systems behind the scenes a single brand we've merged Mount providers, we launched our beanstalk subscription service redesign a whole host of the Onboarding, which is really important part of how parents first engage with the app whole host of other improvements around ACO as well as just mentioned some of them, but behind the scenes a whole range of SCO I guess.
<unk>, both from a product perspective, and content perspective, and that's a constant part of the muscle underway developing internally. So we fully expect to continue to grow in months to come in and then you used to come in terms of other highlights.
And we're investing in the advertising piece I mentioned the advertising piece on the on the website and we've invested in a data management platform and so that gets together more first party data for our ability to then target parents.
That our advertisers target again never sharing his thought it with advertisers of course, but using the data to better target. The parents extensively based on all sorts of interests and profile data whole host of improvements around retention I just called out the Android app.
Waiting to think of Redeveloped and the Android App and that's something that I'm looking to launch in the early part of 2023 hopefully sooner.
And now that's really what our plans are.
We need to work on key features.
Around the <unk> to continue to drive that retention and engagement inside inside the app experience.
So that's sort of I guess, a quick I guess summary of FY 'twenty two at a high level from a business and operational perspective, I'm not going to jump into some of the financial results.
So again, it's very similar to what we've presented earlier. So none of this is going to be that new except I do have some additional color on some of the how we see the next year sort of unpack.
Diving into the P&L.
Oh, I'm sorry, the P&L summary for FY 'twenty, two comparing to FY 'twenty, one so revenue up 34% I've mentioned that you know both driven by the advertising business and then the subscription consumer business.
Cost of goods sold definitely grew also as it related to those revenue streams growing up both from an advertising perspective and subscription cost. So clearly when when someone buys a subscription through the App store, which has a transaction fees as part of subscription and that's what the cost of goods sold really relates to the last 12.
We have increased operational expenses.
Over the course of the year as revenue has grown.
Having said that.
And I guess, probably since April may we started to make concerted efforts to really reduce some of those expenses reduce some of those costs and actually we've taken some pretty significant steps in terms of reducing your.
Cost into the into the next 12 months as well around general admin and cash flows to the tune of $700000.
Which is great and we've seen this fall will be more more save more.
More money to be saved there as well.
Q4 definitely saw some softness to the advertising revenue.
The market has been impacted by that.
All sorts of market forces around inflation to supply chain to clearly award in Europe . So we've definitely seen a slowdown in the AD business in Q4. This.
This quarter.
And that's why it is definitely still prevalent brands that are out there still engaged and still talking about campaigns. Some have been delayed some have been shelved and some of the starting half depending on the brand and obviously the segment that Ryan So we're paying a very much.
A wait and see approach, but you know clearly we felt it was important to cut some of the costs in the business to continue to drive our goal of getting to cash flow positive off the back of obviously, where the business is that today. So we've reduced.
Some of the general admin costs to allow for some of that offset into the next 12 months, but the last 12 months overall really happy with the results in terms of revenue growth and clearly some of those expenses.
We're well invested in for growth some of that you know.
<unk> needs to be reviewed and clearly we would do some of that into FY 'twenty three.
So he is a bit of a waterfall of the cash and how the cash sort of I guess worked through over the last 12 months. So.
July 21, and we're sitting just over 2 million whole host of I guess activities through the course of the year and we finished June at 423 million with clearly a capital raise in the middle net operating cash flows were negative $2 $45 million. So so roughly about six $650000 of burn on average by quarter.
And the process about continuing to manage that and optimize for that cash receipts you can see we're over $11 million, 48% more than the same period last year. So you can see that the business is growing clearly the cash receipts of ground and clearly our ability to manage the expenses is going to be really really important we do see this quarter as I as a cash burn.
Quarter is typically the largest quarter of cash burn for the year.
Overall for the course of the next 12 months, we definitely see that cash flow burn reducing on every significantly you know clearly it's going to be around cost management will reduce a whole heap of cost already around some of the general admin cost as well and will continue to expect revenue growth over the next 12 months.
So let's talk about some of this with a bit more color. So as I said cash burn was about two and a half million, we definitely see this quarter being still just over a million dollar cash burn we've reduced some of the broader.
The costs across the company not just in admin.
But in a whole range of other areas as well and again our goal is to continue to get to cash flow positive even with current cash reserve that's still a very much a commitment and still absolutely our intent behind us.
We provided some guidance on what on what the costs are approximately on average clearly each quarter varies the business is still largely given 70, 580% of it is driven by advertising clearly that's still highly seasonal.
We're about to start the next quarter being the biggest quarter on on the course of the year, but clearly each as opposed to Q3 is going to be the weakest revenue quarter. So some of those costs are going to be varied accordingly, as well, but really I mean, we have a positive revenue outlook for the year and really about ensuring that the.
The cash is managed extensively in the past or manage that connects it to that and we still see ambitious goal to continue to get to that 50, 50 split of consumer and advertising revenue over the next.
You know three years to 2026, so the important point to note is that we're really managing the cash really really well and managing obviously to understand what the market out there is doing in ensuring we have enough flex in the business to continue to get to growth, while modest growth and manage expenses. Accordingly, So arena in a good spot here.
So that's I guess summarizing the financial aspects and again, if there's any any questions on that happy to get to that later, but let's talk about some of the growth and some of the strategy moving forward and a lot of this will be probably be a repeat of what you've seen before and it's about our ability to execute on it.
So we definitely have ambitions to do a lot of things for parents clearly, we do a handful of things today and really our ambition is to really grow that in years to come our memories the content and we talked about that really moving into product affiliate revenue and clearly community as well lifetime value increased $286.
We kept the lifetime value is largely around subscriptions with us.
Small contributors towards advertising as well so across its about continuing to grow that lifetime value, we used to come retaining that customer, making sure the customers coming back spending more with us and clearly looking to drive that lifetime value even higher. So this is still very much our strategy with a whole host of content. We're looking to continue to iterate.
And really not only about engaging the parent as it relates to them in a child, but also offering content to them.
As their own consumer and what we call tampering the parent.
Well. So you know the timing of this is obviously going to be dependent over the next year.
In the future years and missed the way, we're still heading as a company.
I mentioned this before we're still committed to get to 50 50 split between the revenue of advertising consumer you will see is definitely this year.
A concerted effort towards that in the last year with 80 515, Youll start to see that continue to grow consumer revenue into this year and advertising revenue growth, but also the but the percentage of that as it relates to the overall revenue will be lower but do you have a revenue will still continue to grow and we march toward that 2026, golar, but advertising revenue.
Consumer revenue being 50 50.
So one thing we often get asked about sort of how you're going to grow I mean, you don't have a ton of money on acquisition is that our position is often difficult and very difficult to scale. How are we going to grow. So we thought we put together a very short slide to give you an illustrative version of our organic strategy for growth. So clearly.
We can see is vital parents loving the product spreading word of mouth and telling other people about it and that goes without saying, but all the things we talked about today and clearly some of the.
Some of the courts, we get from users directly.
This is important how do we get that message out to everyone else in terms of in terms of basically with its social whether it's E mail channel or through our website.
Again lots of organic means to grow that awareness engagement is really important it's important two ways. One is really around the network effect and parents and grandparents letting other people about it but also our vessel launch a whole bunch of new features around referral and incentives around referrals and more ways to tell other people about the product and clearly get them engaged and they both Ben.
That comes from being able to have that apparel and then we're driving purchase intent for launching a whole bunch of guys. The ability to have shops on the side, we wont be e-commerce as in like where supply chain is the product and ordering from us it will be whats called the affiliate base, meaning.
He is a guy out of a product so think about for your child for back to school birthday, they click on that product because to assignments that purchased in a period of time, we get a transaction fee and that's the way I feel it really works. So it's all about optimizing engagement and conversion and that's an area that we're really looking to build a lot more of in the law.
The next 12 months, we haven't done much of it in the past it's been a small amount it hasn't been really a focus of us we're absolutely focused on that we haven't.
<unk> dedicated to enel around growing the affiliate revenue substantially.
That whole consumer experience. So this is clearly there.
They were purchased by locking in some more people about it and the flywheel really starts. So this is really I guess, a very high level view of how we see the flywheel of growth happening largely organically and continuous obviously promote the brand amongst their network in and around the world.
So in terms of I guess wrapping up where the companies that were really I think in a in a very.
Robust place so our strategy and our goal is to be synonymous with parenting, we still see a huge gap in the market as the body in white space, There's no app out there that really own despite the parents pretty startling and engage with in this area. So associate the opportunity to to really be that app under a single brand lots of addressable market I've spoken about.
We have a great audience that really love the product and love the brand that we can grow tobacco through the growth of flywheel aspects I, just mentioned and I think the multiple revenue streams is really interesting is definitely important.
As revenue streams, really invest and grow and as but basically again in the advertising business, where at the behest of brands the consumer revenue business less so so it presents a huge opportunity in terms of how we can continue to grow and get to.
<unk> lifetime value revenues off the back of what we're doing today so.
So so with that.
And that sort of wraps up the presentation, what I thought I can do now is answer a couple of questions. I've received previously if you have any questions you'd like me to answer placed properly into the Q&A.
I'll jump in but for now I'll just answer some other questions I received.
Throughout the week.
So so one question is.
In terms of our and which financially at the tiny bee and expect to return to China profit. So it's a great question very relevant I'm sure. It's on some of your minds today I guess, we're not in a position today to share the specific forecast as to when however, we're doing all we can to continue to grow our revenues talked about maintaining or even reduce our costs and <unk>.
Clearly get there quickly as I've shared today, we're driving to get to cash flow positive as soon as we can and are already having reduced debt by 700000 annual non core expenses and once we get to that milestone. We think profitability will be next so I can't sit here today and tell you exactly when that'll be but it's definitely going to be.
I would say short to medium future based on us achieving the goals of obviously cash flow positive et cetera.
Thanks for the question.
My question is what's your relationship with Lego now. Thank you for this question as well so over the last 12 months that gets to see it a slightly different strategy. This year in holiday season focus much more on video premium video.
That is in things like Youtube in terms of premium video.
So working with US is really proved quite difficult. This year, having said that we continue to work with them and talked to them about a high trust value prop and we're in active conversations about working together back in 2023. So it was still out of active customer buys the basing our strategy. This year that wasn't it wasn't a lot we could do with them.
In recent times.
So.
Can you. Please talk about how you view your competitive family album is there growth affecting you. So thank you for the question.
In terms of I guess, it's I suppose even if it's out.
There's another app out there problem and it's a really.
And the reason I assume Japan co family album, and it's based on a memory sharing apps specifically.
We don't see them a loss frankly.
I would say up until last year that was spending quite a bit on paid media.
We haven't seen that much in the space I mean, clearly to have a an audience out there that really enjoy and use the product.
But in terms of how it effects on growth I guess I would say submarine were both very small companies compared to the the market I mean with three 8 million babies born in the U S. Every year. The market is very large and really you can have many apps in this space to be very successful. So I certainly don't see them.
As as.
As a.
A threat in terms of growth I see our ability to execute and deliver the audience we have.
And obviously ensure we have a great product to market, that's where you're going to be a key part of our growth strategy as we scale.
Alright.
Uh huh.
I think that's all the questions I've received today.
Unless anyone has any any other question that Mike just to wrap up clearly.
People have more questions for me then please feel free to reach out any time and do that but I guess I'll just wrap up and summarize the company has come off a really great and.
With really great growth, we tried lots of things some things worked really well some things didn't go as well as we had hoped just like any company does we've reset our strategy into this year ahead, continuing to build value for the pair and continue to build value for the consumer and the families to obviously keep coming back and to continue to build a wonderful business. So.
Stay tuned for a lots of new launches over the next 12 months and continue to be supportive of where the tiny beam business is going and you know as I said, if you have any more questions, but it's not that it's definitely a great time.
So as we learn more about the time he means business. So with that thank you. So much everyone again for your support and look forward to updating the market in the future but for now.