tinyBuild (LSE:TBLD) — Preliminary Audited Results for the year ended 31 December 2024

0:00 Good afternoon, and welcome to the TINYBUILD INC. Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now

0:31 like to hand you over to the management team of TINYBUILD INC. Alex, good afternoon to you. Thank you so much, and welcome, everyone. Let's just dive straight in because we have quite a few questions. Everyone has read the disclaimer. Today, me and Jazz will be presenting. For those who don't know, I'm Alex DiC. Borchik, CEO and cofounder of TINYBUILD. Over twenty years of experience, pretty much everything in gaming from professional gaming to production to marketing, jack of all trades. And today, I act as CEO and

1:08 interim game director on a lot of our projects. Jas, a couple words about yourself? Yeah. Jas here. I have twenty plus years of experience in finance and investment banking. I joined the company four years ago at the time of the IPO and became CFO a couple of years ago.

1:27 Alright. So we'll just dive straight in. Today's agenda is going to be an operational review, then a financial review by Jazz, and we'll talk a little bit about strategy. That said, 2024 was a year of free building. It was extremely challenging with a lot of headwinds from the industry in general. And what we have been focused on is cash, generating cash while investing into high potential games and also using data to allocate our capital. So that meant tight cost management, which eventually resulted in our strongest pipeline ever with three games in the top 100 of the STEAM global wish list. Few highlights, the usual slide. We have had just under 35,000,000 in consolidated revenues, generated 6,200,000 cash from operations. Our portfolio is as strong as ever with over 90 games.

2:28 We still generate most of our revenue from our own IP at 77%, and most of our revenue does come from our back catalog, which we'll talk about. And as of December 24, we have had over 3,000,000 in cash at at the end of the year, which is more than the year before.

2:48 Talking about own IP across multiple platforms, we continue to diversify our revenue streams. If you look at the left hand side of the chart, the revenue consolidation is getting spread out even more. And as a reminder, in 2017, we have had half our revenues coming from third party IP and half from our own IP. We're still very strong at 77% of revenues coming for as of gaming revenues. Pardon my French. However, last year 2024 was the first time that we've seen a drop in our back catalog revenues. This is mostly due to lack of new launches the year before and a really challenging environment in the market.

3:37 However, still 87% of our revenues do come from the back catalog. As a reminder, the back catalog is defined by calendar year. So anything that launches in December is going to be counted as back catalog by January. And with that, let's dive straight into finances.

3:59 So first, a quick slide to summarize the results across revenues, EBITDA and the most important component of cash flow, software development. Net game revenues were down just over 20% at €3,300,000 As Alex mentioned, back catalog suffered. We had an improvement in results from new titles, but still most of it is to be expected in 2025 and beyond. In terms of adjusted EBITDA, an improvement, the loss moved from EUR 7,100,000 to EUR 3,700,000, mostly the result of a very aggressive cost action and despite the drop in revenues. Part of the cost reduction, you can also see on the software development investments that dropped to about half of what they were two years ago as a result of some game cancellation and much stronger control on game budgets.

5:03 In terms of profit and loss, the revenues breakdown shows the main driver of revenue drop was indeed game sales from 34,300,000 to 27.7. Development services nearly halved. That's where you will find the Red Servers and development platform deals. Licensing deals were pretty much flat and events up. Pulling together,

5:33 development services and licensing is what you will be left with after the sale of Red Servers. Deadline is going to be is becoming irrelevant at this stage. We don't see much of a market for platform deals anymore. In terms of costs, you see very clearly here the impact of cost savings. Cost of sales down from 31,000,000 to €21,000,000 Administrative expenses down from €26,000,000.27000000 to €21,000,000 And impairment, still some impairment of dev costs in 2024, around €30,000,000 much lower than in the previous year and mostly attributable to two games, Broken Roads and Level zero Extraction, which were two relatively high budget games that didn't perform as well as expected.

6:28 Looking more in details of platform deals, you can see another drop in 2024. And as I mentioned, the amount is becoming small enough that it's going to be less relevant and whichever way it moves in the next few years.

6:46 Moving to cash flow. The cash flow from operation decreased from €10,600,000 to 6,200,000 The main driver of that is lower revenues and a pretty neutral contribution from net working capital as opposed to a strong positive contribution from net working capital last year. Below, in terms of investment activities, you see again the drop in software development investments from EUR 32,000,000 to EUR 90,000,000, function of some gain cancellation, stronger cost control. And in investment and in financing activities, you find the big number of the rights issued, the share issuance January last year, 11,400,000 proceeds.

7:33 That all takes you down to cash at the end of the year of 3,100,000 versus 2.5 at the end of the previous year.

7:45 In terms of investment, looking again at the different break gap breakdown in in terms of a six monthly breakdown of software developments. We saw a trough in the first half of last year and a small rebound in the second half. We are trying to match burn with expected revenues to make sure that we can cultivate and nurture, the the strongest, the highest potential games, we we're working on, and we have a bunch at this point. Alex mentioned the the usual kingmakers, Sand, Ferocious, Streets of Rogue two, but also to be mentioned, The King is Watching and the recent launch of Speedrunner two. In terms of total investments, you see also m and a going from positive to negative. We have made two small disposals. In the gray line, the 2,600,000 proceeds come from the disposal of two small IPs, non core IPs, surgeon simulation a sensor simulator and, totally reliable delivery services.

8:53 We have decreased the amount of investment, where we have kept a very high diversification. Last year, we had over 50 projects under development. This year, we have over 40 projects under development. Diversification, not only in numbers, but also in terms of the size. We have over 10 projects with an annual spend of over $500,000 and the no game accounts for more than 15% of the total. Moving on to the balance sheet. I mentioned a pretty neutral movement in terms of net working capital. The other thing to call out here is the movement in intangible assets, a function of the impairment. And again, cash position, 3,100,000 at the end of the period.

9:42 Cash utilization last year. You can see the two big incoming, cash profit and the share issuance and the main utilization of funds in terms of software developments. Small contribution from M and A and €3,100,000 at the end of the year.

10:01 Back over to you, Alex, for the strategic review. Thank you, Jazz. Oh, we're double clicking. Just to reiterate the five year plan, video games, especially now, despite the backdrop of AAA overhangs from the COVID era, every other week, you see a brand new intellectual property just come out of nowhere and skyrocket. This does not happen in any other entertainment industry. Overnight, you can have something that becomes very well known. And the way to leverage that is to turn that into a franchise. So this year and next year, we're investing into new IP, into existing IP. We're doing animations, anime series, and we're also progressing on live action media. And the general idea and general strategy is that we have IP origination happening in video games and take that to cross media.

10:59 Now everyone's favorite case study, just a few words about Kingmakers. It is our top wish list of game right now. It's sitting at top 15. It is scheduled for this year, and we will be doing more concrete dates closer to launch. Today, I will not comment on the concrete launch days because that would kinda diminish our marketing efforts because we announce when in a very coordinated way these days. But the game is everyone's inner seven year old's dream where you are in medieval England fighting thousands upon thousands of medieval soldiers with machine guns. The game has had a phenomenal announcement last year, and we're all excited about it coming to market.

11:49 More recently, we have launched Deathside. Deathside is an acquisition we made in 2021 where we have the game has had five years of development in early access on Steam and launched to moderate success in December as a one point o launch on Steam. And in February, we have launched the game on consoles. And, without a doubt, this is the best

12:18 platform release we have had in company history. By platform release, I mean, we add additional platforms. We have added Xbox and PlayStation. And this is now a new top franchise for us that has hundreds of thousands of players and a very strong and growing community. I'm really excited about this specific title.

12:42 Last week, we also announced the highly anticipated sequel to Speedrunners. Speedrunners is a competitive two d platformer, and this is one of the few games that you should just pick up on any platform and play with your kids, friends, spouses, etcetera. Very easy to pick up, extremely difficult to master. This was also our very first published game, and it's one of the situations that I want to have more of when we have a franchise sitting on a shelf. We find

13:14 the perfect development team for it, and we develop a sequel. The team behind this previously shipped Nickelodeon All Stars. They're in South America, and they are fans of the franchise as well. The game has generated millions upon millions of views during its announcement in the triple I initiative last week, and we are very pleased with the results.

13:53 And it's important for us to invest into things that we know work and also to find the next gem. I will give a shout out here to The King is Watching, which has had a lot of analysts industry analysts mentioned that it did extremely well during the last Steam Next festival, which is a festival of games on Valve's platform. And acute observers will have noticed that the game has had a peak concurrent user rate higher than triple a games like Dune

14:28 Awakening, which brings me a lot of joy. And this reinforces our one thousand hour strategy because the king is watching is a roguelike, and the demo is still live. If you have not tried it, please do. I have been getting a lot of great feedback from both fans and from industry peers. Some other notable mentions here that you may not know about is All Will Fall also had a great announcement. It's a physics based city builder, which is one of those things where we take a known concept that has a known audience that spends a lot of time in the game, and we put a really unique twist on it. And, also, if you haven't been following Hello Neighbor,

15:14 we are in development of Hello Neighbor three where the original game designer from the very first game has come back full force and is doing really creative development logs in the form of videos. So please check that out. Now multimedia. This is probably the perfect week to talk about because of a little movie based on a game called Minecraft that just came out and is setting records in the box office.

15:44 It has followed it follows up the Sonic three movie, which also did incredible box office run. And I am pleased to confirm that we are working on the Hello Neighbor movie. We have announced it a few months ago. The writer behind it is one of the writers of the Five Nights at Freddy's movie, which is a great contrast to Sonic, Minecraft, and even Mario. Because on one hand, you have the AAA IPs that have been in work for decades. And on the other hand, you said you have something relatively new that has a newer fan base. And the Five Nights at Freddy's movie showed that you can take a relatively new IP and make a successful multimedia franchise out of it. So I'm really happy to have one of the writers on board, and the studio behind it is Boulder Light Pictures.

16:36 They're known for a couple of horror cult classics like Companion, very recent movie, great, Really tense horror thriller, and also the cult classic Barbarian, which came out a few years ago. And we're also working on the animated series for Hello Neighbor. Season two dropped last year, and season three is almost done, which we have seen whenever we do announcements on cross media within this franchise. It results in a meaningful uplift in attention to all of the other products.

17:17 Closing remarks. Just to reemphasize, we're a global developer and publisher. We focus on finding and nurturing intellectual properties that can become overnight hits in video games. And our long term idea is to focus on creating those into multimedia franchises.

17:39 And in regards to the outlook, the board remains confident that we have adopted the right strategy and are on track to deliver results within expectations. With that, we have a lot of questions that I'm more than happy to dive into. That's correct, Alex Jess. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of

18:10 this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Jazz, if I may now hand back to you to read out the questions where appropriate to do so, and I'll pick up from you at the end. Thank you.

18:25 Thank you. So I'll start with a bunch of questions we received online over the past few days and then move on to the live questions. So please be patient. Again, thank you very much for all of the questions received. First one is for Alex. Would you consider a less capital intensive approach to investing in new games to focus on monetizable events like DLCs, sequels, and the and else? It's a balance. When you have something successful, it's easier to make it more successful. That's just the nature of the entertainment industry, and you do want to continue development. The

19:05 challenge here is to make sure that the development team is aligned in terms of incentives to continue working on it. Because when you have something successful, it makes substantial amounts of revenues. So for us, this was why we invested into internal development so that the incentives are indeed aligned. But it is a balance of investing into new things while also nurturing the things that you have. I believe we're striking the right one in terms of our currently announced portfolio. Another question for you, Alex. We're talking about the new Hand of Neighbor game.

19:44 What is the timeline we have in mind? And can you give us a comparison with the Hello Neighbor two? What we will be doing differently to make sure it's a success? So we are not announcing a concrete timeline for Hello Neighbor three. What I will say is that the development of Hello Neighbor two had very similar issues that were recently highlighted over the development of the Borderlands movie. Developing creative project when everyone is locked up and when teams get scaled has been the plague of video games. Many companies and studios have hired new people, and you expect that when people work remote, you will be able to build things like trust and human relationships over scheduled Zoom calls.

20:38 That does not work, and pretty much everyone in the industry learned that the hard way. Now the difference is that we are working directly with the creator of the original. We have been prototyping for years on what could be Hello Neighbor three. And we do believe that we are on the right track right now because these kind of things, they take time. They need inspiration. And I'm I'm excited about the developments and cautiously optimistic. Two questions for myself. First one is a question about executive performance based payout to be linked to per share data to address issues that were resulting from dilution of the capital raise.

21:26 So we have been considering performance based

21:33 for management compensation for management based on per share data. There are pros and cons like for any compensation method. What we what is the ultimate guarantee, I guess, at this point is, for sure, Alex alignment with shareholders in terms of his personal investments in the company. As it come to myself, we have said it in the RNSs in the public announcements that there is a plan which has been worked out and is going to be exactly in the same line, on the same line. So to align myself directly with share ownership towards shareholder value creation?

22:15 Second question is on what we see as a pathway to drive a recovery in the share price. Now for a company, it's really difficult to to speak about the markets and and share price. What, Alex and I are focusing on at this point, is for sure trying to, grow revenues as faster and as high as possible. Alongside revenues, our strategy should, would, will bring margin expansion because most of the titles mentioned above for launch the next few quarters are on IP high margin titles. We think moving the earnings is the first driver to to boost the stock price. The second one is the multiple.

23:05 And on multiple, we still find and this is a consensus commentary from the analysts that follow the company, we still find that TINYBUILD is trading at a discount due to some concerns about the cash position. Last year, we think we have demonstrated we can hit our cash guidance given twelve months before despite still a weak industry, despite some games doing better, some games doing less well than expected. So we think we're building that confidence. It might take a little longer, but we are now on the verge of launching what we have been working on for the last three to five years, all of these high potential games. Next question is for you, Alex.

23:54 Do you have any comment about Nintendo Switch two? We we appreciate you might be covered by NDAs, but can you tell us TINYBUILD position on on Nintendo in terms of games? And and if maybe that side could be ported to Nintendo Switch too? Everything is on the table. I will say that in terms of our platforms, you know, between Steam and the three consoles, As an overall portfolio, we're not dependent on either one. There is a very healthy mix. And for Nintendo, what we've seen is porting games to Switch when it makes sense, it can be very, very fruitful.

24:43 Most of the games are being ported to PlayStation and Xbox. And we have actually seen that this year and at the end of last year was the finally, the generational shift happened. So what that means is that the older platforms are no longer dominant. So the PlayStation four and the previous generation Xbox. So it will very likely take some time for Switch two to have that similar shift happen. So this means that supporting the original Switch was its insanely large installed base is a way to go in the short term. In the midterm, obviously, we are going to look at Switch two. Corollary to this, are we planning to launch other physical versions of Nintendo Switch games in partnership with Atari?

25:36 Once we have the results of sales for the first ones, yes. I do like the idea of retail. And it's it's one of those things that feels like a novelty. But for specific games, it can be a meaningful revenue driver. I'll take the next one. It's about the slide in the presentation where we present the breakdown of development investments by game. Last year, it was over 50 games. This year, it's over 40. Question is, can you give us an update about major projects under development aside from games reannounced? So in that over 40 projects, there are some investments that go inevitably in in back catalog titles, whether they are DLCs, updates, or else, but the majority is is new games.

26:29 All of these games will be vetted by the market. We are data driven increasingly so. And so if we don't find validation, the project will be put aside or or overhauled entirely to make sure that we we have the market validation before we invest more money. Overall, the the the the large games in production are are the ones you you have we have been we have announced. There are, of course, others which are in earlier phase of production, which will be announced in due time. Next question for you, Alex. The way early access games are Perceptance team appears to have changed Launching buggy games to get reviewed that get review bombed and then trying to improve them is not a good strategy anymore as demonstrated by some recent launches.

27:23 We're looking at launching, more of your major games straight into version one or across different platforms? So this question, depending on when I answer it, will have a different response. So in three months, I might say something different. But the consensus right now is that early access, unless you have a very hyped up game, can actually be damaging to the launch. Again, this is after talking to peers and the way that early access works on Steam. Now this may change. And with games like Schedule one releasing into early access and knocking it out of the park, we see that there are always exceptions to the rule.

28:10 So what early access is, it's it allows you to build a very specific type of game, and I still believe that there is a market for that. However, early access games get less visibility on Steam. That is the key. They do not get into the new and trending list, which is one of the main widgets on the storefront. So it's a case by case situation. And sometimes it does make sense to launch a game into one point o and on more platforms. You just need to keep in mind that if this game is intended to be a service to the players, so with consistent updates, there is a lot of overhead that gets added to bring those updates to consoles. It's much easier to publish updates on PC. So, again, it's a very case by case specific situation.

29:07 Okay. Next question for myself. Where should we expect the gross margins and operating margins to trend this year? So here, we have we have a couple of drivers. One is cost management, and we we believe we are now at the right cost structure for for the for the revenue potential we we are seeing. So we we don't anticipate taking any any substantial cost action either way, increasing or decreasing costs. The other one is the revenue mix. The higher the proportion of own IP revenues we get, the higher the flow through to the bottom line. As I mentioned, most of the games announced for launch over the next few quarters are on IP.

29:58 So it is it would be natural to assume that margins will expand in that direction. The margins our peak margins, gross and operating margins were mostly driven by revenues. So the we can easily attend those levels again if we have the right impact, right launch for any of the games we're working on. One more for you, Alex. I'm ready. Would you consider developing a graveyard keeper two? We we do not comment on we do not comment on possible sequels. Let's just say that.

30:49 Okay. Another question on the on the financial side for myself is, will we consider a share buyback going forward? Yes. We will consider a share buyback. As I mentioned, we we see two drivers of the of the stock price. One is earnings, and the other one is multiple. Should we achieve the the earning potential that we are expecting? And should the multiple now move accordingly, should the stock price now move accordingly, then, of course, share buyback becomes the most natural use of our cash. Meanwhile, we have a good investment opportunity. So either way, we think we can put cash at good use. Alex, how well positioned is Sandd to compete with the likes of Sea of Thieves?

31:39 Oof. That that's a great question. It's one of the comparables that we constantly get. And for context, like, if you get me started talking about games, we'll be here for two hours. But I've played a lot of Sea of Thieves. We're talking maybe six or seven hundred hours. And the main issue with it is that it's my issue. Right? It's not an issue of the game. Is that it is focused on PVE, on player versus environment and co op, which is great for a more casual experience. The difference with SAND is that it is PVP focused. The best part of Sand is player versus player interactions. And I believe one of the reasons why Sea of Thieves steered away from PVP is because when you're in the sea of Thieves, right, when you go overboard, the you're you're swimming. So you're pretty much defenseless or less able to interact with other players. And this was one of the core design pillars for us. Like, we have this version of ships, which are these walking tramplers that walk around the desert.

32:44 And when you're on the ground, you're still in the same first person view with the same control. You're not swimming. So there will be a lot of comparables to Sea of Thieves. I believe the other comparables will be more with competitive shooters because that is where the game takes a lot of inspiration from. Now a question for you, Alex. How quickly can a game such as Kingmaker's Sun, the Streets of Rock two, and Ferocious be ported to console? Each one has a different challenge. For multiplayer dedicated server games like Sand, it is more challenging and requires more time.

33:29 For single player games like Ferocious, it is easier because there is no server dependencies, and we don't need to think about things like cross play between consoles or consoles and PC, things like that. So we need to be cautious about when we decide to port games. Because if a game is in the rapid iteration cycles on PC, we don't want the PC players to get less frequent updates because it would take longer to get the updates to consoles due to certification cycles. So on for anyone who may not know, when you do an update to PC, we literally just press a button. It's live. Right? Obviously, we do our own internal testing. But when you need to do an update to consoles, there's an extra step called certification to make sure that the updates are well put. And then it's more difficult to rapid patch something if should something have gone wrong in the build.

34:36 Okay. Another quick question for myself. Outlook for development service revenues going forward. So I mentioned development services, revenue includes Red Servers, so you you should take that away. We have disclosed the revenues being just over 4,000,000, last year, so that's that's gonna, drop. And then we've also said that platform deals are going to be well, the the outlook we see now for platform deals is pretty much very quiet. So not to expect anything in in there. Another question for you, Alex. The SQL to speedrunners, what give you confidence it will generate a good ROI? The way that we approach speedrunners is way before the announcement, we got a group of players with literally thousands of hours in the original under NDA, and we started showing everything that we're working on and playing with.

35:39 Games like that are all about the game feel. And based on the super hardcore fan feedback, we, I believe, are able to achieve that game feel. Now I won't talk about the feature set because the biggest question that we're getting is what is new compared outside of the graphics in speedrunners two. But once we do reveal that, I believe players will be quite excited to try it. And also, since the game is out for such a long time, the original one, it is one of those rare examples of a cross generational game. So if you think about Minecraft actually has been out for a similar amount of time, just a little bit longer, you know, over a decade.

36:28 And it has had that cross generational gap where young parents are now playing it with their kids. The same thing happened to speedrunners. Some people may have started playing it in college way back in 2013 and are now young parents that are playing it with their kids. Okay. Another one for you, Alex. Do you think season two of Hello Neighbor animated series was so much less popular than the first season? That's actually not a factual statement. Season two was more popular than season one. And I assume the data point that was taken there was from the original pilot.

37:17 Because the original pilot, before we developed it into a series, it actually has a lot of views, which if you count them towards season one, it makes it look like season two was not as popular. Another question from James. Given the obvious cash constraints, do you think it was wise to start funding the development of new titles before the preannounced pipeline beyond the preannounced pipeline? Yeah. Otherwise, we'll have gaps in portfolio. And what we're doing is we're searching for lower budget gems that have high ROI potential and shorter development cycles. This is actually something that we did not touch upon as much in the full year results.

38:05 The industry in general is moving towards shorter development cycles. And we have seen that with several tiles that absolutely blew up on Steam. We have also seen that with games like Duckside, which we developed in under a year and about nine, ten months last year and actually shipped them. And we, as a publisher, are also moving towards that because longer development cycles mean that you might just miss the mark on what is popular right now, might not, you know, hit the audience. But also longer development cycles cycles are longer budgets. So I am in favor of getting games into people's hands as soon as possible. And that is what we're doing with our strategy of demos, festivals, playtests, etcetera.

38:52 Another question from Jack. How much cash is required to get Kingmaker Sun and Suits of Rogue to to release? And maybe I can take this one. Mhmm. So we we don't comment on on individual games budget. What I can say is that as we get close to launch, typically, the monthly spend per game tends to go up. Because near the launch, you have more, if nothing else, more marketing costs, but also QA, localization, and porting costs may may add to a specific game. So you you would probably see a little bit of an increasing burn just before the launch for any given game. A question from, what is the reasoning behind the cancellation for further Hellenable to updates?

39:45 What is the was it the lack of budget or incapability to deliver content connected with other media? The reason for that was inspiration for Hello Neighbor three. We felt like we did lot to Hello Neighbor two and delivered significant updates. And there was some sort of, like, self inflicted expectation from the community that there will be more updates, and we manage that very carefully before announcing Hello Neighbor three. A question from Bob. With increased focus on cash, how much development cost do you expect to capitalize this year? So for this year, as we stand now with the process we have with a very good contribution from that side from February onwards, we are planning for a similar development spend as last year.

40:45 Should that change either way, we will adapt to make sure that we keep a cash buffer and maintain the company viable. Another question from Bob. Why do you expect the platform deals to disappear? Is this a chosen strategy? Can you please repeat? Why do you expect the platform deals to disappear? Is this a chosen strategy? It's not necessarily chosen. The industry goes in cycles, and we have seen during the pandemic a cycle of heavy investment into platforms between VR and subscription services and previous to that to cloud gaming services like Google Stadia.

41:36 This was a little bit less regular than the standard investment cycles, and we see that platforms are not investing as aggressively. We're also evaluating the possible impacts of cannibalization when a game goes into a subscription service on day one. So it is mostly driven just by the market. And what we've seen is some platforms have invested a lot, hoping that the user adoption would catch up, specifically with things like VR platforms. And while there is usage for them, there may be other avenues we invest resources into. So for me, the biggest health factor of the business is our end users paying us directly or well, through the platform, but as a sale. Right?

42:34 Our users willing to pay for our content. A question from Edward. Five Nights at Freddy's movie grossed nearly 300,000,000 worldwide. Could you give us a high level indication of what upside there could be for TBLD if a movie performed similarly? Yes. So with the term as I believe Hollywood accounting, it's always difficult to anticipate how much you would get on that kind of gross. And that is heavily dependent on a distribution deal because I do want the movie to go into cinemas. That was the ultimate goal. And the reason for that is because it doesn't really matter how much you make at the box office.

43:20 The uplift in awareness on your franchise is already going to be worth it. Even though the Borderlands movie was not a a successful a critically successful movie by any means nor commercially, If you look at the trends for the games within that franchise, they've had one of the best weeks ever in their lifetime. So it is, first off, a marketing driver, right, a celebration for the fans, and then revenue driver after that. One question from Gareth. I know the uptick in dev spend in the second half of 2024 versus the first half. Is there a signal of confidence in the market and the sector, or are there other factors at play? I can take this one.

44:10 Mhmm. So, yes, we we present the the six monthly spend and the reason of taking the second half. Part of it is simply timing. The budgets are not always evenly spread. I mentioned some concentration of budgets near launch. Part of it is also confidence in specific games, not necessarily in the market. We think the market is still tough. Players are unforgiving on on any game that launches and is half baked. So we we we need to make sure that our games are are meeting audience expectations. And the when we have a a very clear audience validation, we we make that we we we go in that direction, sometimes also increasing the budget for a game. So the budget for for a given game can move up or down depending on a continuous audit validation. Every playtest, every demo, every trailer released may have an impact on on the direction and the budget of the game.

45:14 Another question from mister m. What is the potential upside to revenues if one of the twenty twenty five game releases becomes a blockbuster hit? I guess I can take this one. Well, it's kind of in the question. Right? The answer. Well, the the what is not in the question is where is consensus right now. Right? Consensus right now is assuming a pretty average response to to all of the games we mentioned, including the the the most watched kingmakers sitting at number 15, the global wish list on Steam. If that is the case, then, again, we we we'll be pretty much around consensus. If any of these games is a blockbuster, we would have a stronger incoming on revenues and the the the consequent the the the the the related impact on margins.

46:08 Those any of those games being on IP also means that we we we can look at the the long term, not just the the release of the first game, and that's it. We can look at a much broader broader monetization of the game. Why do I mention that? We we have put out an announcement that speaks about, the project for a movie, on Kingmaker. So the the there is more to come, in that direction as well. Another question from Edward. What are the lessons learned from level zero extraction? It fits the a thousand hour model. How will you avoid these mistakes with Sun, for example?

46:53 Yeah. So level zero is super interesting case study for us internally. The tricky part about that game is it's asymmetrical. What that means is that you have one group of teams, which are humans in the game that are wielding guns and fighting each other and fighting monsters. Whereas on the other hand, you have the team of monsters that is fighting everyone else. And with asymmetrical games, it's incredibly difficult to balance these player classes. Someone always plays as a monster. Someone always plays as a human player, as a soldier. And when you balance one way or the other, one side gets upset.

47:40 So you nerf something. So it makes something more difficult for the soldiers. They all get upset. You then do something to the monsters, and they all get upset, the player base. And this is not uncommon in the industry. We took a risk there, and it did not yield the results we had hoped for. Now the game did come out with a bang. It had a very high concurrent user base. And, unfortunately, that during the course of several updates has dwindled down. So the lesson learned here is avoid asymmetrical games, and there have been other games in this market that had a similar fate, unfortunately.

48:29 Another question for you. Similar to using Deadset Engine for Dark Side, can you use this as a template to develop other multiplayer procedurally generated pixel art games based on different themes such as Vikings, medieval, Steampunk? Yeah. So I guess the question is in the vein of because so using as an engine is not the same as a dead site engine. Now using the dead site engine is definitely a way to move forward where you can take the very difficult infra very difficult to build infrastructure and put another skin on it. In fact, we're actually making strides with that. We have announced that we're developing a mod kit for that site. A mod kit means that anyone can take part of the source code and develop something and publish it within that site as a platform.

49:28 It's very similar to Roblox in a way because all of that is user generated content. So the next step after that mod kit is to see what becomes popular, what people come up with. Because players have much more imagination than than we do and much more time on their hands and can develop something really creative. And then when something becomes popular, you figure out a way to either develop a full game on it or implement that into your core game. That is how you build a platform for user generated content. Another question for you, Alex. Marketing of your games changed over the past five years in terms of costs and conversion into wishlists. Is it now much more expensive to generate the same number of wishlists for a title?

50:20 Okay. So today, you need much more wish list than you used to because more and more games get released on Steam specifically, and the competition for attention is much higher. So marketing, it has evolved. You have to get a lot of pieces into place, and this is what requires infrastructure. So, I mean, a lot of people doing work to get announcements ready to align on marketing beats. We need to now make sure that the development schedules of the games have marketing beats in them because people today are very interested in how games are made versus what the final product is. And you see this across the whole industry.

51:14 The most recent trend, and we've even seen that with the aforementioned Nintendo Switch two announcement, everyone was expecting that it would launch in q u three or q four. That's a standard marketing cycle. You announce in q two ish or around June, and then you launch a product in the fall. The fact that they're anticipating to launch in June was an announcement just last month means that marketing cycles have become much shorter. And this is prevalent with short form content, like TikTok and reels and whatever, you know, short form video you have. Be player attention gets divided very, very fast, and you need to have a concentrated marketing campaign to be able to have a successful launch.

52:08 One more question. Will Kingmakers and Sand be sold at a higher price point than the rest of the catalog? TBD. We will decide that based on the market conditions when we're ready to announce the price points. A recent question from Sam. How can you ensure quality of game production when you have so many games in the pipeline? So the way that we work is we have several producers. Each producer is responsible for a couple of tiles, usually one or two key tiles and some maybe not proven yet tiles. And they're all supported by a large services infrastructure for QA, localization, play testing, etcetera.

52:56 And we give really great people the freedom to decide when their products are already obviously in consultation with us. So this took like, it sounds easy and sounds like it makes sense, but this took a lot of effort and a lot of investment into people for it to make it work. So we don't necessarily have traditional department heads. We have groups of people that work on specific projects that are supported by things like quality assurance, playtesting, localization, porting, etcetera. And this will be I think we have exhausted all questions.

53:44 Any further questions from the audience? That's great, Jas. Alex, if I may just jump in there, and thank you for addressing all those questions for investors today. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Me company platform. But Alex, before before we direct investors to provide you with their feedback, which I know is particularly important to the company, could I please just ask you for a few closing comments? Yeah. I think the industry in general, especially on the AAA front, is seeing the tail end of the overinvestments during COVID. And what I would advise everyone listening here to focus on is not necessarily the triple a part of the industry. It exists in its own bubble, but the double a slash indie space.

54:38 Because every other day, there is a new hit that comes out of nowhere or seemingly comes out of nowhere and takes the market by storm. Usually, this is done in what looks random, but it's often pre pre med premeditated, preplanned, and follows a specific zeitgeist of the industry. Now single game studios that work on a game at the time don't have the advantage that the publishing business like we do, where we're able to launch several games a year and are able to learn and adapt.

55:23 And this is why some things that I hear from shareholders in reference to articles from, like, a year ago, I get asked questions like, how are you approaching this? It it it becomes irrelevant very fast. So the industry is moving at probably the most rapid pace it ever has in terms of how games are marketed, how games are tested, how games are released. What is preconceived as a good KPI today may no longer be relevant tomorrow. So I just want everyone to keep that in mind because in an industry like this, it creates really exciting opportunities. Fantastic. Alex, Jazz, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations?

56:16 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of TINYBUILD INC, we would like to thank you for attending today's presentation, and good afternoon to you all. Thank you.