# tinyBuild Inc Building momentum (Analyst Interview) (LON:TBLD)

- Link: https://www.directorstalkinterviews.com/tinybuild-inc-building-momentum-analyst-interview-lontbld/4121012621
- Published: 2021-07-28T07:16:00+01:00
- Author: Giles

**tinyBuild Inc **(LON:TBLD) is the topic of conversation when Bob Liao talks to
DirectorsTalk. The company AGM statement indicates strong progress on agreements
with distributors, mining the back catalogue and developing interest in planned 
releases. provides us more details into these growth drivers, explains how this 
impacts his view on the company’s ability to meet 2021 expectations and expands 
on long-term growth drivers and Bob´s view on the outlook.

**The AGM statement indicates strong progress on agreements with distributors, mining
the back catalogue, developing interest in planned releases and attracting talent.
The update increases our confidence in tinyBuild’s ability to at least meet expectations.**

tinyBuild indicated that **development agreements from distribution partners** have
exceeded expectations. These increasingly important agreements provide tinyBuild
with visibility in the form of minimum revenues in advance of game release. The 
rising number of distribution platforms (e.g. Netflix) is increasing competition
and boosting demand for quality content from developers and publishers.

The company indicated that **back catalogue **are performing strongly. tinyBuild
has been able to successfully mine its back catalogue for additional revenue by 
releasing downloadable content (DLC) for popular titles and by porting titles onto
additional platforms (e.g. Totally Reliable Delivery Service on Steam and Secret
Neighbor on PS4 and iOS). In addition, **pre-releases** are seeing high downloads
and encouraging KPIs (e.g. tinyKin and Hello Neighbor 2). 

We believe tinyBuild now appears positioned to **at least meet 2021 expectations
without depending on any single large hits**. The company’s release schedule remains
H2 weighted but its strong progress on development agreements with distribution 
partners, back catalogue revenues and KPIs for its early releases have given tinyBuild
increased confidence. Continued strong trading could allow the company to invest
more time and resources in game quality and platform availability to improve revenue
outlook for 2022.

The company’s **strengthening pipeline** also indicates an improving longer-term
outlook. tinyBuild started the year with 23 games in its pipeline and has released
four of the games to date. But the company has already signed seven new games to
increase its pipeline to 26 games. The company’s pipeline remains over half the 
size of its back catalogue. 

The company has been able to **attract talent and retain staff** to support an accelerating
long-term outlook. tinyBuid grew its headcount by 16% to 166 from 147 at the beginning
of the year. This has been helped by management’s favourable employment practices.
The company has implemented policies against crunching, the industry practice of
overworking developers to meet targets, and gifted one extra week of holiday to 
all direct employees. tinyBuild low single-digit churn, compared to an estimated
15.5.% across the industry.

**Valuation**: We believe today’s confident trading update could reverse recent 
price falls. Shares trade in line with UK peers while offering significantly higher
earnings growth (EBIT 21-23 CAGR: 28% v 20%) and margins (Ave EBIT 21-22: 35% v 
22%). We see the potential for earnings upgrades and accretive acquisitions to drive
shares higher.

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