Tiny Ltd.

Good morning and welcome to the Tiny Limited second quarter 2026 results conference call. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one, the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Before we start, we ask you to take a moment to read the disclaimer at the beginning of the slides that accompany this presentation, as it contains important information. We would also like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated. Please note that statements made during this call may include forward-looking statements and future-oriented financial information regarding Tiny and its business, and disclosure regarding possible expectations, events, conditions, or results that are based on information currently available to management, which indicate management's expectation of Tiny's future growth, results of operations, business performance, and opportunities. Such statements are made as of this date hereof, and TINI assumes no obligation to update or revise them, except as required by applicable securities laws. Such statements involve significant risks, uncertainties, and assumptions, and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause results to differ materially from the results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements disclaimer in the slides accompanying this presentation and in the company's press release issued today for additional information. We use non-IFRS financial measures to help investors understand our operating performance. Non-IFRS financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with IFRS. I would like to now turn the call over to the executive team from Tiny for today's earnings call.

Good morning, everyone. Austin here, and thanks for joining us. I'll start with what changed during the quarter and what we are focused on now. I'll then hand it to Mike to go through the detailed financials before we open it up for Q&A. When I moved into the CEO role, I wanted a clear view of where each business stood. We spent significant time going through each operating business, tested the forecast, and reviewed the cost base. That work led to cost reductions, simplifying our overall operating structure, and some difficult decisions, most of which was focused within WeCommerce and Creative Market. That is always difficult, but it gives us a more honest starting point. That reset was important, but the quarter was not only about that. Revenue was $51.6 million and adjusted EBITDA of $10.6 million, a 21% margin. ARR reached approximately $70 million, up 32% year-over-year, which now accounts for 34% of our total revenue, largely driven by the Serato acquisition. This gives our business substantially better visibility than we had a year ago. Serato shows the kind of business we want more of. 70% of its revenue is recurring, and the team continues to build upon its strong core product and partner network. At Metalab, Q2 was affected by project start timing, which we saw pick up substantially in June and continued into Q3. Letterboxd stayed on pace with its strong growth and ended the quarter with approximately 31 million members. We also know where the revenue pressure is within the organization, which we noted at the top of being e-commerce and creative market. A combination of both more competitive markets and a tougher e-commerce and market, both of which we are navigating through. On the balance sheet side, we repaid $2.1 million of debt in Q2 and another $1.6 million after the end of the quarter. Currency changes affected part of that progress. and Leverage ended the quarter at 2.8 times. From here, our focus is on continual improvement, turning more of our earnings into cash flow and lowering leverage. Alongside, we'll continue to look at potential monetizations within the portfolio where logical, while continuing to add high quality businesses to Tiny to grow the business over time. Mike, I'll hand it over to you.

Okay, thanks Austin. I'll get into some of the financial results now in a bit more detail. Starting with revenue, the Q2 2026 total revenue was $51.6 million. This was a 3% increase over Q2 of 2025 and also represented a 3% increase when measured on a constant currency basis. Looking at the highlights of the composition. Software and apps grew from $18 million up to $22.4 million, primarily driven by Serato. Digital services revenue came in at $16 million. This was down from $19.6 million in Q2 of 2025. It really does reflect a tough comparable. Q2 2025 On the creative platform, revenue came in at $11.5 million versus $10.3 million a year ago. This benefited from a significant contract win at Dribbble in the quarter. On an LTM basis, revenue was $208.7 million. This was up 9%. From the comparable period of $192.4 million. The LTM digital services comparison was also impacted by the divestiture of Frosty, AD20, and Z1, along with that outperformance in the first half of 2025 that we've noted. Again, we expect a strong second half based on momentum in Q2 of 2026. Moving on to recurring revenue. This is a key metric we track closely as a proxy for the durability and quality of our revenue base. In Q2, 2026, it reached 17.4 million, up 32% from 13.2 million in Q2 of 2025. Serato is the primary driver here, and as Austin noted, a significant amount of that revenue comes from subscriptions. were also actively investing in the product roadmap and partnerships to sustain that growth year over year. On an LTM basis, recurring revenue was 69.8 million versus 42.8 million a year ago. This importantly points to greater annualized recurring revenue for the business overall, which now stands at 69.6 million, growing 32% year over year. The ARR trajectory reinforces our strategic focus. We want a larger portion of tiny consolidated revenue-based and subscription-based where it makes strategic sense, helping to underpin a strong long-term outlook. Moving on to adjusted EBITDA and adjusted EBITDA margin. The adjusted EBITDA for Q2 of 2026 was 10.6 million. This represented a margin of 21%. On an LTN basis, adjusted EBITDA was 38.2 million. This was up from 35.3 million in the Q2 2025 LTN period. Performance again, largely driven by Serato. Dribble contract wins and the continued cost discipline across the portfolio, which we have referenced and will continue to help us drive margin going forward. LTM margin expanded from 18% to 19%, a modest but meaningful improvement. Given the significant cost rationalizations that we implemented at the end of Q2 of 2026, We expect this will drive further margin improvement going forward. On a related topic, as we have continued to focus on enhancing our disclosure, we have added segmented EBITDA to our disclosure framework for the quarter as part of our ongoing commitment to provide further operation and financial clarity where possible. Further detail is provided in the MD&A. Moving on to free cash flow and free cash flow per share, again as a reminder in Q1 of 2026, we enhanced some of our disclosure to report free cash flow and free cash flow per share on an attributable basis. Again, we believe this gives investors a clearer and more meaningful picture of the capital generated by our underlying portfolio net of debt service obligations. LTM free cash flow was 13.4 million or 46 cents per share compared to 18.6 million or 70 cents per share in the Q2 2025 period. The changing cash flow primarily reflects the timing of contract related payments, income tax installments, and some working capital movements near the end of the quarter. Moving on to the fund. Recall, this is a separate vehicle from our consolidated results, and we report this on an unaudited basis to give investors further visibility into the portfolio. Q2 fund revenue was in US dollars $13.2 million. This is a 15% increase over Q2 of 2025. LTM fund revenue was $55.5 million, again in U.S. dollars, versus $48.4 million in the previous period. Tiny's NAV for the fund was $46.4 million Canadian, which represented a 4% increase from year end. Distributions to Tiny from the fund were again strong. 0.5 million in Q2 and have equated to 2.8 million on an LTM basis. Key portfolio highlights in the fund include Letterboxd surpassing 30.7 million registered members. This number is up 185% since our acquisition in September of 2023. Matina, our Yerba Mate brand, now leads the Whole Foods energy category with 1.8 times the volume of the second place contributor. Turning now to the balance sheet, as of June 30th, 2026, senior debt outstanding was $105.9 million. and our total cash and cash equivalents were $31.6 million, slightly up from $29.3 million at year end. While our net debt to adjusted EBITDA ratio does stand just slightly above our target range of 2 to 2.5, we are making progress. Austin noted some debt repayments both in the quarter and following the quarter and it continues to show that we remain committed to debt repayment. This is a priority within capital allocation. And importantly, as we think about the balance sheet, we have no pending maturities. We've maintained some capital structure flexibility through the extension of the convertible to venture offer. And overall, our objective here is to ensure we have the proper capital structure in place to continue on the longer term journey of capital allocation. Now turning to our roadmap. We have four strategic priorities that are on track. Profitable growth, capital structure optimization, momentum within tiny fund, and disciplined capital allocation. These are all important as we think about our day-to-day operations. In summary, Q2 was a quarter of continued execution against these strategic priorities, alongside a disciplined look at the portfolio and the value through an ongoing asset review. We're well positioned to head into Q3 and we look forward to updating you again on our progress next quarter. With that, we should turn it over to questions.