Good afternoon, ladies and gentlemen, and welcome to the tinyBuild interim results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just simply type in your questions at any time 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 will publish those where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and if you give that your kind attention, I'm sure the company will be most grateful. It's a great pleasure to hand over to the management team from tinyBuild. Good afternoon to you both.
Hello.
Hello, and thank you so much everyone for being here. Welcome to the H1 2023 results. The way that we usually do it is, well, everyone has read the disclaimer, I hope. We are going to be presenting between the two of us. I will handle the operational strategic parts, and Jaz will handle the financial parts. I guess, introduction, presenting today. My name is Alex Nichiporchik. I'm the CEO and co-founder of tinyBuild. I come from a background of being in video games all of my life, starting from playing them professionally and now living the dream of actually working on some of my own favorite franchises. Jaz, you want to say a few words?
Yes. I joined tinyBuild three years ago, just before the IPO. I worked as IR until recently when I was appointed CFO last June.
Yep. The structure will be that I'll do an operational review, then Jaz will dive into the finances, and then we'll talk a little bit about strategy. For the operational review, for those who don't know, last year has been extremely difficult for us because we had a substantial amount of people affected by the war in Ukraine. W e were in literal life-saving mode. This year is a challenging year for different reasons, mostly having to do with lower than expected deals made with platforms. We'll talk about that a little bit more in depth. It's a short-term challenge that presents a long-term opportunity, and the way that I like to frame it is, for the past few years, we had a few options comparable with movies. With movies, you can sell them or license them to a streaming service, for example, to a platform.
But that will limit your possible return on that. It's also predictable. You can also take the game to the box office, to the cinema, where you have potentially uncapped sales potential. Over the past few years, we've had a lot of platforms hungry for content, for exclusive content, for licenses, et cetera, and that has come to a slowdown across the whole industry. With that said, considering this, we have adjusted levels of investment to reduce our cash burn. We are doing ongoing improvements in our finance process, and for now, we have paused M&A to focus on cash generation. That said, we're still investing in new projects developed externally and internally, it's just that we are originating now more IP from that other than mergers and acquisitions.
We're looking at more potential for efficiencies and cost savings, and we are very clearly focused on a specific type of game that we call the 1,000-Hour Game, which I will talk about in detail in the strategy review. I'm sure you've seen all of these slides, and Jaz will talk about, in detail, the stats that we see here. What I will want to flag is our significant amount of our revenues are coming from our own intellectual property at 65%. This is actually a little bit lower than it used to be because our revenue mix is a little bit different this year. This is because some of our titles that are older titles, that are third-party IP, where we don't own the IP or the studio, are performing really well in their second, third, fourth, fifth year of their timeline.
At the same time, we also have 93% of our revenue coming from back catalog. As a reminder, back catalog is counted based on the financial year. If we launch a big game in December, odds are most of its revenue will become back catalog very soon because January will roll around. F rom January, it will be counted as back catalog. Which neatly brings us to our IP across multiple platforms. In 2017, we've had a 50/50 mix. Right now, we have 65%. We expect that in the long term, this will go a little bit up because we do have a lot more own IP titles in development, which do come with a higher margin as well.
If you look at the left slide over here and look at the last graph, H1 2023, you can see that our revenue mix is still very diversified, where we're focused on creating franchise potential. Concentration for top three went up a little bit in H1, mostly due to the good performance of Hello Neighbor 2, which launched last December and became back catalog in January. T hat gives a little bit of revenue concentration because the game is doing quite well. Excuse me, been talking all day today. This brings us to our mix of back catalog and frontlist. A lot of people will assume, which is natural, that games will come out, have their first, let's say, three months, and then drop off in terms of revenue generation, so that you just launch and forget.
While that is true for many types of games, what we are seeing is the opposite, is that the first three months may not be the best three months in the game's lifespan. This is because we do a lot of portfolio management, and we do focus on games we can spend a lot of time. Just some of our top performers like Deadside, Streets of Rogue, SpeedRunners, Potion Craft, they all have systematic elements that allow players to spend a lot of time playing those games. Think thousands of hours. There is a review for Streets of Rogue on Steam, it is one of the top reviews, where the guy says, "Yeah, the game was okay." Time spent, 3,6 00 hours. This is really important to us because it kind of builds the backbone of the business.
We are able to constantly extract additional revenue from this catalog by doing sales. We actually got really good this year and last year in managing our portfolio of sales, which is why wishlists as a metric become increasingly important. A wishlist is when you are a player on Steam, for example, and you see a game you might like and you add it to your wishlist. Then you will get a notification whenever the game, well, if it is not out yet, whenever it releases and whenever it goes on sale, which is a really powerful marketing tool and a great KPI to track to see how well your game is doing. I will be talking about wishlists across this whole presentation. That said, let us take a break and talk about numbers with Jaz.
The first slide is a summary of the performance across revenues, adjusted EBITDA, and a measure of adjusted cash from operations, which is calculated as adjusted EBITDA minus the difference in net working capital. Starting from the left-hand side on revenues. Revenues in the first half were down 20% year-on-year, primarily a function of the drop, pretty sharp drop in platform deals. More on this in a second. Impacting on the gross margins, which is the line on that same chart, were two other factors. A less favorable revenue mix, as pointed out by Alex, less heavy on first and second party, and heavier on third parties. On the other side, also a higher level of amortization of dev cost, which flows directly from the increase in dev cost investments over the past few years.
Moving to the chart in the middle, adjusted EBITDA loss was $1.2 million in the half. Also impacting EBITDA, above and beyond what I have just mentioned on gross profit, was an increase in SG&A in H1. In there, I should point out there are some one-offs and some timing differences which will not affect the second half of the year. In terms of adjusted cash from operations, you can see this being positive, in contrast to a negative adjusted EBITDA. That is proof that we are still generating cash from the operations and the core business is sound. Let me show you a little bit more on that. Drilling into the profit and loss accounts, I want to first focus on the first two lines. It is the breakdown of revenues by game and merchandise versus development services. Game and merchandise were flat.
Revenues were flat at $17.5 million for both first half this year and last year. That is our core business. That is the unit games sold to players. What really went south in the first half was the second line, development services. That is where we book platform deals with the likes of Sony, Microsoft, Meta, Google Stadia when they were live, and so on. That saw a sharp decline in H1 this year, which I am going to show some more evidence in a second. The other two lines I want to focus on the P&L are the impairments for development cost and intangibles. That is something which was triggered by the lower expectations in terms of revenues. We sat down with our accountants and auditors and established the fair value of the assets we are carrying on the balance sheet right now.
That led to a negative adjusted EBITDA of $1.2 million. Moving on to the main reason for this underperformance, which is platform deals. As I mentioned, Sony, Microsoft, Meta, and so on. Those are deals that we sign directly with the platforms. It is not when we sell a game to a player, it is when we receive money directly from platform. We do that for a number of reasons. It could be an exclusivity, it could be the addition of one of our games to a subscription service. It could be a development contribution to develop a certain game for a new platform, for a new technology. Imagine VR headset. This part of revenues, this bucket of revenues, has increased steadily from 2019 to 2022, and all of a sudden, pretty much vanished in the first half of 2023.
We can put that down to a number of factors, but we cannot identify the one reason for this in the first half. It was very difficult to forecast. Is this structural or cyclical? It is most likely cyclical, and cyclical not in terms of macroeconomy, but cyclical in terms of technology cycles. Every time there is a new technology, there is going to be a new player who tries to grab a share of the market. You can think about the subscription services for Microsoft. Before that, you can think about the console cycles, and right now you can see that with VR, and you are probably going to see more of that with cloud gaming. It is going to come back, but for now, we have to conservatively exclude that from our forecasts. We are still signing some platform deals.
You can see a small part of that in the first half of the year. There will be more in the second half, but it is not going to be anywhere close to what we posted last year, and this is the main reason for the drop in revenues and the EBITDA loss in the first half. Moving from the P&L to the cash flow. A couple of elements I want to flag here. First on receivable and payable. The net change here is over $4 million working capital contribution. A bit of a technical, but I know many of you have this kind of knowledge, so let me spend just one minute on this. At the end of the year, we sell a lot of games into the Christmas season, and we book a lot of revenues for that.
We book revenues, as everybody does, and we receive the cash with four to six weeks lag from when we book revenues. That is the net working capital change you see here. Alongside revenues coming from platform, which are delayed in terms of payment by four to six weeks, we also have royalties to be paid to developers, which are equally delayed in the same period, in the same fashion. That is what caused that is + 4 million working capital contribution in the half. Below that, software development. This is where we invest in new games, when we invest in catalog to continue to generate a high level of revenues from existing franchises. We broke that down here. Here we show software development on a six-monthly basis, starting from H1 2020 and peaking in H2 2022 at over 21 million.
This is what is having the biggest impact on our cash position. The investments in new games, which we will launch next year, the following year, and the following year again. We can stop these investments at will at every point in time. We can stop investing in games tomorrow if we want. The decision would be suboptimal because it means we are giving away, we are losing growth in the outer years. The challenge for us as a management team and for myself as a new CFO is finding the exact right balance that gives us the maximum growth potential in the outer years whilst balancing a very sound financial position in the near term. You can see on the right-hand side another picture of investments, this time including M&A.
I have seen a couple of questions on that, and we will take those in turns, but M&A peaked in 2021, was already low in 2022 when we saw fewer opportunities at the right price, and was again much lower in 2023. As said by Alex on the intro , we have paused completely M&A in terms of acquisitions. We are still in discussions with other companies that may be interested in some assets currently under tinyBuild. That is particularly true for underperforming assets. Following on from the time series of development investments, how concentrated is our portfolio of investments? It is not concentrated. It is very well diversified. Out of the $16.9 million spent in H1, we are working on over 50 projects. None of these projects accounts for more than 15%, and it is actually much less than 15% in the current year.
We have still a fair amount of investments in new technology, media, and platform. Think about the animation series for Hello Neighbor, think about VR, and think about other platforms like Roblox and so on. I am closing in on the financials with a quick look at the balance sheet. We have looked at receivables and payables, which really are the main changes here. We have looked at a change in intangibles. What we have left to comment on is the net cash position, moving from $26.5 million to $14.3 million. This is the bridge to explain what happened.
A positive cash profit of $2.1 million. The P&L profit of the negative number you see in P&L, whether you look at adjusted profit or reported profit, is impacted by known cash amounts. The cash profit was actually + $2.1 million. You have just over $4 million positive contribution from working capital, and then the big investments for future games that, as we said, we can dial up and down pretty quickly, and our challenge will be to find the exact balance between expected revenue potential in the near term and investments for future growth. Over to you, Alex.
Thank you, Jaz. In the beginning of this year, I outlined our five-year plan, and I just want to reaffirm that we are sticking with it. I strongly believe that we are in a unique position as an industry and as a company to create new IP, scale it to a franchise level, and then take it cross-media because we've seen so many examples now between The Witcher or the League of Legends Arcane series of when a really good piece of linear media within a gaming IP makes it to a small screen or big screen, it can have a dramatic effect on the sales of the interactive part of the game. This is what we've been doing. We've been investing into IP.
We've been investing into games where people can spend thousands of hours in games that are services and in slightly bigger titles, with the goal of taking that IP and then taking them to linear media and cross media. For reference, for people who don't know, we actually have over 4 million books sold based on Hello Neighbor. We are releasing season one of the animated series based on the game this October, starting with October 7th. We're really excited about that and excited about this plan. Let's talk about the 1,000-hour game. The simplest way to look at is when you look at any story-driven game, for example. Let's say that you have 10 levels, each level takes one hour to beat. You have a 10-hour-long game. In order to add one hour, you need to add one level, which adds 10% of that content.
When you add level number 12, you are adding just over 9% of content, and then you get more and more diminishing returns. Making thousand-hour games that are content-driven is very, very difficult and expensive. That's AAA levels of investment. Instead, we are going for systems-driven design. Where if you have a game that has 10 systems in place and you add system number 11, which may interact with several other systems within that pack, then you may have just added 30%, 40% of content. Then you get an exponential return on that investment. The amount of time you invest into developing the game gets an exponential return on the amount of time that people will spend it. This applies to several subsections that we have, including user-generated content.
One of the reasons why the original Hello Neighbor is still so popular is because users can actually modify the game with a series of mod kits that we released where they can create their own content. We're also investing into procedurally generated worlds and persistent worlds. We're investing into worlds where people can create their own bases to create their own personalized homes. We're investing into PvP and PvE, which is player versus player and player versus environment multiplayer games. For us, it's all about creating products that people will really spend every night with for years to come. We're seeing in our portfolio that this is where the longest returns for our products are. The games that continue to sell well are the ones that follow this pattern. Let's do a couple of case studies while I have everyone here.
I Am Future is a game that is a new IP. We released it earlier this year. The game was a case study of our ability to launch games in a very predictable and data-driven manner. We knew that the game was gaining traction because the Steam page for it has been up since middle of 2021 and was gaining good traction. M uch so that we knew exactly how to amplify that traction. Long story short, we had a successful marketing campaign leading up to the Steam Next Fest, where we were able to validate a few mechanics in the playable demo that a lot of players tried. We got information on what they liked in the game, and that justified a delay in that title, because we knew how to make it better.
That delay directly resulted in phenomenal reception, over 90% positive ratings for the game, $500,000 in sales, and 200,000 additional wish lists that were added to the game's balance. Essentially, think of it this way. It's a new IP. It's in early access, which means it's an active development, and 200,000 people have this game on their wish list, which means that they're waiting for updates and or sale events, and at this phase, seeing a full release, a 1.0 release later in the time that this game is being developed. This is an example of a new IP that we are happy to have launched and have really good hopes for. The second, excuse me, example here is about expanding a franchise.
Punch Club 2 launched this year as a long, long, long development cycle that is a follow-up to 2016's Punch Club. Punch Club was an interesting game. It did not get any traction whatsoever. We knew the game was good. We knew people would like it, but we couldn't get traction at conventions with media, with press, with influencers. Then we kind of caught lightning in the bottle by doing a marketing stunt called Twitch Plays Punch Club. Google that if you want to get more details. Essentially, we had the Twitch chat, which is a live streaming service, play the game in a very chaotic way via the actual chat that controls the game.
It was a very hectic experience where we held the game hostage on Steam, saying, "You as the internet need to beat the game on Twitch before we release it." That resulted in our most anticipated, covered, and financially successful launch of that time. The follow-up encountered similar problems. We knew that the game was going to be difficult to market and that we would need to do a great job at doing data-driven decisions, which is exactly what we did. We have a six-month marketing plan.
It was a very short time to live for the wish lists where we said, "Okay, if wish lists are all fresh, all generated within the last six months, they're going to convert much better on day one, which is going to generate us a lot of exposure." Long story short, the game launched to be more successful than the original, which is a testament to our ability to publish both new and existing IP. Okay, now let's talk about Hello Neighbor, which is a franchise that we've been working on since 2016. The first one launched in 2017. This year we launched the Hello Neighbor VR spin-off, which is actually doing quite well. It's being developed by Steel Wool, the same studio behind Five Nights at Freddy's, which is actually getting a movie this October. I hope everyone will get to see it because it's looking really good.
Hello Neighbor 2 released last December, which means that it's already considered back catalog. Since December we have done almost a dozen updates to Hello Neighbor 2, and the community is really excited about us both improving the game and also tying it into the animated series, which is starting to release on October 7th. Also we're in the process of wrapping up key updates to consoles because remember, Hello Neighbor as a franchise is console strong. It's actually not had a lot of traction on PC. The original, that released way back in 2016, 2017, sorry, was a PC-last game. It means that it was prioritized to be a console game, and that is where the target audience is. This list over here is a glimpse into our announced pipeline.
I think it's really useful to see the full list and then realize that, when we IPO'd, we said that we are in the business of building franchises. Right now, out of the 12 announced games, Kill It With Fire 2, Slime 3K, and Streets of Rogue, numbers four, five, and seven are parts of existing franchises. We have two sequels and one spin-off. Slime 3K is actually a spin-off of Despot's Game, which is a popular game that we released a couple of years ago. We are in the process of transitioning from working on mostly new IP to a balance of existing IP and new IP.
With the closing remarks, I just want to say that we've always been consistent with our story. We know exactly what we want to do, and we are on our way to do it. We want to create IP that lives across multiple media formats that will be here a decade from, or two or five from now. With that, let's jump into Q&A, I think. We have a lot of questions here.
That's great, Jaz. Alex, you do indeed. Let me just give you a couple of moments to review those. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated at the right-hand corner of your screen, but just while the company take a couple of moments to review your questions submitted already. I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard. Jaz, Alex, if I may just ask you and invite you to open up that Q&A tab, and where appropriate, read out the questions, then I'll pick up from you at the end.
Yes. I'll ask you some questions, Alex, in the order they've been submitted. First one on Unity new pricing model. "Do you foresee any impact on your revenues?"
No, we don't foresee any impact. They have pretty much backtracked their pricing model, and it was already way too cheap. I've been pretty vocal about it, and I was always sure that they would completely reverse their decision.
"Given that cash reserves are going down, do you think the business model of acquiring other companies is beneficial, or are you trying to focus more on building your own IPs?" I will take this as a capital allocation question. We have paused M&A, so we have deliberately put all of the M&A discussions on ice when it comes to acquisitions. We continue to have discussions on potential disposals. If somebody were to offer us a good valuation for an asset for which we can not realize the same value in-house, we would consider that.
Other than that, definitely the focus has been shifting since 2022 on building our own IP, which we see as higher potential because when we have own IP, we have a bigger revenue potential. Bearing in mind how diverse is our portfolio of investments, over 50 projects currently under development, we think it is also lower risk compared to bigger M&A deals. Next question is, "What lessons have we learned from underperforming acquisitions, and what measures are in place to avoid repeating similar mistakes?" Do you want to take that, Alex?
Yeah. I think, the consistent lesson here is that M&A works much better when it is for parties you have worked with before. When you have an established working relationship, you kind of take it to the next level. M&A for companies that have not developed that chemistry prior, is a risk that should be considered seriously because so far our studio integrations have been quite seamless because we have working relationships established over the years.
I think this, Alex, is addressed to you, and senior management in general. "Do you have confidence in tinyBuild? If you do, will you be purchasing shares on the open market to demonstrate your confidence?"
I wish I could. I am blocked from buying shares because I am above the threshold for when I would need to make a mandatory bid for the company. I believe the threshold is 30%. I am above that.
Next question is about guidance of financial performance for next couple of years, and I will take that one. The way we are running the business is trying to maximize revenues, trying to maximize return, and minimize the risk. Pretty simple financial concept. The way we do that is very often getting together and looking at all of the revenue opportunities. Up until six months ago, the pot of opportunity to generate revenues was growing very quickly, and we were capitalizing on that. This first half is a little bit of the exception in our 10 years of history, 13 years of history all in. We have learned from that we should never sit on our hands. We should continue to look for more, and we have been doing that right now.
In terms of financial performance over the next two years, first and foremost, our priority right now is to rebalance the amount of investments with the revenue opportunity we see in the market. We have to do that with growth mentality in mind. We are doing that, being very selective about the projects we are investing in and being very selective about the timing, the way we can develop each project, the technology which we can share in-house. That is as much as I can say about the performance. What you can imply from that is that our cash position is stabilizing, the cash burn is decreasing, and we will take more action if needed to make sure that that is the case. On the revenue side, we will continue to look for more opportunities.
Consensus is looking now at a revenue growth, if from a lower base, into next year, and we are fully on board with that. Next question is on Versus Evil legal claim. "Are the claimants still actively involved in the company?" I can take that as well. On Versus Evil legal claim, two things. First of all, it is not a lawsuit. It is a notice of breach. It is the lowest possible legal proceeding we could have. We have looked at that in depth with our lawyers, with our accountants, with our auditors, and we all agreed there was no provision to be taken because we think, the risk of any financial penalty there is close to zero. In terms of the claimants, we cannot comment on specifically individuals. It would put people in a difficult position.
What we can say is that as it happens in this case, we are always first and foremost looking for an amicable solution. We want to resolve this in the quickest possible way and move on with running the business. Next question, "What does Alex make of the share price, and will he be demonstrating his confidence making meaningful purchases?" We've answered that, Alex is above the 30% threshold that prohibits him from buying additional shares. "How are the new titles performing, and how do you measure where a new title is successful or not, Alex?"
I assume the question is whether a new title is successful or not. We look at the sales and the engagement. It is quite clear within the first few days what to expect of the first month. After the first month, it is going to be quite clear what we can expect with updates for the next year or so, because that is when we look at the engagement numbers. To be honest, considering how we have been using wish lists to accurately predict the amount of sales, we kind of know leading up to a launch, with exceptions here and there. Sometimes you will have games that just blow up beyond your expectations or do less than your expectations.
I am going to combine two questions in one. There is one question about buyback, whether we are considering it, and another question about the EBT, how active it is at these low levels. On buybacks, we have a lot of investment opportunities in terms of producing new titles. So f ar, that has been a very attractive employ use of capital. At this current level, of course, the investing in tinyBuild itself has become incredibly attractive. B uyback may, will be considered, should be considered soon. This is no guarantee that the buyback will happen, but it is definitely something that will be taken into account in our capital allocation. On the EBT, the EBT has been active since inception, since December. As a matter of fact, was active recently. I cannot comment on the day-to-day activity, but the EBT is buying shares at current levels.
The instructions are clear. We cannot direct purchases while we are in close period, but just after reporting, we will be able to add new funds if that is appropriate. I am just looking through the questions. " Jaz, you mentioned that the drop-off in gross margin is partly due to higher amortization of dev cost. Does revenue and amortization effectively align in terms of timing?" Yes, there are small differences. Sometimes amortization comes slightly earlier or slightly later than the specific revenues, but in general that is the rule. Bear in mind that if they align in terms of timing, they do not necessarily move hand-in-hand in terms of proportion.
A bigger increase in revenues does not trigger an increase in dev cost amortization, which is what we are paying on the way down in terms of gross margin compression, what we will enjoy on the way up, when revenues will start growing again. Next question, "Regarding the drop-off in platform deals, is there a pattern in terms of the type of games or specific platform where revenue have dropped off?" Alex?
It is across the board. I am sure everyone has seen the massive layoffs that have been happening in West Coast tech giants. Across the board, there is just less appetite right now for new content, and we cannot really pinpoint to anything specific.
A follow-up to this question. "If this platform revenue is indeed cyclical, as I said in the presentation, what factors would drive the next upturn?" It is really a technology cycle. When we see new technologies emerging, there are typically new players that try and take that place, sometimes successfully, sometimes not. Google Stadia was an example of this. A new technology, cloud gaming emerging, and a new player trying to enter as a platform distribution in the video game space. Another follow-up to the same question is, "Are you saying that VR will likely be a driver of platform revenue?" VR is already a driver, if on a smaller scale, it is a small market, of some platform deals.
We will see if adoption continues at the same pace, but the fragmentation of VR platform, VR headsets, if you want, tells you how keen each of the headset maker is to have the right content on their VR headsets so you can enjoy video games. That is driving platform deals. It is subsidizing content creation. A final take on the same question, "Are you developing enough VR games to benefit from such an upturn?" Over to you, Alex.
We're developing VR games where it makes sense. I'm personally really excited about technology and also about Apple coming into the AR/VR headset space. It might just be that we're going to see a resurgence of that. At the same time, I also see how widely used the Oculus headsets are, especially with younger gamers, for playing games for hours every day. I do see that people spend time on these platforms, and I'm happy that we do have some games in development there.
On franchise expansion, and I guess as a follow-up to the comment on the animations dropping in 10 days for Hello Neighbor franchise. "Are you going to try and get a Hello Neighbor film, not just a TV series?"
We'll be exploring live action where it makes sense. I think the key here for us is, if we weren't as protective of our rights, our IP rights, we would already have a film done by this point. We're just really careful and cautious of making any kind of deal where we may lose any rights to our IP. This is exactly the reason why we are producing the animated series for Hello Neighbor ourselves. It's done fully independently, and we're going to release it on our own YouTube because we know that's where a lot of fans are, and that does help gain traction for the brand and its awareness and get a lot of new fans.
Another question on the animated series. "What caused the delay in release of the animated series for Hello Neighbor? In the previous earnings release, it was mentioned that episode 1- 6 would release in H1. Has that been pushed out?"
Yeah, one and two did release in H1. The reason these four are dropping in October is because the only thing that we need to schedule, where people ideally need to be in the same space together, is voice acting. As we were doing some rewrites for the episodes, we knew that we wanted to schedule everything to be properly voiced, and now that process it has an established pipeline. W e expect the gap between season one, which is the first six episodes, and then season two and three, which are six episodes each, to be smaller and more predictable.
I should also add that you might have heard of strikes in the U.S. around Hollywood, unions and so on. Our production is not impacted by those strikes for the way it's set up. F rom now on, we look at a pretty smooth rollout of the next few episodes. Another question. "Will there be a need to raise funds from shareholders?" No, there will not be a need to raise funds based on our current forecasts. If those focus were to change, we would adapt the business model. L et me take this by the horns. We have a credit facility of up to $35 million. That's not something we set up to run the operations. That's something that we had set up had we stumbled on the unmissable M&A opportunity. That has not been the case.
We run the operation on the cash we have in the bank, and we run the operation conservatively, keeping a good buffer of safety in the bank. Right now we have, at the end of H1, we had over $14 million of cash. We're going to use a little bit more of that into the second half to continue investing titles, and then we're going to stabilize the cash position. W e're not looking at a scenario right now, and we will not looking similarly in the future at a scenario where we have to raise money from shareholders or any other source. "Do you plan to launch any of your upcoming service games such as SAND: Raiders of Sophie, Level Zero or Rawmen as a free-to-play?"
We're exploring business models.
There is a bit of confusion. On Alex, the article we had at the AGM, which would have allowed you to buy more shares. That article was voted down by some shareholders, this way making it impossible for Alex to buy more shares. "Would you consider using debt to combine share buyback and investment opportunities?" No. We think share buybacks and investment opportunities should all come out of our cash balance. Again, the credit facility set up was for that unmissable M&A opportunity, which hasn't materialized. A suggestion, I guess, that we could present the H1 numbers for 2023 next to H1 numbers for 2022. Point taken. We have historically presented full- year and half year. We can actually add quite quickly, quite simply, the H1 comparables from the previous years. In all of the tables-
It's there.
Yeah, in all of the tables we have actually presented the granular details of H1 numbers last year, but it could have been on the chart. Point taken. "Is the company expecting to be cash flow positive in FY 2024 after investments?" We are planning to stabilize the cash burn. That as an indirect guidance response answered your question. The uncertainty out there is that we always work on projected revenues and projected costs. We might decide to spend a little bit more on a game which is doing particularly well, or we might have higher revenues or lower revenues. What we're going to do is to create a very safe boundary within which we can absorb that variability, and that's going to be what we operate within. What percentage of the company's issued share is in public hands and what is free float? You have that on our website.
I'm going to point you to major shareholders tab. Alex currently holds 37.8% of the company. The other main shareholders, anything between five and eight, and you've got four of them. Everything else is free float.
Jaz, I might just jump in at that point. You have answered every single question from investors, so thank you for being so diligent and generous with your time this afternoon. If any further questions do make themselves available, there are a couple of very kind comments there from attendees online, I will make those available to you. I know investor feedback will be particularly important to you both. I will shortly redirect those on the call to provide you with their thoughts and expectations. I f I may, Alex, just come back to you just for a few closing comments, and then I will redirect investors to give you their feedback.
I think the point here is that, even though the markets are changing and things are going crazy from one challenge to the other, we still maintain our story. We did exactly what we set out to do during IPO, and we are going to continue to go this way. I am really excited because we have strong data suggesting we are doing the right things. The markets should catch up to that.
That is great. Thank you once again, Alex and Jaz for your time this afternoon. Ladies and gentlemen, could I please ask you not to close this session as we will now direct you to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I am sure will be greatly valued by the company. On behalf of the management team at tinyBuild, I would like to thank you for attending today's presentation, and good evening to you all.
Thank you.
Thanks, everyone.