Good morning, and welcome to the Tiny Limited Third 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 CAD 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 Tiny 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 now like to turn the call over to Austin Singhera, Chief Executive Officer, for today's earnings call.
Good morning, everyone, and thanks for joining. Over the last two quarters, we've been focused on simplifying the business and returning to a more decentralized organization. That work is showing up in our profitability and cash generation. Organic revenue was broadly flat year-over-year, while our adjusted EBITDA margin improved to 25%, our best since Tiny became public over three years ago. We also brought our net leverage down to 2.3 times. Across the group, performance remains mixed. MetaLab and Serato had strong quarters, while WeCommerce and the Creative Platform continue to face revenue pressure. Just after quarter end, we also acquired Oso Cloud, an enterprise permissioning software business with 5.3 million of ARR. It's a great addition to the group and attractive purchase price. Our focus is on continuing to improve operations, find high-quality businesses to acquire, and strengthening our balance sheet to keep Tiny resilient.
Michael, I'll hand it over to you to go through the financial details.
Okay. Thank you, Austin. Let me start with a few of the headline numbers. Adjusted EBITDA for the quarter was CAD 13.2 million. This is up 30% from Q3 of 2025, with an adjusted EBITDA margin of 25%. This reflects our continued focus on efficiency and cost management. As Austin noted, we're also happy to report that our net debt to adjusted EBITDA finished the quarter at 2.3 times. Recurring revenue, CAD 17.2 million, or 33% of total revenue, which is up 2% year-over-year. This is largely driven by Serato, and as Austin noted, will be enhanced through the acquisition of Oso, which will take our ARR from approximately CAD 69 million to closer to CAD 75 million. Free cash flow was CAD 8.6 million, or CAD 0.29 per share.
As a reminder, we now report free cash flow and segmented EBITDA on an attributable basis, which gives you, as an investor, a clearer measure of cash generated by our underlying portfolio. From Tiny Fund 1, we received half a million in distributions. This number is consistent with distributions received in Q2. Fund revenue was $13.7 million, up 4%, and the carrying amount of our investment in the fund was CAD 46.3 million, up 3%. As a reminder, the financial results of the companies within Tiny Fund 1 are not reported as part of our consolidated financial results. In terms of some of the highlights, operationally, at Serato, we launched Serato DJ for iOS in October, bringing DJ software to iPhone and iPad with support for more than 120 controllers and mixers. This is a very exciting development for the Serato business.
MetaLab delivered its strongest top-line quarter since 2022, with revenue up 25% from Q2 of 2026. This was supported by some key customer engagements with high-quality and longer-term customers. At Letterboxd, membership has now surpassed 33 million, which is up 42% year-over-year, and has more than tripled since the Tiny Fund 1 acquired the business in 2023. Moving on to some of the detailed information about the financial results. I'll start with revenue. Third quarter revenue was CAD 52.3 million. This is up 1% from Q2 of 2026. We saw some growth at Serato, but it was largely driven by the MetaLab in the quarter. This helped offset softer results at WeCommerce and Creative Market. Compared with Q3 of 2025, our revenue was down 3% from CAD 54 million. When you exclude divested businesses, organic revenue was essentially flat.
Looking at the segments, the standout, as we've noted, was Digital Services in the quarter, which grew to CAD 19.6 million, up from CAD 18.6 million a year ago, and 12% on an organic basis. Software and Apps was at CAD 22.1 million for the quarter versus CAD 23.2 million, with Serato growing and WeCommerce still facing some top-line pressure. Over the past 12 months, our overall revenue grew 4% to CAD 207 million from CAD 199.6 million.
The mix of business has meaningfully shifted to more recurring revenue. Software and Apps grew to CAD 91.3 million, up from CAD 68.5 million because the LTM period now includes a full year of Serato. On an LTM basis, Digital Services was CAD 69.6 million versus CAD 80.8 million a year ago, but that also reflects the divestitures of Frosty, 8020, and Z1, which have now been offset by MetaLab's strong performance in Q3 of 2026.
Recurring revenue was CAD 17.2 million for the quarter, up 2% from a year ago, and represented 33% of total revenue compared with 31% last year. On an LTM basis, recurring revenue was CAD 70.2 million compared with just CAD 49.8 million a year earlier, and now represents 34% of LTM revenue. The step-up comes from both acquisitions and organic growth, and reflects our strategy of building a more durable earnings base. Moving on to adjusted EBITDA and adjusted EBITDA margin. This was certainly the highlight of the quarter. Adjusted EBITDA was CAD 13.2 million in Q3, the highest of the previous eight quarters, and as Austin noted, our best quarter since Tiny became public over three years ago. Adjusted EBITDA grew 30% from CAD 10.1 million in Q3 2025, as reported in our release, and 24% from CAD 10.6 million in Q2.
The margin was 25%, up 19% from a year ago, and up from 21% in Q2, albeit on slightly lower revenue. Of note, the slide highlighting adjusted EBITDA and EBITDA margin shows Q3 at Q3 2025, excuse me, at CAD 8.5 million. This is for comparability purposes, as we spoke last quarter about a potential bad debt expense from a single customer. We've shown the operational comparison to be relative for the actual results of our operations. On an LTM basis, adjusted EBITDA now sits at CAD 42.9 million with a 21% margin. This is compared with CAD 36.5 million and a 19% on the same adjusted basis in the previously comparable period. The drivers were Serato's outperformance, Dribbble contract wins, and significant cost reductions through the portfolio. As we've noted, operational efficiencies that we've undertaken through the first half of the year have certainly started to drive margin improvement.
We expect to keep our focus on cost management and efficiencies as we move forward, with the objective of continuing to produce strong adjusted EBITDA and adjusted EBITDA margins. Moving on to free cash flow and free cash flow per share. Free cash flow for the quarter was CAD 8.6 million. This represented CAD 0.29 per share, and was compared with CAD 13.7 million or CAD 0.47 per share in Q3 2025. Although it should be noted that Q3 2025 free cash flow and free cash flow per share was heavily impacted from a one-time gain on a licensing revenue agreement. Importantly, when we reflect on Q3 2026 free cash flow per share of CAD 0.29. This is a significant improvement from our Q2 2026 free cash flow per share of just CAD 0.02.
I also want to remind everyone that we changed our framework beginning in Q1 of 2026, and we report free cash flow and free cash flow per share on an attributable basis to continue to give you a clearer and more meaningful measure of capital generated by the owned portions of the underlying portfolio. Moving on to Tiny Fund 1. Tiny Fund 1 companies, excuse me, had combined revenue of $13.7 million in Q3. This is up 4% from $13.2 million in the previously reported quarter. On an LTM basis, Tiny Fund 1 companies generated $56.1 million of revenue, which was up from $49.2 million in the same previously comparable quarter, period, excuse me. Two points of context. Our fund revenue is unaudited, and Tiny consolidated results do not reflect the aggregate revenues, expenses, or profits of the fund's individual investments.
However, we do feel it important to provide you context and a view of the revenue from the companies within the fund, as well as distributions. Those distributions do flow through to Tiny, as does the value of our investment on the balance sheet. As noted, we received half a million dollars of distributions in this quarter, which was consistent with Q2 and compared with a slightly lower number a year ago. The carrying amount of our investment in the fund, a 21.41% interest, was CAD 46.3 million, or $32.6 million as at September 30, 2026. This was just under a 5% increase from December 31 of 2025. Within the fund, Letterboxd membership continues to grow, as we've noted. AeroPress also had a strong quarter, driven by a strong set of Amazon Prime Days, as well as traction from new product launches.
On to slide 10, which covers debt and cash and the balance sheet. Our senior debt outstanding was $103.5 million as at September 30. This was compared to $98.7 million at December 31, 2025. Convertible debentures were unchanged with a face value of $36.1 million. Cash grew significantly in the quarter to $39.5 million, which was up $8 million in the quarter and up from $29.3 million at year-end. As you can see, the operational enhancements and efficiencies are helping to drive cash generation. Excuse me. Our net debt to adjusted EBITDA came in at 2.3x, which importantly is down from 2.8x since Q2. The improvement reflects both lower net debt and a stronger quarter of adjusted EBITDA rolling into the LTM measure.
This puts us well within our target leverage of 2x-2.5x, and shows how far we've come since we were above 3x in 2024. We will continue to monitor this ratio and continue to be committed to ensuring that we maintain a strong balance sheet, allowing us both opportunity for future investment and ensuring that our leverage levels are within our targeted ratios, as well as important levels for our investors. Lastly, on the debt side, we have no pending maturities. While we did have our convertible debenture offer out in the market, it did expire on October 28. However, there was no pending maturity associated with it. We could look at calling those bonds again in the future. At the same time, we remain committed to our target leverage and using increased cash flow to bring leverage down.
We are very pleased with the progress that we've made in this area, and we are well-positioned now to again deploy capital should an opportunity arise, such as in the aforementioned Oso deal. I'll close out with a short review of our roadmap. First, we continue to maintain discussion around profitable growth. We are increasing the recurring revenue base to improve adjusted earnings durability. We're staying focused on cost efficiencies and on improving both adjusted EBITDA and free cash flow. Second, capital structure optimization. This means a continued review of the portfolio with strategic decisions around value creation, and as I noted, an ongoing focus on reducing leverage and increasing financial flexibility.
Third, at Tiny Fund 1, we continue to work towards revenue and NAV increases, driven by operational excellence and improved profitability, which should allow for increased distributions from the fund to Tiny and continued growth of the fund companies through new product launches and distribution opportunities. And lastly, on capital allocation, we're looking to continue to strengthen the portfolio through strategic repositioning of select businesses, pursuing high-quality acquisition opportunities, as Austin noted. Again, I note the example of a recent small acquisition that is an appropriate example of opportunistic repositioning the portfolio and creating growth. To sum up the quarter, a 25% adjusted EBITDA margin, CAD 8.6 million of free cash flow, and leverage of 2.3 times, fitting well within our objectives. We are going to continue to look to enhance the portfolio and our performance as we go forward. Now, we'll turn it over for questions.
We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Amr Ezzat with Canaccord Genuity. Amr, your line is open. Please go ahead.
Austin, Mike, good morning, and congrats on a great quarter. Maybe if we could start with Digital Services. It was probably the biggest positive surprise for us this quarter. Can you walk us through what changed operationally at MetaLab during the quarter, how broad-based the improvement was across clients, then how we should be thinking about the sustainability of that performance going forward?
Sure. Thanks for the question. I can start there. Yes, that is correct. MetaLab had its strongest quarter since 2022. That was up 25% sequentially in the quarter as well in terms of revenue. We are generally seeing larger client engagements, better utilization across the board, and also a ramp-up of some significant new clients. We noted some of those marquee names in the press release as well. In terms of sustainability in the coming quarters, it does remain a project business, so timing matters. Our focus is on building those enterprise relationships and converting those into sustainable work, and that has been the case over the last several quarters. Again, strong quarter. I would not exactly extrapolate it into every quarter going forward, but we are quite happy about the progress so far.
Understood. This is specifically one larger client that contributed, from my understanding?
It is not. It is just generally, again, broad engagement across many larger enterprises.
Fantastic. The magnitude of the improvements from the cost-cutting exercise exceeded our expectations. Can you walk us through how much of that reset is now reflected in the run rate and whether there are still additional efficiencies to come through over the next couple of quarters?
I can start, and Mike, you can jump in. I believe most of that from an operational perspective flowing into the results for the quarter is largely done. I'd say we're, again, kind of shared in my remarks, continually looking at areas within the business, but I'd say largely most of that work is behind us.
Yeah, I think that's the right way to characterize it. We'll always be continuing to look at ways to optimize, but the large amount of that work, Amr, is finished and has been finished for the year. Again, not necessarily sort of run rate, because there'll always be the sort of balance of some of those operational efficiencies against a couple of businesses that are facing somewhat of decline, maybe under pressure on the revenue side. So there is a bit of a balance there as it relates to the run rate. Look, we're very happy with the progress overall. As you know, through our conversations, we've been very focused on that EBITDA margin percentage and that metric, so we're certainly pleased with part of two. Not to suggest it's going to be 25% every quarter, but we're working towards that as a benchmark.
Fantastic. If I could just follow up there, I know you guys don't disclose the Serato profitability separately, but maybe you could give us some color directionally at least. When I look at the 10 points year-on-year EBITDA margin expansion in Software and Apps, is the lion's share of that driven by the WeCommerce cost resets, or is there a meaningful sort of Serato operating leverage as well that we did see come through?
I can start, and Mike, you can add. For this specific quarter, it is a combination of both. This would reflect the meaningful changes we did make within the WeCommerce department that we noted in the previous quarter as well. Since we have acquired Serato, that has been a meaningful contributor to overall margin improvement. I don't think we've specifically disclosed the contribution by those two items, but we are seeing strong operating leverage within Serato, and we expect that to continue the revenue base.
Okay. Thank you. Congrats again.
Yeah, I think that's a good summary, and we noted as well, like, just there's some excitement around Serato for Q4 with the most recent launch, and we'll be looking forward to updating everybody about that in more detail on the Q4 call.
Fantastic. Congrats again. I'll pass the line.
As a reminder, if you would like to ask a question, please press star one to raise your hand. We have reached the end of our Q&A session. I will now turn the call back to Mike McKenna, Chief Financial Officer, for closing remarks.
We would like to thank everybody for joining, and thanks to those on the line who came with questions. We look forward to reconvening with everyone following our Q4 results, and hopefully again delivering on some exciting opportunities and progress. Thanks to everyone for their time and for their support.
This concludes today's call. Thank you for attending. You may now disconnect.