tinyBuild Reports Strong FY 2025 Turnaround, With Revenue Up 17% and Return to Profitability

The studio is prioritising “one-thousand-hour” systems-led games – endlessly replayable titles that can compound over time. Crucially, the stronger 2025 performance gives management more flexibility to pace dev budgets and release timing to maximise each title’s potential, which can be the difference between a flash in the pan and a durable franchise.

That said, the market remains crowded: about 20,000 games launched in 2025, up 8%. Guidance is sensibly cautious but confident – “at least in line” with expectations.

Cash, investment, and working capital: stronger engine, still a small tank

Operating cash flow rose to $12.7m, reflecting higher-margin revenue and tighter spend. The group capitalised $11.8m of software development costs (down from $19.3m), signalling selective investment and expensing more once games hit version 1.0. Year-end cash was $4.6m with no debt. Management flags cash is expected to reduce into the spring as they continue investing in upcoming releases – sensible, but worth monitoring given the modest cash balance.

On concentration, three customers accounted for roughly 73% of revenue. Not unusual in games distribution, but it’s a dependency investors should track.

Impairments, discontinued ops and portfolio pruning: clearing the decks

Impairment charges totalled $7.2m: $3.9m on software development and $3.3m on purchased IP and brands. The company closed one development studio and impaired Versus Evil brand/IP where carrying values weren’t supported. This is never fun, but it’s healthy if it reallocates resources to winners.

tinyBuild sold Brazilian QA arm Red Cerberus in April 2025 for $1.1m after working capital adjustment, booking a $708k loss on disposal. The unit is treated as discontinued operations, with a $789k loss for the year. There’s a Notice of Claim from the purchaser relating to a municipal tax assessment in Brazil, potential liability $862k; management disputes it and has made no provision.

Intangible assets stood at $35.3m, including $19.6m of projects under development where amortisation hasn’t yet kicked in. That’s pipeline value that should translate to revenue over the next one to two years if launches land well.

Share-based awards and governance notes: incentives aligned, dilution to watch

Post period, the CFO received 6,334,400 stock options (fair value about $0.6m), with 53% vesting immediately and the rest over 18 months. The Board also approved 1,600,000 Restricted Stock Awards for the 12 months to 30 September 2024 and 1,000,000 RSAs for the 12 months to 30 January 2026, subject to vesting conditions. The Employee Benefit Trust held 3,937,587 shares at year-end to satisfy awards. These align incentives, though investors should be mindful of potential dilution over time.

The company has no borrowings, and the CEO remains the ultimate controlling party with 57.9% on a fully diluted basis.

My read: a credible reset with levers for further improvement

Positives:

• Clear return to positive adjusted EBITDA and strong operating cash flow.
• Mix shift to own-IP (86%) and durable catalogue monetisation (88% of gaming revenue).
• Hit titles – The King is Watching and Deadside console – provide commercial proof points.
• Lean cost base and lower amortisation support continued profitability on an adjusted basis.
• Deep pipeline with strong wishlist traction and schedule flexibility.

Watch-outs:

• Still a statutory loss – impairments remain a feature as the portfolio is optimised.
• Year-end cash is modest at $4.6m and expected to dip in spring as investment ramps.
• Highly competitive release slate across the industry and revenue concentration in key platforms.
• Contingent liability of $862k tied to the Red Cerberus disposal (no provision recorded).

What to watch in 2026

• Execution and monetisation of flagship pipeline titles such as Kingmakers, SAND, The Lift and Hello Neighbor 3.
• Trend in cash through spring and summer as development spend steps up.
• Catalogue resilience and whether own-IP remains circa mid-80s percent of gaming revenue.
• Resolution of the Red Cerberus claim and any further portfolio impairments.
• DevGAMM growth and broader events contribution after the $300k capital contributions in early 2026.

Overall, this is a solid turnaround year. If tinyBuild sustains own-IP momentum and keeps costs tight while landing the 2026 slate well, the gap between adjusted profitability and statutory profitability should keep narrowing.