The market has welcomed (up about 28% at time of writing) today's trading update from Tinybeans.

The main positives being:

• cashflow positive in month of Dec
• Q3 FY23 forecast to be cashflow positive for full quarter
• Monthly active users rebuilt to over 3 million

The cashflow turn around is mainly a cost out story, with revenues still struggling, but is nevertheless welcome news.

After progressing through multiple business models, the company now plans to have a clear differentiation of a free model (supported by advertising) and a paid model (without ads and including exclusive offers).

It has been a fairly significant fall from grace for Tinybeans over the past 18 months but hopefully a cashflow sustainable base can now give them the impetus to grow.

[Previously held. Sold out at about 70 cents so feel lucky. Bought for about $1.30 so don't feel that lucky]

Further to Tinybeans CR straw, the AFR is reporting Bell Potter are acting as lead manager to raise $7.5m, being $6.5m insto and $1.0m SPP. They are priced at 60 cents, which is a 5.5% discount to close price.

I think if Bell Potter can get them away at that price they've done very well given that the SP has been in a ever steepening freefall in recent months. Even if they raise the full amount away I question whether this gives them sufficient runway to get to cashflow positive. Don't forget a chunk of this is effectively shareholders being asked to make good on the recently announced director loans on which they're earning 13% interest. It's a messy picture right now...

Well dip me in honey and throw me to the Bears. Tinybeans has gone into a trading halt pending announcement of a material capital raise. Who would of thunk it? Truly, there have been more warning signs of this than at an OH&S conference.

[Not held anymore]

Apart from the director loan there's something else about the Tinybeans disclosure that gives pause.  They disclosed the cash balance as at 30 Sep AFTER the loan as USD$1.7m, so BEFORE the director loan that equates to about AUD$1.3m.  Cash as at 30 Jun was AUD$2.9m - so their cash burn in one quarter was $1.6m versus $2.4m of total burn in FY21.  That's in a quarter where they had record revenue.  Revenue isn't cash but it's the closest proxy we have.  They'll need a pretty spectacular Q2 if they're aiming to avoid another capital raise, particularly given Q3 is traditionally soft.

Given that, if I wasn't a shareholder I'd probably be thinking 13% interest plus options doesn't really compensate them for the risk...but I am a shareholder so I think it's borderline criminal.

[Held IRL]

***ASX Announcement***

Eddie Geller, CEO said,

"In FY21, we delivered revenue growth of 109% over the pcp, the highest in our history.  Our growth during the year was driven by strength in advertising, up 131% pcp, and e-commerce, up 465% pcp.

We also generated record quarterly revenue in the fourth quarter, with advertising revenue up 82% pcp and substantial growth across all other revenue lines compared to the prior-year-period.

***

I think this is a pleasing result that seems to have surprised the market.  The real positive for me is the Qtr vs pcp comparison as that's an organic growth number, with Red Tricycle acquired early in CY2020.  Of course this doesn't tell us what investment (particularly marketing and sales) was needed to deliver the growth and the next step for me is to understand what their trajectory to being cash flow positive is.  I'd be disappointed is that isn't targeted in the next 12 months.

[Held]