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Why is the Tinybeans (ASX:TNY) share price edging higher today?

Growth of ASX share price represented by tiny beans stalk being helped to grow by elephant spraying water on the plant
Image source: Getty Images

The Tinybeans Group Ltd (ASX: TNY) share price is edging higher today following the company’s release of its Q1 FY21 update. In early morning trade, shares in the tech company reached an intra-day high of $1.35. However, the Tinybeans share price has since retreated to $1.24 at the time of writing, up 0.82%.

What’s moving the Tinybeans share price?

The Tinybeans share price bounced higher this morning after the company reported a robust result backed by an acceleration in user engagement for the period ending 30 September.

Revenue jumped to $2.5 million, a 123% increase on the prior corresponding period, and 6% on the previous quarter. The record result was achieved by Tinybeans’ premium subscription base growing above 21,800 members.

Earnings before interest, tax, depreciation and amortisation (EBITDA) improved, operating at a loss of $331,000. This represented a 50% reduction on the past three months. With high operating margins, the company noted that revenue is closing the gap as the business grows.

Operating cash burn for Q1 FY21 was $815,000, driven by recruitment costs to support new and existing larger advertising partners. Advertising wins included Walmart Inc (NYSE: WMT), Apple Inc (NASDAQ: AAPL), Cooper Companies Inc‘s (NYSE: COO) CooperVision, Spin Master Corp, Aphabet Inc‘s (NASDAQ: GOOGL) Google and Moose Toys.

Tinybeans recorded a cash balance of $4.55 million at the end of the quarter.

What did the CEO say?

Tinybeans CEO, Mr Eddie Geller, commented on the positive result. He said:

I’m pleased to report another quarter of strong growth despite COVID disruptions to our operations and to our brand partners…

Historically, Q1 is seasonally a slower quarter in the U.S. advertising market, however, a 15% revenue growth in USD terms during difficult economic times is very promising…

We have plans to significantly grow this offering as more and more content gets integrated across the app. E-commerce is a complementary addition to the platform and a total addressable market in the baby/kids category in the U.S. of over 1 trillion dollars.

FY21 priorities

Tinybeans said it continues to perform well with the COVID-19 backdrop and is focused on executing its growth strategies.

New partnership agreements are being worked on and are expected to be released to the market in due course.

The company is anticipating exponential user growth to begin in FY22, with revenues from its consumer segment to eclipse adverting by FY23. This is due to its ever-growing sales team pushing subscription and e-commerce products and services.

About the Tinybeans share price

The Tinybeans share price has been an impressive performer since the beginning of August, reflecting a gain of more than 50% for shareholders. On today’s price, the company has a market capitalisation of just under $58 million.

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Returns as of 6th October 2020

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Apple. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Tinybeans Group Ltd. The Motley Fool Australia has recommended Alphabet (A shares), Apple, and Tinybeans Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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