Why the Tinybeans (ASX:TNY) share price has surged 20% higher today

The Tinybeans (ASX: TNY) share price is up 20% after the company posted record results in its first quarterly update for the calendar year.

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The Tinybeans Group Ltd (ASX: TNY) share price has taken off this morning after the company announced its quarterly update. Shares in the communication platform are currently trading 20.74% higher, at a price of $1.63.

Why is the Tinybeans share price soaring

In today’s release, Tinybeans announced strong revenue growth and earnings before interest, tax, depreciation and amortisation (EBITDA). In addition, the technology platform that connects parents with loved ones, noted it was operating cash flow positive for the first time in its history.

Revenue for the second quarter reached a record high of $3.13 million, an increase of 157% on the same period last year. Driving the growth was advertising revenue, which rose 223% on last quarter. Moreover, the company noted that all revenue lines exceeded expectations, with the quarter delivering records across advertising, subscription, e-commerce and printing.

However, the company did emphasise that it does not expect advertising revenue to remain at this level moving into the third quarter. This is as a result of annual budgets being reset in the new year.

EBITDA came in at -$124,000, which was a 63% increase on Q1. This number turns positive ($809,000) when the company’s growth investments are excluded.

Nonetheless, it was the company’s free cash flow metric that stole the show. For the first time since the business started operations in 2012, Tinybeans reported positive free cash flow. Net operating cash flow was $96,000 for the quarter, compared to the $675,000 outflow the quarter prior.

Management comments

Tinybeans CEO Eddie Geller welcomed the results, saying:

I’m thrilled to report a record quarter of strong growth. This is despite COVID-19 disruptions to our operations and to our brand partners. The first half of our financial year has delivered outstanding results across all aspects of the company.

User engagement grew hitting 4.8 million monthly active users, growth of 21% on the last quarter, whilst revenue hit an all-time high of $3.1 million, delivering further growth of 25% compared to the previous quarter.

Today’s jump in the Tinybeans share price delivers the company a market capitalisation of $75.2 million.

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Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Tinybeans Group Ltd. The Motley Fool Australia has recommended Tinybeans Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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