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Introduction & Market Context
Tiny Ltd (TSXV:TINY) presented its Q1 2025 financial results on May 15, 2025, highlighting significant EBITDA growth and the strategic acquisition of Serato, a global DJ software leader. The company’s shares have shown recent signs of recovery, gaining 2.27% to close at $0.90, despite facing headwinds over the past year with an 18.5% decline according to available market data.
The quarter was marked by improved profitability metrics and strategic initiatives aimed at increasing recurring revenue streams, even as total revenue remained relatively flat year-over-year when including the impact of recent divestitures.
Quarterly Performance Highlights
Tiny Ltd reported adjusted EBITDA of $9.7 million for Q1 2025, representing a substantial 41% increase compared to the $6.9 million reported in Q1 2024. The adjusted EBITDA margin expanded significantly from 14% to 20% year-over-year, demonstrating the company’s focus on operational efficiency and profitability.
As shown in the following financial highlights slide:
Free cash flow generation was another bright spot, reaching $3.0 million in Q1 2025, a remarkable 168% improvement compared to the same period last year. The company’s adjusted free cash flow post debt servicing increased to $1.9 million from $1.1 million in Q1 2024, reflecting stronger operational performance and lower non-recurring expenses.
Total (EPA:TTEF) revenue for the quarter was $48.1 million, slightly down from $48.9 million in Q1 2024. However, when excluding revenue from Q4 divestitures, the company achieved 6% year-over-year growth. The Digital Services segment showed positive momentum, growing to $21.5 million from $20.9 million in the prior year.
Serato Acquisition and Strategic Initiatives
The most significant strategic development in Q1 2025 was the announcement of Tiny’s acquisition of Serato, a global DJ software leader with a 25-year history and strong market position. The acquisition, which closed on May 12, 2025, is expected to substantially enhance Tiny’s recurring revenue profile and overall profitability.
The presentation highlighted the strategic rationale and expected benefits of the Serato acquisition:
According to the company, the Serato acquisition will increase Tiny’s recurring revenue by 68%, total revenue by 24%, and adjusted EBITDA by 45%. Serato brings approximately US$31 million in run-rate revenue with an impressive adjusted EBITDA margin of around 35%. Importantly, about 62% of Serato’s revenue is recurring, which aligns with Tiny’s strategic focus on building predictable revenue streams.
The company also reported progress on integrating previously acquired businesses, combining Stamped, Repeat, and KnoCommerce under unified leadership to create synergies across reviews, loyalty, and customer insights functions. Additionally, Dribbble launched new Projects & Services offerings to generate transaction revenue for designers and clients.
Financial Analysis and Debt Management
Tiny’s recurring revenue reached $9.8 million in Q1 2025, representing 20% of total revenue and a 6% increase from Q1 2024. This growth in recurring revenue, even before the impact of the Serato acquisition, demonstrates the company’s progress in building more stable and predictable revenue streams.
The company has also made progress in reducing its debt burden. As of March 31, 2025, gross debt stood at $113.3 million, down from $116.9 million at the end of 2024. Net debt decreased to $93.0 million from $94.1 million over the same period. More importantly, the net debt to adjusted EBITDA ratio improved to 2.7x from 3.0x in Q4 2024, indicating stronger debt servicing capacity.
The following slide illustrates the company’s improving debt metrics:
Tiny Fund I, the company’s investment arm, generated revenue of $17.0 million in Q1 2025, a 13% increase from $15.1 million in Q1 2024. Distributions from the fund to Tiny were approximately $1.0 million, slightly down from $1.0 million in the prior year period.
Forward-Looking Statements
Tiny Ltd outlined its roadmap for continued EBITDA growth, focusing on three key pillars: organic growth and cost rationalization, Tiny Fund I distributions, and strategic acquisitions.
The company’s growth strategy is illustrated in the following slide:
With the Serato acquisition now completed, management expects to see immediate benefits to recurring revenue and adjusted EBITDA starting in Q2 2025. The company continues to target a net debt to adjusted EBITDA ratio of 2.5x or lower, which would provide additional financial flexibility for future growth initiatives.
The integration of business units and launch of new service offerings are expected to drive organic growth, while the company remains open to evaluating further acquisition opportunities that align with its strategic focus on recurring revenue and profitability.
While Tiny faces challenges from broader e-commerce market softness and potential integration risks with new acquisitions, the Q1 2025 results demonstrate that the company’s strategy of focusing on profitability, recurring revenue growth, and strategic acquisitions is yielding positive results in the current market environment.
Full presentation:
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