Tiny Ltd (TNYZF) (Q3 2026) Earnings Call Highlights: Record 25% EBITDA Margin, Leverage Cut to ...

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• Adjusted EBITDA margin improved to 25%, the best since Tiny Ltd ( TNYZF ) became public over three years ago.

• Net leverage reduced to 2.3 times, down from 2.8 times in Q2, within the target range of 2-2.5 times.

• Metalab delivered its strongest top-line quarter since 2022, with revenue up 25% sequentially, driven by larger client engagements and better utilization.

• Recurring revenue grew 2% year-over-year to $17.2 million, representing 33% of total revenue, enhancing earnings durability.

• Free cash flow was $8.6 million or $0.29 per share, a significant improvement from $0.02 per share in Q2 2026.

• Acquired Oso Cloud, an enterprise permissioning software business with $5.3 million ARR, expected to increase total ARR from ~$69 million to ~$75 million.

• Letterboxd membership surpassed 33 million, up 42% year-over-year and more than tripled since acquisition in 2023.

• Cash grew to $39.5 million, up $8 million in the quarter, providing financial flexibility for future investments.

Negative Points

• Organic revenue was broadly flat year-over-year, with total revenue down 3% compared to Q3 2025.

• eCommerce and creative platform segments continue to face revenue pressure.

• Free cash flow per share decreased compared to Q3 2025 ($0.47), though prior year included a one-time licensing gain.

• Digital Services revenue on an LTM basis declined to $69.6 million from $80.8 million, partly due to divestitures.

• Metalab's strong performance may not be sustainable as it remains a project-based business with timing variability.

• Cost-cutting benefits are largely realized, with limited additional efficiencies expected, and some businesses still face revenue declines.

• Convertible debenture offer expired with no pending maturities, but the company may need to address debt in the future.

Q & A Highlights

Q: Digital Services was the biggest positive surprise this quarter. What changed operationally at Metalab, how broad-based was the improvement across clients, and how sustainable is that performance going forward? A: CEO Austin Singhera said Metalab had its strongest quarter since 2022, with revenue up 25% sequentially, driven by larger client engagements, better utilization across the board, and the ramp-up of significant new clients. He noted the improvement was broad-based across many larger enterprises rather than concentrated in one client. On sustainability, he cautioned that Metalab remains a project-based business where timing matters, so the strong quarter should not be extrapolated to every quarter, though management is focused on converting enterprise relationships into sustainable work.

Q: The magnitude of the cost-cutting improvements exceeded expectations. How much of that reset is now reflected in the run rate, and are there additional efficiencies to come over the next couple of quarters? A: CEO Austin Singhera said most of the operational work is largely done and reflected in the quarter's results, though the company continues to look at areas within the business. CFO Michael McKenna agreed, adding that the large amount of that work is finished for the year, but the run rate will always reflect a balance between operational efficiencies and a couple of businesses facing revenue pressure. He said management is pleased with the 25% adjusted EBITDA margin, is not suggesting it will hit 25% every quarter, but is working toward that as a benchmark.

Q: On the 10 points of year-over-year EBITDA margin expansion in Software and Apps, is the lion's share driven by the eCommerce cost resets, or is there meaningful Serato operating leverage coming through as well? A: CEO Austin Singhera said it is a combination of both for this specific quarter, reflecting the meaningful changes made within the eCommerce department noted in the previous quarter, as well as Serato's contribution since acquisition. While the company has not specifically disclosed the contribution by each item, he said Tiny is seeing strong operating leverage within Serato and expects that to continue on the revenue base. CFO Michael McKenna added there is excitement around Serato over Q4 with the most recent launch, with more detail to come on the Q4 call.

Q: What drove the quarter's profitability and cash generation, and how did adjusted EBITDA and margin compare with prior periods? A: CFO Michael McKenna said adjusted EBITDA was $13.2 million, up 30% from $10.1 million in Q3 2025 and 24% from $10.6 million in Q2, marking the highest of the previous eight quarters and the best quarter since Tiny became public over three years ago. The margin was 25%, up from 19% a year ago and 21% in Q2, albeit on slightly lower revenue. On an LTM basis, adjusted EBITDA sits at $42.9 million with a 21% margin, compared with $36.5 million and 19% on the same adjusted basis previously. Drivers were Serato's outperformance, digital contract wins, and significant cost reductions through the portfolio.

Q: What is the current state of the balance sheet, leverage, and liquidity? A: CFO Michael McKenna said senior debt outstanding was $103.5 million as of September 30, compared with $98.7 million at December 31, 2025, while convertible debentures were unchanged with a face value of $36.1 million. Cash grew significantly to $39.5 million, up $8 million in the quarter and from $29.3 million at year-end. Net debt to adjusted EBITDA came in at 2.3 times, down from 2.8 times in Q2 and well within the 2 times to 2.5 times target, showing how far the company has come since being above 3 times in 2024. He noted there are no pending maturities, though the convertible debenture offer expired on October 28, and the company could look at calling those bonds again in the future.

Q: How did revenue perform in the quarter and on an LTM basis, and what is the mix shift toward recurring revenue? A: CFO Michael McKenna said third-quarter revenue was $52.3 million, up 1% from Q2 2026, driven largely by Metalab and some growth with Serato, offsetting pressure at eCommerce and Creative Market. Compared with Q3 2025, revenue was down 3% from $54 million, but organic revenue was essentially flat excluding divested businesses. Over the past 12 months, overall revenue grew 4% to $207 million from $199.6 million, with the mix meaningfully shifting toward recurring revenue. Recurring revenue was $17.2 million, or 33% of total revenue, up 2% year-over-year, and on an LTM basis was $70.2 million versus $49.8 million a year earlier, now representing 34% of LTM revenue.

Q: What is the status of the Oso Cloud acquisition and its impact on ARR? A: CEO Austin Singhera said that just after quarter end, Tiny acquired Oso Cloud, an enterprise permissioning software business with $5.3 million of ARR, calling it a great addition to the group at an attractive purchase price. CFO Michael McKenna added that the acquisition will take Tiny's ARR from approximately $69 million to closer to $75 million. He cited the deal as an example of opportunistic repositioning of the portfolio and creating growth, and said the strengthened balance sheet positions the company to again deploy capital should an opportunity arise.

Q: How did free cash flow and free cash flow per share trend in the quarter? A: CFO Michael McKenna said free cash flow for the quarter was $8.6 million, or $0.29 per share, compared with $13.7 million, or $0.47 per share, in Q3 2025, noting that Q3 2025 was heavily impacted by a one-time gain on a licensing revenue agreement. Importantly, the Q3 2026 free cash flow per share of $0.29 is a significant improvement from Q2 2026's $0.02. He reminded that beginning in Q1 2026, Tiny reports free cash flow and free cash flow per share on an attributable basis to give a clearer measure of capital generated by the owned portions of the underlying portfolio.

Q: How did Tiny Fund 1 perform in the quarter, and what were the key portfolio highlights? A: CFO Michael McKenna said the 13 Tiny

For the complete transcript of the earnings call, please refer to the full earnings call transcript .