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TINYBEANS GROUP LTD (TNY) - Building a Safe Digital Haven for Family Memories

• Andrew Musgrave

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Privacy concerns have never been more pressing for parents sharing family photos online. Enter Tinybeans, the trusted platform helping millions of families safely capture life's precious moments without the risks associated with mainstream social media.

In this revealing conversation with Managing Director and CEO Zsofi Paterson, we explore the remarkable journey of this Australian-founded, ASX-listed company that's now making major waves in the US market. With one million monthly active users and 50,000 paid subscribers, Tinybeans has successfully navigated the challenging path from startup to sustainable business.

The discussion dives into Tinybeans' recent financial milestone—achieving positive operating cashflow for the first time—through a strategic reset of their operating model. Paterson shares candidly about reducing their team by 70% while improving performance and strengthening subscription retention rates. This rare glimpse into the company's internal transformation reveals valuable lessons for businesses balancing growth with capital efficiency.

We explore innovative product developments like gift cards and upcoming physical photo products that aim to increase customer lifetime value. Patterson also unpacks their marketing strategy, including strategic partnerships with BabyList in the US and Bounty Bags in Australia that place Tinybeans directly in front of new parents at the perfect moment. The conversation concludes with a look toward FY25 priorities: accelerating paid subscriber growth, better monetizing their substantial free user base, and carefully managing the path to profitability.

Whether you're a parent concerned about online privacy, an investor interested in subscription business models, or an entrepreneur navigating the balance between growth and sustainability, this episode offers valuable insights into building a purpose-driven tech company in today's challenging market. Subscribe to ASX Briefs for more conversations with the leaders shaping Australia's business landscape.

Andrew Musgrave Host

Welcome to ASX Briefs, where we dive into the stories behind the tickers shaping Australia's markets. And today we're thrilled to be joined by Zsofi Paterson, the Managing Director and CEO of Tinybeans Group Limited, a trusted, privacy-first platform used by millions of parents to safely share and store family memories. Zsofi, thanks for joining me today and welcome to the ASX Briefs podcast. 

Zsofi Paterson Guest

Thanks for having me. 

Andrew Musgrave Host

Now, just to kick things off. For investors that may be unfamiliar with Tinybeans, can you start by just giving a brief overview of the company? 

Zsofi Paterson Guest

Sure, we are a private platform built for families to safely save and share their family moments via our photo sharing applications, website and email as well. Been around since about since 2012. Founded in Australia. Listed in 2017. We have about a million kind of monthly active users that are utilizing our applications and our technology. About 50,000 of those are paid subscribers. We are biggest in the US, so we have about 75% of our audience and our subscriber base in the US, and second biggest market is our home market of Australia. 

We are typically I mean, we're a consumer subscription revenue business at our core, so now over 50% of our revenue is annual recurring revenue from subscription payments. But then we also have revenue lines from brand partnerships, some e-com and also some affiliate revenue, and we're typically catering to, like very, very new families, so people that are about to have a baby or very recently had a baby, and they come across us because they're looking for a way to, you know, stay really connected and engaged with their family over those kind of early months and early years and want a way to safely kind of capture, save and share memories and share with like a really intimate group of people. So also, very relevant in today's age where there is a lot of concern around kind of deep fakes and AI and the risks of sharing you know your kids' content on social media. 

Andrew Musgrave Host

Okay, and let's just touch on the financials. So, the company has delivered positive operating cashflow for the first time in recent history. So, what were the key levers behind this milestone and how does it validate your go forward strategy? 

Zsofi Paterson Guest

Yeah, so we had a really good Q3 and we just released that in those results in April and it's really reflective of the hard work that we've done over the course of FY25, where we've refined our strategy and accordingly, really fine-tuned our operating model and reset our cost base. 

So, a key part of this was thinking really carefully about the team we needed and how best to access the talent we needed, and we've reshaped our team to be a much like to be a lean, high-performing, globally remote team, supplemented by subject matter experts on a fractional basis, and so far this model is working really well. So, I think we did. You know, if I look at the percentages, I think we've kind of reduced our full-time employee base by about 70% and you know we're seeing lots of kind of improvements from doing that. On a revenue side, we also had the strongest ever kind of retention of our subscription across our paid subscriber base, which delivered really strong recurring subscription revenue which translated straight to cash in that last quarter as well.

Andrew Musgrave Host

Okay, and Q3 also saw a 91% year-on-year reduction in net cash burn. So how confident are you in maintaining this level of capital efficiency while continuing to invest in growth? 

Zsofi Paterson Guest

So, look, there is some seasonality with our business and Q3 is typically our strongest cash quarter due to a large volume of our annual paid subscribers renewing their plans in Q2. And plus, historically, it's the biggest quarter for brand partnership revenue as well, because it's the kind of Christmas quarter which is big in the US in particular. So, while we may not see this level of cash performance ongoing, we're really confident that our cash burn will be significantly down PCP and we have really, you know, level, set it to a rate that is much more sustainable, you know. But the challenge is real, and I think we'll touch on it a bit in a minute. But you know, finding the right balance between cash preservation and investing for growth is something that we, you know, continue to tackle, like many businesses. But, yeah, over the last kind of six to 12 months, we have been very, very focused on that cash, on that cash burn number. 

Andrew Musgrave Host

Okay, and then just touching on some of the products, so you've got Tinybeans gift cards are an innovative way to engage both gift givers and new parents. So, what early insights have you seen from the rollout and how might it evolve, especially in B2B and employee benefit channels? 

Zsofi Paterson Guest

Yeah, so we launched Tinybeans gift cards late last year as we had a lot of feedback over many, many years a lot of it predating me that Tiny Beans subscribers who use and love our product and use it for years and years with their family and tell their friends and family around it all about it they actually wanted to be able to give the Tiny Beans gift subscription to new or expecting mothers in their circle. 

So, you know we worked on that last year. We launched it and we had a really nice little kind of moment in around the launch and we had some really nice sales over the kind of holiday period as well, um, with people adding it to their kind of Christmas and holiday gift giving baskets, which is kind of interesting because babies are born 365 days a year, but it was something that we saw um create like a nice giftable moment and one of the reasons why we were also interested in launching that, as you mentioned, is that we've used that kind of gifted product as a way to develop our distribution channels and whether that be on large employment perks platforms in the US or Australia or via major brand partnerships, and that's an area that we're continuing to kind of build out as we go. So yeah, I mean hot tip for anyone with a baby on the way or with friends and family. It's a great, great gift and you can buy them at tinybeans.com. 

Andrew Musgrave Host

Okay, and you've mentioned plans to expand the physical photo product range, so can you give us a glimpse into how this fits within the broader monetization strategy? 

Zsofi Paterson Guest

Yeah. 

So look, our thesis here is that anyone that is going to the effort of kind of curating a beautiful kind of digital journal or of their family's kind of moments and their babies or young children's moments, are probably quite interested in also having a physical keepsake for themselves or, again, for grandparents, aunties, uncles or for the little ones actually. 

So, this is something that we've validated this with a lot of customer research. We've also looked at market data and looked at, you know, the kind of physical product category and the growth that's expected over the next couple of years. So, we see this as a really nice way to grow our customer lifetime value and our average revenue per user, which are already, you know, really strong. We see this as a, you know, ways to really expand and accelerate the revenue in that perspective as well. So, yeah, more to come on that and we, you know, later this year you will see an expansion in the range. At the moment we just offer photo books, which are a lovely product, but we think there's a lot more that we can do there to best cater to our families. 

Andrew Musgrave Host

Okay, and you touched on the strong new subscriber growth. So, what channels or tactics are proving the most effective in driving acquisition right now? 

Zsofi Paterson Guest

Yeah. So, look, we've spent a lot of work and time over the last six months really developing and testing out our marketing mix and trying to work out how we think about top of funnel, mid funnel and bottom funnel. We had a really nice December as well, testing some new initiatives which I can talk about. So, we've already spoken about gift cards, which sold nicely over the holidays. We also looked for opportunities within our free user base to drive conversion to paid subscription plans and we utilize like a lot of really smart lifecycle marketing efforts to drive that and diving deep into kind of patterns of usage and putting the right offers in front of the right people at the right time and we saw, you know, really nice conversion there. We've also been doing a little bit more across our paid media channels and seeing some good cost-effective opportunities within Google in particular, while doing a little bit of brand work across meta to drive top of funnel as well. 

Andrew Musgrave Host

Okay, and the inclusion in Babylists, “Hello Baby” box in the US and Bounty Bags in Australia are exciting. So how do these touch points tie into your vision for brand reach and subscriber growth in 2025? 

Zsofi Paterson Guest

Yeah, so both of these offered a really. So, you know, Babylist in the US for people listening is a big registry site and in the US, most people that are expecting babies go and register the kind of gifts that they want from their families and friends, and BabyList is one of the big businesses that does that, outside of Amazon and Walmart and Target and we've had a nice long-term partnership with them that kicked off last year and this year it's turned into being able to offer Tinybeans, a trial of Tinybeans to every person, every family that's expecting, and receive straight to their door a gift box, and there's about 300 000 of those going out over the course of 2025. 

And similarly, Bounty Bags is an initiative in Australia where you know, you go into a, you have a baby, and you're given a hospital bag that has a range of kind of like samples and products to try, and we're also, you know, exploring that or utilizing that as one of our distribution channels and these are really interesting to us because they allow us to reach, you know, our prime target subscriber right at the stage that we need to get them in a really cost-effective manner. So, you know, we're a couple of months into that and we're seeing some nice kind of traction there. We're seeing people give it a go and we're seeing really nice engagement with the product and now, hopefully, we're waiting to see and doing everything we can to try and encourage those people to convert to ongoing paid subscribers as well. 

Andrew Musgrave Host

Okay, now, just to wrap things up, what are some of the key milestone’s investors can look out for as you progress through the rest of FY25? 

Zsofi Paterson Guest

Yeah, so pay subscriber growth for us remains a really key priority and now that we kind of have level set our business, manage the cost base, kind of have our marketing mix and marketing strategies and tooling set up, we're in a better place to be able to go for that. 

At the same time, monetization is really, really important for us and the kind of a couple of the key things we're working on this year are very much focused on better monetizing our free user base and all the people that sit in the Tinybeans world, of which there are many, many, many. So I think you know, things you can look at is, as we've talked about, the expansion of the physical product range which is happening later this year, and between now and then there's going to be some interesting kind of things we're doing from a subscription tiering point of view as well to make sure that Tinybeans kind of caters to families at different stages of their journeys in, you know, having and bringing up children as well. And, as we also touched on, finding, and, you know, making sure we're navigating that balance between going for growth, and being able to invest in kind of the product development and innovation that we think will drive that, whilst also managing our cash burn, is something as well we're going to going to be paying careful attention to, but yeah, they're the kind of key things that we will, you know, investors should look out for. 

But it's a really exciting time. I think it's been a, you know, a really good year and we've made a lot of change. We've made a lot of kind of, we've done a lot of hard and heavy work, and it's time where we can kind of be a little bit more creative and flexible in our approach and hopefully, at the end of the day, deliver a path to profitability.

Andrew Musgrave Host

All right, Zsofi. Well, it's been great to chat today, so thanks for your time and we look forward to further updates in the upcoming months from Tinybeans. 

Zsofi Paterson Guest

Thank you, I appreciate the opportunity. 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.