Game maker Tinybuild's shares tumble as it warns it could run out of cash by end of January

The business was once valued at £600 million
Alex Nichiporchik
CEO and founder Alex Nichiporchik will underwrite, subject to shareholder approval, a future equity fundraise of up to $10 million
Marloes Chater Photography

Video game maker Tinybuild, once valued at £600 million, says it needs to find new cash by the end of January to stay alive, after being hit by the combination of weak sales and two legal settlements.

Tinybuild had already warned on sales earlier in the year but said that the market has deteriorated further in October, and some major contracts now may not be signed. Sales are now expected to fall between $40 million and $50 million.

At the same time, the business agreed two legal settlements that have hit its balance sheet. These concern payments related to the acquisition of game publisher Versus Evil in 2021, and are for a combined $3.5 million.

Tinybuild singled out Versus Evil's games as a particular underperformer in its recent trading performance.

The business now has only $5.7 million in cash, and expects to have an amount “in the low single digit millions” when the year ends.

“The outlook for FY24 remains cautious,” Tinybuild said. “The Company expects continued pressure on discounting in a crowded market for new releases. The planned launch of certain promising games in 2024 gives reason for optimism and this coupled with a leaner cost base could translate into strong operating leverage in the event of a recovery in video games sales.”

If no new contracts are signed and new funding isn’t secured, Tinybuild says it will run out of money by the end of January. CEO and founder Alex Nichiporchik will underwrite, subject to shareholder approval, a future equity fundraise of up to $10 million. Shareholders will be able to participate under the same terms.

Tinybuild shares plummeted by another 34.7% this morning to 4p, valuing the firm at a little over $8 million. They are down more than 98% since the firm first floated in 2021.

Alex Nichiporchik said: "2023 has been an incredibly challenging year. The whole team at tinyBuild worked tirelessly to release our best products, despite the impact of the war in Ukraine that deeply affected most of us. 

“We couldn't overcome weak demand for video games and the sudden reversal of market dynamics that had favoured us over the previous years. We innovated in marketing, refocused our catalogue, and adjusted the cost base as quickly as possible, and, despite these actions, it wasn't enough in such a rapidly evolving market.

“It's physically painful to part ways with colleagues after all the good work they put into the company. The only reason to justify this decision is that the company has entered a pivotal stage and I am committed to do everything I can to ensure we get through this tough period. We owe it to all our stakeholders now to bounce back and deliver on what tinyBuild can achieve.”

It’s the third London-listed independent game studio to see share collapse in a little over a week. In late November, shares in Team17 - the firm behind 1990s classic Worms - plunged by more than 40% after a profit warning. Last week, shares in Cambridge-based game maker Frontier Developments tumbled as it revealed another new game flopped.

Tinybuild was founded in 2011, starting with the flash game No Time To Explain. Other Tinybuild games include Hello Neighbor and Not for Broadcast.