Motorsport Games Q1 2025 Earnings Report

Motorsport Games EPS Results

• Actual EPS: $0.33
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Motorsport Games Revenue Results

• Actual Revenue: $1.76 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Motorsport Games Announcement Details

• Quarter: Q1 2025
• Date: 5/9/2025
• Time: After Market Closes
• Conference Call Date: Friday, May 9, 2025
• Conference Call Time: 5:00PM ET

Motorsport Games (NASDAQ:MSGM), Inc. is a publicly traded developer and publisher of interactive motorsport entertainment, headquartered in Miami, Florida. The company specializes in creating officially licensed racing simulation titles and managing associated esports competitions. By focusing exclusively on the motorsport genre, Motorsport Games aims to deliver authentic digital experiences that mirror the rules, tracks and vehicles of real-world racing series.

The company’s core activities include the development of video games under licenses from major sanctioning bodies such as NASCAR, the Fédération Internationale de l’Automobile (FIA) and International Motor Sports Association (IMSA). Notable releases include the NASCAR Heat and FIA Certified to Win series, GRID Legends and F1 Manager 2022. In addition to traditional console and PC titles, Motorsport Games operates competitive esports leagues—bringing professional drivers, teams and fans together through virtual racing events and online tournaments.

Since its founding in 2018, Motorsport Games has pursued strategic acquisitions to bolster its technical capabilities and licensing portfolio. In 2021 the company added Studio 397—developer of the rFactor 2 simulation platform—and 704Games, the team behind the NASCAR Heat franchise. These moves expanded Motorsport Games’ global reach across North America, Europe and Asia, positioning the company to serve publishers, racing series and automotive partners with turnkey digital and esports solutions.

Motorsport Games Q1 2025 Earnings Call Transcript

Key Takeaways

• $2.5 million investment led by VR headset maker Pimax announced on April 15, which drove shares over 2.5× higher than prior levels.
• Net income improved to $1.0 million in Q1 2025 from a $1.7 million loss a year earlier, and adjusted EBITDA rose to $0.6 million versus a $1.0 million loss.
• Le Mans Ultimate revenues increased by $0.4 million year-over-year in Q1 despite the prior year being its release quarter.
• Total Q1 2025 revenues fell 41.9% to $1.8 million, primarily due to a $1.5 million drop from the sale of the NASCAR license and reduced back catalog sales.
• Cash and equivalents rose to $3.1 million by April 30 after private placement proceeds, but management expects net cash outflows ahead and is exploring further funding or asset-sale options.

Presentation

[Operator]

Thank you for standing by, and welcome to Motorsport Games Incorporated First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. As a reminder, today's conference is being recorded. I would like to turn the conference over to Ben Rossiter Turner from Motorsport Games. Please go ahead.

[Ben Rossiter-Turner, VP of Competition at Motorsport Games]

Thank you, and welcome to Motorsport Games First Quarter twenty twenty five Earnings Conference Call and Webcast. On today's call is Motorsport Games' Chief Executive Officer, Stephen Hood and Chief Financial Officer, Stanley Beckley. By now, everyone should have access to the company's first quarter twenty twenty five earnings press release filed today after market close. This is available on the Investor Relations section of Motorsport Games' website at www.motorsportgames.com. During the course of this call, management may make forward looking statements within the meaning of U.

[Ben Rossiter-Turner, VP of Competition at Motorsport Games]

S. Federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements. Except as required by law, the company undertakes no obligation to update any forward looking statement made on this call or to update or alter its forward looking statements whether as a result of new information, future events or otherwise. Please refer to today's press release and company's filings with the SEC, including its most recent quarterly report on Form 10 Q for the quarter ended 03/31/2025, for a detailed discussion of certain risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.

[Ben Rossiter-Turner, VP of Competition at Motorsport Games]

In today's conference call, we will refer to certain non GAAP financial measures such as adjusted EBITDA as we discuss the first quarter twenty twenty five financial results. You will find a reconciliation of these non GAAP measures to their most directly comparable GAAP measures as well as other related disclosures in the press release issued earlier today, which is also available on the Investor Relations section of Multiple Games' website at www.multiplegames.com. And now, I'd like to turn over the call to Stephen Hood, Chief Executive Officer of Municipal Games. Stephen?

[Stephen Hood, CEO & President at Motorsport Games]

Thank you everyone for joining this conference call today. I'm pleased to address you today with our company's outlook in a much improved state. I have previously mentioned that the company was not short of suitors following the public sharing of the message we were considering strategic alternatives. This along with the hard work undertaken by management to reduce costs and liabilities cleaned with the positive progress in sales and player numbers for our early access game Le Mans Ultimate, meant that the company became a realistic and enticing proposition for investment. As a result of this, we recently announced on April 15 a $2,500,000 investment into our resurgent business led by virtual reality headset manufacturers Pimax.

[Stephen Hood, CEO & President at Motorsport Games]

This investment coupled with the expectation of continued sales performance of our titles has given our business significant additional breathing room as we further develop our products and continue to assess and act upon the future potential of our company. Thus far, it also appears to have helped increase confidence in the business on the market with shares trading more than 2.5 times higher than the period prior to the announcement of the investment. Net revenues from our Le Mans Ultimate racing title were 400,000.0 higher in q one twenty twenty five versus the same prior year period despite q one twenty twenty four being the release quarter for the game, which is a positively surprising result. Although total revenues for q one twenty twenty five were lower than the same period in the prior year, primarily due to the reduction in the back catalog of games we have available following the sale of the NASCAR license. It is pleasing to be growing new revenue growth through the Le Mans franchise, but also through our race control subscription platform.

[Stephen Hood, CEO & President at Motorsport Games]

Race control was and is a major component of our mission to build owned infrastructure around our gaming titles so that we can elevate the customer experience. Our cash flow from operations has also improved as evidenced by the average positive cash flow from our operations of approximately 100,000.0 per month generated by the company during the three months ended 03/31/2025. Future updates for the Le Mans Ultimate game are planned for release soon. On tenth June, we will be bringing teams and driver swap functionality, allowing players to share a car in a live environment. This is a technical challenge, but one we are excited to approach, particularly as it ties into our race control matchmaking and service platform, allowing us to take on these challenges with more confidence and ownership than our competitors.

[Stephen Hood, CEO & President at Motorsport Games]

Additionally, we'll be adding the final pack of the 2024 season pass, which has been a great revenue driver for this title. Following this, we have an exciting road map designed in collaboration with our partners at Automobile Clubs de Loueste, the ACO, the organizer of the twenty four hours of Le Mans endurance race, planned to be announced after our June release, which we confidently believe will excite the game's fan base. The business continues to assess new ways of expanding the Le Mans ultimate audience. It can be expected that the game will be moving from its early access phase into a version one point zero or full release this year with more details coming soon. This would be an important milestone and would unlock new sales and marketing tactics that we can employ.

[Stephen Hood, CEO & President at Motorsport Games]

Additionally, we have made comments that we are exploring console opportunities by bringing LeMond Ultimate to PlayStation and Xbox gaming consoles. As we approach version one point zero, the ability to scope this work more accurately becomes possible. This work continues at pace with discussions underway with multiple potential publishing collaborators, and we hope to have something to announce soon. Development and publishing video games is not our only source of income. Although in recent years, our esports event output has fallen whilst we concentrated on developing the Le Mans ultimate title, we still intend to revisit the award winning twenty four hours of Le Mans virtual, which historically brought great attention to our games alongside sponsorship revenue.

[Stephen Hood, CEO & President at Motorsport Games]

Our relationship with Kindred Concepts, also known as f one arcade, is also still live. We license our software to their venues with the fees growing alongside their expansion. There is additional potential for development work to enhance their in venue experiences as well. As the business reviews its progress, we believe we are now ready for the next stage of growth. We believe the racing game market is underserved in terms of quality and choice, and now as the successful developers behind one of the defining PC racing simulators in Le Mans Ultimate, we are exploring new opportunities to expand our portfolio to diversify and generate new revenue streams, which have the potential to excite motorsport and sim racing fans.

[Stephen Hood, CEO & President at Motorsport Games]

Now I would like to invite Stanley Beckley, our chief financial officer, to talk about the financial results for the first quarter of twenty twenty five.

[Stanley Beckley, Chief Financial Officer at Motorsport Games]

Thanks, Steven, and good evening, everyone. As with previous earnings calls, I wouldn't be offering any forward looking guidance today. Instead, I will focus on providing an update on our financial results and highlights from the first quarter of twenty twenty five. Revenues for the quarter were $1,800,000 down by $1,300,000 or 41.9% when compared to the same period in the prior year. The decrease in revenues was primarily due to a $1,500,000 decrease in NASCAR related revenues in 2025.

[Stanley Beckley, Chief Financial Officer at Motorsport Games]

A gaming title we are no longer authorized to sell starting in 2025. A 200,000.0 decrease in our factor two title, offset by $400,000 increase in 2025 from sales of LeMonde Ultimate compared to 2024. Net income for the quarter was 1,000,000 compared to a net loss of 1,700,000.0 for the same period in the prior year, an improvement of 2,700,000.0. The increase in net income is driven by an increase in other operating income of $500,000 which represents the amount to be reimbursed to the company for legal fees pursuant to the Innovate settlement agreement entered on 03/27/2025. A $1,700,000 reduction in total operating expenses, primarily related to headcount reductions in Q4 twenty twenty four and a $200,000 gain from the settlement agreement entered into with Luminess on 02/20/2025.

[Stanley Beckley, Chief Financial Officer at Motorsport Games]

Net income attributable to Class A common stock was 0.33 per share for the first quarter of twenty twenty five compared to a net loss of 0.61 for the same period in the prior year. We are reporting adjusted EBITDA of 600,000.0 for the first quarter of twenty twenty five compared to an adjusted EBITDA loss of 1,000,000 for the same period in the prior year. The improvement in adjusted EBITDA of $1,600,000 was primarily due to the same factors driving the previously discussed change in net income for the first quarter of twenty twenty five when compared to the same period in the prior year, as well as a decrease in stock based compensation compared to the prior year period. As we list the liquidity, this continues to be a key area of focus for the company. As of 03/31/2025, we had cash and cash equivalents of 1,100,000.0, which increased to 3,100,000.0 at 04/30/2025, after taking into account the proceeds from the private placement.

[Stanley Beckley, Chief Financial Officer at Motorsport Games]

The increase in cash and cash equivalents was primarily due to 2,350,000.00 in net proceeds from a private placement of our class a common stock and issuance of a prefunded warrant, which closed on 04/11/2025. During the three months ended 03/31/2025, the company generated an average positive cash from operations approximately 100,000.0 per month. And while it has taken and continues to take measures to reduce its costs, the company expects to have a net cash outflow from operations for the foreseeable future as it continues to develop its product portfolio and invest in developing new video game titles. In order to address this liquidity shortfall, we continue to explore several options including, but not limited to, additional funding in the form of potential equity and debt financing arrangements or similar transactions, strategic alternatives for our business, including but not limited to the sale or licensing of our assets in addition to past sales of a NASCAR license and traction, and for the cost reduction and restructuring initiatives. Thank you all for your time.

[Stanley Beckley, Chief Financial Officer at Motorsport Games]

And now I will turn the call back to Steven for closing remarks.

[Stephen Hood, CEO & President at Motorsport Games]

Thank you again for everyone joining this call today. We are incredibly pleased to have hit this major milestone in receiving our latest investment and remain confident that with our expertise and experiences, there will be opportunities to grow this business in the coming years, and we are on the right path to success. I'll now pass it back to the operator.

[Operator]

Thank you. And this concludes today's program. We thank you for your participation. You may disconnect at any time.

Participants

Executives

• Ben Rossiter-Turner, VP of Competition
• Stephen Hood, CEO & President
• Stanley Beckley, Chief Financial Officer