Motorsport Games Q1 2026 Earnings Call Transcript

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Provided by Quartr
May 13, 2026

Key Takeaways

  • Positive Sentiment: Revenue jumped 129% year over year to $4.0 million, driven mainly by stronger sales of Le Mans Ultimate and higher RaceControl subscription revenue. Management also said the company generated positive operating income and improved adjusted EBITDA.
  • Positive Sentiment: Le Mans Ultimate continues to gain traction, with a new all-time Steam peak of more than 8,800 concurrent players after version 1.3 launched. The company emphasized that average concurrent users are also rising sharply, suggesting players are sticking with the game.
  • Positive Sentiment: RaceControl is becoming a meaningful recurring revenue stream, with monthly recurring revenue now above $0.2 million and Q1 subscription revenue of $0.8 million, or 19% of total company revenue. Management described it as a high-margin platform business with room for further expansion.
  • Neutral Sentiment: The company completed a major corporate restructuring, including repurchasing 904,395 Class A shares from Driven Lifestyle Group and retiring all Class B super-voting shares. Shareholders also approved an expansion of the employee equity plan, and management said these moves improve governance and flexibility.
  • Neutral Sentiment: Motorsport Games said development of Le Mans Ultimate for PlayStation and Xbox is progressing, but exact timing is still uncertain and more details are expected in 2027. The company is also preparing a new long-term project that will build on its existing simulation technology, live-service platform, and community.
AI Generated. May Contain Errors.
Earnings Conference Call
Motorsport Games Q1 2026
00:00 / 00:00

Transcript Sections

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Operator

Thank you for standing by, and welcome to Motorsport Games Inc.'s Q1 2026 Earnings Call. 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
Ben Rossiter-Turner
VP of Studios at Motorsport Games

Thank you, and welcome to Motorsport Games' Q1 2026 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 Q1 2026 earnings press release filed today after markets closed. 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.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.

Ben Rossiter-Turner
Ben Rossiter-Turner
VP of Studios at Motorsport Games

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 the company's filings with the SEC, including its most recent quarterly report on Form 10-Q for the quarter ended March 31, 2026, for a detailed discussion on 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
Ben Rossiter-Turner
VP of Studios 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 Q1 2026 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 Motorsport Games' website at www.motorsportgames.com. Now I'd like to turn over the call to Stephen Hood, Chief Executive Officer of Motorsport Games. Stephen?

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Thank you, Ben. Good afternoon, everyone, and thank you for joining the Motorsport Games Q1 2026 earnings call. We have started 2026 from a position of real financial strength. Revenues of $4 million in Q1 have more than doubled year on year. We have once again generated positive operating income, posted significantly improved adjusted EBITDA, and continue to grow our cash position from operations. The ongoing delivery of Le Mans Ultimate content or downloadable content or DLC, plus the ever-improving monetization of RaceControl are key to those revenues.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

The financial independence we have now built, driven principally by the consistent commercial success of our primary gaming title, Le Mans Ultimate, and the recurring revenue we are generating through RaceControl, is what has given us the ability to act decisively in the early weeks of this quarter, both for the benefit of all our shareholders and to set the company up for its next stage of growth. I will come back to that shortly. On Le Mans Ultimate, player engagement continues to accelerate. On March 31st, we once again recorded a new all-time player peak, more than 8,800 concurrent players in Steam. This new peak was determined around the release of version 1.3, introducing Circuit de Barcelona-Catalunya, the Duqueine LMP3 race car, and Logitech TRUEFORCE support. This growth in player numbers is not a one-off.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

We have consistently reported player growth since launch. In the Q1 of 2025, we had a peak of 4,000 players and an average of just over 1,300. Peak concurrent players grew 118% year over year. However, the metric we track most closely is average concurrent users because it strips out the spikes from content releases and shows whether people are actually sticking around. That number grew 169%. The floor is rising, not just the ceiling. Looking ahead to the Q2, we have an update planned for release in June to coincide with the real world 24 Hours of Le Mans, the highlight of the World Endurance Championship upon which our game is based.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

The persistent cadence of meaningful improvements that has defined our work over the past two years continues and continues to be funded by the company's own operating performance. I want to take a moment to speak about RaceControl specifically because it deserves to be understood, not just as a feature supporting Le Mans Ultimate, but as a standalone platform business in its own right. RaceControl is our proprietary matchmaking, competition, and live service platform. It is the infrastructure layer that powers organized racing for our community and increasingly for those partners who want to reach that community. Monthly recurring revenues have exceeded $0.2 million, and the first three months of 2026 have been among the strongest periods of growth we have seen since launch.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

What excites us the most is not where RaceControl is today, it is how quickly it can add meaningfully to our growth profile as we continue to layer in features and functionality. The roadmap ahead is substantial, and each addition compounds the platform's value to both our players and our commercial partners. What makes RaceControl particularly attractive from a financial perspective is its margin profile. As a platform business built on infrastructure we already own and operate, incremental revenue carries significantly more favorable EBITDA contribution than our content business. It is, in the truest sense, a high-quality revenue stream, recurring, scalable, and deeply embedded in the daily behavior of our most engaged players. Beyond direct subscription revenue, RaceControl is becoming the activation layer of choice for automotive manufacturers, motorsport series, and global consumer brands seeking direct engagement with a highly targeted, highly passionate audience.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Our recent collaboration with Genesis, the luxury automotive brand and WEC newcomer, demonstrates what that looks like in practice, and we are delighted that Logitech, one of the world's leading gaming hardware manufacturers, has chosen RaceControl as the platform to power the Logitech G Challenge Esports Series. These are not peripheral partnerships. They are a validation that RaceControl has become an infrastructure that serious organizations want to access. The combination of Le Mans Ultimate's ongoing commercial momentum, RaceControl's growing recurring revenue layer, and our consistent operating profitability provides us with a useful flexibility going forwards. Progress on bringing Le Mans Ultimate to PlayStation and Xbox in collaboration with our development partners continues as planned. We are deepening investment in our proprietary simulation technology, which is the long-term retention engine for the core of our market.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

We are strengthening the team with targeted hires across engineering, platform, and strategic leadership, and we are in the formative stages of preparing a new long-term project. This new title will leverage everything we have built from our simulation technology, our live service infrastructure, our RaceControl platform, and the community relationships we have cultivated through our popular racing game, Le Mans Ultimate. This is not a speculative greenfield project, but one that is being designed to take another giant stride in the company's output with the same accessible discipline that has defined our reemergence as a premier racing game developer. We believe this represents a significant long-term value creation opportunity, and we look forward to sharing more in due course. On consoles specifically, our exact timing for the release of Le Mans Ultimate remains subject to further development progress. The work undertaken is complex.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Realistically, we expect to announce more details on launch as we enter 2027, as we move into the latter stages of the project and build confidence in our expected launch window. As previously mentioned, we are taking a careful, quality-first approach and plan to select the best release window rather than deliver out of financial necessity. Our existing and future player base is very vocal about their desire for a console release for Le Mans Ultimate, and we are pleased to confirm that development is progressing well. I would now like to turn to a series of corporate actions we executed in the past few weeks, which mark a significant step forward for the company. We repurchased 904,395 shares of our Class A common stock from Driven Lifestyle Group LLC.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

As part of that transaction, all Class B shares which had carried a 10-time voting advantage were retired, meaning every share now holds equal voting power. Shareholders also approved an expansion of the awards available under our employee equity plan, giving us an important tool to incentivize and retain the people driving our growth. Before I hand over to Stanley, I want to step back and reflect on what this moment represents for Motorsport Games. The corporate actions we executed this quarter, the repurchase of shares from Driven Lifestyle, the retirement of Class B voting rights, the Citibank credit facility are not simply transactional steps. They are a direct reflection of how far this company has come, and I want to take a moment to thank Driven Lifestyle. They were with us at inception, and their early support was critical in getting Motorsport Games to where we are today.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Their decision to retain a minority shareholding in the company is not only a vote of confidence in our future, it was also a pragmatic outcome from our balance sheet. By retaining an equity stake rather than a full cash exit, we were able to achieve the same strategic result, the retirement of all Class B super voting shares and the return of equal voting rights to all shareholders while deploying less cash to do so. These actions also point forward. Our strength and financial position built from operations has given us the ability to act decisively. We have returned greater ownership and strategic influence to the company, secured additional flexibility through the Citibank facility, and positioned ourselves for the next phase of growth. Everything we have built has been purposeful. The simulation technology, the live service infrastructure, RaceControl, the community, the commercial partnerships.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

We have been building a foundation, one that we continue to advance, all whilst demonstrating its value-supporting products like Le Mans Ultimate. We are not yet in a position to share the full detail of what that foundation will support next, but I want to be direct. We have a product roadmap we believe has the potential to drive a very meaningful revenue and profit growth in 2027 and beyond, and we expect to discuss it in detail on our Q3 earnings call. What I can tell you today is that our next stage of growth will not require us to start from scratch.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

It will leverage everything we have already proven: our technology, our platform, our audience, and our operational discipline. The risk profile of what comes next is fundamentally different from a traditional game development bet because the foundation is already in existence and generating returns. We look forward to telling you much more. For now, I'll hand over to Stanley Beckley, our Chief Financial Officer.

Stanley Beckley
Stanley Beckley
CFO at Motorsport Games

Thank you, Stephen, and good evening, everyone. As with previous earnings calls, I won't be offering any forward-looking guidance today. Instead, I will focus on providing an update on our financial results and highlights from the Q1 of 2026. Revenues for the quarter were $4.0 million, up by $2.3 million, or 129.3% when compared to the same period in the prior year. The increase in revenues was primarily due to a $1.6 million increase from sales of Le Mans Ultimate and a $0.7 million increase in RaceControl subscriptions compared to the same prior year period. Monthly recurring revenues for RaceControl subscriptions now exceed $0.2 million.

Stanley Beckley
Stanley Beckley
CFO at Motorsport Games

Management plans to grow this important revenue stream as we continue to diversify our product mix and work towards our goal of becoming a multi-format and multi-title video game developer and publisher. Net income for the Q1 of 2026 and 2025 was approximately $1.0 million respectively. Net income attributable to Class A common stock was $0.06 per share for the Q1 of 2026, compared to net income per share of $0.33 for the same period in the prior year. We are reporting adjusted EBITDA of $1.5 million for the Q1 of 2026, compared to $0.6 million for the same period in the prior year.

Stanley Beckley
Stanley Beckley
CFO at Motorsport Games

The improvement in adjusted EBITDA of $0.9 million was primarily due to the same factors driving the previously discussed change in net income for the Q1 of 2026 when compared to the same period in the prior year, as well as an increase in stock-based compensation compared to the prior year period. As it relates to liquidity, as of March 31, 2026, we had cash and cash equivalents of $5.9 million, which decreased to $3.8 million as of April 2026. Due to the company's $3.7 million repurchase of its shares from Driven Lifestyle Group LLC on April 22, 2026, partially offset by cash inflows from operations.

Stanley Beckley
Stanley Beckley
CFO at Motorsport Games

Management believes that this share repurchase from Driven Lifestyle will strengthen our corporate governance structure and position the company for its next stage of growth whilst underscoring our confidence in our business and liquidity position. During the three months ended March 31, 2026, we generated an average positive cash flow from operations of approximately $0.5 million per month. That was primarily due to increased profitability and the capitalization for internally developed software. We currently have no purchase commitment liabilities. Furthermore, our working capital as of March 31, 2026, was $5.2 million versus $4.2 million as of December 31, 2025, underscoring a much improved balance sheet and liquidity position.

Stanley Beckley
Stanley Beckley
CFO at Motorsport Games

Management remains confident in the company's product roadmap as we work towards porting Le Mans Ultimate on console over the next several months. We also secured a $3 million revolving line of credit from Citibank in February 2026. As of March 31st, 2026, there was no amount owed to Citibank under the revolving line of credit. As of April 30th, 2026, there was $1.2 million owed to Citibank under this revolving line of credit. Thank you all for your time. Now I will turn the call back to Stephen for closing remarks.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

In closing, the story of Q1 is a simple one. Le Mans Ultimate continues to grow. Our financial position continues to strengthen, and that strength is now actively translating into action. For our shareholders, that means meaningfully improved governance. For the long-term health of the business, it means continued investment in our team, our technology, and the opportunities we are now in a position to pursue. We are no longer running multiple games from a position of necessity. We are running it from a position of strength, with options, with conviction, and with a clear sense of where we are taking this company. The future we are building is not just for the next quarter, it is for the next decade. Thank you all for joining us today. I look forward to updating you on our continued progress. I'll now hand it back to the operator.

Operator

Our first question today will come from Anja Soderstrom with Sidoti & Company.

Alex Hantman
Alex Hantman
Analyst of Equity Research at Sidoti & Company

Hi, this is Alex on for Anja. Thanks for taking questions. My first question is on the Le Mans Ultimate version 1.3 that you mentioned. It drew a record 8,800 player peak in March, which is an impressive milestone. I'm curious, how has engagement trended since the launch? Could you talk a little bit about what the roadmap may look like for the remainder of 2026?

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Hi, Alex, it's Stephen. Thank you for your question. To be perfectly honest, it's trending upward. We talked specifically not just about the peaks but actually, the average concurrent users, the stickiness of the product. What we've seen over the history of the product, and certainly since one point three remains true, is that with more content and more exposure, we're building a record number of players that are sticking around, buying the content and participating. We've seen that groundswell starting to follow the product. We haven't proactively really spent marketing dollars in trying to accelerate that, it's really organic growth of those player numbers. We do have new content packs that are planned for this year, which will be no surprise to anybody. They've proven very popular.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Every time we add more cars, more track content, and expand the game offering, which is built around Le Mans and World Endurance Championship, by its nature is quite singular. We found that we reach new players. We have an idea and a concept for new track content that will reach additional markets. Because typically, we found we're incredibly strong in Europe, which is no surprise given Le Mans history and its location, and we've dined out very well on that. In order to take this game internationally, we're starting to look at additional content that would attract people that aren't naturally bought into the Le Mans concept or European content. We have got more things to reveal in the future, but I'm quite excited about that. It will keep climbing.

Alex Hantman
Alex Hantman
Analyst of Equity Research at Sidoti & Company

Great context. Thank you. You spoke about this in the prepared remarks a little bit, that RaceControl continues to expand as another recurring revenue driver. Could you tell us a little bit about where you see recurring revenue as a percentage of total business going and over the next 12 months or so?

Stanley Beckley
Stanley Beckley
CFO at Motorsport Games

Yes. Hi, Alex. I can take that. We currently don't provide forward-looking guidance, but I can speak about how well RaceControl has done. In Q1 2026, for example, it was a bigger share of our revenues. Q1 2026 saw us generating RaceControl subscription revenues of $0.8 million, which was 19% of the total revenues of $4 million for the quarter, compared to RaceControl subscriptions only accounting for 6% of our revenues in Q1 2025. I can't speak too much about where we see it going in terms of specific numbers, but we do expect it to continue growing as the game becomes more popular and more units are sold. We are getting to the point where revenue stream is more diversified, with RaceControl subscriptions encompassing a greater share of our, of our total revenues.

Alex Hantman
Alex Hantman
Analyst of Equity Research at Sidoti & Company

Got it. Thanks for sharing. Last one from us, can you talk a little bit about the Formula One opportunity? What you're doing there today and how you see it evolving and what pipeline and other related revenue opportunities look like for that?

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Hi, Alex. I guess this one was probably for me. The Formula One opportunity is always interesting. Formula One's a huge motorsport the world over, international markets. It's a no-brainer for us to be interested in that space. That's one of the reasons why we were more than happy to provide our technology to power Formula One Arcade. Every arcade venue and every activity that they provide around the world in all their facilities, including the new pop-up facilities, is powered by technology owned by and operated by Motorsport Games. That technology actually powers Le Mans Ultimate, a later version of that technology anyhow.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

One of the reasons we did that was to overcome this concept that our technology as a boutique sim racing software developer, which is what we are today, very specialized software company, can produce something that is accessible for a much larger market. Because people typically think that sim racing software is the preserve of a nerdy kid in a bedroom with a simulator rig. This is the kind of stuff I have at home. Anybody can walk in off the street and enjoy our technology in an F1 Arcade venue, from grandma to 10-year-old kids to mom, dad, friends. It's a family entertainment experience powered by sim racing software.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

That foot in the door, with F1 Arcade, the group behind that, and Liberty, who are part of that operation, is just part of our strategy to build our relationship with Formula One, demonstrate the viability of the software, the advantage and the power of the software. I mean, bear in mind, F1 Arcade chose not to use the official Formula One game, but instead chose Motorsport Games software produced by our developer Studio 397. That is a crucial kind of positive step in building relationship, surfacing the technology, and really enabling our engineers to provide Formula One through F1 Arcade cutting-edge software.

Stephen Hood
Stephen Hood
CEO at Motorsport Games

Whilst there is an exclusive agreement in place with Electronic Arts at the moment, like any software developer, we would be interested in expanding our offerings in the future. F1 Arcade is set to grow, but we're exploring possibilities about what we could support in terms of single-seater racing in the future, one element of which could be Formula One. It would be speculation right now. There isn't anything definitive, but we'd certainly be interested in expanding our offering.

Alex Hantman
Alex Hantman
Analyst of Equity Research at Sidoti & Company

Thank you for all the background. That is all from us.

Operator

Thank you. At this time, there are no further questions in queue. This will bring us to the end of the Motorsport Games Q1 2026 earnings call. We appreciate your time and participation. You may now disconnect.

Executives
    • Ben Rossiter-Turner
      Ben Rossiter-Turner
      VP of Studios
    • Stanley Beckley
      Stanley Beckley
      CFO
    • Stephen Hood
      Stephen Hood
      CEO
Analysts
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