Core Viewpoint - Motorsport Games Inc. (NASDAQ:MSGM) is underperforming in terms of capital efficiency, as indicated by its negative Return on Invested Capital (ROIC) compared to its Weighted Average Cost of Capital (WACC) [2][6]. Financial Metrics Summary - Motorsport Games Inc. has a ROIC of -28.03% and a WACC of 13.73%, resulting in a ROIC to WACC ratio of -2.04, indicating insufficient returns to cover its cost of capital [2][6]. - Genius Group Limited (GNS) has a ROIC of -29.47% and a WACC of 25.16%, leading to a ROIC to WACC ratio of -1.17, which is less negative than MSGM's but still indicates inefficiency [3]. - Versus Systems Inc. (VS) shows a ROIC of -47.17% and a WACC of 16.17%, resulting in a ROIC to WACC ratio of -2.92, indicating even lower efficiency than MSGM [4]. - Cosmos Health Inc. (COSM) has a ROIC of -33.52% and a WACC of 17.85%, with a ROIC to WACC ratio of -1.88, slightly better than MSGM but still negative [4]. - Magic Empire Global Limited (MEGL) has the highest ROIC to WACC ratio among peers at -0.48, with a ROIC of -7.64% and a WACC of 15.98%, indicating it is closer to covering its cost of capital [5]. - Mobile Global Esports Inc. (MGAM) presents the most concerning figures with a ROIC of -351.37% and a WACC of 4.64%, resulting in a ROIC to WACC ratio of -75.66, highlighting severe inefficiencies [5][6].

Core Insights - Motorsport Games Inc. has released Le Mans Ultimate Version 1.1, which includes significant new content and features aimed at enhancing the game's scope and accessibility following a successful summer launch of Version 1.0 [1][6] Game Updates - The major addition in Version 1.1 is the European Le Mans Series (ELMS), marking its first official representation in Le Mans Ultimate. Players will receive free access to ELMS liveries and an unrestricted LMP2 car with updated physics [2][3] - The first ELMS Pack is priced at £8.99/€9.99/$11.99, or available as part of a discounted Season Pass at £21.99/€24.99/$28.99, with a 10% launch discount for a limited time [2] - Pack 1 features the Silverstone Circuit and the Ligier JS P325 LMP3, introducing a new prototype class and exciting endurance racing formats. Additional ELMS packs are planned for late 2025 and early 2026 [3] Customization and Multiplayer Enhancements - The custom livery system has been enhanced, allowing players to use their liveries in single-player Race Weekends and adding support for custom numbers. The update also introduces LiveryHub for sharing designs [4] - Version 1.1 introduces regional hosted servers in Asia and North America to improve multiplayer experiences by reducing latency. Other improvements include refinements to car selection menus, native TrackIR support, and the addition of Simplified Chinese language [5] Company Commitment - The CEO of Motorsport Games emphasized the update as a step forward in building on the momentum from the summer, reinforcing the company's commitment to delivering an authentic and engaging endurance racing experience [6]

Core Insights - Motorsport Games Inc. specializes in developing and publishing racing video games within the gaming industry, competing with companies like Genius Group Limited and Versus Systems Inc. [1] Financial Performance - Motorsport Games Inc. has a Return on Invested Capital (ROIC) of -28.03% and a Weighted Average Cost of Capital (WACC) of 13.67%, resulting in a ROIC to WACC ratio of -2.05, indicating inefficiency in generating returns [2][5] - Versus Systems Inc. has a ROIC of -47.17% and a WACC of 16.08%, leading to a ROIC to WACC ratio of -2.93, highlighting significant inefficiency in return generation [3] - Magic Empire Global Limited has the highest ROIC to WACC ratio of -0.48, with a ROIC of -7.64% and a WACC of 15.94%, suggesting it is the least inefficient among its peers [4][5]

Summary of Motorsport Games Inc. Conference Call Company Overview - **Company**: Motorsport Games Inc. - **Ticker**: MSGM - **Industry**: Video Game Development, specifically focused on racing games and eSports - **Staff**: 41 employees, primarily developers and engineers [5] Core Business Model - Motorsport Games develops, publishes, and manages a backend platform for racing games, aiming to enhance customer experience and monetize through subscription services [4] - The company focuses on simplifying the sim racing segment, which has been characterized by outdated products and fragmented experiences [4] Key Products - **Le Mans Ultimate**: - Recently launched version 1.0 after 18 months in Early Access [6] - Officially licensed title associated with the 24 Hours of Le Mans race [7] - Features a unique squad-based gameplay allowing players to take turns in a single car [10] - Sold over 240,000 units with a strong following despite minimal marketing [11] - **rFactor 2**: - Legacy product known for high-end racing simulation technology [15] - Continues to perform well and supports the development of newer titles [15] Financial Performance - Significant operating losses were reported historically, with a peak loss of $16 million in Q1 2022 [22] - Recent turnaround efforts led to a net income of $4.2 million in Q2 2025, with revenues up 37.7% year-over-year [23] - First quarter in company history to generate income from operations [23] - Monthly cash flow from operations averaged $46,000 for the first half of 2025, significantly improved from previous years [24] Market Insights - The racing video game market was valued at over $5 billion in 2024 and is projected to grow to over $6.9 billion by 2032 [27] - The racing simulator market is expected to grow at a rate of 15.6% during the same period [27] - The acquisition of Codemasters by Electronic Arts for $1.2 billion highlights the market's potential [27] Strategic Initiatives - Plans to port Le Mans Ultimate to gaming consoles (Xbox and PlayStation) to reach a larger audience [29] - Ongoing discussions for potential new driving or racing experiences leveraging existing technology [30] - Collaboration with F1 Arcade and Liberty Media to expand opportunities in the racing simulation space [30] Management and Governance - New management team and Board of Directors in place to drive the company's turnaround [28] - Leadership includes experienced professionals from the gaming industry and finance [25][26] Conclusion - Motorsport Games Inc. is positioned for growth with a strong product lineup and strategic initiatives aimed at expanding its market presence and improving financial performance [28][30]

Company Overview - Motorsport Games Inc. is a racing game developer, publisher, and esports ecosystem provider, focusing on official motorsport racing series [4] - The company is known for its innovative video games and engaging esports competitions, aiming to create racing games that closely resemble reality [4] - Motorsport Games holds licenses for iconic racing series such as the 24 Hours of Le Mans and the FIA World Endurance Championship, with recent releases including Le Mans Ultimate Version 1.0 [4] Upcoming Events - The CEO Stephen Hood and CFO Stanley Beckley will present and host one-on-one meetings with investors at the H.C. Wainwright 27th Annual Global Investment Conference from September 8-10, 2025, in New York City [1][7] - Investors can schedule one-on-one meetings with the executives by contacting the company via email [2] Investor Relations - A replay of the conference webcast will be available on the investor section of Motorsport Games' website [2] - The company utilizes various channels, including its investor relations website and social media, to communicate material financial information to investors [6]

Summary of Motorsport Games (MSGM) Conference Call - August 20, 2025 Company Overview - **Company**: Motorsport Games (MSGM) focuses on creating video games, primarily in the racing and simulation segments, predominantly for the PC platform [2][3] - **Staff**: The company has approximately 41 employees, with 32 developers, positioning itself as a boutique racing game developer [4] Core Products and Services - **Main Title**: "Le Mans Ultimate" is the flagship game, officially licensed and based on the famous Le Mans 24-hour race, featuring various categories of cars [6][7][10] - **Game Features**: The game allows players to race together, share cars, and participate in competitions, enhancing the multiplayer experience [9][10] - **Sales Performance**: The base game has sold over 240,000 units, and the company has seen significant player engagement and interest in updates [11][12] Financial Performance - **Recent Financials**: - Q2 2025 reported net income of $4.2 million, with revenues 37% higher than the same period the previous year [26] - Earnings per share for Q2 2025 was 82¢, up from 33¢ in Q1 2025 [26] - Adjusted EBITDA for Q2 2025 was $3.7 million, marking the first quarter with income from operations [26] - **Cost Management**: The company has implemented cost-cutting measures, reducing monthly cash burn to less than $100,000, significantly lower than previous years [27][45] Market Insights - **Industry Growth**: The racing games market was valued at over $5 billion in 2024 and is expected to grow to $6.9 billion by 2032, with the racing simulator market forecasted to grow at 15.6% [30][31] - **Competitor Activity**: Codemasters was acquired by EA for $1.2 billion, indicating strong interest in the racing game segment [31] Future Opportunities - **Expansion Plans**: The company aims to port "Le Mans Ultimate" to gaming consoles (Xbox and PlayStation) to reach a larger audience, with a timeline of 12 to 18 months for this transition [33][34] - **New Titles and Features**: Plans to develop new titles and enhance existing ones, leveraging technology from "R Factor 2" and exploring partnerships with Liberty Media [34][35] Community Engagement - **User Community Relationship**: The company has worked to improve its reputation and relationship with the gaming community, receiving positive feedback and support from players and influencers [54][56] Conclusion - **Outlook**: The company is optimistic about its product offerings and financial performance, with a focus on continuous updates and community engagement to drive future growth [49][50]

Company Overview - Motorsport Games Inc. is a racing game developer, publisher, and esports ecosystem provider, focusing on official motorsport racing series [4] - The company is the officially licensed developer for notable racing series such as the 24 Hours of Le Mans and the FIA World Endurance Championship [4] - Recent product releases include Le Mans Ultimate Version 1.0, featuring new cars and updated 2025 content [4] Investor Engagement - The company will present at the Sidoti August Virtual Investor Conference on August 20-21, 2025, with CEO Stephen Hood and CFO Stanley Beckley hosting one-on-one meetings with investors [1][2] - The presentation is scheduled to begin at 9:15 AM ET on August 20, 2025, and will be accessible via a provided link [2] Industry Context - Sidoti & Company, LLC has established Sidoti Events, LLC to enhance its conference business, focusing on small and microcap companies [3] - Sidoti's coverage includes approximately 150 equities, with a significant portion participating in its Company Sponsored Research and Lighthouse Equity Research programs [3]

Financial Data and Key Metrics Changes - Revenues for Q2 2025 were $2.6 million, an increase of $700,000 or 37.7% compared to the same period in the prior year [22] - Net income for the quarter was $4.2 million, compared to $2.1 million for the same period in the prior year, an improvement of 103% [24] - Adjusted EBITDA for Q2 2025 was $3.7 million, compared to an adjusted EBITDA loss of $500,000 for the same period in the prior year, reflecting a $4.2 million improvement [25] Business Line Data and Key Metrics Changes - Game revenues from "Le Mans Ultimate" increased by $1.3 million, particularly from DLC sales, contributing significantly to overall revenue growth [22] - The subscription service "Race Control" saw a net monthly recurring revenue (MRR) growth of 296% in June alone, indicating strong player engagement [14] Market Data and Key Metrics Changes - The company reported record game revenues in June, outside of the original product release month, demonstrating strong continued interest in "Le Mans Ultimate" [10] - The subscription service has over 200,000 registered accounts, contributing significantly to the business since its introduction [14] Company Strategy and Development Direction - The company is focusing on the development of "Le Mans Ultimate" and plans to expand its gaming franchise beyond sim racing endurance titles [21] - There are ongoing discussions with potential partners for publishing responsibilities to maximize the game's long-term potential [12] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the turnaround progress and highlighted the importance of the subscription service as a predictable cash flow source [15][27] - The company aims to attract new players through the introduction of a career mode feature, expanding its audience [20] Other Important Information - The company has completed the purchase of Studio 397, gaining full control over the technology and intellectual property, which is expected to enhance future game development [18] - The company is investing in its SaaS infrastructure and has hired a new vice president of revenue and growth to maximize game content and subscription revenues [16] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without any inquiries from participants [29]

Financial Performance - Revenue for Q2 2025 was $2.6 million, a 37.7% increase year-over-year, driven by growth in Le Mans Ultimate downloadable content sales and Race Control subscription services [2][39] - Net income reached $4.2 million, up 103% year-over-year, attributed to revenue growth, cost controls, and an $800,000 benefit from a Wesco Insurance Company settlement [3][40] - Adjusted EBITDA was $3.7 million, a significant improvement from an adjusted EBITDA loss of $500,000 in the prior year, primarily due to revenue growth and lower stock-based compensation [3][41] Operational Highlights - The company achieved positive income from operations for the first time, reporting $2 million after adjusting for $1.1 million in non-recurring income [4][34] - NASCAR-related revenues declined by $900,000 due to the exit from sales of that title beginning in 2025 [4][39] - Le Mans Ultimate contributed significantly to revenue, with a $1.3 million increase in sales, particularly from downloadable content [5][39] Subscription Services - Race Control subscription service surpassed 2,000 registered accounts, with net monthly recurring revenue (MRR) growth of 296% in June [5][29] - Annual recurring revenue (ARR) was approximately $972,000 as of June, with MRR at about $81,000 [6][31] - The quick ratio peaked at 4.66 in June, indicating strong subscriber growth [30] Product Development and Market Strategy - Le Mans Ultimate exited early access with version 1.0 in July, achieving new records for concurrent and daily active users [7][23] - The final DLC pack for the 2024 season was released, adding new vehicles and circuits, with plans for further expansions [7][22] - The company is in late-stage negotiations for console ports on Xbox and PlayStation, aiming to expand its market reach [8][25] Management and Strategic Initiatives - John Tibble was appointed as Vice President of Revenue and Growth to enhance game content and subscription monetization efforts [9][32] - The settlement of Studio 397 acquisition costs has provided full control over technology and intellectual property, enabling further product leverage [9][33] - The company is exploring partnerships for publishing responsibilities to maximize the potential of its gaming franchises [26]

Financial Performance - Q2 2025 revenues reached $2.6 million[6] - Net income for Q2 2025 was $4.2 million[6] - Adjusted EBITDA for Q2 2025 amounted to $3.7 million[6] - Earnings per share (EPS) for Q2 2025 were $0.82, compared to $0.77 in Q2 2024[6] - Net income attributable to Motorsport Games Inc increased by $2.2 million, reaching $4.3 million in Q2 2025, a 102.2% improvement compared to $2.1 million in Q2 2024[6] Liquidity and Cash Flow - The company generated $0.3 million in cash from operations during the six months ending June 30, 2025[6] - As of June 30, 2025, the company's cash and cash equivalents were approximately $2.4 million, increasing to $2.8 million by July 31, 2025[10] - The company generated an average positive cash flow from operations of approximately $46,000 per month during the six months ended June 30, 2025[10] Product Release - Le Mans Ultimate Version 1.0 was released on July 22, 2025, featuring new cars, advanced team management, and customer liveries[6]