Motorsport Games(US:MSGM)2025-11-06 21:13Revenue Performance - Total revenues for the three months ended September 30, 2025, were $3.1 million, an increase of $1.3 million or 71.9% compared to $1.8 million in the same period of 2024[146]. - Total revenues for the nine months ended September 30, 2025, were $7.5 million, an increase of $0.7 million or 11.0% from $6.7 million in 2024, driven by a $3.4 million increase from the Le Mans Ultimate racing title[163]. Gaming Segment Performance - The increase in Gaming segment revenues was primarily driven by a $1.8 million increase from sales of the Le Mans Ultimate racing title, particularly from DLC sales[146]. - Gross profit for the Gaming segment increased by $1.4 million or 130.4% to $2.5 million for the three months ended September 30, 2025, compared to $1.1 million in 2024[149]. Cost and Expenses - Cost of revenues decreased by $0.1 million or 16.6% to $0.6 million for the three months ended September 30, 2025, compared to $0.7 million in 2024, mainly due to reduced royalty payments related to NASCAR titles[148]. - Total operating expenses decreased to $1.7 million in 2025 from $3.0 million in 2024, a reduction of $1.3 million or 43.4%[152]. - Development expenses dropped to $0.4 million in 2025, down 50.6% from $0.8 million in 2024, primarily due to lower headcount and capitalization of internally-developed software costs[154]. - General and administrative expenses decreased to $1.1 million in 2025, a 41.3% reduction from $1.9 million in 2024, mainly due to lower legal and professional fees[155]. Profitability - Consolidated gross profit increased to $2.5 million in 2025, up from $1.1 million in 2024, representing a 130.4% increase, with a gross profit margin of 80.7% compared to 60.2% in the prior year[150]. - Gross profit for the nine months ended September 30, 2025, was $5.9 million, an increase of $1.4 million or 30.1% from $4.6 million in 2024, with a gross profit margin of 79.6% compared to 67.9% in the prior year[166]. Other Income and Expenses - Other operating income increased to $1.6 million in 2025 from $0.3 million in 2024, primarily due to settlements and negotiated discounts[173]. - Interest expense significantly decreased to approximately $1,000 in 2025 from $30,000 in 2024, reflecting reduced liabilities related to the acquisition of Studio397[158]. - Other income, net rose to $3.4 million in 2025, up from $1.0 million in 2024, driven by foreign currency gains[175]. - Other comprehensive loss increased to $2.7 million in 2025 from $0.7 million in 2024, primarily due to unrealized foreign currency translation adjustments[176]. Cash Flow and Financial Position - As of September 30, 2025, the company had cash and cash equivalents of $4.1 million, up from $859,271 as of December 31, 2024[178]. - For the nine months ended September 30, 2025, the company generated net income of $6.0 million and cash flows from operations of approximately $2.3 million, compared to a net loss of $0.2 million and cash flows used in operations of $1.7 million for the same period in 2024[180]. - The net cash used in investing activities for the nine months ended September 30, 2025 was approximately $0.7 million, primarily related to the capitalization of internally-developed software[181]. - The net cash provided by financing activities for the nine months ended September 30, 2025 was $1.5 million, compared to $0.8 million for the same period in 2024[182]. - The company raised approximately $2.5 million in gross proceeds from the April Private Placement, resulting in net proceeds of approximately $2.35 million after offering expenses[187]. EBITDA and Adjusted Metrics - Adjusted EBITDA for the three months ended September 30, 2025 was $1,059,367, compared to $50,127 for the same period in 2024[200]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $5,368,433, a significant improvement from an Adjusted EBITDA loss of $1,465,205 in 2024[201]. - The EBITDA for the nine months ended September 30, 2025, was $6,843,893, compared to $1,677,057 for the same period in 2024[201]. Liabilities and Commitments - The company had an accumulated deficit of $85.7 million as of September 30, 2025[178]. - The company terminated the $12 million Line of Credit Agreement with Driven Lifestyle on November 5, 2025, due to concerns about future borrowing requests[184]. - The company has no material commitments to acquire capital assets as of September 30, 2025[189].