Motorsport Games (MSGM) Earnings Transcript

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]