Core Viewpoint - Motorsport Games Inc. has shown significant revenue growth and improved profitability in 2025, driven by the success of its Le Mans Ultimate racing title and a strategic shift towards a hybrid revenue model [7][11][12] Earnings & Revenue Details - For Q4 2025, Motorsport Games reported revenues of $3.8 million, a 94.9% increase from $2 million in Q4 2024, with net income of $0.8 million compared to a net loss of $2.9 million in the prior year [2] - Earnings per share were 15 cents, reversing a loss per share of 89 cents in Q4 2024 [2] Gross Profit and Margins - Gross profit rose to $3.3 million from $0.9 million a year earlier, with gross margin expanding to 85% from 45.8% [3] - For the full year 2025, revenues increased 30% to $11.3 million from $8.7 million in 2024, with gross profit rising to $9.2 million from $5.5 million and gross margin expanding to 81.5% from 62.9% [4] Business Drivers - Gaming revenues accounted for 100% of total revenues in both 2025 and 2024, primarily driven by the Le Mans Ultimate title and associated downloadable content [5] - The company experienced a decline in revenues from NASCAR titles due to the decision to sell the NASCAR license [5] Liquidity and Cash Flow - As of December 31, 2025, cash and cash equivalents were approximately $5 million, increasing to $6 million by February 28, 2026 [6] - Motorsport Games generated an average positive operating cash flow of $0.3 million per month during 2025 [6] Management Commentary - Management characterized 2025 as a turning point, attributing improved financial performance to the success of the Le Mans Ultimate racing simulation and a strengthened cash position [7] Product Development and Engagement - The company enhanced the Le Mans Ultimate platform with updates, including new content and competitive features, leading to significant growth in player engagement [8] - Concurrent player counts on Steam peaked at over 8,700 in January 2026 [8] Strategic Initiatives - The strategic importance of RaceControl, the company's online racing platform, was highlighted, with over 400,000 registered accounts and more than 26,000 paying subscribers by the end of 2025 [9] - The company is shifting towards a hybrid revenue model, combining game sales, DLC, and subscription revenues [12] Future Outlook - Management plans to scale its platform and expand its product portfolio, including investments in technology and bringing Le Mans Ultimate to console platforms [13] Financial Developments - In Q4 2025, Motorsport Games secured a $3 million revolving line of credit from Citibank N.A., enhancing financial flexibility [14]

Financial Data and Key Metrics Changes - The company achieved record profitability with a 30% year-over-year revenue growth, generating revenues of $3.8 million for Q4 2025, which is a 95% increase compared to the same period in the prior year [5][22] - Net income for Q4 2025 was $800,000, a significant improvement from a net loss of $2.9 million in the same quarter of the previous year, marking an increase of $3.7 million [22] - For the full year 2025, revenues totaled $11.3 million, up $2.6 million or 30% compared to the prior year, with net income reaching $6.8 million compared to a net loss of $3.1 million in 2024 [25][26] Business Line Data and Key Metrics Changes - The primary driver for revenue growth was higher digital game sales from the release of Le Mans Ultimate and increased downloadable content sales [22] - Revenues from the Le Mans franchise accounted for approximately 78% of total annual revenues in 2025, up from 34% in the previous year [48] - RaceControl, the company's subscription platform, contributed 11% of total revenues in 2025, compared to less than 1% in 2024, indicating a diversification of revenue streams [48] Market Data and Key Metrics Changes - Average concurrent players on Steam increased from approximately 786 in January 2025 to nearly 3,000 by December 2025, with a peak of over 8,700 concurrent players recorded in January 2026 [11][12] - The company noted that despite increased competition in the racing game market, Le Mans Ultimate continued to grow its player base and engagement [11] Company Strategy and Development Direction - The company is focused on scaling its platform and expanding its product offerings, with plans to bring Le Mans Ultimate to PlayStation and Xbox consoles, which represents a significant market expansion opportunity [18][19] - The strategy includes leveraging the RaceControl platform to create a hybrid revenue model combining game sales, downloadable content, and recurring subscription revenues [14][16] - The company is actively recruiting marketing talent to enhance its outreach as it prepares for console launches [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial stability and ability to continue building momentum through 2026 and beyond, emphasizing the successful turnaround achieved in 2025 [20][29] - The CEO highlighted the importance of product quality and community engagement in driving organic growth without significant marketing spend [12][29] Other Important Information - The company secured a $3 million revolving line of credit from Citibank in February 2026, which will support the development of Le Mans Ultimate for consoles [28] - As of December 31, 2025, the company had cash and cash equivalents of $5 million, which increased to $6 million by February 28, 2026, reflecting improved liquidity [26][27] Q&A Session Summary Question: What is the main driver for the decline in development costs year over year? - The company capitalized about $1.1 million of development costs related to significant upgrades and enhancements to the game, along with restructuring efforts that reduced payroll costs for developers and contractors [32][33] Question: Is AI a driver for the reduction in development costs? - AI is utilized in rapid iteration and development processes, contributing to faster updates and potentially lowering costs, while enhancing the creative output [34][35] Question: What is the expected impact of Le Mans Ultimate's console launch on revenue and margins? - The console launch is on track for early to mid-2027 and is expected to significantly expand the addressable market, providing a more accessible entry point for consumers [36][38] Question: How does the company plan to manage customer acquisition costs? - The company has invested very little in marketing, leading to organic growth, but is now looking to recruit marketing talent to broaden its audience [44][47]

Financial Data and Key Metrics Changes - The company achieved record profitability with a 30% year-over-year revenue growth, generating revenues of $3.8 million for Q4 2025, which is a 95% increase compared to the same period in the prior year [5][19] - For the full year 2025, revenues were $11.3 million, up $2.6 million or 30% compared to the prior year, with net income of $6.8 million compared to a net loss of $3.1 million in 2024 [22][23] - Adjusted EBITDA for Q4 2025 was $1.9 million, compared to an adjusted EBITDA loss of $2.5 million for the same period in the prior year [20] Business Line Data and Key Metrics Changes - The increase in revenues was primarily driven by higher digital game sales from the release of Le Mans Ultimate and higher downloadable content sales [19] - Revenues from the Le Mans franchise accounted for approximately 78% of total annual revenues in 2025, compared to 34% in the previous year [43] Market Data and Key Metrics Changes - Average concurrent players on Steam increased from approximately 786 in January 2025 to nearly 3,000 by December 2025, with a peak of over 8,700 concurrent players in January 2026 [11] - The company has seen organic growth without significant marketing spend, indicating strong player engagement and community support [11][12] Company Strategy and Development Direction - The company is focusing on scaling its Race Control platform, which combines game sales, DLC content, and recurring subscription revenues, creating a more stable financial model [14][15] - Plans are underway to bring Le Mans Ultimate to PlayStation and Xbox, which represents a significant expansion of the addressable market [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue building momentum through 2026 and beyond, emphasizing that the turnaround phase is behind them [26] - The company is actively recruiting marketing talent to raise awareness of its product offerings as it prepares for console launches [12][39] Other Important Information - The company secured a $3 million revolving line of credit from Citibank in February 2026, which will support the development of Le Mans Ultimate for consoles [25] - The working capital improved significantly, with a positive working capital of $4.2 million as of December 31, 2025, compared to negative working capital of $2.2 million in the previous year [25] Q&A Session Summary Question: What is the main driver for the decline in development costs? - The company capitalized about $1.1 million of development costs related to significant upgrades and enhancements to the game, which contributed to the decrease in development costs [28] Question: Is AI a driver for the reduction in development costs? - AI is utilized in rapid iteration and development processes, helping to bring updates to market faster and potentially reducing costs [30][31] Question: What is the expected impact of Le Mans Ultimate on revenue and margins upon its console launch? - The product is on track for release in early to mid-2027, with expectations of a significant impact on revenue due to the larger addressable market on consoles [32][34] Question: How does the company anticipate AI to improve customer acquisition costs? - The company has invested very little in marketing, leading to low customer acquisition costs, and is looking to leverage AI to enhance efficiency in various business areas [38][41]

Financial Data and Key Metrics Changes - The company achieved record profitability with a 30% year-over-year revenue growth, generating revenues of $3.8 million for Q4 2025, which is a 95% increase compared to the same period in the prior year [5][19] - For the full year 2025, revenues were $11.3 million, up $2.6 million or 30% compared to the prior year, with net income of $6.8 million compared to a net loss of $3.1 million for 2024 [21][22] - Adjusted EBITDA for Q4 2025 was $1.9 million, compared to an adjusted EBITDA loss of $2.5 million for the same period in the prior year [20] Business Line Data and Key Metrics Changes - The increase in revenues was primarily driven by higher digital game sales from the release of Le Mans Ultimate and higher downloadable content sales [19] - Revenues from the Le Mans franchise accounted for approximately 78% of annual revenues in 2025, compared to 34% the previous year [44] - Race Control, launched in December 2024, contributed 11% of total revenues in 2025, up from less than 1% in 2024 [44] Market Data and Key Metrics Changes - Average concurrent players on Steam increased from approximately 786 in January 2025 to nearly 3,000 by December 2025, with an all-time peak of over 8,700 concurrent players recorded in January 2026 [11] - The company has seen organic growth without significant marketing spend, indicating strong player engagement and community support [11][12] Company Strategy and Development Direction - The company is focused on scaling its Race Control platform and expanding its portfolio of racing experiences supported by the same technology and competitive ecosystem [16] - Plans to bring Le Mans Ultimate to PlayStation and Xbox are underway, which represents a significant expansion of the addressable market [15][16] - The company aims to build a sustainable business model that combines game sales, downloadable content, and recurring subscription revenues [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial stability and ability to continue building momentum through 2026 and beyond, emphasizing the successful turnaround phase [17][26] - The competitive landscape has seen new racing titles, but Le Mans Ultimate has continued to grow its player base and engagement, demonstrating the effectiveness of the company's focus on authenticity and technology [10] Other Important Information - The company secured a $3 million revolving line of credit from Citibank in February 2026, with no outstanding debt [25] - Cash and cash equivalents increased from $5 million at the end of 2025 to $6 million as of February 2026, with an average positive cash flow from operations of approximately $0.3 million per month [24] Q&A Session Summary Question: What is the main driver for the decline in development costs year over year? - The company capitalized about $1.1 million of development costs related to significant upgrades and enhancements to the game, with a decrease in payroll costs for developers and contractors [28][29] Question: Is AI any sort of driver to the development costs coming down? - AI is utilized in rapid iteration and development processes, helping to bring updates to market faster and reduce costs [30][32] Question: Are you still expecting to launch Le Mans Ultimate for PlayStation and Xbox in late 2026 or early 2027? - The product is on track for early to mid-2027, with expectations of a significant impact on revenue due to the larger addressable market [33][35] Question: How do you anticipate AI to be a positive for customer acquisition costs? - The company has invested very little in marketing, leading to low customer acquisition costs, and is looking to leverage AI to enhance efficiency in customer engagement [39][42] Question: How should we think about continued growth and profitability? - The company expects to remain cash flow positive, with a strong liquidity position and a diversified revenue stream from Le Mans Ultimate and Race Control subscriptions [43][44]

Q4 and Full Year 2025 Results March 10, 2026 This presentation provides select highlights about Motorsport Games Inc.'s results of operations. Please see Motorsport Games' 2025 Form 10-K, filed with the SEC and Q4 and full year 2025 earnings release for more complete information on the Company's results of operations, cash flows, financial condition and liquidity. motorsportgames 1 Q4 2025 Highlights Financial Highlights Key Highlights – FY 2025 and Subsequent Update *Adjusted EBITDA is a non-GAAP financial ...

Core Insights - Motorsport Games Inc. reported significant financial improvements in 2025, marking it as a breakthrough year with a clear strategic focus on technology and player engagement [2][10][12]. Financial Performance - Revenue for Q4 2025 was $3.8 million, a 94.9% increase from $2.0 million in Q4 2024 [4][10]. - Gross profit for Q4 2025 reached $3.3 million, up from $0.9 million in the same period last year, with a gross profit margin increase to 85.0% from 45.8% [4][11]. - Net income for Q4 2025 was $0.8 million, compared to a net loss of $2.9 million in Q4 2024, reflecting a $3.7 million improvement [5][12]. - Adjusted EBITDA for Q4 2025 was $1.9 million, a significant turnaround from an Adjusted EBITDA loss of $2.5 million in the prior year [6][13]. Annual Financial Results - Total revenue for the full year 2025 was $11.3 million, a 30.0% increase from $8.7 million in 2024 [11]. - The gaming segment accounted for 100% of total revenues, with a notable increase in sales from the Le Mans Ultimate racing title, particularly in downloadable content [11][12]. - Net income for the full year 2025 was $6.8 million, or $1.43 per share, compared to a net loss of $3.0 million, or $0.94 per share, in 2024 [12][14]. - Adjusted EBITDA for the full year 2025 was $7.3 million, a substantial improvement from an Adjusted EBITDA loss of $3.9 million in the previous year [13][14]. Product Development and Engagement - The release of Le Mans Ultimate Version 1.2 in December 2025 included new content and major advancements, leading to a fivefold increase in average concurrent players on Steam, peaking at 8,740 in January 2026 [2][10]. - The company is focused on scaling its platform, adding talent, and investing in technology to expand its product portfolio in 2026 [2][10]. Cash Flow and Liquidity - As of December 31, 2025, the company had cash and cash equivalents of approximately $5.0 million, which increased to $6.0 million by February 28, 2026 [16]. - The company generated an average positive cash flow from operations of approximately $0.3 million per month during 2025, primarily due to increased profitability [16]. Strategic Focus - Motorsport Games aims to build on its technology and deliver an authentic racing experience, with a focus on a smaller, disciplined team and a rapidly growing global community [2][10].

Industry Overview - Esports stocks represent publicly traded companies that generate significant revenue from competitive video gaming, including game publishers, tournament organizers, streaming platforms, hardware makers, esports teams, and related advertising or betting firms [2] - These stocks offer exposure to the rapidly growing esports and digital entertainment market but are characterized by volatility and dependence on game popularity, sponsorship/media deals, and changing consumer or regulatory trends [2] Company Summaries Allied Gaming & Entertainment (AGAE) - Allied Gaming & Entertainment, Inc. is an experiential entertainment company focused on creating esports venues and live events for video games and poker, founded in 2017 and headquartered in New York, NY [3] Motorsport Games (MSGM) - Motorsport Games Inc. develops and publishes multi-platform racing video games in the United States, operating through Gaming and Esports segments [3] - The company offers a variety of racing video games, including rFactor 2, NASCAR Heat series, KartKraft, and Le Mans Ultimate, catering to different gaming platforms [3] Brag House (TBH) - Brag House provides an integrated esports platform designed for casual gamers to engage in college sports rivalries in a personalized gaming environment, targeting the Generation Z audience [4]

Group 1: Microcap Market Overview - Microcaps have rallied nearly 20% over the last 2 months, contrasting with the flat performance of the S&P 500 [1] - Microcaps are sensitive to interest rates and macroeconomic conditions, with a notable valuation gap compared to large caps attracting investor interest [2] - Microcaps are approximately twice as volatile as large caps, which may deter risk-averse investors [3] Group 2: Interest Rate and Inflation Concerns - The primary risk for microcaps is the uncertainty surrounding interest rates, with concerns that inflation may resurface in 2026, potentially halting rate decreases by the Federal Reserve [4] - Factors such as tariff pass-throughs, tighter labor supply, and fiscal spending contribute to inflationary pressures that could impact rate policies [5] Group 3: Company Highlights - Motorsport Games Inc. (MSGM) is a racing video game developer with significant revenue growth and a high gross margin of 80% last quarter, indicating strong market reception [6][10] - Daily Journal Corporation (DJCO) has transitioned its focus from newspaper publishing to its software business, Journal Technologies, which now accounts for 80% of revenue and grew by 32% in the past fiscal year [11][12] - DJCO holds nearly $500 million in marketable securities, providing potential for acquisitions or further investment in growth [13]

Core Viewpoint - Zacks Investment Research has initiated coverage of Motorsport Games Inc. (MSGM) with an "Outperform" recommendation, indicating a belief that the company has entered a structurally improved phase after a multi-year turnaround [1] Company Overview - Motorsport Games is a racing video game developer and publisher focused on officially licensed motorsport franchises, now showing sustained operating profitability, improved margins, and a more durable revenue mix after years of heavy investment and restructuring [2] Key Growth Drivers - Le Mans Ultimate has become the core franchise for Motorsport Games, generating higher sales than NASCAR titles did in the comparable prior period after the sale of the NASCAR license in late 2023 [3] - The game's exit from Early Access in mid-2025 has led to record player engagement, with ongoing downloadable content extending monetization beyond launch, supporting a longer product lifecycle and more predictable cash generation [3] - The launch of the RaceControl platform adds a recurring subscription layer to the business, improving revenue visibility and customer lifetime value while reducing dependence on single-title sales cycles [5] Profitability and Financial Health - Profitability has been reinforced by significant margin expansion due to a higher mix of digital content and sharply lower development and administrative costs, leading to strong operating leverage [4] - Improved liquidity and positive operating cash flow have allowed management to remove going-concern language in 2025, marking a milestone in the company's recovery [6] Future Opportunities - Medium-term upside could arise from the console expansion of Le Mans Ultimate, with early production beginning and a targeted launch window of late 2026 to early 2027, potentially expanding the addressable market [6] Market Positioning - Motorsport Games has a modest market capitalization of $19.47 million, with shares trading at valuation multiples well below industry and market averages, presenting an attractive risk-reward profile for investors willing to tolerate microcap volatility [9]

Core Viewpoint - Motorsport Games Inc. has received a nomination for the Autosport "Pioneering & Innovation" Award for its title Le Mans Ultimate, highlighting its strong position in the racing simulation market and commitment to technological advancement and innovation [1][2]. Group 1: Award Nomination - The Autosport "Pioneering & Innovation" Award recognizes initiatives that advance motorsport through technology and engagement, with the winner to be announced on January 21, 2026, in London [2]. - Le Mans Ultimate's nomination places it alongside leading projects in the global motorsport industry, emphasizing its significance in the racing simulation market [2]. Group 2: Player Engagement and Updates - Following the Version 1.2 update in December, Le Mans Ultimate has achieved its highest concurrent player counts, with a peak of 8,740 players on January 3, 2026, coinciding with the "6 Hours of Monza" live service event [3][4]. - The update included significant content and platform improvements, such as expanded European Le Mans Series integration and community-driven quality-of-life enhancements, leading to a 608% increase in online race laps driven in December compared to the previous year [3][4]. Group 3: Management Insights - The management views the increase in player activity as validation of the company's product roadmap and live-service development strategy, emphasizing the importance of product quality and community engagement [5]. - The nomination for the Autosport Awards further supports the company's long-term strategy of building premium, officially licensed motorsport platforms aimed at cultivating durable audiences over time [5].