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]

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]