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Date
Wednesday, Aug. 13, 2025 at 5 p.m. ET
Call participants
Chief Executive Officer — Stephen Hood
Chief Financial Officer — Stanley Beckley
Head of Investor Relations — Ben Rossiter-Turner
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Takeaways
Revenue-- $2.6 million for the quarter ended June 30, 2025, an increase of 37.7% year-over-year driven by growth in Le Mans Ultimate downloadable content sales and Race Control subscription services.
Net income-- Net income was $4.2 million, up 103% year-over-year due to revenue growth, cost controls, and an $800,000 benefit from a Wesco Insurance Company settlement.
Adjusted EBITDA-- Adjusted EBITDA was $3.7 million, a reversal from an adjusted EBITDA loss of $500,000 in the prior year, predominantly attributable to revenue growth, settlement income, and lower stock-based compensation.
Income from operations-- Income from operations was $2 million. The company achieved positive operational income for the first time after adjusting for $1.1 million in non-recurring income.
NASCAR license transition-- NASCAR-related revenues declined by $900,000, reflecting the exit from sales of that title beginning in 2025.
Le Mans Ultimate contribution-- Revenue increase was primarily driven by a $1.3 million rise in sales from Le Mans Ultimate, especially downloadable content.
Subscription metrics-- Race Control subscription service reached well over 2,000 registered accounts as of August 2025, with net monthly recurring revenue (MRR) growth of 296% in June and a quick ratio peaking at 4.66 in June.
Annual recurring revenue (ARR)-- Approximately $972,000 annual recurring revenue (ARR) in June, with monthly recurring revenue (MRR) at about $81,000 as of June and subsequent continued increases post-Q2 2025.
Cash position-- Cash and cash equivalents were $2.4 million as of June 30, 2025, increasing to $2.8 million as of July 31, 2025.
Cash flow-- Average positive cash flow from operations was about $46,000 per month for the six months ended June 30, 2025, mainly from insurance and settlement proceeds.
Product lifecycle milestone-- Le Mans Ultimate exited early access with the 1.0 version in July, showing new records for concurrent and daily active users following the end of the quarter.
Downloadable content (DLC) expansion-- Final DLC pack for the 2024 season added two vehicles and a new circuit; further expansion will bring additional circuits and vehicle classes to the game.
Esports engagement-- Over 6,000 drivers registered and formed more than 1,700 teams for Le Mans Virtual qualifiers during the opening test, indicating increased player participation.
Console strategy-- The company entered late-stage negotiations with a third-party studio for an Xbox and PlayStation port and is discussing publisher partnerships, including the potential for up-front funding.
Studio 397 ownership-- Final balance settled for Studio 397 ownership, ensuring full control over technology and IP, with no further acquisition-related outflows.
Management hires-- John Tibble was hired as Vice President of Revenue and Growth to strengthen game content and subscription monetization efforts.
Summary
Motorsport Games(MSGM 1.17%) reported its first-ever income from operations, highlighting a successful shift following the NASCAR license divestiture. Robust subscription growth, fueled by Race Control and strong premium content sales in Le Mans Ultimate, has strengthened recurring revenues and improved cash generation, with net monthly recurring revenue (MRR) growth of 296% and annual recurring revenue (ARR) of approximately $972,000 as of June. Strategic initiatives included transformative steps in esports, the transition out of early access for Le Mans Ultimate, and late-stage console porting negotiations—all explicitly supported by measured player and revenue data, and clear management disclosure.
Chief Executive Officer Hood noted, "Le Mans Ultimate now delivers upon this collaborative distinction, bringing some of what makes popular multiplayer games—playing" framing the product's expanded multiplayer focus as central to growth aspirations.
Planned expansion into new platforms and markets is supported by discussions for third-party publishing and funding collaborations, a departure from the company's prior self-publishing model.
The settlement of all Studio 397 acquisition costs enhances control over technology and intellectual property, with management identifying this move as enabling further product and platform leverage.
Accelerated SaaS investments, evidenced by the appointment of John Tibble and infrastructure enhancements, underpin the company's push towards scalable recurring revenues in gaming and esports services.
Industry glossary
DLC (Downloadable Content): Additional digital content released post-launch, expanding gameplay or features in a core title, often for incremental revenue.
SaaS (Software as a Service): A model where software is accessed via subscription and delivered over the internet rather than as a one-time purchase.
ARR (Annual Recurring Revenue): The annualized value of subscription or recurring contract revenue, providing visibility into cash flow sustainability.
MRR (Monthly Recurring Revenue): The monthly value of subscription-based revenue, used to track near-term trends.
Quick ratio (subscription business context): The ratio of acquired (new) subscribers to churned (lost) subscribers within a given period, indicating growth momentum for a subscription service.
Le Mans Virtual: Motorsport Games’ flagship endurance esports event based on digital competition linked to the iconic 24 Hours of Le Mans race.
Full Conference Call Transcript
Ben Rossiter-Turner: Thank you, and welcome to Motorsport Games Inc. Second Quarter 2025 Earnings Conference Call and Webcast. On today's call is Motorsport Games' Chief Executive Officer, Stephen Hood, and Chief Financial Officer, Stanley Beckley. By now, everyone should have access to the company's second quarter 2025 earnings press release filed today after market close. This is available on the Investor Relations section of Motorsport Games Inc.'s website at www.motorsportgames.com. During the course of this call, management may make forward-looking statements within the meaning of the U.S. federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.
Except as required by law, the company undertakes no obligation to update any forward-looking statement made on this call or to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise. Please refer to today's press release and the company's filings with the SEC, including the most recent quarterly report on Form 10-Q for the quarter ended 06/30/2025, for a detailed discussion of certain risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. In today's conference call, we will refer to certain non-GAAP financial measures such as adjusted EBITDA as we discuss the second quarter 2025 financial results.
You will find a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, as well as other related disclosures, in the press release issued earlier today, which is also available on the Investor Relations section of Motorsport Games Inc.'s website at www.motorsportgames.com. And now, I would like to turn the call over to Stephen Hood, Chief Executive Officer of Motorsport Games Inc. Stephen?
Stephen Hood: Thank you, everyone, for joining this conference call today. We have some exciting turnaround news, product, and software service or SaaS developments to lay out today as part of our overview of ongoing progress made by the company in the second quarter of the year. Work continues apace on our primary game title, Le Mans Ultimate. A major update was delivered by Studio 397, our development arm, during the run-up to the real-world 24 Hours of Le Mans held in June. The game title was demonstrated on-site to thousands of people attending Le Mans. Our activation was further enhanced alongside Pimax, a recent lead investor in Motorsport Games Inc., with simulators running their latest VR headsets.
In our product update, significant gameplay improvements were pushed into the product, including support for teams and driver swap races. In most racing titles, everyone is out for themselves. But with endurance racing, there are three drivers per team, each driving parts of a race. It's a real team effort, and as such, Le Mans Ultimate now delivers upon this collaborative distinction, bringing some of what makes popular multiplayer games—playing with friends as a squad, as opposed to against one another—to the sim racing genre. Players within the team can customize their car livery to bring their own identity to the racetrack. Liveries can be freely shared around with other players.
Some of the designs are very complex works of art. We are planning a livery market enabling players to host and trade their custom designs with others through an easy platform extended from our existing Race Control platform designed to reduce the complexity of sim racing. Now that team events have been incorporated into the product experience, we can accelerate our plan to bring the world's biggest racing esports event back into focus. Le Mans Virtual will be returning with the final expected to be held next year, with early qualifying rounds appearing in Q4 of this year. Le Mans Virtual was a resounding success when hosted on our prior product, rFactor 2.
Now that we have an official Le Mans product in full swing, we are excited to leverage the latest technology in the return of what we hope will be a great spectacle and marketing vehicle for our evergreen game, Le Mans Ultimate, and multiplayer platform, Race Control. As part of the feature rollout, we have been testing the viability of our platform to host such large-scale real-time events, and we are impressed with the player interest. In the opening test, over 6,000 drivers signed up, delivering more than 1,700 teams, a great testament to early player reaction to a feature we are going to be leveraging ever more in the run-up to Le Mans Virtual.
Additionally, the final downloadable content pack for the 2024 season was delivered, including two new vehicles, the Lexus and Lamborghini GT3s, and the Lusail Circuit in Qatar. We also, during that week, in coordination with our partners at the Automobile Club de l'Ouest, announced an expansion of the game to include the European Le Mans Series, or ELMS for short. This expansion to the game will add three more iconic venues in Paul Ricard, Circuit de Barcelona-Catalunya, and the home of British racing, Silverstone, along with the LMP3 class of cars. A prospect that seems to have excited fans of what we believe to be a viable gaming franchise in Le Mans Ultimate.
The result of this update and the associated marketing activity brought tremendous visibility to the product. The month of June, viewed in isolation outside of the original product release month of February 2024, delivered record game revenues. Additionally, the game set new concurrent and daily active user records, demonstrating strong continued interest in the product and the 24 Hours of Le Mans upon which we base our licensed gaming experience. Following the June update on July 22, outside of this reporting period but a significant milestone in the company's calendar and one I would like to mention, we delivered version 1.0 of the product. Once again, the game set new records for concurrent and daily active users.
We believe this demonstrates that, unlike some licensed game titles, the success of the product itself is not critically tied to the real-world race and championship upon which it is based. The biggest race is held in June, but our new player records came about more than a month later. In line with the full release, version 1.0 dignifying the product has left the early access phase. Players have reacted favorably to this new phase of the product life cycle. Leaving early access means that we can tap into new marketing and sales tactics, as well as commence work on the much-anticipated console port of the game.
Fans are increasingly eager to see our product on Microsoft Xbox and Sony PlayStation gaming consoles, and, of course, the vast audience available to us via those platforms is of great interest. With regards to the console port, I am pleased to confirm that we are in late-stage negotiations with an expert third-party development studio well-versed in transitioning this kind of title to gaming consoles. It is hoped that the initial portion of work can begin in the coming weeks, and it could lead to a full-blown agreement to bring Le Mans Ultimate to an even larger audience.
Additionally, we are in conversations with potential partners interested in taking on publishing responsibilities and assisting in turning our product into a long-term multi-format gaming franchise. Whilst we currently self-develop and publish all of our products and content, we see several advantages to partnering with a more experienced and well-connected publishing company to maximize the opportunity we believe to be within reach. There are also discussions taking place about any incoming publisher funding the console port, which would see Motorsport Games Inc. receive a sizable upfront payment and de-risk cash flow pressures in the near term. We think this shows that the continued success of our game has piqued interest across the industry.
Le Mans Ultimate game revenues were a driving force in revenue and net income. Both were significantly higher than the equivalent quarter in 2024, an increase of 37.7% and 103%, respectively, despite the company no longer generating NASCAR revenues since the beginning of the year. You will recall we opted to sell the NASCAR license as part of our plan to bring about development focus and bring to market higher quality games, especially those with potential for additional forward-thinking revenue streams which could compound when integrated within our overall ecosystem. We build the games, provide the online platform, and own the end-to-end experience, which should benefit not only our ability to increase accessibility and quality but also player experience.
As of 06/30/2025, we have cash and cash equivalents of $2.4 million, which increased to $2.8 million as of 07/31/2025. Where game revenues continue to climb, demonstrating great player confidence in Le Mans Ultimate, we are even more pleased with our subscription offerings. Race Control, the Motorsport Games Inc.-owned platform, which brings players together to enjoy our titles, with well over 2,000 accounts now registered, has contributed significantly to the business since its introduction. In December, a subscription service went live, offering additional perks to our player base. Growth has been rapid, with net monthly recurring revenue or MRR growth at 296% in June alone.
More impressive is our quick ratio, a measure of new subscribers versus churn subscribers, of 4.66 at our highest peak in June. We believe anything over four to be a significant indicator of growth, and this despite the service and manpower focus being in its early stage life cycle. We believe these statistics prove that our subscription product is incredibly sticky, adding value to our players and resulting in net revenue retention that exceeds business models that simply rely on unit sales. Prior to December 2024, the company generated revenues from typical game content sales. We now offer up clear indicators of our move into a SaaS territory, aided and accelerated by our complete control over the experience ecosystem.
Game, content, and now services. We are agile and unafraid to steer a course to benefit growth. With this impressive growth and retention, we view Race Control as not only an important revenue line but also the basis of predictable forward-looking cash flow that will allow for us to make better strategic investments and bring even more value to players who are active subscribers. As of June alone, we had an annual recurring revenue or ARR of approximately $972,000 with an MRR of approximately $81,000. Those numbers have been improved upon considerably since, and we look forward to updating you on this exciting area in future earnings calls.
As a result of this explosive growth, we are investing in our SaaS infrastructure and expertise. I am delighted to announce the hiring of John Tibble as Vice President of Revenue and Growth. John had previously served in a senior role at Motorsport Games Inc. and has experience at Codemasters, Vivendi, and CI Games. He rejoins the business with a mission to maximize our game content and now subscription revenues and has already had a positive impact on our earnings. We are delighted to welcome back a strong leader with a proven track record in John. This is a great indicator of where the company stands today versus where it was when I returned in 2023.
We are making enormous strides in attracting and retaining top-tier talent. The decision to overhaul the business and focus on Studio 397, our remaining development arm, has proven itself worthy of a road to recovery. What is a game studio without great games? We leverage the technology acquired and then extended through Studio 397 to positive effect. In early July, we settled the remaining balance of the Studio purchase. With this, the company now has full and complete ownership over the technology and IP. There will be no further payments related to its purchase, bringing our cash flow into a more favorable position.
We are now empowered to continue leveraging the technology that underpins rFactor 2, F1 Arcade, and now Le Mans Ultimate, knowing it is under Motorsport Games Inc.'s control. All of this has contributed to a major milestone for the company. A turnaround story worthy of appreciation saw us record income from operations of $2 million in Q2 2025. After adjusting for other non-recurring other operating income of $1.1 million, Q2 2025 was the first quarter in the company's history that income from operations was generated. We have worked hard to stabilize, demonstrate our capability, and I am proud of how everyone across the business has pulled together to make this happen.
There is a pride across the organization that makes a real difference. Business growth is now a routine conversation within the corridors of Motorsport Games Inc. Whilst the foreseeable future will see further development of our successful Le Mans game and with our recent announcement of a career mode feature, allowing players who tend to avoid online multiplayer racing in favor of solo zero-to-hero style gameplay, we aim to attract a wealth of new players to the product over the longer term. We are also looking to expand core technologies to serve new opportunities and drive major enhancements through Race Control.
In addition, we are in active conversation with our recent investors, led by Pimax, about ways in which we can enhance the VR sim racing scene and generate new business opportunities benefiting both Motorsport Games Inc. and Pimax. We believe there is an opportunity to begin mapping out a future in which the company scales to develop and operate more than one game franchise, possibly outside of the sim racing endurance market we are widely recognized as leading. Whether this is a new IP or a licensed title is under discussion.
We are deploying effort to identify the next opportunity, and you can be assured that the revitalized company that is Motorsport Games Inc. has proven innovation and quality at the forefront of its player offerings. Now, I would like to invite Stanley Beckley, our Chief Financial Officer, to talk about the financial results for 2025.
Stanley Beckley: Thank you, Stephen. And good evening, everyone. As with previous earnings calls, I will not be offering any forward-looking guidance today. Instead, I will focus on providing an update on our financial results and highlights from 2025. Revenues for the quarter were $2.6 million, up by $700,000 or 37.7% when compared to the same period in the prior year.
The increase in revenues was primarily due to a $1.3 million increase in 2025 from sales of our Le Mans Ultimate recent title, particularly DLC sales, a $200,000 increase from Race Control, and a $100,000 increase in our rFactor 2 title compared to 2024, offset by a $900,000 decrease in NASCAR-related revenues, a gaming title we are no longer authorized to sell starting in 2025. Net income for the quarter was $4.2 million compared to a net income of $2.1 million for the same period in the prior year, an improvement of $2.1 million or 103%.
The increase in net income is driven by an increase in revenues, lower operating expenses, as well as $800,000 from the Wesco Insurance Company settlement in June 2025. Net income attributable to Class A common stock was $0.82 per share for 2025 compared to $0.77 for the same period in the prior year. I am pleased to report that after adjusting for other non-recurring other operating income of $1.1 million, Q2 2025 was the first quarter in the company's history that income from operations was generated. We are reporting adjusted EBITDA of $3.7 million for 2025 compared to an adjusted EBITDA loss of $500,000 for the same period in the prior year.
The improvement in adjusted EBITDA of $4.2 million was primarily due to the same factors driving the previously discussed change in net income for 2025 when compared to the same period in the prior year, as well as a decrease in stock-based compensation compared to the prior year period. As it relates to liquidity, as of 06/30/2025, we had cash and cash equivalents of $2.4 million, which increased to $2.8 million as of 07/31/2025. For the six months ended 06/30/2025, we generated an average positive cash flow from operations of approximately $46,000 per month.
That was primarily due to $800,000 from the Wesco Insurance Company settlement in June 2025 and $500,000 from a settlement agreement with HC2 Holdings Inc. in March 2025. Thank you all for your time. And now I will turn the call back to Stephen for closing remarks.
Stephen Hood: Thank you again for everyone joining this call today. You can no doubt tell we are happy to bring you this update, showing our turnaround is really kicking into gear. This provides us with great satisfaction, but it is part of a much bigger story we are going to be telling over the next few quarters. Motorsport Games Inc. has an evergreen gaming product on its hands. We are seeing record player numbers, our subscription service has added a SaaS component to the business, and we are invested in driving that component forward to the benefit of our loyal customers. I will now pass it back to the operator.
Operator: Thank you. And there are no questions on the line at this time. So we will conclude today's program. Thank you for your participation in Motorsport Games Inc. Second Quarter 2025 Earnings Call. You may now disconnect.