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Date

Tuesday, March 10, 2026 at 5 p.m. ET

Call participants

  • Chief Executive Officer — Stephen Hood
  • Chief Financial Officer — Stanley Beckley

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Takeaways

  • Quarterly Revenue -- $3.8 million, up 95% from the comparable period, mainly from higher digital game and downloadable content sales of Le Mans Ultimate.
  • Annual Revenue -- $11.3 million, representing a 30% increase, driven by $5.8 million from Le Mans Ultimate and $1.2 million from Race Control, offset by a $4.4 million drop related to the NASCAR title sale.
  • Quarterly Net Income -- $800,000, a $3.7 million improvement from a net loss of $2.9 million in the prior period.
  • Annual Net Income -- $6.8 million, up from a $3.1 million net loss, reflecting both revenue gains and cost reductions.
  • Adjusted EBITDA -- $1.9 million for the quarter, $7.3 million for the year, compared to respective losses of $2.5 million and $3.9 million previously.
  • Net Income per Class A Share -- $0.15 for the quarter and $1.43 annually, against losses of $0.89 and $0.94 in the prior periods, respectively.
  • Cash Position -- $5 million as of December 31, 2025, increasing to $6 million by February 2026, supported by positive cash flow.
  • Operating Cash Flow -- Average monthly positive cash flow of $300,000 during 2025, totaling $4.1 million generated from operations for the year.
  • Working Capital -- $4.2 million at year-end, up from negative $2.2 million previously, indicating improved liquidity.
  • Debt Status -- No outstanding debt or purchase commitment liabilities, and a $3 million undrawn revolving line of credit secured with Citibank in February 2026.
  • Le Mans Ultimate Player Metrics -- Steam average concurrent players rose from about 786 in January to nearly 3,000 by December 2025; January 2026 saw a record 8,700+ concurrent players and an average exceeding 4,200.
  • Race Control Platform Metrics -- More than 400,000 registered accounts, over 26,000 active paid subscribers, and approximately $200,000 per month in recurring revenue at year-end.
  • Le Mans Ultimate Revenue Mix -- Accounted for 78% of annual revenues, a rise from 34% in the previous year after the NASCAR transition.
  • Race Control Revenue Contribution -- Made up 11% of annual revenues compared to less than 1% the year before, reflecting growth since its December 2024 launch.
  • Development Cost Drivers -- $1.1 million in capitalized development costs for significant game enhancements and DLC; payroll for developers and contractors decreased due to restructuring.

Summary

Motorsport Games (MSGM 3.85%) reported a marked financial turnaround, shifting from significant net losses to positive net income and cash flow, following the strategic focus on Le Mans Ultimate and the sale of its NASCAR license. The company’s Race Control platform accelerated diversification of revenue streams, combining live service, subscription, and game sales, and fostered engagement among users and third-party partners. Management emphasized minimal marketing spend, with growth attributed largely to organic player adoption and technical product enhancements. Ongoing platform expansions and planned console launches position the company for further addressable market gains and continued financial momentum.

  • Stephen Hood stated, "Le Mans Ultimate has captured the attention of the simulation racing community and validated the strategic decision we made to focus the company around a smaller, more disciplined development team and clear long-term strategy."
  • Recent product updates included Easy Anti-Cheat integration, Team Online Championships, Engineer Mode, and the Live Steward system, signaling ongoing investment in the gaming experience and community retention.
  • Stanley Beckley reported, "we generated an average monthly positive cash flow of $300,000 per month in 2025, or $4.1 million cash generated from operations for the entire year," underscoring a sharp improvement from prior-year outflows.
  • Le Mans Ultimate console development was described as "very much on track for either early to mid-2027," with management expressing confidence in the market expansion potential from broader platform accessibility.
  • Management disclosed that Race Control subscriber retention and recurring revenue growth accelerated in the first two months of 2026, though no explicit guidance was provided.

Industry glossary

  • Le Mans Ultimate (LMU): Motorsport Games Inc.’s flagship endurance racing simulation title, referenced as a driver of revenue and player growth.
  • Race Control: The company's proprietary online matchmaking and competition management platform supporting subscription services and integrated with key game titles.
  • DLC (Downloadable Content): Additional purchasable game content released post-launch to expand user experience and monetization.
  • Early Access: A publicly released development stage allowing players to purchase and play a game prior to its full release, used as a feedback and iteration mechanism.

Full Conference Call Transcript

Stephen Hood, and Chief Financial Officer, Stanley Beckley. By now, everyone should have access to the company's fourth quarter and full year 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 will make certain forward-looking statements, which are any statements that are not historical facts within the meaning of 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 statements 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 its most recent Annual Report on Form 10-K for the year ended 12/31/2025, 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 fourth quarter and full year 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 will also be available on the Investor Relations section of Motorsport Games Inc.’s website at www.motorsportgames.com. I will now turn the call over to Stephen Hood, Chief Executive Officer of Motorsport Games Inc. Stephen?

Stephen Hood: Thank you, Ben. Good afternoon, everyone. Thanks for joining the Motorsport Games Inc. fourth quarter and full year 2025 earnings call. I am delighted to report that we have achieved record profitability, with 30% year-over-year revenue growth, generated consistent positive quarterly cash flow, and have substantially improved our cash position, which will enable us to accelerate our progress. Despite the challenges experienced across the wider gaming market, we have delivered a significant turnaround and stand before you today in a tremendously healthy state. In 2025, we generated 95% higher revenues than the same period in the prior year.

At the end of 2025, we had cash and cash equivalents of $5 million, which increased to $6 million as of February 2026. The company generated an average monthly positive cash flow from operations, driven primarily by an increase in profitability. We also secured a revolving line of credit in February 2026. This line of credit is in place on very good terms to ensure we are able to deliver on our multiplatform plans for Le Mans Ultimate without tempering our plan to initiate the build of a new gaming title. Twelve months ago, I spoke on this call acknowledging the very real challenges our business faced.

We needed cash availability and the company was in transition following the strategic sale of our NASCAR license. Today, we are in a fundamentally different position. Le Mans Ultimate has captured the attention of the simulation racing community and validated the strategic decision we made to focus the company around a smaller, more disciplined development team and clear long-term strategy. For Motorsport Games Inc., 2025 was the year we proved this model works. During the year, we delivered five major updates to Le Mans Ultimate in February, June, July, September, and December. This cadence of meaningful improvements is unusual in our racing segment.

It reflects both the commitment of our development team and the advantages of operating a live service product at pace. In July, the game successfully exited Early Access. Since then, we have continued to invest aggressively in improving the player experience, expanding content, and strengthening the underlying technology that powers our simulation experience. In September, we introduced the first content from the European Le Mans Series, responding directly to player demand for additional circuits and categories. In December, we released version 1.2, which represented one of the most comprehensive updates to the platform to date.

While new content such as Circuit Paul Ricard and the Ginetta G61 LMP3 race car were important additions, the larger story was the investment we continue to make in our simulation technology. These technical improvements are the foundation of our approach to building long-term trust and retention in the core of our immediate market. We also made substantial progress in strengthening the competitive integrity of online racing. Version 1.2 introduced Easy Anti-Cheat integration, the launch of our Driver Badge reputation system, and the first phase of Live Steward, an automated incident detection system designed to identify unsafe or unsporting driving behavior.

These systems are critical to building a healthy and sustainable online competitive environment and further demonstrate Motorsport Games Inc.’s intention to improve the experience for not only our core market today, but those players we believe we will reach over time. Alongside this, we introduced the Team Online Championships, enabling organized multi-race seasons, and Engineer Mode, which allows teammates to manage pit strategy remotely during endurance races. These types of features are intended to deepen engagement and reinforce Le Mans Ultimate’s position as a premier endurance racing simulation. It is also important to recognize that over the past year, competitor racing titles have launched into the market; some were highly anticipated. We welcome that competition.

It pushes the genre forward, and we have seen renewed energy within this market segment. What is particularly encouraging is that despite those launches, Le Mans Ultimate has continued to grow its player base and engagement at an accelerated pace. In other words, we have competed in a very active market environment, and the response from players has demonstrated that our focus on authenticity, technology, and community is winning meaningful support. Players are recognizing our passion and celebrating the utility of our chosen content. Average concurrent players on Steam increased from approximately 786 in January 2025 to nearly 3,000 by December that same year—almost a fourfold increase. I am pleased to report that momentum has continued into 2026.

In January, we recorded an all-time peak of over 8,700 concurrent players, with an average player count exceeding 4,200. For a PC-only title, which right now is where Le Mans Ultimate sits, and one that operates within a specialized simulation category, these numbers are strong and compare favorably with many long-established competitors. Importantly, this growth has been entirely organic. We have not invested significantly in marketing during this period. In areas where we do not have dedicated talent and experience, we limit spend.

There will come a time where we push our message to a wider audience, and as such, we are actively recruiting for exceptional marketing talent to join our team and raise awareness of our strong product offering, not least in the run-up to Le Mans Ultimate arriving on gaming consoles. In the meantime, product quality, word-of-mouth advocacy, and a highly engaged community are helping us reach new heights. This brings me to Race Control, which is rapidly becoming a central pillar of our financial model. Race Control is our proprietary matchmaking and competitive racing platform that powers the online experience for those products we choose to integrate; both rFactor 2 and Le Mans Ultimate benefit from this platform.

Beyond enabling online play, it provides an optional subscription layer that allows us to move additional services and features to our most dedicated players. This platform has allowed us to transition from a traditional video game business model, where revenue is largely front-loaded around launch, toward a hybrid model combining game sales, DLC content, and recurring subscription revenues. By the end of 2025, Race Control had over 400,000 registered accounts, more than 26,000 active paying subscribers, and was generating approximately $200,000 in monthly recurring revenue. Importantly, the first two months of 2026 have been among the strongest monthly recurring revenue growth periods we have seen to date.

Many of the features we have introduced, such as Team Championships, Driver Badges, Live Steward, and Engineer Mode, are designed to specifically increase the value of this and strengthen subscriber retention. This combination of recurring revenue, active player engagement, and ongoing content expansion creates a much more stable and scalable financial model for the company. Beyond direct player revenue, Race Control is also becoming a platform that global brands and rights holders want to utilize. Through Race Control, we can provide a turnkey competitive infrastructure for online racing events, including matchmaking, scheduling, anti-cheat, broadcasting tools, and official classification. This creates opportunities for automotive manufacturers, sport series, and consumer brands to activate directly with highly engaged gaming audiences through our platform.

The conversations we are having in this area are encouraging, and we will share more on these developments in the future. Speaking of the future, we continue to make progress on bringing Le Mans Ultimate to PlayStation and Xbox game consoles. Our external development partners are working alongside our internal teams to deliver the first console versions, while simultaneously improving the underlying game engine for our existing and very supportive PC player base. Console represents a significant expansion of the addressable market for Le Mans Ultimate, and we are taking a careful, quality-first approach as we execute on this opportunity.

Finally, with the financial stability we have now achieved, we are beginning to explore the next phase of growth for Motorsport Games Inc. Le Mans Ultimate has demonstrated that our technology, our development approach, and our community engagement strategy can deliver a profitable and sustainable business. We are now evaluating opportunities to extend that model to additional titles in the future. Whilst it is still early, our goal is clear: to build a portfolio of racing experiences supported by the same technology platform, live service infrastructure, and competitive ecosystem that powers Le Mans Ultimate today. To support that next phase of growth, we have begun strengthening the team with targeted hires across engineering, platform development, and strategic leadership.

These additions will help accelerate our ability to expand on the Race Control platform and support the development of future products. I am also pleased to welcome Peter Hanson-Chambers to work alongside our management team in a consultancy role, as we shape the company's next steps. Peter was previously Co-CEO and CFO of Hutch Games and brings deep experience in building and scaling successful game businesses, having operated with top-tier IP such as Formula One and other recognizable licenses in the motorsport space for many years.

He has already made a positive contribution towards our forward plans, and we are excited about the perspective and expertise he brings to Motorsport Games Inc., and hope to speak more on this in the future. With the foundation now firmly in place and operating as we had planned, we are confident in our ability to continue building momentum through 2026 and beyond. The turnaround phase is behind us. Now our focus is on scaling the platform we have built. I will now turn the call over to Stanley Beckley, our Chief Financial Officer, to discuss the financial results for the fourth quarter and full year 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 the fourth quarter and full year 2025. Revenues for the quarter were $3.8 million, up $1.8 million, or 95%, compared to the same period in the prior year. Higher digital game sales from the release of Le Mans Ultimate, a core game title, along with higher downloadable content sales, were primary drivers for the increase. Net income for 2025 was $800,000, compared to a net loss of $2.9 million for the same period in the prior year, an increase of $3.7 million.

Higher revenues, lower cost of goods sold, and operating expenses were key contributors to the increase in net income for the full year 2025 when compared to the prior year period. Consequently, net income attributable to Class A common stock was $0.15 for 2025, compared to a loss per share of $0.89 for the same period in the prior year. We are reporting adjusted EBITDA of $1.9 million for 2025, compared to an adjusted EBITDA loss of $2.5 million for the same period in the prior year. The reasons for the increase in adjusted EBITDA are the same as those discussed and that affect the change in net income for the period and comparative quarter.

For full year 2025, revenues were $11.3 million, up $2.6 million, or 30%, when compared to the prior year period, primarily due to a $5.8 million increase in 2025 from sales of our Le Mans Ultimate racing title released in February 2024, particularly DLC sales, which were higher compared to 2024, and $1.2 million from Race Control, offset by a $4.4 million decrease in revenues in 2025 related to NASCAR, a game title the company decided to sell so that we might concentrate our efforts elsewhere. As a result, we were not selling the NASCAR titles from the start of 2025. Net income was $6.8 million for 2025, compared to a net loss of $3.1 million for 2024.

Higher revenues, lower cost of goods sold, and operating expenses were key contributors to the increase in net income for the full year 2025 when compared to the prior year period. Adjusted EBITDA was $7.3 million for the full year 2025, compared to an adjusted EBITDA loss of $3.9 million for the same period in the prior year, an improvement of $11.2 million. The increase in adjusted EBITDA was primarily due to the same factors driving the previously discussed change in net income for the full year 2025 when compared to the prior year period, as well as the reduction in the non-recurring gains being excluded from adjusted EBITDA.

Net income attributable to Class A common stock was $1.43 in 2025, compared to a net loss of $0.94 in the prior year. As it relates to liquidity, as of 12/31/2025, we had cash and cash equivalents of $5 million, which increased to $6 million as of 02/28/2026. For the year ended 12/31/2025, we generated an average positive cash flow from operations of approximately $300,000 per month that was primarily due to increased profitability, $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. We currently have no outstanding debt or purchase commitment liabilities.

Furthermore, our working capital as of 12/31/2025 was $4.2 million versus negative working capital of $2.2 million as of 12/31/2024, underscoring a much improved balance sheet and liquidity position. We also secured a $3 million revolving line of credit from Citibank in February 2026. There is currently no balance due to Citibank under the revolving line of credit. Thank you all for your time. I will now turn the call back to Stephen for closing remarks.

Stephen Hood: Thank you again, everyone, for joining this call today. If I can summarize all the progress we have delivered over the last twelve months, it would be through the lens of our turnaround. We have had multiple profitable quarters, delivering a strong cash position. We have a scalable model in our Race Control platform, which is building an audience and paying subscribers at a steady rate. We have architected strong organic demand without significant marketing spend. We are hard at work on bringing our most recent game to the console market and are close to incubating the next product from the company that brought you the evergreen Le Mans Ultimate. We have moved beyond stabilizing the business.

We have demonstrated that our model works, and now our focus is on scaling it. Thank you for joining us today. I will now turn it back to the operator.

Operator: Thank you. We will now open for questions. We will take our first question from Anja Soderstrom with Sidoti. Your line is open.

Anja Soderstrom: Hi, thank you for taking my questions, and congratulations on the nice performance. I am just curious, with the development costs declining year over year, what is the main driver for that?

Stanley Beckley: Yes. Hi, Anja. Thanks for the question. As we disclosed in our Form 10-K, we capitalized about $1.1 million of development costs. These were costs related to significant upgrades and enhancements to the game. We have released a lot of content to LMU since the game's launch in February 2024. To date, we have released about seven individual downloadable content packs, including the European Le Mans Series Pack 1 that was released in September and Pack 2 that was released in December. Pack 3 is scheduled for release later this month. So that is the main reason for the decrease in development costs.

We also, in the past couple of years, have gone through some restructurings, so our payroll costs are also down for developers and contractors.

Anja Soderstrom: Okay. And is AI any sort of driver to the development cost coming down? Or how are you implementing AI?

Stephen Hood: Hi, Anja. Very good question. AI is everywhere at the moment. It certainly features in Motorsport Games Inc.’s business. I think a lot of companies are driving forward trying to figure things out. We are a high-tech software engineering business by nature, and AI has always featured in our development pipelines and in our products. The way that we utilize it at the moment is in a lot of rapid iteration. One of the benefits of Le Mans Ultimate at the moment, as a live service, is the rate at which we are putting out these updates.

It is a live service that is very much in front of the community, who are welcoming the regular updates, the regular pack updates, the new content coming out. AI is already forming a part of that development experience. Obviously, I am not going to give away our secrets at the moment, but we are leveraging it to an ever-growing extent. I think it does bring down development costs, but the biggest advantage for us is that we can more readily put out updates that resonate with our players. It is beneficial to us because it enables us to really drive home the creative advantage that we have.

Anja Soderstrom: Okay. Thank you. You mentioned LMU for PlayStation and Xbox is progressing. Are you still expecting to launch that in late 2026 or early 2027, and how meaningful do you think that is going to be to revenue? What sort of impact is it going to have on margins?

Stephen Hood: Hi. I will take that again, Anja. The product is very much on track. We are going to drill down as we get closer to release with an exact release date. The key thing that I would like to project at the moment is that it is less of a technical challenge for us now because we have been in this business for some time. It is actually about picking the right window for release—what is the most beneficial window for release? Do we pair it with a major motorsport event? What are competitor titles doing? It is very much on track for either early to mid-2027. I think it is going to have a big impact.

I would say that because I have been in this industry for some time and have worked on many a console product. The addressable market is huge. There is a real lack of high-end racing simulations available on console, and that has been a traditional problem for many years. There are lots of different racing games out there—there are more arcade titles—and in order for the average consumer to engage in the depth of simulation racing experience that we provide, people are having to spend upwards of $2,000, $3,000, $4,000 on a high-end PC, a wheel, and pedals. That is a major investment that not a lot of people are willing to make for the first time experiencing racing simulation.

As soon as you go to console, where you can pick up a console for a few hundred dollars, if you can engage through that medium, which is more readily accessible to most people, and you can experience our titles, it stands to reason that we can hit a much larger audience because the price of entry is dramatically reduced. It may mean that people come into our ecosystem. It may mean that they come into contact with Race Control in greater numbers, and they may wish to step up to the PC product.

We are going to put out a high-quality product on console, on PlayStation and Xbox, that will be available worldwide, and we are very excited about that. We are not putting out any guidance in terms of the addressable audience that we expect to reach, but—

Anja Soderstrom: Okay. Thank you. Can you hear me? The line dropped off.

Stanley Beckley: Yes. It looks like Stephen got cut off there, but I think he was just finishing off his points.

Anja Soderstrom: Okay. Then I am also curious about the customer acquisition cost, and also maybe how you anticipate AI to be a positive for you there—how you can work with AI to become more efficient there.

Stanley Beckley: Sure. As far as customer acquisition cost, we have invested very little in marketing over the past two years, and our growth has been primarily organic during this time. However, as we seek to get our message out to a wider audience, we are actively looking for suitable marketing talent to join our team. With very little to no marketing spend, there is not much in terms of customer acquisition cost there. The second question about the use of AI—I believe Stephen may have addressed that earlier—but AI is used to some extent by the development team and with regards to answering customer queries. Stephen is back, and I think he can get into more details on that.

Stephen, are you there?

Stephen Hood: Yes. I managed to reconnect. Are you talking about AI?

Stanley Beckley: Yes.

Stephen Hood: We are leveraging it across the business—not to replace the creative direction that we have and the expertise, but to bring elements to market faster, which is the primary use right now. Short-cutting things enables us to really punch above our weight, and that is the important utilization of AI for us. We are a relatively small team by choice right now. We are getting the wheels turning, but AI enables us to deliver at a far more rapid rate and bring more content and choices to players, which is clearly working for us.

Anja Soderstrom: Okay. Thank you. You have been driving quite nice revenue growth driven by the Le Mans release. How should we think about continued growth there and sustained profitability? You also improved the balance sheet—what are your priorities for cash and capital allocation, and are you expected to remain cash flow positive?

Stanley Beckley: I will address the latter half of that question first. Our cash flow and our liquidity position are much stronger over the past year than they have been since inception. As we disclosed in our Form 10-K that was filed after market close today, we generated an average monthly positive cash flow of $300,000 per month in 2025, or $4.1 million cash generated from operations for the entire year, compared to an average monthly cash burn of $200,000, or $2.8 million used, in 2024. We had a robust cash balance as well of $6 million at the end of February, and we recently secured a $3 million revolving line of credit facility from Citibank.

This line of credit facility will be more than sufficient for us to fully support the development of LMU to console. As it relates to the revenue mix, our LMU franchise has more than made up for the loss of revenues from the sale of our NASCAR license. In 2025, for example, revenues from our Le Mans franchise consisted of about 78% of annual revenues versus 34% the previous year.

The mix of the LMU revenues, in addition to growing the Race Control subscriptions—which made up 11% of our total revenues in 2025 versus less than 1% in 2024; the Race Control platform was launched in December 2024—has led to a bit more balancing and diversification of our revenue stream, and we expect that to continue to grow into the future.

Anja Soderstrom: Okay. Thank you. That was all from me. Thank you.

Stanley Beckley: Thank you.

Operator: This does conclude the Q&A portion of today's call and also the meeting today. Thank you. We appreciate your time and participation. You may now disconnect.