Motorsport Games, Inc. ((MSGM)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Motorsport Games, Inc. painted a picture of both achievement and challenge. While the company celebrated the success of its Le Mans Ultimate game, the launch of a new subscription service, and favorable legal and financial resolutions, it also faced significant financial hurdles. These include a substantial net loss and concerns about cash reserves and future funding. Despite these challenges, the company remains optimistic about its growth prospects and potential recovery.
Le Mans Ultimate Success
Le Mans Ultimate has emerged as a standout success for Motorsport Games, receiving a warm reception from consumers and industry influencers alike. A major update in December led to a surge in player numbers, reaching levels not seen since the game’s initial launch. The game is drawing favorable comparisons to industry giants and has captured the attention of a rapidly expanding audience.
Launch of Subscription Service
Motorsport Games launched a new subscription service through racecontrol.gg in December, generating over $120,000 in gross revenues within the first 21 days. The service has attracted nearly 6,000 active subscribers, indicating strong early adoption and potential for future growth.
Revenue Increase
The company reported a revenue increase for the fourth quarter, reaching $2.0 million—a 13% rise compared to the same period last year. This growth was primarily driven by higher digital game sales, particularly from the release of Le Mans Ultimate.
Settlement with Luminis
A settlement with Luminis has bolstered Motorsport Games’ financial position by $180,000, removing obstacles to full ownership of Studio 397 and their original technology contribution to Le Mans Ultimate.
Positive Legal Ruling
Motorsport Games received a favorable ruling in the Innovate Corporation litigation, securing a summary judgment in its favor on all counts. This outcome potentially alleviates some of the company’s legal fee liabilities.
Net Loss Increase
Despite revenue growth, the company reported a net loss of $2.9 million for the fourth quarter of 2024, a significant decline from the net income of $2.7 million in the same period the previous year. This $5.6 million decrease highlights the financial challenges faced by the company.
Cash Position and Funding Concerns
As of December 31, 2024, Motorsport Games had $0.9 million in cash and cash equivalents, which increased to $1.2 million by February 28, 2025. However, the company acknowledges that this is insufficient to fund operations over the next year, necessitating additional funding.
Adjusted EBITDA Loss
The company reported an adjusted EBITDA loss of $2.5 million for the fourth quarter of 2024, compared to an adjusted EBITDA of $0.4 million in the prior year. This reflects a challenging financial period for Motorsport Games.
Forward-Looking Guidance
In its forward-looking guidance, Motorsport Games highlighted a 13% revenue increase for the fourth quarter, driven by digital game sales of Le Mans Ultimate. Despite this, the company reported a net loss due to increased expenses. Full-year revenues reached $8.7 million, with an adjusted EBITDA loss of $3.9 million. The company is actively exploring funding options to address future cash shortfalls, with cash and cash equivalents at $1.2 million as of February 28, 2025.
In summary, Motorsport Games, Inc.’s earnings call revealed a company at a crossroads, celebrating significant achievements while grappling with financial challenges. The success of Le Mans Ultimate and the new subscription service are bright spots, but concerns about cash reserves and funding loom large. The company remains hopeful for growth and recovery, as it navigates these complex financial waters.