Motorsport Games (MSGM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 8.2% year-over-year to $1.9 million, driven by Le Mans Ultimate's strong launch and digital sales.

• Net income for Q2 2024 was $2.1 million, reversing a net loss of $8.2 million in Q2 2023, aided by $2.5 million from the INDYCAR settlement and $0.6 million from BARC (TOCA) settlement.

• Gross profit margin improved to 59.0% from 50.2% year-over-year, reflecting higher digital sales and lower royalties.

• The first paid DLC and Season Pass for Le Mans Ultimate saw strong uptake, with 46% of buyers choosing the Season Pass.

• Raised $1 million in gross proceeds from a registered direct offering to support operations.

Financial highlights

• Q2 2024 revenue was $1.9 million (+8.2% YoY); net income was $2.1 million (vs. $-8.2 million Q2 2023).

• Adjusted EBITDA loss narrowed to $0.2 million from $2.7 million year-over-year.

• Gross profit for Q2 2024 was $1.1 million, with a gross margin of 59.0%.

• Net income per share was $0.87, compared to a loss of $3.04 per share in Q2 2023.

• Cash and cash equivalents were $0.5 million as of June 30, 2024, rising to $1.3 million by July 31, 2024 after a $0.9 million capital raise.

Outlook and guidance

• Management expresses substantial doubt about the ability to continue as a going concern due to insufficient liquidity for the next year.

• Additional funding is required to sustain operations, with options including equity/debt financing, asset sales, and cost reductions.

• Company expects continued net cash outflows and ongoing losses as it invests in new game development.

• NASCAR product revenue is expected to decline and cease after December 31, 2024 due to license sale.

• Further adjustments to product roadmap and business structure may be necessary to address liquidity constraints.