Motorsport Games Reports First Quarter 2025 Financial Results
Rhea-AI Summary
Motorsport Games (NASDAQ: MSGM) reported its Q1 2025 financial results, showing a net income of $1.0 million ($0.33 per share) compared to a net loss of $1.7 million in Q1 2024. Despite revenue declining 41.9% to $1.8 million, the company improved its bottom line through cost reductions and settlements. The company recently secured $2.5 million through a private placement led by Pimax, increasing cash reserves to $3.1 million as of April 30, 2025.
The company's Le Mans Ultimate racing title is showing promise, with a significant update planned for June 10th. However, Motorsport Games continues to face liquidity challenges and expects net cash outflow from operations, leading them to explore additional funding options, strategic alternatives, and cost reduction initiatives.
Positive
- Achieved net income of $1.0 million in Q1 2025, compared to $1.7 million loss in Q1 2024
- Secured $2.5 million through private placement with Pimax in April 2025
- Maintained high gross profit margin of 73.5%
- Generated positive monthly cash flow from operations of $0.1 million in Q1 2025
- Successfully reduced operating expenses through headcount reductions
Negative
- Revenue declined 41.9% year-over-year to $1.8 million in Q1 2025
- Expects continued net cash outflow from operations for foreseeable future
- Reduced workforce by 38% (23 employees) in cost-cutting measure
- Facing ongoing liquidity constraints requiring additional funding
- Gross profit decreased by $1.1 million year-over-year
News Market Reaction – MSGM
On the day this news was published, MSGM declined 4.42%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
MIAMI, May 09, 2025 (GLOBE NEWSWIRE) -- Motorsport Games Inc. (NASDAQ: MSGM) (“Motorsport Games” or “the Company”) today reported financial results for its first quarter ended March 31, 2025. The Company has also posted the first quarter 2025 earnings slides highlighting key milestones that occurred during and subsequent to the period, which are accessible on the Company’s investor relations website.
“Following our recently announced closing of a
Hood continued, “With the immediate future secure, the business is undertaking efforts to create opportunities for growth within our existing portfolio of games but to also look for exciting new product opportunities that can benefit from the investment made into our technology, as showcased with the successful Le Mans Ultimate simulation game”
“Looking ahead, Q2 2025 is likely to be a busy period for our Le Mans Ultimate game with a significant update planned for June 10th featuring new game features and the release of the final 2024 season content pack with more exciting news for the game set to be released in the near future.”
First Quarter 2025 and Subsequent Business Update
- Net income attributable to Motorsport Games Inc. of
$1.0 million in Q1 2025 compared to a net loss of$1.7 million in Q1 2024, an improvement of$2.7 million . - Net income attributable to Class A common stock was
$0.33 per share in Q1 2025, compared to a net loss per share of$0.61 in Q1 2024. - Released update for Le Mans Ultimate in February 2025 that included the addition of three more LMGT3 category cars along with significant quality of life improvements.
- Raised
$2.5 million in gross proceeds from a private placement of the Company’s Class A common stock and issuance of a pre-funded warrant, which closed on April 11, 2025.
Select Financial Highlights for the Three Months Ended March 31, 2025
Revenue for the first quarter of 2025 was approximately
Net income for the first quarter of 2025 was
Adjusted EBITDA(1) for the first quarter of 2025 was
The following table provides a reconciliation from net income (loss) to Adjusted EBITDA(1) for the first quarter of 2025 and 2024, respectively:
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | ||||||
| Net income (loss) | $ | 1,022,613 | $ | (1,683,398 | ) | ||
| Interest expense, net | 13,010 | 30,882 | |||||
| Depreciation and amortization (1) | 252,057 | 601,946 | |||||
| EBITDA | 1,287,680 | (1,050,570 | ) | ||||
| Gain from settlement of purchase commitment liabilities | (175,460 | ) | - | ||||
| Gain from Settlement Agreement | (500,000 | ) | - | ||||
| Stock-based compensation | - | 68,191 | |||||
| Adjusted EBITDA | $ | 612,220 | $ | (982,379 | ) | ||
| (1) | Includes | |
Cash Flow and Liquidity
As of March 31, 2025, the Company had cash and cash equivalents of approximately
The Company’s future liquidity and capital requirements include funds to support the planned costs to operate its business, including amounts required to fund working capital, support the development and introduction of new products, maintain existing titles, and certain capital expenditures.
In order to address its liquidity shortfall, the Company continues to explore several options, including, but not limited to: i) additional funding in the form of potential equity and/or debt financing arrangements or similar transactions (collectively, “Capital Financing”); ii) other strategic alternatives for its business, including, but not limited to, the sale or licensing of the Company’s assets; and iii) cost reduction and restructuring initiatives, each of which is described more fully below.
On October 3, 2024, the Company implemented additional measures intended to continue to bring down its year-over-year operating expense through a reduction of the Company’s workforce primarily in the United States and the United Kingdom by approximately 23 employees and contractors. The workforce reduction impacted approximately 23 individuals or
On July 29, 2024, the Company completed a registered direct offering of shares of common stock and pre-funded warrants to purchase shares of common stock and concurrent private placement of warrants to purchase shares of common stock with H.C. Wainwright & Co., LLC acting as the exclusive placement agent, which offerings raised approximately
On April 11, 2025, the Company entered into a securities purchase agreement with several institutional and accredited investors for the issuance and sale in a private placement (the “Private Placement”) of the following securities for aggregate gross proceeds of approximately
Due to the continuing uncertainty surrounding the Company’s ability to raise funding in the form of potential Capital Financing, and in light of its liquidity position and anticipated future funding requirements, the Company continues to explore other strategic alternatives and potential options for its business, including, but not limited to, the sale or licensing of certain of the Company’s assets in addition to the past sales of its NASCAR License and Traxion.
If any such additional strategic alternative is executed, it is expected it would help to improve the Company’s working capital position and reduce overhead expenditures, thereby lowering the Company’s expected future cash-burn, and provide some short-term liquidity relief. Nonetheless, even if the Company is successful in implementing one or more additional strategic alternatives, the Company will continue to require additional funding and/or further cost reduction measures in order to continue operations, which includes further restructuring of its business and operations. There are no assurances that the Company will be successful in implementing any additional strategic plans for the sale or licensing of its assets, or any other strategic alternative, which may be subject to the satisfaction of conditions beyond the Company’s control.
As the Company continues to address its liquidity constraints, the Company may need to make further adjustments to its product roadmap in order to reduce operating cash burn. Additionally, the Company continues to seek to improve its liquidity through maintaining and enhancing cost control initiatives. The Company plans to continue evaluating the structure of its business for additional changes in order to improve both its near-term and long-term liquidity position, as well as create a healthy and sustainable Company from which to operate.
There can be no assurance that the Company would be able to take any of the actions referred to above because of a variety of commercial or market factors, including, without limitation, market conditions being unfavorable for an equity or debt issuance or similar transactions, loans not being available from third parties, or that the transactions may not be permitted under the terms of the Company’s various debt instruments then in effect, such as due to restrictions on the incurrence of debt, incurrence of liens, asset dispositions and related party transactions. In addition, such actions, if taken, may not enable the Company to satisfy its capital requirements if the actions that the Company is able to consummate do not generate a sufficient amount of additional capital.
(1)Use of Non-GAAP Financial Measures
Adjusted EBITDA (the “Non-GAAP Measure”) is not a financial measure defined by U.S. generally accepted accounting principles (“U.S. GAAP”). Reconciliations of the Non-GAAP Measure to net income (loss), its most directly comparable financial measure, calculated and presented in accordance with U.S. GAAP, are presented in the tables above.
Adjusted EBITDA, a measure used by management to assess the Company’s operating performance, is defined as EBITDA, which is net income (loss) plus interest expense, depreciation and amortization, less income tax benefit (if any), adjusted to exclude: (i) gain from settlement of license liabilities and other agreements; (ii) impairment of intangible assets; (iii) loss contingency expense; and (iv) stock-based compensation expenses.
The Company uses the Non-GAAP Measure to manage its business and evaluate its financial performance, as Adjusted EBITDA eliminates items that affect comparability between periods that the Company believes are not representative of its core ongoing operating business. Additionally, management believes that using the Non-GAAP Measure is useful to its investors because it enhances investors’ understanding and assessment of the Company’s normalized operating performance and facilitates comparisons to prior periods and its competitors’ results (who may define Adjusted EBITDA differently).
The Non-GAAP Measure is not a recognized term under U.S. GAAP and does not purport to be an alternative to revenue, income/loss from operations, net (loss) income, or cash flows from operations or as a measure of liquidity or any other performance measure derived in accordance with U.S. GAAP. Additionally, the Non-GAAP Measure is not intended to be a measure of free cash flows available for management’s discretionary use, as it does not consider certain cash requirements, such as interest payments, tax payments, working capital requirements and debt service requirements. The Non-GAAP Measure has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for the Company’s results as reported under U.S. GAAP. Management compensates for the limitations of using the Non-GAAP Measure by using it to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business than would be presented by using only measures in accordance with U.S. GAAP. Because not all companies use identical calculations, the Non-GAAP Measure may not be comparable to other similarly titled measures of other companies.
Conference Call and Webcast Details
The Company will host a conference call and webcast at 5:00 p.m. ET today, May 9, 2025, to discuss its financial results. The live conference call can be accessed by dialing 1-800-267-6316 or 1-203-518-9783 and using Conference ID “MOTOR”. Alternatively, participants may access the live webcast on the Motorsport Games Investor Relations website at https://ir.motorsportgames.com under “Events.”
About Motorsport Games:
Motorsport Games is a racing game developer, publisher and esports ecosystem provider of official motorsport racing series. Combining innovative and engaging video games with exciting esports competitions and content for racing fans and gamers, Motorsport Games strives to make racing games that are authentically close to reality. The Company is the officially licensed video game developer and publisher for iconic motorsport racing series including the 24 Hours of Le Mans and the FIA World Endurance Championship, recently releasing Le Mans Ultimate in Early Access. Motorsport Games also owns the industry leading rFactor 2 and KartKraft simulation platforms. rFactor 2 also serves as the official sim racing platform of Formula E, while also powering F1 Arcade through a partnership with Kindred Concepts. Motorsport Games is also an award-winning esports partner of choice for the 24 Hours of Le Mans, creating the renowned Le Mans Virtual Series. Motorsport Games is building a virtual racing ecosystem where each product drives excitement, every esports event is an adventure, and every race inspires.
For more information about Motorsport Games visit: www.motorsportgames.com.
Forward-Looking Statements
Certain statements in this press release, the related conference call and webcast which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are provided pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements or information in this press release, the related conference call and webcast that are not statements or information of historical fact may be deemed forward-looking statements. Words such as “continue,” “will,” “may,” “could,” “should,” “expect,” “expected,” “plans,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning (i) our confidence that the Company is showcasing an improved outlook; (ii) our efforts to create opportunities for growth within our current portfolio of games and new product opportunities that can benefit from the investment made in our technology; (iii) the significant update planned for our Le Mans Ultimate game featuring new game features, the release of the final 2024 content pack and more exciting news for the game set to be released in the near future; (iv) not having sufficient cash on hand to fund operations over the next year and additional funding being required in order to continue operations; (v) obtaining additional funding in the form of potential equity and/or debt financing arrangements or similar transactions; (vi) entering into strategic alternatives for the Company’s business, including, but not limited to, the sale or licensing of the Company’s assets in addition to past sales of its NASCAR license and Traxion; and (vii) the Company’s ability to improve its liquidity through further cost reduction and restructuring initiatives.
All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside of the Company’s control and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to: (i) difficulties, delays or less than expected results in achieving the Company’s growth plans, objectives and expectations, including delays in the release of new game features and the release of the final 2024 season content pack, failure to improve the Company’s long-term funding needs in order to produce the great game experiences it has proved it can offer under its new business structure, decreased sales of the Company’s products due to the disposition of key assets, further changes in the Company’s product roadmap, the Company’s inability to deliver new products and/or new content or features for existing products, and/or the Company’s inability, in whole or in part, to continue to execute its business strategies and plans, such as due to less than anticipated customer acceptance of its new game titles and/or less than anticipated benefits from its future technologies, the Company experiencing difficulties or the inability to launch its games as planned, less than anticipated performance of the games impacting customer acceptance and sales and/or greater than anticipated costs and expenses to develop and launch its games, including, without limitation, higher than expected labor costs, the Company’s inability to establish partnerships with additional service providers to come onboard to the Company’s ecosystem and, in addition to the factors set forth in (ii) through (vi) below, the Company’s continuing financial condition and ability to obtain additional debt and/or equity financing to meet its liquidity requirements, such as the going concern qualification on the Company’s annual audited financial statements posing difficulties in obtaining new financing on terms acceptable to the Company, or at all; (ii) difficulties, delays in or unanticipated events that may impact the timing and scope of new or planned products, features, events or other offerings; (iii) less than expected benefits from implementing the Company’s management strategies and/or adverse economic, market and geopolitical conditions that negatively impact industry trends, such as significant changes in the labor markets, an extended or higher than expected inflationary environment, a higher interest rate environment, tax increases impacting consumer discretionary spending and/or quantitative easing that results in higher interest rates that negatively impact consumers’ discretionary spending; (iv) greater than anticipated negative operating cash flows such as due to higher than expected development costs, higher interest rates and/or higher inflation, or failure to achieve the expected savings under any cost reduction and restructuring initiatives; (v) difficulties and/or delays in resolving the Company’s liquidity and capital requirements due to reasons including, without limitation, difficulties in securing funding that is on commercially acceptable terms to the Company or at all, such as the Company’s inability to complete in whole or in part any potential debt and/or equity financing transactions or similar transactions, any inability to achieve cost reductions, including, without limitation, those which the Company expects to achieve through any cost reduction and restructuring initiatives, as well as any inability to consummate one or more strategic alternatives for the Company’s business, including, but not limited to, the sale or licensing of the Company’s assets, and/or less than expected benefits resulting from any such strategic alternative; and/or (vi) difficulties, delays or the Company’s inability to successfully complete any cost reduction and restructuring initiatives, in whole or in part, which could result in less than expected operating and financial benefits from such actions, as well as delays in completing any cost reduction and restructuring initiatives, which could reduce the benefits realized from such activities; higher than anticipated restructuring charges and/or payments and/or changes in the expected timing of such charges and/or payments; and/or less than anticipated annualized cost reductions from any cost reduction and restructuring initiatives and/or changes in the timing of realizing such cost reductions, such as due to less than anticipated liquidity to fund such activities and/or more than expected costs to achieve the expected cost reductions.
Factors other than those referred to above could also cause the Company’s results to differ materially from expected results. Additional examples of such risks and uncertainties include, but are not limited to: (i) the Company’s ability (or inability) to maintain existing, and to secure additional, licenses and other agreements with various racing series; (ii) the Company’s ability to successfully manage and integrate any joint ventures, acquisitions of businesses, solutions or technologies; (iii) unanticipated operating costs, transaction costs and actual or contingent liabilities; (iv) the ability to attract and retain qualified employees and key personnel; (v) adverse effects of increased competition; (vi) changes in consumer behavior, including as a result of general economic factors, such as increased inflation, higher energy prices and higher interest rates; (vii) the Company’s inability to protect its intellectual property; and/or (vii) local, industry and general business and economic conditions.
Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the Company’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, its Quarterly Reports on Form 10-Q filed with the SEC during 2025, as well as in its subsequent filings with the SEC. The Company anticipates that subsequent events and developments may cause its plans, intentions and expectations to change. The Company assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law. Forward-looking statements speak only as of the date they are made and should not be relied upon as representing the Company’s plans and expectations as of any subsequent date.
Website and Social Media Disclosure
Investors and others should note that we announce material financial information to our investors using our investor relations website (ir.motorsportgames.com), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media and blogs, to communicate with our investors and the public about our company and our products. It is possible that the information we post on our websites, social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on the websites, social media channels and blogs, including the following (which list we will update from time to time on our investor relations website):
| Websites | Social Media | |
| motorsportgames.com | Twitter: @msportgames | |
| Instagram: msportgames | ||
| Facebook: Motorsport Games | ||
| LinkedIn: Motorsport Games | ||
The contents of these websites and social media channels are not part of, nor will they be incorporated by reference into, this press release.
Contacts:
Investors:
Investors@motorsportgames.com
Media:
PR@motorsportgames.com
Appendix:
The following table provides a comparative summary of the Company’s financial results for the periods presented:
| MOTORSPORT GAMES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||
| Three Months Ended March 31, | |||||||
| 2025 | 2024 | ||||||
| Revenues | $ | 1,758,453 | $ | 3,029,036 | |||
| Cost of revenues | 465,386 | 666,627 | |||||
| Gross profit | 1,293,067 | 2,362,409 | |||||
| Operating expenses: | |||||||
| Sales and marketing | 97,701 | 250,386 | |||||
| Development | 601,953 | 1,063,357 | |||||
| General and administrative [1] | 1,168,482 | 2,190,266 | |||||
| Depreciation and amortization | 18,126 | 73,724 | |||||
| Total operating expenses | 1,886,262 | 3,577,733 | |||||
| Other operating income | 500,000 | - | |||||
| Loss from operations | (93,195 | ) | (1,215,324 | ) | |||
| Interest expense | (13,010 | ) | (30,882 | ) | |||
| Other income (expense), net | 1,128,818 | (437,192 | ) | ||||
| Net income (loss) | 1,022,613 | (1,683,398 | ) | ||||
| Less: Net loss attributable to non-controlling interest | (18,445 | ) | (18,442 | ) | |||
| Net income (loss) attributable to Motorsport Games Inc. | $ | 1,041,058 | $ | (1,664,956 | ) | ||
| Net income (loss) per Class A common share attributable to Motorsport Games Inc.: | |||||||
| Basic and diluted | $ | 0.33 | $ | (0.61 | ) | ||
| Weighted-average shares of Class A common stock outstanding: | |||||||
| Basic and diluted | 3,183,558 | 2,722,728 | |||||
| [1] | Includes related party expenses of |
An image accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/3c86d0ca-0182-41b3-a1c0-fe1af7fd2bc6
FAQ
What were MSGM's Q1 2025 earnings per share?
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