Motorsport Games Reports Second Quarter 2025 Financial Results
MIAMI, Aug. 13, 2025 (GLOBE NEWSWIRE) -- Motorsport Games Inc. (NASDAQ:MSGM) ("Motorsport Games" or "the Company") today reported financial results for its second quarter ended June 30, 2025. The Company has also posted the second 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.
"Q2 2025 has been an incredible period of growth for our Company," commented Stephen Hood, President and Chief Executive Officer of Motorsport Games. "The Le Mans Ultimate team at Studio 397 utilized greatly the attention that the ‘real-world' 24 hours of Le Mans attracts and delivered key features alongside strong marketing messaging to great effect. The result of which has been record player activity and greatly increased revenues year-over-year for the product."
"Our recently announced expansion downloadable content ("DLC") for Le Mans Ultimate to include the European Le Mans Series is also designed to continue this trend going forward" continued Hood. "We expect to deliver a first taste of this additional content to eager players at the end of Q3 2025."
"Now on a more solid financial footing, the Company is committed to undertaking efforts to further grow both the Le Mans franchise and possible future new titles to bolster our portfolio and diversify our income streams."
Second Quarter 2025 and Subsequent Business Update
Net income attributable to Motorsport Games Inc. of $4.3 million for Q2 2025 compared to $2.1 million in Q2 2024, an improvement of $2.2 million or 102.2%.
Net income attributable to Class A common stock was $0.82 per share in Q2 2025, compared to net income per share of $0.77 in Q2 2024.
Generated cash from operations of $0.3 million during the six months ended June 30, 2025.
Released Le Mans Ultimate Version 1.0 on July 22, 2025, featuring two new cars added to the base game, advanced team management mechanics, customer liveries and additional improvements
Select Financial Highlights for the Three Months Ended June 30, 2025
Consolidated revenue for the second quarter of 2025 was approximately $2.6 million compared to approximately $1.9 million for the same period in the prior year, an increase of approximately $0.7 million, or 37.7%. Gross profit was $2.1 million compared to $1.1 million for the same period in the prior year, an increase of $1.0 million, while gross profit margin increased to 82.4% from 59.0%.
Net income for the second quarter of 2025 was $4.2 million, compared to net income of $2.1 million for the same period in the prior year, an improvement of approximately $2.1 million or 103.0%. The increase in net income is driven by an increase in consolidated revenue of $0.7 million, other operating income of $1.1 million, which includes $0.8 million from the Wesco Insurance Company settlement and $0.3 million related to discounts negotiated on a few outstanding vendor invoices. Net income attributable to Class A common stock was $0.82 per share for the second quarter of 2025, compared to net income of $0.77 for the same period in the prior year.
Adjusted EBITDA(1) for the second quarter of 2025 was $3.7 million, compared to an Adjusted EBITDA loss(1) of $0.5 million 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 the second quarter of 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.
The following table provides a reconciliation from net income to Adjusted EBITDA(1) for the second quarter of 2025 and 2024, respectively:
Three Months EndedJune 30, 2025
Three Months EndedJune 30, 2024
Net income
$
4,238,172
$
2,087,483
Interest expense, net
4,740
29,746
Depreciation and amortization (1)
253,935
587,160
EBITDA
4,496,847
2,704,389
Gain from settlement of license liabilities
-
(3,248,000
)
Gain from Wesco Settlement Agreement
(800,000
)
-
Stock-based compensation
-
10,658
Adjusted EBITDA
$
3,696,847
$
(532,953
)
(1
)
Includes $242,238 and $522,830 of amortization expenses included in cost of revenues for the three months ended June 30, 2025 and 2024, respectively.
Cash Flow and Liquidity
As of June 30, 2025, the Company had cash and cash equivalents of approximately $2.4 million, which increased to $2.8 million as of July 31, 2025. During the six months ended June 30, 2025, the Company generated an average positive cash flow from operations of approximately $46,000 per month that was primarily due to $0.8 million from the Wesco Insurance Company settlement in June 2025 and $0.5 million from a settlement agreement with HC2 Holdings 2 Inc. in March 2025. While it has taken, and continues to take measures to reduce its costs, the Company expects to have a net cash outflow from operations for the foreseeable future as it continues to develop its product portfolio and invest in developing new video game titles.
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.
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 $1.0 million in gross proceeds before deducting the placement agent's fees and other offering expenses. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.
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 $2.5 million: (i) 1,894,892 shares of the Company's Class A common stock, par value $0.0001 (the "Class A Common Stock") and (ii) a pre-funded warrant (the "Pre-Funded Warrant") to purchase up to 377,836 shares of Class A Common Stock at an exercise price of $0.0001 per share. The purchase price for one share of Class A Common Stock was $1.10 and the purchase price for one pre-funded warrant was $1.0999 per share, representing a premium of approximately 33% to the closing price of the Company's Class A common stock as of April 10, 2025. The Company received net proceeds of approximately $2.35 million from the Private Placement, after deducting offering expenses paid by the Company. The Company intends to use the net proceeds received from the Private Placement primarily for working capital and general corporate expenses and other strategic initiatives approved by the Company's board of directors.
(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, 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 our operating performance, is defined as EBITDA, which is net income 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 from operations, net 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 ...
