Name: MGT CAPITAL INVESTMENTS, INC. Q1 2015 Earnings Call
Start: 2025-11-20 10:26:21.800238+00

Executive Summary

Q1 2015 revenue rose to $0.217M with gross margin $0.127M (59% of revenue), up 253% YoY, while operating loss remained at -$1.340M and net loss at -$1.294M ($-0.11 diluted EPS) .
No Wall Street consensus estimates were available from S&P Global for MGTI in Q1 2015; as a result, beat/miss analysis versus estimates is not applicable.
Liquidity runway guidance extended: management indicated operations funded “at least through April 30, 2016” in the Q1 press release and “at least through May 15, 2016” in the 10-Q, supported by lower cash burn and ATM capacity .
Potential stock reaction catalysts: management reiterated intent to monetize DraftDay (3rd-largest daily fantasy platform) amid multiple indications of interest; an earlier LOI to merge with Tera Group (Bitcoin derivatives SEF) announced Feb 27, 2015 was later aborted, a mixed strategic signal for investors .

What Went Well and What Went Wrong

Gross margin growth: GM reached $0.127M (59% of revenue), +253% YoY; management noted GM and OpEx were flat vs Q4 despite seasonal revenue headwinds .
Cash burn improvement: Net cash used in operating activities declined to -$0.997M vs -$1.424M in Q1 2014, reflecting cost controls and GM contribution from DraftDay .
Strategic optionality: “The Company continues to review multiple indications of interest” for DraftDay, intending to monetize while retaining a significant stake in the market .

Continued losses: Operating loss -$1.340M and net loss -$1.294M persisted despite GM improvement; diluted EPS remained negative at -$0.11 .
Seasonal softness: Management flagged seasonally lower revenue in Q1 and flat GM vs Q4, underscoring dependence on sports seasonality .
Aborted LOI: Q1 press release announced a LOI to merge with Tera Group; the Q1 10-Q disclosed the merger was not executed by its deadline and was aborted, removing a near-term crypto-derivatives growth avenue .

Metric	Q1 2014	Q2 2014	Q3 2014	Q1 2015
Revenue ($USD Millions)	$0.085	$0.320	$0.297	$0.217
Gross Margin ($USD Millions)	$0.036	$0.153	$0.129	$0.127
Operating Income (Loss) ($USD Millions)	($1.305)	($1.527)	($1.443)	($1.340)
Net Income (Loss) ($USD Millions)	($1.122)	($1.391)	($1.380)	($1.294)
Diluted EPS ($USD)	($0.13)	($0.15)	($0.14)	($0.11)

Segment breakdown (Q1 YoY comparison):

Segment Metric ($USD Thousands)	Q1 2014	Q1 2015
Gaming Revenue	$42	$217
IP Licensing Revenue	$43	$0
Total Revenue	$85	$217
Gaming Operating Loss	($373)	($371)
IP Operating Loss	($58)	($192)
Unallocated Corporate Operating Loss	($874)	($777)
Total Operating Loss	($1,305)	($1,340)

KPIs and liquidity:

KPI	Q1 2014	Q1 2015
Cash & Cash Equivalents ($USD Thousands)	$1,455	$1,380
Player Deposit Liability ($USD Thousands)	$952 (Dec 31, 2014)	$773 (Mar 31, 2015)
Net Cash Used in Operating Activities ($USD Thousands)	($1,424)	($997)
Weighted Avg Shares (Diluted)	8,796,041	11,260,174

Metric	Period	Previous Guidance	Current Guidance	Change
Liquidity runway (operations viable)	Through date	Through Mar 31, 2016	Through May 15, 2016 (10-Q)	Raised
Liquidity runway (press release)	Through date	Through Mar 31, 2016	Through Apr 30, 2016 (PR)	Raised
Cash utilization trend	FY 2015	Not specified	“Cash utilization to continue to trend lower”	Lowered burn (directional)
GM contribution drivers	FY 2015	DraftDay GM anticipated	DraftDay GM plus cost reductions	Maintained/expanded drivers

Topic	Previous Mentions (Q4 2014 10-K)	Previous Mentions (Q3 2014 10-Q)	Current Period (Q1 2015)	Trend
Daily Fantasy Sports (DraftDay)	Emphasized as core growth driver; aiming to monetize; competition from FanDuel/DraftKings	Acquisition of DraftDay; revenue/GM contributions cited	Intent to monetize DraftDay amid multiple indications of interest; 3rd-largest platform positioning	Strengthening focus on monetization
Cost discipline & cash burn	Lower corporate governance costs vs 2013; ATM capacity available	OpEx reduced YoY; SG&A down vs prior year	Cash burn trending lower; OpEx flat vs Q4	Improving
Legal/patent enforcement	Aruze IPRs pending; stay in Mississippi action; contingency arrangement	Ongoing enforcement and IPR context	Gioia Systems complaint (Apr 21, 2015) noted; patent IPR responses continued	Ongoing/legal overhang
New initiatives (crypto derivatives)	Not present	Not present	Feb 27 LOI to merge with Tera; later aborted per 10-Q	Mixed—initiative announced then withdrawn
Regulatory (licensing)	NJ CSIE license application in process; timing uncertain	NJ CSIE process ongoing	No Q1 update beyond core gaming ops	Neutral

“The Company continues to review multiple indications of interest in an effort to create maximum value from DraftDay's position as the third largest daily fantasy sports website… intends to monetize its investment and also retain a significant stake in the future of this explosive market.” (Press release commentary) .
“Compared to fourth quarter 2014, gross margin was flat, despite the impact of seasonally lower revenues… Operating expenses were also flat compared to previous quarter.” (Operational context) .
“Through careful acquisitions and development, we have transformed MGT into a leading skill based gaming company; as we continue to execute, we are confident that shareholders will benefit greatly.” — Robert Ladd, CEO (Q2 2014 press release, contextual to DraftDay strategy) .

No Q1 2015 earnings call transcript was available in the document catalog; key clarifications from MD&A: overlay costs on DraftDay expected to decrease as user base and liquidity build .
ATM usage: ~3.16M shares sold through May 14, 2015, gross proceeds ~$1.695M; ~$5.4M capacity remaining, offering flexibility to fund operations .
Liquidity runway clarified to “at least through May 15, 2016” based on cash, GM from DraftDay and expected SlotChamp launch .

S&P Global consensus estimates for Q1 2015 EPS and revenue were unavailable for MGTI; therefore, comparison to Wall Street consensus cannot be provided.

DraftDay monetization is a central strategic catalyst; management cites multiple indications of interest and plans to retain a stake, offering potential valuation unlocks in DFS assets .
Operational leverage remains constrained: despite GM improvement (59% of revenue, +253% YoY), losses persist and the business continues to rely on equity financing via ATM, implying dilution risk .
Cash burn is improving (-$0.997M in Q1 vs -$1.424M YoY), and liquidity runway has been extended, reducing near-term going-concern risk .
Legal overhangs (Aruze IPRs; Gioia complaint) and regulatory uncertainties (licensing) remain, potentially impacting timelines and costs .
The aborted Tera LOI removes a crypto-derivatives growth vector but underscores management’s willingness to pursue opportunistic transactions; investors should monitor future M&A or asset sales .
Segment data show revenue concentration in Gaming, with IP revenue at zero in Q1; continuing efforts to reduce DraftDay overlay and grow user liquidity are critical to margin trajectory .