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Motorsport Games Inc. (MSGM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered another profitable quarter: Revenue $3.10M (+71.9% YoY), gross margin 80.7%, net income $0.79M ($0.14 EPS), and Adjusted EBITDA $1.06M, driven by Le Mans Ultimate base game/DLC and growing Race Control engagement .
  • Second consecutive quarter of operating profit; management removed prior “going concern” disclosures in the Q3 2025 10-Q, citing improved liquidity (cash $4.1M at quarter-end; $4.5M as of Oct 31) .
  • Strategic catalysts: console port of Le Mans Ultimate (PlayStation/Xbox) now in early production with targeted delivery in late 2026–early 2027; re-launch of Le Mans Virtual eSports series; continued Race Control feature rollouts (Livery Hub, 100k liveries processed) .
  • No formal guidance was provided; Wall Street consensus (S&P Global) appears unavailable for EPS/revenue, limiting estimate-based framing this quarter. Where comparisons would normally anchor to consensus, we note the absence of coverage.

What Went Well and What Went Wrong

What Went Well

  • “We are very pleased to once again generate net income for the Company this quarter,” with growth and profitability “primarily driven by our Le Mans Ultimate title” .
  • Operating profit for a second straight quarter and removal of “going concern” disclosures, supported by cash rising to $4.5M by Oct 31 and positive operating cash flow trends .
  • Player engagement hit “all new heights” around Version 1.0 and ELMS DLC; Race Control’s Livery Hub processed ~100,000 liveries, evidencing sticky user behavior and ecosystem effects .

What Went Wrong

  • NASCAR-related revenue declined ~$1.0M YoY in Q3 as the title is no longer authorized for sale; revenue mix now more concentrated in Le Mans Ultimate ecosystem .
  • Other operating income was lower YoY by ~$1.4M, creating a headwind that partially offset operating efficiency and revenue gains .
  • Management reiterated no forward-looking guidance, and S&P Global consensus appears unavailable, limiting benchmarked beat/miss context for near-term trading .

Financial Results

Quarterly Trends (Q1–Q3 2025)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$1,758,453 $2,591,840 $3,100,018
Gross Profit ($USD)$1,293,067 $2,136,953 $2,502,201
Gross Margin (%)73.5% 82.4% 80.7%
Total Operating Expenses ($USD)$1,886,262 $1,273,387 $1,707,253
Income from Operations ($USD)$(93,195) $1,968,063 $798,948
Net Income Attrib. to MSGM ($USD)$1,041,058 $4,258,400 $789,296
EPS (Basic & Diluted, $USD)$0.33 $0.82 $0.14
Adjusted EBITDA ($USD)$612,220 $3,696,847 $1,059,367

Q3 2025 vs Prior Quarter and Prior Year

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD)$1,802,946 $2,591,840 $3,100,018
Gross Profit ($USD)$1,086,223 $2,136,953 $2,502,201
Gross Margin (%)60.2% 82.4% 80.7%
Income from Operations ($USD)$(1,931,885) $1,968,063 $798,948
Net Income ($USD)$(573,025) $4,238,172 $768,537
EPS ($USD)$(0.18) $0.82 $0.14
Adjusted EBITDA ($USD)$50,127 $3,696,847 $1,059,367

Revenue Drivers – Q3 2025 YoY Change

DriverYoY Change Detail
Le Mans Ultimate (LMU)~$2.3M revenue in Q3 2025, significantly above NASCAR-related revenues in prior-year periods
Race Control+$0.4M YoY contribution vs Q3 2024
rFactor 2+$0.1M YoY contribution vs Q3 2024
NASCAR~$1.0M YoY decline (no longer authorized starting 2025)

KPIs and Liquidity

KPIQ1 2025Q2 2025Q3 2025Post-Q3
Cash & Equivalents ($USD)$1.1M (3/31/25) $2.4M (6/30/25) $4.1M (9/30/25) $4.5M (10/31/25)
Adjusted EBITDA ($USD)$0.61M $3.70M $1.06M —
Race Control Livery Hub——~100,000 liveries processed —
Weighted Avg. Shares3,183,558 5,206,536 5,456,286 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q4 2025N/ANo guidance provided Maintained: No guidance
MarginsFY/Q4 2025N/ANo guidance provided Maintained: No guidance
OpExFY/Q4 2025N/ANo guidance provided Maintained: No guidance
OI&E / Tax RateFY/Q4 2025N/ANo guidance provided Maintained: No guidance
Segment-specificFY/Q4 2025N/ANo guidance provided Maintained: No guidance
Capital ReturnsFY/Q4 2025N/ANo guidance provided Maintained: No guidance

Earnings Call Themes & Trends

TopicQ1 2025 (May)Q2 2025 (Aug)Q3 2025 (Nov)Trend
Console port (PS/Xbox)Exploring partners; scope work underway Late-stage negotiations; potential publishing/funding support Early production; ETA late 2026–early 2027 Advancing toward execution
Race Control SaaSPlatform growth; subscription foundation Explosive MRR growth (+296% in June), ARR ~$972k, quick ratio 4.66 Highest-performing quarter; Livery Hub live; ~100k liveries Sustained momentum
LMU product roadmapTeams/driver swaps, 2024 Pack; move to 1.0 in 2025 June update; ELMS expansion announced Version 1.0 launched; ELMS DLC rolling; record engagement Strong releases and engagement
Liquidity/Going ConcernPrivate placement; improving cash ops Cash up to $2.8M (7/31); positive CFO/settlements Cash $4.1M (9/30), $4.5M (10/31); going concern removed Marked improvement
eSports: Le Mans VirtualReturn contemplated as roadmap expands Q4 qualifying targeted; strong sign-ups Planning/partner negotiations; Bahrain presentations Re-launch in sight
AI/Tech enablement——Using AI to accelerate productivity (not replace creativity) Operational optimization theme

Management Commentary

  • Stephen Hood (CEO): “We believe this sustained increased revenue, primarily driven by our Le Mans Ultimate title, alongside improved profitability showcases our markedly improved operational efficiency and that our products are showcasing market fit.”
  • Stephen Hood (CEO): “I’m delighted to announce a console port of Le Mans Ultimate is now in early production… with a current estimated delivery between late 2026 and early 2027.”
  • Stanley Beckley (CFO): “Q3 2025 and Q2 2025 now stand as the only two quarters in the company’s history that income from operations has been generated.”
  • Stephen Hood (CEO): “Base game sales continue apace. Additional content or DLC sales for our game remain very strong, and more people are joining our value-adding Race Control subscription service every month.”

Q&A Highlights

  • No analyst Q&A occurred; the operator closed the call without questions .
  • No guidance clarifications provided; CFO reiterated the decision not to provide forward-looking guidance .

Estimates Context

  • S&P Global Wall Street consensus appears unavailable for EPS and revenue for Q3 2025; actual revenue reported was $3.10M, but we cannot benchmark to consensus due to lack of published coverage .
  • Implication: Sell-side recalibration is unlikely near term; narrative and retail/institutional interest may hinge on execution milestones (ELMS rollouts, Race Control SaaS scaling, console port progress) rather than beat/miss optics.

Key Takeaways for Investors

  • Le Mans Ultimate ecosystem is scaling: Version 1.0 and ELMS DLC delivered stronger engagement and monetization; Adjusted EBITDA positive and margins robust (80.7% gross) .
  • Business inflection: two consecutive quarters of operating profit and improved liquidity; “going concern” disclosure removed in Q3, reducing balance-sheet overhang risk .
  • Strategic optionality: console port underway with potential third-party financing/publishing support; multi-format franchise ambitions can expand TAM in late 2026–early 2027 .
  • SaaS flywheel: Race Control engagement and features (Livery Hub) deepen retention; prior quarter metrics (ARR/MRR) indicate durable cohort dynamics .
  • Mix shift risk: NASCAR revenue loss creates higher reliance on LMU; execution must sustain content cadence and community engagement to avoid revenue volatility .
  • Near-term trading: With no guidance and limited sell-side coverage, stock moves may be catalyzed by product/content releases, eSports announcements, and console port milestones more than traditional estimate beats.
  • Medium-term thesis: If PC monetization remains strong and console port is executed with external funding/marketing, LMU can mature into a cross-platform franchise supported by a recurring-services layer (Race Control).

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