MSGM - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to Motorsport Games Incorporated First Quarter 2022 Earnings Call [Operator Instructions].

As a reminder, today's conference is being recorded. I would like to turn the conference over to Jake Pisano from ICR. Please go ahead.

Jake Pisano

Thank you. first earnings Games webcast. call Motorsport to quarter conference XXXX and Welcome am at President Pisano, I Vice ICR. Jake Chief today's On call Officer. New, and are Games Financial Motorsport Executive Dmitry Chairman and CEO; Kozko, Jon have now, release press after access By today should to company's XXXX filed first closed. the market earnings quarter everyone This of Games the Web site section on is Relations at available Investor Motorsport www. Motorsport Games.com.

expressed those we discuss to the today's the statements year ended call, refer recent a Form cause implied the we the as for EBITDA as actual Please management's update in call, certain such risks adjusted from US including current statements alter whether -- statements, within company's are of the results. XX-Q differ a certain federal During involve to quarterly laws. XX, uncertainties described forward-looking law, report based materially will and any its risks the result non-GAAP In first the that today's Except release results differ the undertakes as information, future to that XXXX from XXXX actual most in forward-looking of refer today. expectations of these those to as make update on any SEC, course beliefs required and or could on made conference financial the by management events, or forward-looking may of results statements to detailed securities this statements. March materially for financial its otherwise. These and made of or with forward-looking measures, forward-looking obligation meaning to no quarter statements new on filings press discussion company call this could cause and

now, as of Executive to reconciliation the of And related Motorsport to non-GAAP issued other like measures, Kozko, will disclosures well as their Chief to Officer most Dmitry find Dmitry? earlier call measures the today. in over directly I'd release turn comparable GAAP press You financial Games. a these

Dmitry Kozko

the ahead and XNS that esports about most and and included as NASCAR for hello information allow the I'd XXXX Microsoft make published weeks In X.X.X.X, month. and to that support release facilitate regards and ago, planning everyone. engine our bases games XX: product term PlayStation steward Ignition start included product of Sony now improvements With We're studio. an us our like introduce continue franchise, for the using roadmap some Xbox next today be targeting Ignition we update, of long series XX: community as of a you, a NASCAR release. with our our that update exciting This the beyond. a great as Games roadmap. we're to this Thank to licenses for remainder to update road community timeline patch continued in to on a working captive well NASCAR NASCAR which Motorsport the of fan our world's few who and on the closely are will X full with we're we revised update of

delivering year. will the The game to on that with and Series title franchise listen working our support fans team because We order if paramount opposed need about should the gamer Xbox, to in full we're and new XXXX more Next roster, expansion There XXXX be do as the a and work reason us. fans for [DLC] products. PlayStation the plan the season XXXX still on HUD, XXXX XXXX. NASCAR great not their include our charge out title our season for us expansion time there as not regular in and have September to bring constructive our title NASCAR due additional as to around understand that want is NASCAR in with for to still to season to we of NASCAR accomplish to will will excitement on team some We're need Nonetheless, the Because expectation partners a more. experience result. suffer first DLC that content to schedule, XXXX continue that And will race Series value UI working to We NASCAR going Cup Cup season as revenues we're a and to bring will enjoy updated made game to reset console is expansion be the to September improvements title. we The XXXX what full already in sport. and and we will title. we a of a be, the enough Gen deliver price to PC the will main Fanatec XXXX delivering is of feedback the at time in expect NASCAR users expansion, cars this features that we season XXXX

in we However, in critical results revenue our developing as is financial later this call, diversify on the run. experience results. John great strategy gaming long our for that sources you'll is to further our QX believe And to hear our our strongly investment starting a talk show about

widely Switch launch come. great fall product Switch XXXX. popular fan reviews to We the to brand approach to forward be NASCAR visuals Nintendo and NASCAR saw for we updated and look our and title for Nintendo NASCAR Additionally, Switch to in introduce our as title features. in platform additional plan Switch the releasing years improved title, new the include ‘XX XXXX expand will the continuing details the new platform. fall, game new The in we demographics for the a We'll

beyond develop game to to and will work NASCAR, will INDYCAR, NASCAR the KartKraft XXXX, As to utilizing that to while NASCAR XXXX to NASCAR BTCC on season and By update improving X, We our more and XXXX of work done continued the team Engine. a the Mans allocated fans. include expansion revamped the we moving than time games and XXXX Unreal currently their utilize relationship new title. consult future development the and The the is We the appreciate for the rFactor XXXX, and committed for Le and still XXXX previous titles. of with features by fully the the mid we're goal of with our in the the release expect support. current currently earlier We're our teams amazing into bring for updated releasing year all quality look targeting improvements all of title. XXXX date experiences valued the

a and new an game, launch the also to we're games XXXX, celebrate bring INDYCAR market. official game the game expected XXXX, XX we this the launch. virtual experience XXX games our will year provide. INDYCAR Le our in Later to Le Mans additional interactive fans hour iconic helping expecting NASCAR we anniversary with official that Mans the in to be when plan BTCC to of month, anticipate of the news Additionally, besides And the video provide

this one and we of experience year, for positive During game realistic to full main a KartKraft PC, this receive on we're year. continues QX to our carting release consoles of this user bringing the exciting which launched currently And of working feedback.

spotlight choose. rFactor get So update for the it we X is deserves. console our tuned starting finally which stay will on to

look update help cylinders and bringing we users continue we're on seems monitoring X relationships. continue quality and resource hire released partner external to We the as like to grow a a internal world real to capabilities During quick more improvements which development of and to UI/UX on our our feedback switched schedule, update highly studios to drivers our with QX, to enjoy socials. as on forward currently provide a these predictable life development the on requested release studio I'd talent the based we rFactor more fans. on development We're the scheduled worldwide and all our content into games. expand firing work we to of

by an mobile these the but opportunity game content to be leveraging We games on applying our mobile the core in that for to most on on potentially for now. pipeline us they of console the main revenue Our as products focus is plan are generate game zone top our releases current in us console the console currently resources future titles. building our continues future

with invest the and resources As production. remains mobile we on our we these to mobile to our increase in for continue console development expect time more game licenses. allocate growth to teams our PC of focus But to exclusive for now,

Let's on touch our esports.

its off As award continuing was for track announcing series this build over this of season's extremely and XXXX were we million sports mentioned we're proud of into Sport Mans five our that Mans franchises. QX earnings accepted team forward this It us the a XXXX virtual use feeling great call, in looking of week series of XXXX in to by helped XXXX for previous with the past as exposed technology to year. best last races. and YouGov into our soon other momentum finished esports we're our XXXX virtual fans to our sport our Le And details Le on XX our running brand,

our Lastly, I want liquidity. an provide to update on

to core certain to resolve while multiple been explore going continue product our looking we As funding development, to concern options endeavors ways runway. extend pausing our continue to various at qualification, we've

recent in there's continue quarter going concern. and to first about our reiterated our as a As XX-K indicated doubt ability in XX-Q,

made recent we amount cash As acquisition still the are as Luminis that to million of the on out. in of part have have our roadmap of deferred today, we available options to I we have laid payment agreed $X an connection This approximately just pay payment product of obligation exploring X.X% that remaining We're we $X need the Studio actively on debt-free schedule million hand. of reflects that XXX. to to and execute to we ensure the capital of our

to reach resolving priority profitability, main issue. effectively revenue and liquidity Our generating products is our continue producing

these We up likely and three. have solutions with combination of three will some end

or raising Our options debt include equity.

we sector, However, to reflects additional recent near-term feasible market in cost sell-offs also spend. in be begin this pursuing market. the roadmap could tech option massive given initiatives. once Currently, possibly see the the We're conditions structure stability only opportunities some our reduce current current to and revised

the any releases unforeseeable of levers later, means some some least time and licenses opportunities pull, Additionally, of franchise cash-generating on option events, be to favorite licenses our based towards under like partner still less are launching major delaying could games. cash-generating self-sustained the follow profitability. additional it releases such we be catalyst additional us console our including relations. is bearing Sequencing our good product leaving and an potentially to franchises monetize as our could option there stewards launching long-term This events

and games also studio leverage us. to possible studio type these share we're new only class business various additional since exploring profit that world and licenses, we licenses partners are build the of holds in it's game these IP that would development Additionally, alternative with opportunities, racing bring

As decision knowledge other's you hand to out I'm let make all hoping can on the the leverage industry to see, With our this and experience options exploring veterans to over for me months. table. financials. solidify as the and fortunate best surrounding laying me coming in them each to we're circumstances. to that, review it plan current And we're have Jon we

Jon New

XXXX Dmitry. XXXX gaming XX% QX for QX reflects primarily the you, sales contributed million or of Thank in to which from I summary $X.X to additional of compared our XXXX, highlights first QX share for X, increase our million financial million Revenues year-over-year XXXX, revenue. million the as like were for quarter $X.X QX rFactor $X.X $X.X of would XX% total XXXX.

$X.X increased XX Additionally, XXXX XX% Le held primarily eSports event QX revenue Mans revenues QX were revenues. our XXXX January. from total of eSports million, in hour the

offset during changes IPO was product decrease to XXXX development considers as related intangible to write-downs adjusted as and releases compared revisions current by roadmap downward Our and product compared revenue was quarter decrease loss net adjusted is line XXXX, million. business top in million. and $XX assets. $XX.X resulting assets intangible in loss and reduction with reduction million loss to compared timing improved of $X.X loss compensation where The general drive of loss performance. million we of the plan $X.X EBITDA of EBITDA The stock primarily stream an the due $X.X first talked EBITDA about. beginning increase XXXX in revisions in in of EBITDA for million as $X.X market of our made our goodwill scope to million in our primarily to to expenses, to increase Dmitry $X.X financial due The adjusted was administrative and XXXX and and QX to QX net diversify XXXX XXXX when million goodwill QX net to $XX.X and QX was IPO $X.X million loss add-backs. capitalization add-backs $X.X million our expenses had QX million

for future continue incur expenses as operating expect we new franchises. the game losses incur to to to to We continue foreseeable develop

going the Dmitry has we same our plan to games are revenue fun, address us generating on to be priority Dmitry liquidity now forward. liquidity the requirements cash our noted, fund we From remains provide well for the Our insufficient Operator? will operations today. operating as XX months. to current hand as rolling performing questions. continue And its an perspective, company's year-end for outlined to our and requirements. Thank you joining taking out the as steps for let's next existing go liquidity projected is

Operator

is question from line [Operator with of the The Instructions] Michael Graham Canaccord. first

Michael Graham

just posting other a and for call to Thanks day. couple. all for wanted the detail ask the the I in the

may sort first but you do and once this Ignition I was The you how on of slip NASCAR about releases calendar you're to might said then one us by like during And -- well. roll me, another the thinking the for have when that? as might we update XX and XX, have you longer-term have just of during the expect cadence an it NASCAR the one or And to around year year? have see

Dmitry Kozko

potentially on mid-XXXX. briefly looking release that are to the XXXX in mentioned title We we call NASCAR

starts actual is As as February about the franchise. our to that calls, we align our some try race previous releases season NASCAR as time. talked historically to around we in can of of goal the close title to

for fair to XXXX, and the targeting have sometime closer start. and to come schedule walking this actual posting we in release sometime would look date assume relationship that forward to around to we're years summer, the so future. it's long-term is that NASCAR But what midyear, release keep that during near we'll season So with be continue license actually that closer we'll to

Michael Graham

of And ask your you is, to then some outlined the options. other wanted thing I just liquidity

mention when you layer And be. if or wondering lines. mentioned if on some one might could to of think your you debt also, go say ask you like, to deeper of do just along reduce the options options ability equity, your some like just I And terms go wanted well as the expenses. can things magnitude and raise of what's maybe Just you maybe could what that you -- of a in you layer those that deeper

Dmitry Kozko

developing work internally So our make four continue product, on on keep as continue to simultaneously, That foot licenses we to franchises sort all launching the way, them during The foot we is have existing to our resources sure plus KartKraft to as increase potentially we product rFactor fast plus the we possible of longest runway that projected we as of on can. and release development have our to those goal of gas the to it. can. monetize as we products

-- possible. to continue foot external launch roadmap. these to as But internal the not a development, just future that it, that we in resource expense continue the course, to It's could expand as delayed roll be, could of potential quickly expansion we soon We that we it, to something so put the want as start those going and So but the do. when result come the mean need would on of of resources, potentially will need, internal our reducing with talk franchises I'm and our some not want releases simplify then of we product our delay hire as about slow gas to will we could be and side title that. a to we on extend as if

Operator

is Noble Kupinski next line The with the Capital Michael from Markets. of Instructions] question [Operator

Michael Kupinski

adding you disruptions now So earlier, in is the is just resources terms Dmitry, I particularly Russia. know had or wanted increase the number And just and if you about employee mentioned was in development. in is the an stable right the development, how wondering -- I in this given this employees to of that or of

just And at you're personnel just point? can personnel not give actually shifting or on this some thoughts so adding or you us if whether

Dmitry Kozko

expanding our We all studios worldwide. includes resources are internal that our

up that games that we us Therefore, staff and call, across senior We recall publish. require revamped we especially previous in the we to departments. all the you quality what earnings on we're artists, folks. just and doing we about more control increasing terms As need talked department we more type that QA does goes need of might our more of quality how of our need programmers,

staffing It's that headcount. our So quarter from has another. terms to necessarily development on interruptions just number increased to in Russia to other right part talent just And It's shifting QX of talent. reported any experience now. material as continues that end total of operate one usual. not our up great from question, QX don't to the the in there's of wherever we your We is

could the everybody all situation geopolitical four year on we're the or course, be now, product sat Of focusing right working future, continue releases we'll down But in to agile. and change in a on. that

Michael Kupinski

And in that here? burn rate you fact the goes as the know just the think adding you go particular, given you thoughts curious some where quarter? this burn then give I do from are that into staff, if you I'm about us that -- can some rate don't

Jon New

to keep cash move operating see we burn been our it forward or quarter… take consistent, down we're fairly So from the has Speakers] rate [Multiple that and flow looking it as this way

Michael Kupinski

in me we're game with maybe of the trends that everything the seen recession, affected how to were the if overall we sense economic a you and at of just quite just else well on. of knows terms that downturn. industry be to economic industry we've US gaming that go I prospect you maybe give the well. general going will who industry -- Can in overall, do in inflation looking I'm gaming then kind economic -- downturn? if this to would going believe the downturns, past And an an terms of just wondering by do know the continue believe gaming of the as industry you into

Dmitry Kozko

Michael, do might go events might home this folks alternative possibly not might entertained. and sort turn type these mine. need that that them an be of to I experience that is around happen would of there of keeps opinion do They a much. believe, They us, as unfavorable still when entertainment. out But stay personal interactive

assume of a more of So they television be in experiences. in that and perhaps gaming would front I front their could

something So do should a good happen our folks like -- racing entertainment be source around a foresee that we affordable like for great this world. the very that games options could

So then that don't for be do, business. potentially that, if our that point. to hopefully, get we could we But believe we good

Operator

[Operator Dmitry for the Instructions] now back conference I'll to closing And remarks. turn

Dmitry Kozko

story. point Thank sort been diversity our franchise see QX other you very besides finally are starting follow the in to us ones this for our a you products our the of thank be we much, reflected to to our release to in are and starting of milestones you our probably, to of special notable But see We're and achieved. that to that time starting for us NASCAR also our year see highlight is all on one revenue map. visible finally period that attached streams. joining continue where we earnings has could

vision really to to It So we the that it masses. on execute on is bring our us. of focus something Motorsport thrill to for momentum continue and is continue to the important

joining much thank for So you again very us.

Operator

that disconnect today's you participation for does We call. your please your That thank line. and conclude you ask conference

Motorsport Games (MSGM) 17 May 222022 Q1 Earnings call transcript