Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by, and welcome to Motorsport Games Inc.'s Second Quarter 2023 Earnings Call.

As a reminder, this conference is being recorded. [Operator Instructions]

I'd now like to turn the conference over to Ben Rossiter-Turner from Motorsport Games. Please go ahead.

Ben Rossiter-Turner

to webcast. second welcome conference XXXX and and call you, Motorsport quarter Games earnings Thank

call Motorsport By section Investor today's quarter market Chief at have On close. is website to of XXXX Financial Hood; Officer, access available filed www.motorsportgames.com. Officer, Motorsport and earnings Stephen This press Games's Jason today company's is Relations Potter. the now, release should Games’ everyone second Chief after Executive the on

no the may the on the meaning obligation actual update statements of these from call beliefs materially to within call, and information, on forward-looking During a cause forward-looking These management’s in based or to that this statements. to or risks made new uncertainties of described as and or of management federal future statements, required whether forward-looking are events forward-looking make laws. course expectations undertakes otherwise. securities and alter by U.S. involve differ results could result its update statements as any those company Except law, this statements current the

of XXXX could the those a today's today. differ expressed the Please with any company's statements quarter filings in XX-Q recent forward-looking including June from on its and made cause most ended actual XX, the results to press quarterly discussion for that release detailed report refer certain materially SEC risks Form for to or implied

as adjusted we conference will results. non-GAAP as In measures refer EBITDA we call, such the certain today's XXXX second to discuss financial quarter financial

in release earlier to as as comparable measures a find well press their non-GAAP reconciliation issued disclosures most related will of directly measures You these today. other GAAP the

Executive of Games. Stephen? Stephen the Hood, turn And now, Motorsport to I'd call Officer Chief over like to

Stephen Hood

conference for gratitude to my today. extend participants joining I this all call

the been has behind scene. preceding period The discreetly marked by activity intense conducted of an quarter

encompassed April. endeavor emphasized objectives. has strategic processes, return a upon my in culture, with our projects, aligns of I comprehensive This corporate focus evaluation the Our and direction

aimed a and measures organization. accelerating streamlining our at purpose for Plan the of implemented simplification of sense initial structure the strategic organizational instilling the studios, heightened our Restructuring During we phase, throughout satellite XXXX the

Consequently, product subsequent market the highly sold accessible having it natural expectations to of units product product the Gen This our PlayStation, DLC surpassed our XX,XXX our appeal Car and NASCAR I our preparation for NASCAR anticipated the despite year's date. potential am successful the completion, titled a upgrade X PC on enduring top become suggests has Heat to to Update, the pleased and Next end, report launch underscoring performance offerings, Xbox, update platform. This line. over by the grossing of of aging for significantly

Rivals, Additionally, for our introduced an product. NASCAR Switch the is functionality. update foster interest to renew in we This which the greater social multiplayer Nintendo enhancement and interaction, released local expected

current a undertaken competitive areas have I positioning of the period, this company's enhancement. and for During standing, assessment comprehensive

Our needed forward reevaluation in operational our resource to the looking future. opportunities sorely critical present pragmatic and was capacity are intrinsically and A the business influenced by of our context. financial

cultivation all commercial and sectors the across prioritized functions. have we Consequently, of consideration

term realistically revenue process now projects contribute the assesses Our and on even based are potential, to and non-direct decision making rigorously indirectly. when investments returns generation

unlikely possible seemed and termination. scrutiny propel sustain to subject our decount Activities business forward themselves are to all

expenditure and resolving organization operations. objective needs, media Our cash centers our flow sustainable on mitigating for rightsizing the

on our We forward retained implementing exploring necessary path and chart to avenues have are outlook adjustment. diverse the actively positive

Mans that proprietary and multi-revenue our showcase a without sustainability event Centennial centered X present unveiled planned strength resources. at Recent those Notably, X as capitalizes around FX game with Arcade and June project our Mans rFactor our overextending with including the in our the ACO pathway opportunity Kindred a such expansion. Le conjunction technology collaborations, initiatives to Le on on the

living their geared accelerate licenses. our towards technology playing to traditional the market. that a our in master ongoing consoles paths deal part will future of in roadmap, door believe Motorsport open arrival diverge remains multi-format Our that from investigating we game versatile titles variety and games to exciting those are room into investment and mainstream of We particularly this

professional experiences, empower of known will be to game approach be a underserved. This and cater can segment anticipate us the for with platform to that system, coming experience code we Through a ahead to a believe something players, superior broadening by and designed complemented its I name broader rate accessible, consumer. expect synergy This our of ecosystem, to racing position both control, of ownership the we us a this spectrum forge reach to is over months. is competition the provide taking our to sociable previously under our

Now I to into Officer of of Jason second XXXX. for the delve Motorsport results financial invite Chief Financial Potter, the quarter Games,

Jason Potter

Thank you, Stephen, and good evening, everyone.

highlights today. in guidance forward-looking calls, financial As and earning won't on previous I offering from providing XXXX. quarter second I our the Instead, any of results an focus update on be will

and revenues platform were sponsorships. drivers reserves revenues The lower in party million, to million $X.X the XX% when to the $X.X Revenues third lower through when digital mobile QX offset lower compared and to favorable same which were by and sales year. game on volume primary XXXX. revenues esports sales partially compared reduction prior to the in acceleration and development of down period pricing allowances or Less super

marketing, million in the loss a net by well a $X.X million and compared change of value $X.X impairment recognized million quarter $X.X for gains primarily fair was in as liability classified administrative in increase warrants XXXX, year. in $X.X million $X general the when of in loss change an prior as certain of recurring value expenses, development, million, the quarter as in currency noncash and asset foreign as loss same well which gain. offset driven Net second the was partially The a favorable by of reduction to was period

by Reduction taken the prior overhead XXXX was in helped EPS us restructuring driven actions approximately has the negative compared lower overhead to which in of million $X in Consequently, our quarter spend exceeding period million program, year. overhead of reducing was were through in the same processing. internal annualized company's headcount, as the certain in of $X.X expenditure XX, costs target by annualized XX, on savings global the an December under savings part improvements and for June in basis $X.XX These in XXXX. negative changes $X.XX by achieved end our XXXX,

in to We we've same $X.X discussed the period comparative the adjusted an EBITDA quarter of and in for prior of in of period EBITDA are in year. change loss million respect the to to 'XX second The reporting quarter. loss for same as and adjusted adjusted million $X the loss the improvements loss EBITDA the compared the

EBITDA same basis, the year-to-date discussed to same year. was in million same prior for adjusted $XX.X revenues a year-to-date in when million in year, year. due $XX.X performance. down to for $X.X Year-to-date the the period On $X.X $X.X quarterly down the the million, the to Net respect were period million the from million compared primarily period period $XX.X million was loss in factors compared last to same the prior

'XX for compared for in between the portion million for the XX, loss Noncash asset XXXX net $XX.XX the $X prior and $X.XX significant the the account $X.X ended period year-to-date months loss same adjusted six impairment period difference losses a of EBITDA million and was year. for periods. to June respectively respective for of EPS and the

company. be to key liquidity. a of area for to on focus This Moving continues the

million, remainder monthly equivalents down XXXX cash of of position to $X.X ended our XX, XX, of XX, XXXX December $X.X cash additional reduced cash continue year down approximately of March funding will operations and XX, which believe is in of operations. XXXX, that equivalents average average net be our for and As to compared cash burn operations insufficient $X.X had And $X.X cash XX, $X.X $X.X million in months for from Net to million, by ended June $X.X we the order monthly million June burn July representing cash the cash when million required and million, of $X we the through XXXX. as fund to used is XXXX in million six XXXX. an million the

potential we liquidity business not exploring to, sale initiatives. the and not our or but to, or are of similar restructuring several licensing address and including, this of its arrangements transaction, to options, funding including, alternatives and/or financing assets; order additional In form limited reduction equity strategic effectively limited in for the three, shortfall, cost but debt asset

all moments. for your back call I time. you And will Thank our turn the closing now Stephen for to

Stephen Hood

now closing, In for us support. would questions. our Operator? to their shareholders go Thank I let's for like ongoing you And today. to joining thank

Operator

[Operator Instructions] Canaccord Genuity. with line the proceed. And from comes of Jason first Please Tilchen question our

Jason Tilchen

going Mans game building what Good titles from other you the Thanks. talking perspective, could characteristics a games to these coming for taking are racing this either about made differentiate out franchise, some maybe Le particular, I the question. was afternoon. And - a other are there just minute from spend in that some racing you're the out are of out the of by the thanks as you December, from publishers? perspective, a that's that hoping think visual future

Stephen Hood

Stephen here. question, good one Hi answer. I'm to excited Very Jason, it's that

differentiate driving action I at which mean a market, And through course, an the a I racing vehicle that's a think when look on-track around environment. you're racing looking the to, or we're But by of track positively typically, how the developers at my are key what us order you to people positively focus. And mind, in that games? market? play differentiate, do in at for in looking for motivations

in in the when home, world, there to challenges appeal. on career In in to the race So problem participate and a requires market gaming. at number motivation ready everybody one recent ladder. are living games be of In the today for your the way mass or the very prepared a same the is course of up of begins. real the of of get developers the That a many very track having your life, inability race. specific a to is way a kind at a that weaknesses working normal time very of racing people time of And get is room

friends Mans, allowing fighting that if others XX to of key it's a team them. is to this distinctions Because racing particular, tackled at about in convenient by single against a of So in time think using particular, in the people you about a Le participate vehicle. with Mans Le one at Endurance

that's can everybody enables the a So mechanic very whereas one play one the demand there's swaps. that win. team think dog, very, racing of interesting We driver that it another. same racing driver doggy person games groups friends game one a only against together in in more most competes to on than entails car It's

one In or can being that up tells positive or succeed racing, a friends and may distinction It's in the Le hugely really world, the team our Endurance it That acquaintances combination with in ethics. together. of or whatever about a ends racing. well the partners racing be, team Mans Endurance in whatever market is

about If things, like an you rating also team. sorts a gains think will people a you positively And games. one play the in you another. in true mode enables to involves that. squad, received take play of terms lot in today typical to between pattern change Mans does a that and exist not it async Le That all of titles, pass

have So consumers to our we it's think up a very pick on. offering that distinct started

haven't about teasing us far, a any and reception actually it's this, and started We gone the really But positive, into position it. detail major we differentiator is accordingly. think we very so

Jason Tilchen

was the And And burden mentioned really on made Thank path was one that July? the terms to July timing just of was you is $XXX,XXX. burn that is? should position. cash go in the The just going in in there about why burn, you. where talk I expect next think been helpful. if decisions have potential were the math million. cash That's any few relative then given down And Or to back decision just slower about doing solving about sort a cash of we of the months the what the you situation? $X.X for position Can here, monthly QX, to liquidity the what in then Great.

Jason Potter

is Hi for Jason. Jason, Thanks question. this the

million from net flow versus two other bit months, cash months the from see, July net to on the is dropped on $X.X just lower average, And we a did about burn little three million the when the compared operations year-to-date. quarter a cash quarter. operations the right, down cash you're in $X.X for for So in the

payments and some As cash in minimum timing probably always terms flows you to there is of our guaranteed like. aware, of are royalty lumpiness the

in upside we're from what some July to benefit in as in now so program drove then quarter, fall about some some and starting those you of of Also and - short seeing And up from slightly the burn we've savings. where things within realized a that gain due from the started see to I think XXXX payments higher falling the see in you're out. QX which million month we're smooth a earlier cash is particular the annualized $X.X benefit

starting And so to through position. into filter our that's cash balance

a yes, see so that. we're to little bit upside starting And of for

Jason Tilchen

you very much. Thank Great.

Operator

Our Markets. of the next with line question comes Kupinski Capital Michael from proceed. Please Noble

Michael Kupinski

of have questions Thank here. couple a you. I

in that product game and you about your given In kind something just I you've DLC that in the the a little investing that surprise of that Ignition launch that? no that going the screen, to give going bit DLC the Can have to Can be you planned on what seem was us NASCAR cycle? to the also me implications terms Heat was of Heat and were thought - that because and thoughts about I something kind X my mainly that you X to for Ignition X? didn't of decision that are the And a that then me. was NASCAR Heat particular was longer quarter, for because talk given was of that replace give and radar launched

Stephen Hood

Hi DLC, year. Car back Good actually Heat Michael, in tail-end last question. was X it's of Stephen. Next completed The NASCAR partially the the Update Gen

well-regarded complete, deal, a live. update some title on development additional X, April, NASCAR I me if product great to business content that in near people to we continue Heat across took and So few was NASCAR update, in lots for to complete and the just content we through still coordination claim It pipeline, was legacy which my looking what the had a didn't X. Heat that decision push us of the return short of required a tax a ago, of it that the struck months near company

of And it vibrant. finish me as put complete consultation comment huge that NASCAR the of very didn't and see took catalog huge we a in And kind to the was it up, that also back to but resource decision you who uptake. or it received, remain were it amount made into with take effort keen heard to to make the of gains. sense a well hands And

that felt addition by I'm So clear a franchise. the community DLC decent reputation. affinity piece a NASCAR love of there's and Heat a in was gains, It's sure. gaming for good And the multiple

Players People the take true that a title that, of Heat But conflicting was Heat over the up NASCAR pick Ignition, right with one a franchise. is sense of yes, designed that don't the mantle ready. And to made vibrant those very serve the to following DLC was remained see it piece now. with we to games. still titles, very of two have and kind near another

Michael Kupinski

mean, kind Seems when it you you expect I like going positive? your know Can us titles Is little number when a a flow of about out coming roadmap a brilliant cash of for burn? I move. cash bit to possible of talk a thoughts give be? you can that provide are but that your that investors towards might swing to that there's back

Stephen Hood

very is the something that likely viability into the will Board cash the we're options review Yes. to a our before undergoing we've those kind doing further That's across what we to provide for of the return in and now. potential number a of needs the a they while our internally I That taking be business, production, understanding discussed are and with progress. been far having the something think Board are benefit to opportunities revenues. at products, business the needs of to got of how are. for moment of which able on That development. And the titles broad a we're kind close that

development. I great the think just I I with opportunities assets But are are core think number optimism. that and a not And I've game it's certainly products. licenses in of actually a And when products of products, returned and in mentioned deal there

to will have complementary have because and - that be as other we launched. that been live any also in see to We well. they go the services experiences keen development that we're games

I to and about view but with that game, that further revenue business, experience. gaming just When enables ecosystem, the the a not our audience. delivering promoting the come DLC players entertainment it's audience about talk ecosystem gel together, the to monetizing an enjoy and additional driving having from

select idea next of the go for All the to with fruition. future. about coming just that where is very careful becomes to and the and sustainable be we're that business we And going viable

in where next those what lightly. track we'll this of upside know very I outstanding have we and headed the all So conversations, we resolved quarter, and will is. think But we're firmly

Michael Kupinski

Going titles that my forward so vault, are you're generate maybe previous with Heat the return you you to that favorable with things you're moving that - are that launch there the speak, question, inexpensively there on? to outside might and back that that that or of DLC contemplating other to Mans a the and be can launch other in things planning able X publishing like Le on

Stephen Hood

got medium be in I we review going do it a a idea be go number we going We're Well, comprehensive we considered to there opportunities. of where a that forward. to free. good I products. allow The to And I resources term. long clearly, need comes products And have are mean, think our for on the quite invest we continue. think and of and where about those very nothing near, we've to

the mean people PC to made are consoles, mass ultimately preservable reach market niche. that additional is the a vibrant cars, will interested market in doors open experience. consumers very of on vehicles, believe driving typically an to driving And and reaching the games I we additional let mainstream We're a we we a if there. But that room. there's alone view racing, there gamer racing my And think living can arriving are trying stand I opportunities, chance being doing know I in many entertainment reference revenues. and provide

many to need after. to go on to fruition. to that don't wish invest we're years in are going things We significantly But in I just projects. of come going to which to there opportunities am settle So we're those there. interested I take near-term

exciting I to need validate. are opportunities some there there that think we

Michael Kupinski

all I Thank you. That's have.

Operator

for call the to Thank time. you. further questions I'd no There management this at are comments. turn to back like closing

Stephen Hood

Thank time you questions. for thank you. very much much I you I today. much participation your very appreciate Thank this the And everybody's for in call.

Operator

This conference. concludes today's

your at You your may Thank for lines disconnect this participation. time. you

Motorsport Games (MSGM) 21 Aug 232023 Q2 Earnings call transcript