Motorsport Games Inc (MSGM) Q4 2024 Earnings: Revenue Growth Amidst Financial Challenges

Motorsport Games Inc. (MSGM) reported its Q4 2024 earnings on March 20, 2025, revealing a mixed bag of financial results. The company saw a 13% increase in revenue, driven by the successful launch of Le Mans Ultimate, but also faced significant net losses and liquidity concerns. Let's dive into the key takeaways from the earnings call and explore what this means for the company's future.



Revenue Growth: A Silver Lining

The most positive news from the earnings call was the 13% year-over-year increase in revenue for Q4 2024. The company reported $2.0 million in revenue, up from $1.7 million in the same period last year. This growth was primarily driven by higher digital game sales from the release of Le Mans Ultimate, which reached a milestone of 100,000 net unit sales in Q4 2024. The game's popularity and positive reception from consumers and industry influencers have been a significant boost for the company.

Net Loss: A Cause for Concern

Despite the revenue increase, Motorsport Games Inc. reported a net loss of $2.9 million for Q4 2024, compared to a net income of $2.7 million in the prior year. This significant decrease in net income is primarily due to increased other expenses, which totaled $2.2 million. These expenses were mainly comprised of foreign currency losses incurred from remeasuring transactions denominated in a currency other than U.S. dollars. Additionally, the absence of a $3.0 million gain from the sale of the NASCAR License in Q4 2023 contributed to the net loss.

Adjusted EBITDA: A Mixed Picture

The company's adjusted EBITDA loss for Q4 2024 was $2.5 million, compared to an adjusted EBITDA of $0.4 million in the prior year. This decrease is driven by the same factors that contributed to the net loss, as well as a decrease in stock-based compensation compared to the prior year period. The adjusted EBITDA loss highlights the company's ongoing financial strain, despite the revenue growth from Le Mans Ultimate.

Cash Position: A Looming Challenge

One of the most concerning aspects of the earnings report is the company's cash position. As of February 28, 2025, Motorsport Games Inc. had $1.2 million in cash and cash equivalents, up from $0.9 million at the end of 2024. However, this amount is insufficient to fund operations over the next year, given the company's average monthly net cash burn of $0.3 million. The exploration of additional funding options indicates ongoing liquidity challenges, which could impact the company's ability to continue operations in the long term.

Subscription Service: A New Revenue Stream

One bright spot in the earnings report was the introduction of a subscription service via RaceControl.gg, which generated over $120,000 in gross revenues in the first 21 days. This new revenue stream has the potential to provide a more stable source of income for the company, as it is less dependent on the success of individual game releases. The positive reception of the subscription service is a testament to the company's ability to innovate and adapt to changing market conditions.

Full Year Performance: A Step in the Right Direction

For the full year 2024, Motorsport Games Inc. reported revenue of $8.7 million, up $1.8 million from the prior year. The full year net loss was $3.0 million, compared to $14.3 million in 2023. The adjusted EBITDA loss for 2024 was $3.9 million, improved from $9.3 million in 2023. These results indicate that the company is making progress in reducing its cash burn and improving its financial performance, despite the ongoing challenges.

Looking Ahead: Strategic Alternatives and Partnerships

In light of the company's financial challenges, Motorsport Games Inc. is exploring strategic alternatives for future growth. The successful launch of Le Mans Ultimate and the positive reception of the subscription service have opened new conversations with potential partners, publishers, or investors for projects such as console ports of Le Mans Ultimate or business investment. These partnerships could provide the company with the resources and expertise needed to continue its growth and innovation in the gaming industry.

Conclusion: A Balancing Act

Motorsport Games Inc.'s Q4 2024 earnings report paints a picture of a company in transition. While the revenue growth from Le Mans Ultimate and the introduction of a new subscription service are positive developments, the company's net loss and liquidity concerns are cause for concern. As Motorsport Games Inc. explores strategic alternatives and partnerships, it will be crucial for the company to balance its short-term financial challenges with its long-term growth potential. Only time will tell whether the company can successfully navigate these challenges and emerge as a leader in the gaming industry.