Motorsport Games (MSGM) 7 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to the Motor Sport Games Inc.

Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Ben Rossiter-Turner, Vice President. Please go ahead.

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

beliefs These materially statements and results current of U.S. meaning During of call, this the uncertainties management's and the risks to described on management securities involve within these statements laws. that course expectations actual based forward-looking statements. and may from make forward-looking cause in are federal could those differ

its the company the materially forward-looking result risks forward-looking on cause today. a statements, new as most expressed SEC, company's of by this made press certain whether results information, to on recent that filings September its implied of Except otherwise. in a or the future or and today's discussion obligation alter to those statements report for or differ to undertakes statements law, Please to ended XXXX, forward-looking made quarter actual release update refer any the as call quarterly including required detailed with for events or from no could XX-Q any Form XX, update

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

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

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

accomplished This I'm to call walk our have leadership thus and team achievements a happy has incredible of the you senior efforts you to recognizable by started to and we success. very all Board continuation conference business today. past deliver This quarter through joining work far. the been positive Thank to has results, participants the tangible steer future undertaken this to

I discipline Stanley will Chief effective Beckley to drive is exemplary Jason announce to no Stanley in our business XXXX. it perfectly enthusiasm with can and Financial our up financial stone something to business. unflinching our Stanley fantastic Stanley like reins pick our that the our unturned Officer from incredibly individual we leave as X, detail-orientated into his work building continuing addition and to team, need change with positive would first the Interim momentum. November an become. energy this Potter, is a will maintain to aligns know

of this alongside who assisting to for team, period Jason, his sincere and call, this very months. months. when Jason and through and Jason as phase, expertise, we leadership providing about the needed, owe support weeks launch on accelerating last and Stanley today to the excited over My over thanks valuable pad. few committed guidance in me I'm has and next the to effort the restructuring onboarding is this the several knowledge the next providing

subject projects. net We million the speed deferred in cash plus certain proceeds me million at company a conditions. and up comprehensive that assessment will to early signed please company's the off October, fall XX of payable closing, an additional consideration next $X.X the months, of $X the over satisfaction to NASCAR of generated Now of the on announced in priorly to the bring license allow to you position results

to market. significantly license and both sale financial focus us the to near-term come are projects with to resources and development obligations NASCAR associated that anticipated our allows This reduces financial on

of XX X provide believe means end will revenue months, have over of to a XXXX. revenue over generated we next cash limited be decline affords operational company products existing to the the the time. to to another the amount NASCAR our We cycles quarters continue our to ability company by anticipate executed stability some this game license, although back-catalog through which the back-catalog. we selling from NASCAR This of Additionally, our this the

September our A But the satellite estimated initially period today. key was XXXX principle simplifying higher is reducing of reductions of action, approximately under Restructuring Program. be significantly the estimated as Program total built was What by originally this at our XXXX The $X began $X.X assessment was to efficient structure. million million COVID previously the end our now of deliver annualized is to cost streamline XX, less need further during of This XXXX. Restructuring announced XXXX. while studios approximately to through streamlining the operations,

cost produce our taken and technology elsewhere with week, our We opportunities traffic was identifying the closing retained development title. currently are INDYCAR within Australian In further resume title future have oversight and utilization, studio, to control. last for and of which assets business, planned reduction initiatives, growth restructuring and we to to the we slated the all

the Additionally, our have of brand and versus of action due a indicating its alongside media highly website, use, and We've similarly cost. retained site, revenues elements audience business already prospects. has growth for Traxion.GG, been to closed respected the plan underperforming

that effective X, of XXXX. BTCC of our license as announced our terminated the November recently we Additionally, has licensor BTCC license

process we evaluate continue landscape of to being ongoing will changing our such, as our is corporate the business As in pivoted. for structure and the

into tomorrow version our name improved technology, multiplayer and an the System, publicly planned In Mans previously of X, open today October, Ultimate game first Competition in This recent code a powering game. our available is we Le rFactor under referred released service to the beta. RaceControl for

strength to our registered as expected release, projections, all week. RaceControl of strength quickly to period to a program learnings beating benefit major all push beta later going this been expectations, Mans. Feedback registration users short X saving broke same from is available a Mans positive, overwhelmingly Ultimate from continue Within alongside arrival and becomes for reaching the has We considered the early this Le players the have title, limited our in soft the of to Le a with to launch of month. opted rFactor but now ahead XX,XXX service and launch

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players for building first, cameras. We are the not the

itself sustain We grow. something can making are that and

XXX, Ultimate, subject We racing February releasing product racer team. veteran anticipated I on On Le available date of anticipate the game of that further the release our the Studio XXXX, pleased with due updated highly today next release, our XX, confirm am we this can in planned details Mans from course.

for X fidelity a with Hours are of to into treat. game, the the World the of in plethora utilizing attention some memory. upgrades, most real and With positive We behind racing sports Endurance a Mans see state-of-the-art, games highly the are recognizable car simulation, engine XX vehicles Championship rFactor appetite Le regarded of pleased physics a

in The releasing the into window to and passion we the season. to the is new an going project look ideal second in run-up none, product the to forward

movement Porsche automotive a serve With particularly of and means and Endurance world exciting season to BMW, and period, greats on the wonderful from Lamborghini, well. into the to Ferrari wave believe Championship which this returning our Cadillac of we're the will the segment World to compete, heading an many

as planning racing headway in story in for much the We're team-based racing mainstream also will and we enjoy convenient them. take not making games, to concept, a how endurance of audience. usually to collaborative Players able our this to found wider be when

is and expected to Concepts XXXX. the States a second in found high-tech in Additionally, pleased planned come Ultimate Boston our will within United with that to Kingdom chosen X of in FX to the Le investment and demonstrate technology project I rFactor ongoing Formula to a Being open Studio am X the rFactor testament XXX, with continued platform say in title. Kindred the home to entertainment continuing their grow. be Mans They partnership utilizes the online the to the X is venue United Arcade our shortly

return in reorganization the is This demonstrate since my positive to of period year results. earlier starting

is optimism the focus new underperforming and to of have as closed continue sense we Our high-growth deliver business units to of emerge organization. heightened as profitable, purpose throughout sustainable, to business our been a continues foster sense projects and

for sale today announcing NASCAR company our of Ultimate Since joining been the release more new our of date as NASCAR planned the the service, Le portion an offloading significant back-catalog CEO, doubling retaining of through license, and we've Mans our RaceControl, a obligations, executed updated of for our than online our reduce product. XXXX, the projections significantly users able financial costs, to NASCAR

the We to are work continue business diligently pleased drive with progress the to forward. and

speak to quarter Jason on XXXX. the financial Potter, of Chief the Now of I'll Officer results Financial Games, Motorsport for third the invite

and Stephen, Thank you, everyone. good evening,

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

Car virtual partially to commenced to due the seasons, Update primary Revenues commenced in September digital release which timing Higher series DLC DLC Gen a 'XX-'XX compared or XXXX. in the game Le million were offset and reduction by the June season were NASCAR year. the of $X.X period $X.X for XX.X% XXXX, were driven which Mans Heat in revenue compared in X, the prior the esports when up increase, Next of 'XX-'XX drivers the by million, to sales part same the by in

driven loss the development expenses year. was $X.X and in the in and primarily in reduction decrease Net increase quarter discussed. when in $X for net the million compared million to previously marketing, same as well The a revenue million, as $X.X change a period was of million prior loss a by $X.X general administrative

in XXXX, million in in and savings XXXX $X.XX XXXX. global taken Program, achieved reduction internal lower in us improvements processes. costs for spend under $X.X in the our in driven in our exceeding period overhead basis annualized annualized negative XX, overhead of Restructuring of year. on end the which overhead compared part has The was the September company's with as through by quarter EPS helped million the was $X.XX target $X Consequently, same the by approximately our certain prior reducing an negative changes These savings were headcount, by of expenditures actions

period of respect improvements in adjusted same for comparative quarter to the net are the the third in to XXXX the EBITDA those loss an million same period loss are in for EBITDA million an year. $X.X We of as loss in of the reporting in The in changes adjusted prior adjusted discussed the loss EBITDA $X.X compared quarter.

year-to-date On million, to loss of period volumes compared lower when and sales basis, the the the year, revenues the in same compared retail same Net pricing. digital, the a million primarily driven less year. lower down $XX and prior due million period by $XX period prior to for $X.X mobile to in were sales, year-to-date $X.X million game was for favorable

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

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

was XXXX, months approximately XX, $X.X for XX, XXXX. X equivalents the million in used $X.X December of when average $XX.X XX, ban compared Net represent ended of cash monthly cash of September million, net cash to year burn September of from average $X.X down and XXXX. million June from for of million down XXXX, operations as the cash ended XX, As million monthly the cash we $X.X $X had operations million,

addition position this insufficient order $X is October In we shortfall, the sale to XX, the liquidity cost be are and/or As alternatives in for of debt including, actively NASCAR recent form and transactions; restructuring three, to, of operations address to we QX which equivalents $X.X limited strategic cash sale cash sale but exploring one, of continue increased million the at initiatives. our the that funding of NASCAR licensing financing and not but through and in the fund arrangements additional or XXXX, required the operations. to similar end including, potential to, million reduction funding business, of license, to our following several will from and not XXXX, order or believe limited assets in options, license; further to equity additional

now Thank all I'll you And to time. closing remarks. for Stephen turn call the your for back

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

comes Michael question first Kupinski from [Operator with Markets. Instructions] Our NOBLE Capital

so I'm quick its is on color sorry wondering you I on us, this little of the existing and this you've one. maybe if current what that? on its reasons for I if late, British -- little on wondering all Touring -- add And the kind -- licenses company and that? your and us if A can you obligations if just tell a was the just just can behind of was forth? a already update Can joining you were an what license Car give discussed on

Michael, hear good from you. to

So license. the an as of In BTCC we in a disclosed in not disclosed assuming -- the in the behind which update XX-Q, through, maybe to we to first whole in then but I'll Stephen have answer respect have respect as Form give part that we ]. and [ are the on some added being terms there from BTCC obligations will payments current [indiscernible] yet

are in payments agreement. that was behind license some, the to some essence, week. [ BTCC made so pending the be ] under And from still this one there drivers of the That need damnation

addition... In

Go ahead.

Jason, licenses? is to that be terms in payments plumbing of terms I'm the Or additional additional in any do you other make . you cash that you the just you'll currently, I so a did the cash part is those needing? the -- was comment? that have have have of whole wondering, of that And -- enough kind of sorry,

termination. the we it's $X.X BTCC the so subject the mean owe mean, million, -- to amount I is specifically I under that

can Form some to as a get the and number conversations of to with looking with be on on result work us that's that engage But next and we're [indiscernible] disclosed XX-Q. week, termination that in obviously parties point that. BTCC the specifically, So in

to been, tremendously I what whole, has down as when prior think, prior it's quarters balance come even perspective our compare year at we from a year-to-date. the and look cash a financing and we and

the And to see monthly before. close where with average happy cash balance $X.X directionally. us we're is just we've heading million which been QX, that So about you should to never

it any And factoring we need, we all and are where look last additional payments under might so we'll be purchase the with that and at covers when funding commitments. we're obviously the required think future any X and we residual burn that in cost

you those -- at XX-Q, is there kind on? us but maybe Got in which negotiations And you. And sorry in there I'm you if are other licenses covered are of Are are this is point? -- of a the give risk going what this behind licensees. those with a gauge -- how

okay. That's

those in future those the obviously, So they've been to payment have with there I are mean, INDYCAR But come and we either associated license, of royalty they've kind on of -- presently the payments adhere so guarantees X with look behind and primary licenses, in we'll license that the coming months. with not arrangements. to on are Mans to schedules remaining Le in

through Or went Are you further to you you can there where are tremendous cut point? expenses base that at that at know reorganization I level And feel the need you you be? this you. a consolidation. now Got and

us. week we'll to is tried of and Yes. opportunities things more easy do the decisions some I and around, to for been sustainable where as reduce cost obviously restructuring of tough our changes that overhead the but the we had level. we'll We've matches hasn't to this mean, continue those much can. today. But we that always to I a base, have try overhead course, organization to make look some of as we've side mean, I from some reduce to to think for announced review

to and possible. as then also something And make we're and as upon improve efficient sure is we'll so to continue review this

concludes and All our right thank today's attending then. This you conference, for presentation.

You all may now disconnect.