Yahoo Finance Motorsport Games Inc (MSGM) Q1 2024 Earnings Call Transcript Highlights: Significant Revenue ...
Revenue: $3 million, up by $1.3 million or 75.2% year-over-year.
Net Loss: Reduced to $1.7 million from a larger loss in the previous year.
Earnings Per Share (EPS): Improved to -$0.60 from -$2.23 year-over-year.
Adjusted EBITDA: Loss reduced to $0.4 million from $4.2 million year-over-year.
Net Cash Used in Operations: $0.5 million for the quarter, average monthly net cash burn from operations down to $0.3 million.
Cash and Cash Equivalents: $1.2 million as of March 31, 2024.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Revenue increased by 75.2% compared to the same period last year, driven by higher digital game sales and development of simulation platforms for third parties.
Net loss improved by $3.6 million compared to the same period in the prior year, primarily due to higher gross profit and lower operating expenses.
Successful launch of 'Lumin Ultimate' game on PC, which exceeded business forecasts and received positive public reception.
Settlement of previous license dispute liability with ARCTOCA Tokyo Limited for a significantly reduced figure, improving the balance sheet.
Introduction of new licensing deals and content updates, including a planned subscription service, to enhance the gaming ecosystem and drive future revenue.
Negative Points
Net cash used in operations for the three months ended March 31, 2024, was approximately $0.5 million, indicating ongoing cash burn.
The company anticipates needing additional funding to continue operations, exploring options including equity and debt financing or asset sales.
Despite improvements, the company reported an adjusted EBITDA loss of $0.4 million for the first quarter of 2024.
The company faces challenges in maintaining liquidity, with only $1.2 million in cash and cash equivalents as of March 31, 2024.
Dependence on the success of new game launches and updates to drive revenue, with significant investment in marketing and development needed.
Q & A Highlights
Q: Thanks for taking the question and congrats on the strong launch for Lumin Ultimate. I'm curious about the console opportunity. Do you currently have the capabilities in-house to develop the console version of this game, and what might the timeline look like for its launch? A: (Stephen Hood, CEO) We have a great internal team that developed Lumin Ultimate efficiently. For console development, we plan to leverage external partners to manage the process cost-effectively and professionally, utilizing our internal resources for technical know-how while outsourcing the heavier lifting.
Q: Can you dive a bit more into the differences between what is offered in the free risk control currently and what a subscription would look like? How do you view that opportunity both within Lumin Ultimate and more broadly? A: (Stephen Hood, CEO) The free version of Lumin Ultimate provides a solid entry point, and we aim to make the subscription model highly attractive by enhancing the team experience and storytelling aspects. This approach encourages group participation, which is vital in the racing space where competition is fierce.
Q: In terms of overall cost savings, we saw a significant year-over-year improvement on the net EBITDA loss. Are there further improvements expected, or have the restructuring moves been fully reflected in the financial performance now? A: (Stanley Beckley, Interim CFO) The benefits of our 2022 restructuring program have been fully realized by the end of 2023. Our current focus is on maintaining these efficiencies and exploring additional cost-saving measures where feasible without impacting business operations.
Q: Can you review the roadmap for the release of games, DLCs, and the subscription service? When can we expect these to be available? A: (Stephen Hood, CEO) The first piece of new content for Lumin Ultimate is set to coincide with the Le Mans event in June. We plan to roll out new content every two to three months, aiming to fully update the game to the 2024 season by the end of the year. The subscription service is likely to come online around July or August.
Q: How long has the sales tail been for Lumin Ultimate into the second quarter, and what are the expectations moving forward? A: (Stephen Hood, CEO) Sales were initially strong and are expected to peak again around the Le Mans event. We anticipate a spike in interest and player numbers during this period, which should be highly beneficial for maintaining momentum.
Q: Do racing games lend themselves to modifications by user content creators, and is this an opportunity for Lumin Ultimate? A: (Stephen Hood, CEO) While mods are vital for some legacy racing titles, Lumin Ultimate is designed to maintain a high-quality, curated experience. We focus on delivering premium content directly from our team, ensuring consistency and quality for our players.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
