Motorsport Games reports swing to profit in Q2

MIAMI - Motorsport Games Inc. (NASDAQ: MSGM), a developer and publisher of racing games, has announced a positive shift in its financial performance for the quarter ending June 30, 2024. The company expects to report net income between $1.6 million and $1.8 million for the quarter, a significant improvement from the net loss of $8.2 million during the same period last year.

The anticipated turnaround is attributed to several key transactions, including a $2.5 million gain from a Settlement and Licensing Agreement with INDYCAR LLC, a $0.6 million gain from an agreement with BARC (TOCA) LIMITED, and a $250,000 gain from the sale of non-core assets to Traxion.GG Limited.

Despite these gains, Motorsport Games anticipates a net loss from operations ranging from $1.2 million to $1.4 million for the quarter, which is nevertheless a reduction from the $8.6 million operational net loss reported in the previous year's corresponding period.

For the first half of 2024, the company expects revenues to be between $4.7 million and $4.9 million, up from $3.5 million in the first half of 2023. CEO Stephen Hood credits the improved financial outlook to the company's strategy of reducing costs, streamlining operations, and focusing on shareholder value.

The preliminary results reflect management's current information and are pending final financial closing procedures. Motorsport Games has emphasized that these figures are unaudited and subject to change. The company's independent accounting firm has not yet completed its review, and as such, these preliminary estimates are not to be considered a comprehensive statement of financial results or condition for the quarter.

Motorsport Games is known for developing and publishing games that closely replicate real motorsport racing experiences, holding official licenses for prominent racing series such as the 24 Hours of Le Mans and the FIA World Endurance Championship. Its portfolio includes the rFactor 2 and KartKraft simulation platforms, and it has partnerships for esports events like the Le Mans Virtual Series.

The information disclosed is based on a press release statement from Motorsport Games.

In other recent news, Motorsport Games Inc. has reported significant developments. The company's Q1 2024 earnings reveal a substantial 75.2% year-over-year rise in revenues, reaching $3 million. Additionally, the net loss has improved, decreasing to $1.7 million. This financial turnaround is partly credited to the success of the "Le Mans Ultimate" game, which exceeded sales expectations.

In a recent Annual Stockholders' Meeting, shareholders elected John Delta as an independent Class II director for a two-year term and ratified the appointment of Grant Thornton LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024.

Motorsport Games has also regained compliance with NASDAQ's continued listing requirements, a reflection of its commitment to strong corporate governance and financial integrity. This achievement is attributed to the implementation of the company's 2024 Restructuring Plan, which saved $6.7 million in annual costs.

In line with these developments, Motorsport Games is planning a subscription service and content updates to further engage its user base. However, the company is also exploring various financial strategies to secure additional funding necessary for ongoing operations. These advancements are part of the company's broader strategy to create shareholder value and drive growth in the gaming and entertainment industry.

InvestingPro Insights

As Motorsport Games Inc. (NASDAQ: MSGM) navigates through its financial recovery, InvestingPro data indicates a complex picture for investors. With a market capitalization of only $6.06 million, the company is trading at a negative price-to-earnings (P/E) ratio of -0.63, reflecting its recent unprofitability. However, a notable quarterly revenue growth of 75.15% in the first quarter of 2024 suggests a potential rebound in sales, aligning with the company's positive financial forecast for the upcoming quarter.

InvestingPro Tips highlight several factors that investors should consider. Motorsport Games holds more cash than debt, which is a positive sign for financial stability. Yet, the company is quickly burning through cash, and its short-term obligations exceed its liquid assets, indicating potential liquidity challenges. Moreover, the stock has experienced significant volatility and has underperformed over the last month, quarter, and year, with a 1-month price total return of -13.9% and a 3-month price total return of -23.63%. These metrics underscore the high-risk nature of the investment.

For those interested in a deeper analysis, additional InvestingPro Tips can provide further guidance on Motorsport Games' financial health and stock performance. There are currently 11 more tips available for MSGM at https://www.investing.com/pro/MSGM. To access these insights and more, consider using the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

The mixed signals from the data and tips reflect the transitional phase Motorsport Games is undergoing. While there are positive aspects such as revenue growth, the company's operational challenges and stock volatility remain areas for investor caution. These insights from InvestingPro may help investors make more informed decisions as they weigh the potential risks and rewards of investing in Motorsport Games.

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