Motorsport Games Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you, and welcome to Motorsport Games' second quarter 2026 earnings conference call and webcast.

On today's call is Motorsport Games' Chief Executive Officer, Stephen Hood, and Chief Financial Officer, Peter Hansen-Chambers. By now, everyone should have access to the company's second quarter 2026 earnings press release filed today after market close. This is available on the investor relations of Motorsport Games website at www.motorsportgames.com. During the course of this call, management may make forward-looking statements within the meaning of U.S. federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Except as required by law, the company undertakes no obligation to update any forward-looking statements made on this call or to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to today's press release and the company's filings with the SEC, including its most recent quarterly report on Form 10-Q for the quarter ended June 30, 2026, for a detailed discussion on certain risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. In today's conference call, we will refer to certain non-GAAP financial measures, such as the adjusted EBITDA, as we discuss the second quarter 2026 financial results.

You will find a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, as well as other related disclosures in the press release issued earlier today, which is also available on the investor relations section of Motorsport Games website at www.motorsportgames.com. I'd like to turn over the call to Stephen Hood, Chief Executive Officer of Motorsport Games.

Stephen. Thank you, Ben. Good afternoon, everyone, and thank you for joining the Motorsport Games second quarter 2026 earnings call.

We are now six consecutive quarters into proving that this business works. First half revenue was $7.6 million, up 74% year-on-year, and gross margin expanded to almost 85% from just under 79% a year ago. We are not just growing, we are growing more efficiently. We generated positive operating income for the sixth quarter in a row. Le Mans Ultimate and RaceControl remain the two engines behind that, and this quarter, RaceControl took another real step forward, which I will come back to. Le Mans Ultimate player engagement accelerated in this quarter. We spoke last time about the all-time peak of more than 8,800 concurrent players achieved in March. That momentum spiked again. April was our highest ever month for average daily active users, which, as I have said previously, is the number that matters most to us.

It tells us players are sticking around, not just appearing for a moment. I am delighted to say that we have now sold more than half a million units of the base game and more than 1.2 million individual pieces of DLC or downloadable content since launch. That is half a million players enjoying Le Mans Ultimate enough to then go on and spend additionally to extend that experience. An experience that has clearly resonated within the player base we have built. Here is the interesting part. Each and every one of those players competing online has an account on RaceControl. They exist within a platform we operate within our ecosystem. That is an advantage to us on several fronts.

We can ensure a cleaner onboarding experience for new players, we can communicate with them directly, and we can continue to invest in building the platform. I have said before that RaceControl deserves to be understood not solely as a feature that supports Le Mans Ultimate, but as a standalone platform business, and this quarter makes that case better than any quarter before it. Peter, our new CFO, will walk you through just how fast that is scaling, but the short version is this. We are building a unique model in our sector. It is recurring, it is predictable, high margin, and is not seasonally affected by releases as a traditional game release model. It helps us to engage with and retain players, establishing a loyal community. We can monetize the most engaged players and funnel those revenues back into the service and products to improve them further.

RaceControl might still be in its infancy, but we believe that it will prove to be an ever more critical component of our distinct entertainment offerings in the future. We believe it is already proving to be a real jewel in our portfolio, amplifying our games in a distinct way versus the competition. On our last call, we talked about wanting to bring content to Le Mans Ultimate that reaches players who are not already bought into the Le Mans and European racing world. As strong as we are in Europe, understandable given the product title, we know that is not the entire addressable market, and that there are great racing experiences outside the laser focus on Le Mans content we have stuck to since launch.

In July, after quarter end, we updated the game to version 1.4, and with it added Daytona and Laguna Seca, two of the most iconic circuits in American racing, as the first part of our newly released US Track Pass. We expect packs 2 and 3 in September and December respectively, and we're actively exploring what comes next for Le Mans Ultimate content in 2027. Whilst we do not envisage opening our Le Mans gaming title to completely unrelated racing content, we do believe there are still significant content offerings that can be added to the Le Mans Ultimate experience over at least the next couple of years. To go beyond this, we will need to release a new title. We will have more on that on our next earnings call.

For now, let me move on to console progress and how we're shaping up on bringing Le Mans Ultimate to PlayStation and Xbox platforms. On consoles, development of Le Mans Ultimate for PlayStation and Xbox continues as planned. I've said before, this is complex work. Bringing a high-fidelity simulation experience to the home console market isn't routine in our industry. But we believe console players are starved of the kind of experience we know we can deliver. Not every player can justify the expense of a suitable gaming PC, let alone a simulator rig complete with wheel and pedals. Bringing Le Mans Ultimate to console widens our reach and allows us to connect with a market that is genuinely underserved. PC-level simulation experiences are hard to find on console platforms.

Arriving on console will be another important milestone in the growth of our company, and the learnings from this project will directly benefit future releases. Before I hand over, a word on our leadership. Peter Hansen-Chambers joined us as Chief Financial Officer effective July 1st, and this is his first call with us. He brings a wealth of experience from highly respected games companies including Codemasters and more recently Hutch Games, where he was CFO and co-CEO. I'm very glad to have him on board. Internally, I had been relaying to our team that in order for us to take the next step on our journey, we need to evaluate how we make progress. The recovery of Motorsport Games, whilst a wonderful story, is not the story.

There is still so much more to do, and it's important that everyone in our organization appreciates the energy that will be required to move ahead. Peter's energy, enthusiasm, and experience is a key part of our continual evolution. I also want to thank Stanley Beckley for his role in getting this company back on track. We're delighted that he continues with us in his role as Chief Accounting and Compliance Officer. The workload has grown, and it made sense to expand the team so that we can meet the challenge of transitioning from recovery to growth, whilst retaining the talent and expertise that helped shape our return to form. This strength has allowed us to act opportunistically where we see value for the company's long-term health and value for shareholders.