Motorsport Games — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenues for Q2 2026 were $3.5 million, a 36.6% increase from $2.6 million in Q2 2025; revenues for the six months ended June 30, 2026, were $7.6 million, a 74.0% increase from $4.4 million in the same period in 2025.
• Gross profit for Q2 2026 was $2.9 million compared to $2.1 million in Q2 2025; for the six months ended June 30, 2026, gross profit was $6.4 million compared to $3.4 million in the prior year period.
• Gross profit margin for the six months ended June 30, 2026, increased to 84.7% from 78.8% in the same period in 2025.
• Net income for Q2 2026 was approximately $0.2 million, compared to $4.2 million in Q2 2025, which included non-recurring gains of $2.3 million from foreign exchange rates and $0.8 million from the Wesco Settlement Agreement.
• Non-GAAP Adjusted diluted net income per share was $0.19 in Q2 2026 compared to $0.25 in Q2 2025; for the six months ended June 30, 2026, it was $0.33 compared to $0.24 in the prior year period.
• Adjusted EBITDA for Q2 2026 was $0.8 million compared to $1.4 million in Q2 2025; for the six months ended June 30, 2026, Adjusted EBITDA was $2.2 million compared to $1.0 million in the prior year period.
• Development expenses nearly tripled year-over-year in Q2 2026, primarily reflecting continued investment in Le Mans Ultimate and RaceControl.
• Working capital as of June 30, 2026, was $2.9 million, compared to $2.2 million as of June 30, 2025.
• Cash and cash equivalents were approximately $3.9 million as of June 30, 2026.
• The Company maintains a $3 million revolving line of credit from Citibank, N.A., of which $1.2 million was drawn as of June 30, 2026, with a maturity date of February 20, 2028.

Guidance and Future Outlook

• Management stated that the business transformation is now consistent and repeatable, evidenced by growing more efficiently alongside revenue expansion.
• RaceControl is identified as central to future growth, with management expecting to share further news on the next stage of growth for the platform on the next earnings call.
• The initial results of the U.S. Track expansion in Le Mans Ultimate are described as very promising, with the launch date reporting the highest single-day revenues since the game's initial Early Access launch.

Business Segments and Product Lines

• RaceControl subscription revenues grew to approximately $1.4 million for the six months ended June 30, 2026, up from approximately $0.3 million in the same period in 2025, an increase of approximately 348.9%.
• RaceControl generated approximately $2.9 million in annual recurring revenues as of June 30, 2026, up from approximately $1.2 million for the full year 2025.
• RaceControl had more than 40,500 paid subscribers as of June 30, 2026, an increase of more than 230% compared to June 30, 2025, achieved entirely through organic growth.
• RaceControl represented approximately 18.0% of total revenues for the six months ended June 30, 2026, compared to approximately 7% for the first half of 2025 and less than 1% for the full year 2024.
• Le Mans Ultimate base game sales exceeded 500,000 units, with approximately 1.2 million individual downloadable content (DLC) units sold since launch.
• Version 1.4 of Le Mans Ultimate was released in July 2026, adding Daytona and Laguna Seca race circuits and other game improvements.
• The Company achieved a new all-time peak of more than 8,800 concurrent players in March 2026 and recorded its highest-ever month for average daily active users in April 2026.

Market and Competitive Landscape

• The Company is building a virtual racing ecosystem where each product drives excitement and every esports event is an adventure.
• Motorsport Games is the officially licensed video game developer and publisher for the 24 Hours of Le Mans and the FIA World Endurance Championship.
• The Company owns the rFactor 2 and KartKraft simulation platforms, with rFactor 2 powering F1® Arcade through a partnership with Kindred Concepts.
• The Company is an award-winning esports partner for the 24 Hours of Le Mans, creating the Le Mans Virtual Series.

Risks and Challenges

• Forward-looking statements note risks including difficulties or delays in achieving growth plans, delays in releasing new game versions, and inability to deliver new products or content.
• Risks include less than anticipated customer acceptance of new titles, lower than expected performance impacting sales, and higher than anticipated development and labor costs.
• Potential risks involve the inability to establish partnerships with additional service providers, adverse economic conditions such as inflation and higher interest rates impacting consumer discretionary spending, and changes in consumer behavior.
• The Company faces risks related to maintaining or securing licenses with racing series, managing joint ventures or acquisitions, attracting and retaining qualified employees, and protecting intellectual property.

Management Commentary and Tone

• Stephen Hood, President and CEO, expressed delight at reporting a sixth consecutive quarter of profitability and strong revenue growth in the first half of the year.
• Hood highlighted that gross margin expansion alongside growth demonstrates the business is growing more efficiently and that the transformation is consistent and repeatable.
• Hood noted that RaceControl now carries a materially better margin profile than the content business because it runs on infrastructure the Company operates itself and is embedded in daily player habits.
• Management believes the six-month Non-GAAP Adjusted diluted net income per share figures provide a more useful overview of performance given the non-recurring gains in Q2 2025.

Other Key Points

• The Company completed the repurchase of 904,395 shares of Class A Common Stock from Driven Lifestyle Group LLC, resulting in the retirement of all outstanding Class B Common Stock and the elimination of super-voting rights.
• Peter Hansen-Chambers was appointed as Chief Financial Officer effective July 1, 2026.
• The Company generated an average positive cash flow from operations of approximately $0.5 million per month during the six months ended June 30, 2026.
• A conference call and webcast were hosted on August 14, 2026, to discuss the financial results.