Motorsport Games — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenues were $3.8 million, a 21.8% increase from $3.1 million in Q3 2025; nine-month revenues were $11.3 million, a 52.3% increase from $7.4 million in the same period in 2025.
• Gross profit margin for Q3 2026 was 88.0%, up from 80.7% in Q3 2025; for the nine months ended September 30, 2026, the margin was 85.8%, up from 79.6% in the prior year period.
• Net income for Q3 2026 was $0.7 million, marking the seventh consecutive quarter of profitability; income from operations was $1.2 million, a 52.4% increase from $0.8 million in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $1.8 million, a 75.7% increase from $1.0 million in Q3 2025; for the nine months ended September 30, 2026, Adjusted EBITDA was $4.0 million, a 99.0% increase from $2.0 million in the prior year period.
• Non-GAAP Adjusted diluted net income per share was $0.51 for the nine months ended September 30, 2026, compared to $0.45 in the same period in 2025.
• Cash and cash equivalents were $5.4 million as of September 30, 2026, compared to $4.1 million a year earlier; working capital improved to $4.2 million from negative $2.2 million as of December 31, 2024.
• Deferred revenue reached $1.6 million at September 30, 2026, the highest quarter-end balance since the IPO, up from $1.1 million a year earlier.
• Cash flow from operations for the nine months ended September 30, 2026, was approximately $4.1 million, compared to $2.8 million in the same period in 2025.
• The Company capitalized $1.7 million of internally-developed software in the nine months ended September 30, 2026, compared to $0.7 million in the prior-year period.

Guidance and Future Outlook:

• RaceControl is on track to generate approximately $3.4 million in annual recurring revenues (ARR), up from approximately $2.9 million as of June 30, 2026.
• The updated RaceControl web portal at racecontrol.gg is expected to run entirely on the Company's own technology starting in December 2026, enabling mobile, tablet, and desktop engagement.
• The U.S. Track Pass for Le Mans Ultimate is expected to be completed with Pack 3 in December 2026, adding two more popular circuits.
• Management stated the recovery is complete and the focus is on using momentum to power the next stage of growth and build a larger, more diversified business.
• The Company expects to continue claiming UK Video Games Tax Relief, though the timing and amount will vary.

Business Segments and Product Lines:

• Le Mans Ultimate has passed 2 million combined unit sales (base game and DLC) as of October 31, 2026; over 520,000 players own the base game and have purchased 1.5 million pieces of DLC.
• RaceControl subscription revenues grew to approximately $2.0 million for the nine months ended September 30, 2026, up from approximately $0.7 million in the prior year period, representing 17.3% of total revenues.
• RaceControl had more than 45,000 paid subscribers as of September 30, 2026, an increase of more than 157% compared to September 30, 2025, achieved entirely through organic growth.
• Le Mans Ultimate Version 1.4 was released on July 28, 2026, featuring the U.S. Track Pack 1 (Daytona International Speedway and WeatherTech Raceway Laguna Seca), achieving the biggest DLC launch-day revenue in the game's history.
• Le Mans Ultimate Version 1.4.2 was released on September 22, 2026, featuring the U.S. Track Pack 2 (Michelin Raceway Road Atlanta and Streets of Long Beach), along with race car liveries and game improvements.
• A 24 Hours of Le Mans Special Event in October 2026 set a new all-time peak of 11,941 concurrent players, up more than 3,000 from the previous record.

Market and Competitive Landscape:

• The Company noted that RaceControl growth was achieved entirely through organic growth.
• The Company owns the industry-leading rFactor 2 and KartKraft simulation platforms, with rFactor 2 powering F1® Arcade through a partnership with Kindred Concepts.
• The Company is the officially licensed video game developer and publisher for the 24 Hours of Le Mans and the FIA World Endurance Championship.

Risks and Challenges:

• Forward-looking statements cite risks including delays in releasing new game versions, inability to deliver new products or features, and less than anticipated customer acceptance.
• Risks include higher than expected labor costs, difficulties in establishing partnerships, and adverse economic conditions such as inflation, higher interest rates, and tax increases impacting consumer discretionary spending.
• Potential risks involve the ability to maintain existing licenses, manage acquisitions, attract and retain qualified employees, and protect intellectual property.
• The Company noted that actual results could differ materially due to factors such as unanticipated operating costs, transaction costs, and contingent liabilities.

Management Commentary and Tone:

• Stephen Hood, President and CEO, expressed pleasure at extending the profitability streak to seven consecutive quarters and noted that gross margins are expanding as more revenue stays inside the business.
• Hood stated that owning and operating the RaceControl platform provides complete control and faster development, protecting a significant head start.
• Peter Hansen-Chambers, CFO, highlighted that the balance sheet progress is clearest, with cash and deferred revenue at their highest levels since the IPO, providing the means to invest with pace and discipline.
• Management described the business as improving its financial position with a complete recovery, shifting focus to the next stage of growth.

Other Key Points:

• The Company repurchased 904,395 shares of Class A Common Stock for $3.7 million in the second quarter of 2026.
• In August 2026, the Company issued 414,747 shares of Class A Common Stock upon the exercise of outstanding warrants, generating approximately $0.9 million in proceeds.
• The Company maintains a $3 million revolving line of credit from Citibank, N.A., of which $1.2 million was drawn as of September 30, 2026; the facility matures on February 20, 2028.
• Total stockholders' equity increased from $1.2 million as of December 31, 2024, to $8.2 million as of September 30, 2026.
• Accounts payable decreased from $3.0 million as of December 31, 2024, to $0.4 million as of September 30, 2026.
• Development expense for Q3 2026 was $0.1 million, down from $0.4 million in Q3 2025, primarily due to the recognition of approximately $0.69 million in UK Video Games Tax Relief.
• Net income attributable to Motorsport Games Inc. for Q3 2026 was approximately $0.3 million ($0.07 per share), compared to $0.8 million ($0.14 per share) in the prior year period, largely due to a $0.5 million provision for income taxes relating to the Dutch subsidiary Studio397 B.V.