Motorsport Games Inc.

What they do

Motorsport Games develops and publishes racing video games, primarily Le Mans Ultimate, the official game of the 24 Hours of Le Mans and the FIA World Endurance Championship. The company also owns KartKraft and Studio 397's rFactor 2 technology, which powers F1 Arcade through a partnership with Kindred Concepts. It generates revenue from full-game sales, downloadable content (DLC), and its RaceControl subscription platform.

Revenue drivers

• Le Mans Ultimate — Primary revenue driver; released in early access February 2024 and full version 1.0 in July 2025. Revenues have grown with quarterly revenue reaching $4.0M in Q1 2026, up 129% year-over-year.
• RaceControl subscription platform — Subscription-based platform that provides recurring revenue; management cites its steady expansion as contributing to Q1 2026 growth.
• DLC and in-game purchases — Downloadable content and in-game purchases generate incremental revenue; the company plans to drive recurrent consumer spending through extra content.

Recent performance

In Q1 2026, revenue was $4.0 million, up 129.3% from $1.8 million in Q1 2025, with gross margin improving to 87.2% from 73.5%. Net income was $1.0 million in both periods, but Q1 2025 included a $0.5 million legal fee reimbursement. Adjusted EBITDA was $1.5 million in Q1 2026, up from $0.6 million in Q1 2025. The company generated positive operating income and reported cash of $5.9 million as of March 31, 2026. For fiscal year 2025, revenue was $11.3 million with net income of $6.9 million, versus $8.7 million revenue and a $2.8 million net loss in 2024.

Strategy

Management plans to expand the portfolio beyond Le Mans Ultimate, including bringing the title to consoles and exploring future titles. It is leveraging the rFactor 2 technology platform and community engagement to build a scalable business. The company intends to organize the 2026/27 Le Mans Virtual Series and expand recurring revenue through subscriptions and esports. It also focuses on securing additional capital through debt facilities, such as the Citibank line of credit, and has repurchased shares from its controlling stockholder.

Risks

• Dependence on limited number of distribution partners — The company expects to derive significant revenues from sales to a very limited number of distribution partners, concentrating revenue risk.
• Need for additional capital — Aside from the Citibank line of credit, there are no financing commitments; the company may require further capital to meet obligations, which may not be available on acceptable terms.
• Key license and partnership concentration — The business relies on official licenses from ACO/WEC; loss of these licenses could materially harm operations.
• Material weaknesses in internal controls — The company has disclosed material weaknesses in internal control over financial reporting and is in the process of remediation.

Outlook

Management projects continued momentum from Le Mans Ultimate and RaceControl, targeting sustained growth and profitability. They expect to expand to consoles and possibly new titles, and plan to organize the 2026/27 Le Mans Virtual Series. The company secured a $3.0 million revolving line of credit in February 2026 to support product investment. The share repurchase from Driven Lifestyle is intended to increase shareholder value and strategic influence.