Motorsport Games (NASDAQ:MSGM) reported its seventh consecutive quarter of positive net income as sales of downloadable content for Le Mans Ultimate and subscriptions to its RaceControl platform lifted third-quarter revenue and margins.
Revenue rose 21.8% from a year earlier to $3.8 million in the third quarter of 2026, while adjusted EBITDA increased 75.7% to $1.8 million. The company reported net income of $0.7 million, including $0.3 million attributable to Motorsport Games, or $0.07 per share.
For the first nine months of the year, revenue increased 52.3% to $11.3 million, exceeding the company’s revenue for all of 2025. Chief Financial Officer Peter Hansen-Chambers said the business remains influenced by its release calendar, motorsport events and seasonality, and urged investors to evaluate its performance over several quarters rather than in isolation.
RaceControl Growth Supports Margins
RaceControl subscription revenue rose to approximately $2 million in the first nine months from $0.7 million a year earlier, accounting for 17.3% of total revenue, compared with 9.2% in the prior-year period. The platform had more than 45,000 paid subscribers at the end of September, up more than 157% year over year.
Based on October monthly recurring revenue of approximately $282,000, the platform was generating about $3.4 million in annual recurring revenue, up from approximately $2.9 million when the company reported in August, Hansen-Chambers said.
Motorsport Games plans to launch a new RaceControl web portal in December that it will own and manage entirely in-house. Hansen-Chambers said the move will eliminate a revenue share paid to the platform’s original technology partner, allowing the company to retain the 10% of RaceControl revenue it had been sharing.
Chief Executive Officer Stephen Hood said the company intends to add features and services to encourage more Le Mans Ultimate players to subscribe. He did not provide a revenue forecast for the updated platform. Hansen-Chambers said RaceControl also could play a significant role in future products.
Gross margin rose to 88% in the third quarter from 80.7% a year earlier. Hansen-Chambers said RaceControl has helped the revenue mix because the company shares less of that revenue. He added that the effect of a future console launch on margins will depend on how many units are sold.
Game Sales and Console Development
Hood said Le Mans Ultimate has passed 2 million sales across all channels, comprising more than 520,000 copies of the base game and 1.5 million pieces of downloadable content. The first U.S. Track Pack, released in July, delivered the game’s biggest downloadable-content launch day, while a second pack followed in September. A third American content pack remains scheduled for December.
The company has a playable development version of Le Mans Ultimate running on both PlayStation and Xbox, a milestone reached ahead of its December target. Hood said the console release remains on track for 2027, with a more precise launch window to be defined closer to release.
Hood also said the company is working on potential projects involving partners, licensing and new capabilities as it seeks to reduce dependence on a single product or relationship. He said Motorsport Games would not announce projects until agreements are signed, but hopes to provide more information on its next earnings call.
Cash Flow and Development Spending
Operating income rose 52.4% to $1.2 million in the third quarter. For the first nine months, it increased to $2.9 million from $2.7 million, although Hansen-Chambers noted that the prior-year figure included $1.6 million in one-off other operating income, mostly from settlements.
The company capitalized $1.7 million in development costs during the first nine months, compared with $0.7 million a year earlier. It also recognized approximately $0.69 million of U.K. video games tax relief in the third quarter, reducing reported development expense.
Cash generated from operations rose to $4.1 million for the nine months from $2.8 million a year earlier. Motorsport Games ended September with $5.4 million in cash, including $0.9 million in proceeds from an August warrant exercise. It had drawn $1.2 million on a $3 million revolving credit facility.
Hansen-Chambers said the company is reviewing its corporate structure and pursuing partnerships as it moves from a turnaround toward growth. He did not provide forward-looking financial guidance.
About Motorsport Games (NASDAQ:MSGM)
Motorsport Games Inc. (NASDAQ: MSGM) is a video game developer and publisher focused on racing and motorsport entertainment. The company creates and distributes racing games for consoles and personal computers, and supports related online, competitive and esports experiences. Its portfolio has included officially licensed motorsport titles and racing technology platforms. Motorsport Games has been associated with products such as Le Mans Ultimate , the official game of the FIA World Endurance Championship, and rFactor 2 , a racing simulation platform developed by its Studio 397 business.
