Motorsport Games Inc. Q3 FY2021 Earnings Call

Welcome to today's Motorsport Games Incorporated Third Quarter twenty twenty one Earnings Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. I'll now turn the call over to your host Ashley DeSimone of ICR. You may begin.

Thank you, operator. On today's call are Dmitry Kozko, Motorsport Games' Executive Chairman and Chief Executive Officer; Stephen Hood, President; and Jon New, Chief Financial Officer. By now, everyone should have access to the company's third quarter earnings press release filed today after market close. This is available on the Investor Relations section of Motorsport Games' website. During the course of this call, management may make forward-looking statements within the meaning of the 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 statement 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 the company's most recent annual report on Form 10-K and the company's quarterly report on Form 10-Q for the period ended September thirty, twenty twenty one for a detailed discussion of the 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 adjusted EBITDA as we discuss the third quarter twenty twenty one financial results. You will find a reconciliation of these non-GAAP measures to our actual GAAP results, as well as other related disclosures in the press release issued earlier today. And now, I'd like to turn the call over to Dmitry Kozko, Chief Executive Officer of Motorsport Games. Dmitry?

Thank you and hello, everyone. My name is Dmitry Kozko, Executive Chairman and Chief Executive Officer of Motorsport Games. It’s a pleasure to discuss our third quarter results with you today, along with Stephen Hood, our President; and Jon New, our Chief Financial Officer. Please take a look at our Q3 highlights video and Q3 earnings slides posted on the landing page of our IR website. We share some visuals from our just released NASCAR 21: Ignition game and a glance of the first round of twenty twenty one, twenty twenty two Le Mans Virtual Series Esport events. We opened these quarterly videos and now, our quarterly earnings slide and continue to give you a sense of Motorsport Games' progress towards our vision to become the household brand name for racing games and esports. I want to say thank you to our new and existing stockholders and racing fans, who have been patiently waiting for the release of our new NASCAR 21 title. The wait is over. We chose to pull forward our normally scheduled quarterly earnings conference call to get you not only our Q3 results but also the information related to the recent launch of our NASCAR 21 title. I'm excited and humbled to say that NASCAR 21: Ignition was launched on October twenty eight. This is a significant milestone for a young company particularly because this is the first title that was built on our proprietary Motorsport Games internal development platform leveraging Unreal Engine and rFactor technologies. There has been a lot of excitement around NASCAR 21: Ignition. During the pre-release period, we experienced technical glitches. This is common whenever a new game is launched on a new engine, and I'm pleased to report that due to the flexibility of our new Motorsport Games engine and the hard work of the internal development team, we were able to release patch updates very quickly. In fact, for the PlayStation and PC platform, we were able to get the patch out to users early in the morning of the official October twenty eight release in the U.S. and for the Xbox users within forty five hours after the U.S. release. Just ahead of the NASCAR Martinsville race weekend, where the gaming impact was featured at the NASCAR village for fans to play on-site. We thank our community for your patience, understanding, and ongoing support. The work is not over though, and it is our commitment to continue to update the game with patches as we learn more and implement feedback we are receiving. The game has been the newest installment in the officially licensed NASCAR gaming franchise and is available physically or digitally for Sony PlayStation four, Microsoft Xbox one and PC through the Steam store. The console version comes with a free upgrade path for the Sony PlayStation five and Microsoft Xbox Series X/S, with free downloadable upgrades available for those users. This year's game comes complete with new updates and additions built upon the foundations of the previous iteration of our NASCAR titles. For example, we developed a brand new theme booth offering unparalleled level of optimization to create NASCAR pain schemes with completely iconic race numbers, which we've already seen fans praising while creating some amazing personalized themes. When we first announced the pre-orders of NASCAR 21: Ignition on August twelve, we immediately saw great demand in pre-orders, which carried through all the way to the launch date. Overall, pre-order revenue, including estimates for the launch date were approximately eighteen percent higher when compared to NASCAR Heat 5 for the same period. This included one of our largest selling orders to date as Motorsport Games from GameStop, Walmart, Amazon, Best Buy, and more. Visual pre-order part of the revenue significantly increased year-over-year to approximately one hundred fifty-seven percent when compared to NASCAR Heat 5. We believe that our digital revenue would generally have a higher gross margin relative to packaged goods will continue to increase during the remainder of Q4 twenty twenty one. Launch date was a very momentous occasion for us. It is clear to us how passionate our fans are about NASCAR 21: Ignition and racing games in general. We shared our passion and have been capturing some community feedback. We're actively working on addressing this feedback received from our community and bolstering our next updates to address quality of life and new future requests. We are pleased with all the passionate feedback pouring in across all of our social channels and particularly we stay transparent with our community and partners and most importantly showcase that we deliver on our promises and that we truly care. Shortly after the launch and implementation of the patches for our platforms we saw positive community sentiment and appreciation. We are building our games for the future and we believe it's important for us to invest in our community. The launch of NASCAR 21: Ignition is an example of a primary growth strategy which is to create great racing games that we can scale by expanding our portfolio brands since the multiple franchises with multiple games each paired with dedicated esports offerings. Starting with our NASCAR partnership, we have officially announced we will be launching the first-ever NASCAR title for the Nintendo Switch platform. This is the first time we're expanding to the Nintendo Switch and are excited to invite a whole new audience of gamers and fans. Our fans have long waited for the Nintendo Switch version of NASCAR and we're excited to give them an affordable version of such a game. NASCAR Heat Ultimate Edition+ for Nintendo Switch is targeted to launch on November nineteen with pre-orders currently live across retail and digital stores. Sales orders for this product have already exceeded our initial internal projections and will be ready to hit the shelves in time for this holiday season. NASCAR Heat Ultimate Edition+ on Nintendo Switch includes everything found in NASCAR Heat 5 Ultimate Edition for console plus the twenty twenty one NASCAR health series cars rosters and primary paint kits. The previous twenty twenty official game drivers, cars and schedules from the three NASCAR National series and extreme dirt races featuring thirty-nine authentic tracks remain in this game as well. Further future content includes twenty twenty throwback and playoff paint schemes and Tony Stewart as a playable character. We continue to make progress on development of our BTCC, Le Mans, and now INDYCAR games, leveraging our March innovation for Motorsport Games engine as possible and building on top of the learnings and evolution of NASCAR 21: Ignition. Additionally, we continue to evolve our early access hard craft games by releasing more upgrades and content while bringing the car title closer to a full release for PC, which we expect will be before the end of this year. We also continue to integrate our rFactor 2 platform into our Motorsport Games engine and add additional content as well as use rFactor 2 to run our official esports event. Let’s dive a little bit more into the details about our esports initiatives. We continue to value the growing importance of esports in our business, which has funneled new users across our product base and driven prior fan engagement and new potential revenue streams from sponsorships. We dedicate ourselves to being the leading player in the racing esports scene and we believe that our combination of world-class events around unmatched iconic IP and effective user engagement with our fans will help us get there. We have officially launched the expanded twenty twenty one, twenty twenty two Le Mans Virtual Series in the third quarter of twenty twenty one. The first two rounds have been completed with entertaining growth for the fans, and we are anticipating a spectacular grand finale for the 24 Le Mans virtual, which will be a live and televised event from the twenty twenty two other sport international show on January fifteen to sixteen in twenty twenty two. We are incredibly proud of the level of the participants from famous drivers, world-class teams, manufacturers, and partners. We welcome Thrustmaster as our official hardware partner, Rolex as Official Timepiece Partner, Total Energies as Official Energy Partner, Goodyear as our Official Tire Partner, LEGO Technic as Official Engineering Partner and Algorand as Official Blockchain Partner for this twenty twenty one, twenty-two Le Mans Virtual tour. Official events like this continue to bring awareness to product offerings, such as rFactor 2 and the rest of our core games. This year, we plan to announce more official annual esports events and leverage our community platform traction as it continues to grow in audience and engagement. We continue to focus on developing and bringing capabilities to our community through traction that will allow fans and friends to compete against each other, rank among others and develop virtual racing figures. Lastly, I would like to formally welcome Peter Moore to the Board of Directors. Peter is no stranger to the gaming industry and brings us thirty years of gaming and entertainment consumer industry experience. Formerly, he was COO of Electronics and head of EA Sports, and currently he serves as Senior Vice President and General Manager of Sports and Life Entertainment at Unity Technologies. We're excited to have him on board, giving us the opportunity to leverage his career experience as we continue to grow from a single franchise company to a multi-franchise company in the racing game sector. Now Stephen is going to say a few additional words about our product development.

Thank you, Dmitry, and hello everyone. My name is Stephen Hood, and I’m the President of Motorsport Games. We are happy to bring NASCAR 21: Ignition to an enthusiastic audience, and I would like to echo Dmitry's comments. While we're incredibly proud of the work done by the development team, we acknowledge there remain certain bugs that must be fixed. The initial day-one and second patches have already been incorporated into the game, delivering over three hundred improvements across all areas of the product, and our teams are currently working on patch three that will address other outstanding issues. Again, I'd like to give a big thank you to our development team for their continued efforts on NASCAR 21: Ignition. As we see the rollout for NASCAR 21: Ignition, and NASCAR Heat Ultimate Edition+ on the Nintendo Switch, I would like to give an update on the continued expansion of our capabilities and how our development teams are scaling to handle multiple franchises. Throughout the development process, we have worked hard to scale our capabilities through our acquisitions of Studio 397 and 704Games, as well as the core team behind the ever-impressive KartKraft product. These acquisitions give us strength in technologies and expertise that we will further leverage to elevate our own scalable development platform, the engine room of our product and development efforts. The experience of delivering our own product from start to finish is a major highlight for our growing business. Building an all-new NASCAR gaming franchise with an all-new team, tools and technologies is an important step forward, and one that proves we can deliver our own products. Next, we plan to improve our pipeline further by integrating the source code of our rFactor 2. Integration of the preferred component since the Unreal Engine and the MSGM development platform under the guidance of our now-complete technical management team will undoubtedly improve product stability. Furthermore, we will capitalize on the matured toolset offered by KartKraft and the Unreal Engine product to harness a more efficient product development pipeline which will serve to level up our outlook going forward. These are the familiar growth steps on a software developer's trade. The difference is that we are doing it at a much faster rate typically found within organic game development. We are progressing in our roadmap as expected. As our tools and technologies evolve, so must our QA testing team. Scaling from one project to multiple franchises requires additional expertise and as guardians of product stability and quality, it makes sense to ensure this department has the resources necessary to plan leisure time improving our health moving forward. Accommodating the growth of products is crucial to our ability to increase the number of product releases while simultaneously increasing product quality. With increasingly complex software products, user-generated content, integrated services, and the accretion of the Motorsport-focused ecosystem, we're going to be testing at a much larger scale than ever before. We are laser-focused on where we are going, and I believe more than ever that we have the right people, technologies, and tools to position ourselves at the front of the pack. Now let me hand over to Jon New to give a review of our third quarter financial results.

Thank you, Stephen. My name is Jon New, and I’m Chief Financial Officer of Motorsport Games. I'd like to welcome you to the third quarter earnings call and I would now like to share a financial overview for the third quarter and year-to-date, September thirty. Revenues were two point one million dollars for the third quarter of twenty twenty one compared to nine million dollars in the prior year period. The gap between comparisons is primarily attributable to releasing NASCAR Heat 5 in the third quarter of twenty twenty versus releasing NASCAR Ignition 21 in the fourth quarter of twenty twenty one. The revenues from NASCAR 21: Ignition game sales will primarily be recognized in the fourth quarter of twenty twenty one and into the first part of twenty twenty two. So this timing difference will come up again and again as we go through this conversation. Net loss and net loss per share of Class A common stock were six point six million dollars loss and one point two million dollars gain respectively for the three months ended September thirty, twenty twenty one and twenty twenty. As mentioned, the quarterly comparisons are significantly affected considering the different release stage in NASCAR Heat 5 during Q3 twenty twenty versus NASCAR 21: Ignition that was released in Q4 twenty twenty one. Big picture for the third quarter, we exceeded analysts' consensus expectations on revenues and gross margin for the third quarter of twenty twenty one while our adjusted EBITDA loss was higher than analysts' expected, and that was primarily due to higher development expenses due to more products in the pipeline and to a lesser extent some higher marketing costs. Net loss income was a loss of six point seven million dollars and income two point six million dollars for the three months ended September thirty, twenty twenty one and twenty twenty respectively due to the timing of game releases. Adjusted EBITDA is one of our key performance measures given our IPO and acquisition activities during twenty twenty one, and adjusted EBITDA takes that out primarily due to the timing of the NASCAR game release, our adjusted EBITDA loss was five point five million dollars for the three months ended September thirty, twenty twenty one as compared to an adjusted EBITDA gain of three million dollars for the three months ended September thirty, twenty twenty. For the nine months ended September thirty, twenty twenty one and twenty twenty, total revenues were six point nine million dollars and sixteen point one million dollars respectively. Again, you're seeing a nine point two million dollars decrease in revenues driven by the timing of our NASCAR games releases I discussed above. For the nine months ended September thirty, twenty twenty one, revenues for our gaming segment decreased by nine point four million dollars or fifty seven percent to six point seven million dollars from fifteen point eight million dollars for the nine months ended September thirty, twenty twenty. Net loss or income attributable to Motorsport Games Inc. was a loss of twenty-six point two million dollars and income of zero point nine million dollars respectively, for the nine months ended September thirty, twenty twenty one and twenty twenty. Adjusted EBITDA loss was twelve million dollars for the nine months ended September thirty, twenty twenty one as compared to an adjusted EBITDA gain of three point three million dollars for the nine months ended September thirty, twenty twenty. The primary reason for the fifteen point three million dollars change was twelve point four million dollars of IPO-related expenses and non-cash stock-based compensation resulting from our IPO in January. We also had an additional two point one million dollars of acquisition-related expenses during the nine months ended September thirty, twenty twenty one that did not exist in twenty twenty. Looking ahead, as we move through the fourth quarter of twenty twenty one, expectations for full year revenue remain at twenty point five million dollars, with an updated adjusted EBITDA loss of twelve million dollars. We are pleased to have gained the INDYCAR license during the third quarter of twenty twenty one, and this will continue to increase our development costs as we work toward a twenty twenty three release of new INDYCAR game and other planned product releases. Thank you for joining us today, and now let's go to questions.

Our first question comes from Michael Graham from Canaccord. Please state your question.

Thank you and good evening guys, and congrats on the big launch. It's an exciting time. Really happy to see the game get out there, and it’s also great to see that you had such good momentum on pre-orders up eighteen percent versus your last game, which is pretty encouraging. I have a couple of questions about the game. One is there was buzz as you mentioned, and I'm just wondering if you saw much returns activity and just maybe you could comment in general about your overall level of exposure to returns at all? And then I wanted to ask Stephen maybe to make a comment on now that you have this first game out on the new engine, how much heavy lifting is sort of behind you at this point when it comes to releasing future games? I'm just wondering if your experience with Ignition has led to any evaluation of the future launch cadence and how you're thinking about that? And then I just have one more after that.

Thank you, Mike, for that. I really appreciate it. It's Dmitry. I'll address the first question and then pass it on to Stephen. So as far as the refunds are concerned, platforms like Steam, PlayStation, and Xbox do offer different methods of refunds, and the estimated revenue results for the pre-orders and launch date that we discussed on the call actually include those refunds accounted for during those periods. So without a doubt there is some impact on our revenue. How much specifically for the quarter will be hard to estimate at this moment, but from what we're seeing so far, the buildup demand for the game is currently still putting us ahead of our last NASCAR Heat 5 release, and those are the numbers that we were able to bring to you guys as soon as those estimates became available.

Thanks, Dmitry. Hi, Michael. Good question. When we're talking about how much of the heavy lifting is behind us, it's a very good question. I've always maintained, and I still do, that ultimately there's a significant difference in my mind between the opening self-created product in NASCAR Ignition and our subsequent releases. Future releases will be built on top of not only the learnings but the technology provided in Ignition. Let's not forget Ignition is now a live product and as live as last week is in the hands of gamers. A live product has already been updated with over three hundred fixes and improvements pushed into it, which is just over a week ago. Breaking ground with that kind of product, which was built from the ground up, has gone through multiple iterations of testing both internally and with first parties, like Microsoft and Sony. That’s now in the hands of thousands and thousands of gamers. I think there's a night-and-day difference between really breaking the seal with your first product, which is a huge challenge, and we're very proud of reaching this milestone. Where we go from here, because the clock doesn't start over again, I think as we set to zero, it’s a continuation. So we're actually standing on the shoulders of Ignition for our future projects. And the way that I'd probably describe it is you can expect a hockey stick trajectory toward product improvement. Subsequent NASCAR products will be better off over the next two to three years or future product releases are better.

Yeah. That's great. Very helpful. My next quick one before I go back in the queue, guys, is just on the guidance for the full year, which implies around thirteen point six million dollars or seven million dollars for Q4. Could you just make a high-level comment on within that expectation, how much are you expecting to get out of esports and mobile, sort of like any high-level comments about the weighting between your console games and those other revenue streams?

Sure, Michael. So, you're right to obviously assess the thirteen point six. We are expecting and projecting internally that about two-thirds of that will be related to the NASCAR 21: Ignition. The rest coming from the NASCAR Heat Ultimate Edition+ for Switch, which we’re super excited about. Our esports and mobile will contribute to this overall number, but the main driver of this quarter revenue is obviously the release of the game.

Our next question comes from Franco Granda from D.A. Davidson. Please state your question.

Hi everyone. I echo the congratulations on the launch. It's good to see this game finally out there and making waves with the news cycle. And again, thanks for letting me ask a couple of questions here. So, I guess for the next several patches for NASCAR 21, how do you feel or how do you think about the balance between ironing out some of the current issues in the game versus potentially adding some features that some of the fan base might think are missing?

Hi, Franco. It's Stephen. Good question. I think the landscape for games, as you probably know, is a complex one. We release these software products; they are inherently very complicated and they cover many areas of kind of gameplay and entertainment product stability, especially for particular machines. It's super important for us to deliver a stable experience that enables everybody to play, wherever they're playing, whether it's on PlayStation, Xbox, or PC. Once you leave the four walls of not just developers and publishers, but also the first parties, the most important thing for us is to really ensure that the entertainment experience is as required by gamers today. There's a certain standard where they are expecting to invest in something and play routinely versus how many features that we can add in the future. People don't so much care about the features that we could add in the future; they want stability and enjoyment in the product that they have today. As soon as they attain that, they start clamoring for, right this game is great, and I wish you could add X, Y, Z. That will be what we consider to be the second phase of NASCAR Ignition’s lifecycle. Right now, it's ensuring everything is as great as it can be; there's still some more work to be done there, and then we shift focus to what features can we add in order to improve the product further, and it’s a long-term proposition.

Yeah. Thanks, Stephen. And the only thing I’d like to add, which echoes what Stephen was saying, is that we have a live product out there. We have a very vocal and passionate community, which we’re super proud of. That's actually helping to shape what type of things go into improvement and evolution of Ignition of twenty-one Ignition and what type of things make it into what the future NASCAR 22 title would be. As we know, NASCAR next year is upgrading to next-gen cars, which is a very exciting content piece. So at the very minimum, there’s going to be a big differentiation in terms of the type of content, vehicles, etc. that are in the next version. But having the product in hands of many, many fans now is helping to influence and shape our decisions on what the community really desires between the two titles, and NASCAR 22 is already in development, as you would expect.

I appreciate it. Thank you so much for the color here. I guess that you have a game launching before the end of the year for the Switch title. But I wanted to really touch a little bit on the mobile opportunity and may have missed it, but I'm not sure if you mentioned any updates on the soft launch of the Match Three games for mobile? And then if you could update me on where your initiative around NASCAR mobile lies today?

Hi, Franco, Stephen here again. To touch on the mobile piece, I think we always maintain that it's a key part of the future product portfolio. It makes sense. My mind that we have unsurprisingly given the opportunity we have to leverage the assets that we put into the console and PC products. The technology is trickle-down and the reuse of assets is an advantage for us. Actually, the team that we have in mobile demonstrates some great talent in putting together the NASCAR Switch product that we talked about. We are super excited about bringing that to the Nintendo Switch platform. But mobile is a core priority. We've already seen that they've been updating the existing Heat mobile title and NASCAR Heat mobile game with another update expected this month. So we're keeping that live and pushing that. We're also looking to kind of soft launch NASCAR Match Three title early next year in Q1 twenty-two, and we continue to review plans around the British Touring Car and INDYCAR franchises that we have onboard and whether or not that’s suitable for mobile. We've got some ambitious plans around ultimate team concepts probably related to the NASCAR franchise as we think there's a great opportunity there. We can do very well. But the mobile market is quite mature these days. These aren't far and forget products, so we can't over-commit to these. We need to get the right ingredients and setup in place so that once we're operating successfully on the NASCAR side, we can more readily scale the output to match the opportunity from these other franchises. So we’ll get it right for NASCAR and then I think we can scale further.

Thank you for that. I certainly imagine that as you start adding IP through your portfolio, it'd be beneficial to put out titles around this IP and it would just not be a NASCAR experience. One very last one related to this, are you planning on sticking with Unity for the next mobile titles? Are you making this adjustment for whatever is not in the pipeline yet for mobile?

So the Heat Mobile title remains on Unity. There's no need for us to reinvent the wheel there. You don't want to do that during the lifetime of a product, but what we do plan to do where appropriate is try to align the technologies. And we want to actually get away from having to worry about the technology. Our mission is really to build the entertainment experiences and reach as many people as possible. The end user never really cares about the technology, and while I do as a developer, I'd like to simplify the whole thing. That’s one of the things that we've been working incredibly hard on for the last couple of years, so that we can align the tech across the different products and opportunities that we have. So that we have one very experienced team, which has now shipped a product in NASCAR Ignition, working together with our partners to deliver new products to the NASCAR Switch platform. If we can start to align these products over time with the same technology base, moving away from Unity where it makes sense to use Unreal, which we are spearheading for NASCAR Ignition and other titles, that would make our lives that much easier and would enable us to be more efficient and effective in the future. But we do it where it makes sense. Right now, we are split somewhat on existing legacy mobile titles using Unity, but the future for us is firmly centered around Unreal.

I appreciate it. Extremely helpful, and congrats again.

Our next question comes from Mike Hickey from Benchmark Company. Please state your question.

Hey, Dmitry, Jon, and Stephen, congrats on your launch. Just a couple of questions. The first is on the patches. It sounds like you've had a good view and have been successful here in addressing some of the products. Any noted sort of an inflection in player response? Obviously at launch I think everyone was pretty critical initially, and now that you cleaned that up, do you see it shifting in your players' sentiments, Stephen again?

Hi, Mike. Thanks for the question. Absolutely, it's a short answer. We are monitoring the community sentiments very closely as you would expect us to. We have, as expected, a very robust support ticket system to make sure that we're getting back to people, and we did see the number of those support tickets coming in drop significantly after the patch, called one point two point one, which addressed a lot of the stability issues and contained over three hundred different fixes that could even be considered as feature sets. Because of that community sentiment change to mostly positive, we have started to see appreciation and some folks in the community defending us and saying, 'No, no, check out the latest patch, it addresses the concerns you might have.' It's great to see the passion of the community starting to get behind us and starting to recognize that we really do care about not just delivering them the product that they expect, but also that a little bit more. So, community sentiment has begun to flip positively.

Dmitry, are you looking to engage with influencers, or are you looking to maybe adjust the marketing strategy, obviously still with the holiday window open? So it seems factors are performing better.

Absolutely, our main part of that is to make sure that our influencer network that we are tapping into is aware of the patch release and they are installing and able to do updated content and so on. We've been successful at that. There are definitely some influencers that have been vocal in the beginning during the pre-release phase. We were even able to unveil the patch live on YouTube and Facebook, which was great to see that reaction. So yes, we continue to inform the influencers of everything that's going on, and not just them, but the community in general. We want the fans to know that we're putting these things out. More importantly, we're hearing them and we're addressing their desires, not just stability things, but feature sets and some things that hardcore NASCAR fans really want. We want them to know that we are working on it and that updates have just been released.

Nice. I think you touched on it, Dmitry, but your QA adjustments, how much is this sort of internal versus external resource, so the QA process against that launch? Broadly speaking, outside of the bugs, are there other areas of concern of quality you can touch on? And I guess how do you think about bridging the current experience of recurring, where it's going to be?

Hi, it’s Stephen. I can probably take that one. It's a multiple question situation, so my answer is, on such complex products, you do work with internal and external development QA partners. I made reference earlier to wanting to expand that internal capability. As we increase the number of franchises and active products that we're working on, we'll need to increase those skill sets and headcount slightly. But we do have a worldwide team that works across the QA process testing the titles. This process does happen not just at the end of title development, but also for the duration of the product's lifecycle. They play a vital role in steering this product from creation through to delivery, and our QA teams in my mind have done a fantastic job trying to steer this product from creation through to delivery. They have a significant importance in what we should be doing, but there’s really no substitute for our product going live into the hands of thousands and thousands of gamers that have their own bespoke setups. We encountered a couple of issues where we just didn't have the setups available internally to recreate the same kind of home network setups that people had. But we got the feedback from the community, and within hours, we began patching to fix these issues, and that’s what the community expects.

Absolutely, and I don't think ultimately anybody expects perfection upon launch. There are lots of products that come out with known issues that developers are working on. As soon as a product is submitted, the next phase of the product cycle starts, which is product improvement, fixing issues, and adding features. What we're living through right now with NASCAR Ignition is incredibly important as we continually improve that product. I think it’s vital to keep stepping forwards and I believe that we will win the hearts and minds of gamers. We are still the new kid on the block, and I think there’s a great deal of promise in NASCAR Ignition, and we’re rapidly improving the product. I believe people will recognize that and that with each release from now on, including patches, we will improve the product and ultimately bridge the gap on the Metacritic score.

Thank you, Stephen. That's great. Good luck, guys.

Thank you.

At this time, we have no further questions. Would you like to give any closing remarks?

Sure. I always take the opportunity to thank again, first of all, the community, which ultimately is our fans and who we're going after and building and cultivating this. Secondly, obviously, our team, who is creating and showcasing this passion for creating amazing and great racing games. I really want to make a dent in the racing genre altogether and third, in no particular order, obviously, the folks that are on this call and others that are backing us and believing in this vision. We are here for the long run. We’re putting something together that is really special. We’re proud of that foundation. We have released the title that we built from scratch, which was put together by components that were not put together before and we released it on the consoles for the masses. That is a foundation that we were looking for and something that gives us a great opportunity to build skyscrapers on top of that, which is not something we had before. I'm really excited and humbled by the team being able to achieve this and just thankful for the community, our internal team, and the investment group for seeing this through and continuing to watch our progress. So thank you.

This concludes today's conference call. Thank you for attending.