Q1 2021 Motorsport Games Inc Earnings Call

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Thank you for joining US today. This program will begin momentarily. Please remain on the line. Thank you for your patience.

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Thank you for standing by and welcome to the first quarter 2021 conference call and webcast for Motorsport game on.

On today's call are Dmitry, Costco executive Chairman and Chief Executive Officer.

Wood, President and John <unk>, Chief Financial Officer.

By now everyone should have access to the company's first quarter earnings press release filed today after market close.

This is available on the Investor Relations section of Motorsport games website at Www Dot Motorsport game dotcom.

During the course of this call management may make forward looking statements within the meaning of the federal security 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.

Please refer to today's press release, and the company's filings with the S E T, including the company's annual report on the form.

One 10-K for the year ended December 31st 2020, and the company's quarterly report on form 10-Q for the period ended March 31, 2021 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.

And today's conference call, we will refer to certain non-GAAP financial measures such as adjusted EBITDA as we discuss the first quarter 'twenty 'twenty. One financial results you will find a historical reconciliation of these non-GAAP measures to our actual GAAP results included in the press release issued earlier.

Today.

We do not provide a reconciliation for adjusted EBITDA on a forward looking basis, because we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is now available without unreasonable efforts due to the inherent difficulty.

Of forecasting the timing and amount of certain items, such as but not limited to certain acquisition related expenses and stock based compensation expenses as such adjustments have not yet occurred or out of our control and cannot be reasonably predicted and accordingly, we are unable to.

Dress the probable significance of the on the available information and now I would like to turn this call over to Dmitry coastal Chief Executive Officer of Motorsport game.

Hello, everyone. It's a pleasure to be speaking with you as we report another successful quarter for Motorsport game.

Please check out our investor video posted on the landing page of our IR website. We hope. This video gives you a sense of the energy and excitement inherited everything that we do here at motorsport games, while quickly illustrating our key milestones in the quarter.

Before I dive into details I want to say a quick thank you to our shareholders, including many new investors we have met in the past few months.

Thank you for taking the time to learn our story and to follow up on this amazing journey.

So all of our Dear shareholders, let me quickly reiterate who we are and what drives us.

We are an award winning leading racing game developer publisher and an esports ecosystem provider of official Motorsport racing series throughout the world.

Our Michelle Motorsport games is simple, we create and spread the joy through racing games, starting with our exclusive access to our parent company's 55 million monthly active users and beyond.

We achieved this mission by developing and publishing great racing games, and immersive esports experiences all of the world's most iconic races, and brands, who trust us with their valuable IP and often in a long term partnerships like we have with NASCAR.

There are one of several iconic brands that we work with today, including a T O, which represents 24 hours over the ball and British touring car Championship.

We're just getting started.

I'm proud of our team and the progress we're making towards the launch of NASCAR next and building Motorsport games into a world class Interactive Entertainment company.

And we're truly world class as we're operating 24 seven across continents with more than 122 team members at the close of the quarter expanding our development resources by nearly 30% growing fast from where we were just months ago.

And at any given time, our developers and programmers are innovating and collaborating across the United States, United Kingdom, Russia, Australia, and now the Netherlands. This global studio presence, it's differentiating as we seek additional opportunities to expand our fan base and become the.

Market leader in virtual Motorsport racing around the world.

Our strategic initiatives are key here as we assembled the assets needed to elevate from one product company to a multi product game publisher developer and then esport provider.

The combination of studio 397, and our factor to heart grafts and anticipated acquisition of digital sales is highly synergistic and I'm very pleased with the progress we have been made year to date integrating these new assets, which we believe ultimately will translate into the most.

Impelling gaming experiences for our fans.

This is particularly the case with NASCAR next where we anticipate the game to be released in the back half of the third quarter of this year, which we feel is the ideal time to launch this exciting new game.

The quality of this game is set to be incredibly high and their realistic experience. They provide is what our fans have been asking for and what they expect from a world class Gaming company.

We continue to strive towards our goal of achieving a triple a status where does game franchise truly belongs.

The game brings high quality realistic graphics to consume the player in the real world racing experience, while showcasing the unique and fun characteristics of NASCAR.

This is possible due to our recent strategic initiatives and let me update you on those.

Since completing the acquisition of studio 397, and acquiring their hyper realistic technology platform. Our factor too we had been able to accelerate the integration of this technology into the new NASCAR game.

Furthermore, we will now integrate their technologies with a complete understanding and security that it will in the future integrate at the source code level as part of the M. S. G. M engine further improving our development efficiencies across a racing game portfolio.

As our core development team enhanced our source code.

Amy and all improvements are additionally, folded back into our factor too to improve that product as well.

This efficiency was not possible before the acquisition.

Other sport games and studio 397 had a working relationship for the past two years and this great relationship enables us to seamlessly integrate talented developers technology and gaming expertise.

We also completed the acquisition of car truck or Motorsport games, Australia during Q1.

This acquisition allows us to further diversify our global presence and attract new fans to our community, while adding another racing discipline to our gaming portfolio and we look forward to parent car craft with another notable IP.

Motorsport games, Australia is continuing to enhance the core craft title to provide new content and updated physics.

Our development teams have all the tools necessary to create games that are fun immersive and realistic.

Completing this acquisition has been great for our product pipeline and developing capabilities already.

We're also working towards completing the anticipated digital tells acquisition.

Which we're super excited about.

As of now we do not have any additional M&A plans to disclose however.

We're always exploring new opportunities to maximize our shareholder value and capital, but at this time, our core focus is finalizing the NASCAR next.

And getting it into the hands of our eager fans.

And now an update on our esport business, which funnels, new users across our product base and drives higher fan engagement and new potential revenue streams from sponsorships.

It is a highly compelling market opportunity and growing global phenomenon now a billion dollar industry expected to grow at a CAGR of 10% over the next decade.

In 2020, nearly half a billion people around the world watching esports event and that number is only trending upwards.

We're participating in that growth and we want to be the dominant player in the racing esports scene, we believe our combination of world class events around iconic IP and effective user engagement with our fans will help us get there.

A few of the events with showcase for finals of the dirt rally two point no World series.

Walt Rally Cross esports series, and our winter heat events on our own NASCAR heat five video game.

And we just received an exciting validation one week ago will receive the 2021 sports Technology Award for the best use of esports by sports brand.

There are 24 hour Lamont virtual event.

This was a category for middle with competitors, including Formula One N E S L.

The award is a leading global celebration of technology led innovation across international sports sector, and we want the E sports category.

It's held annually as a competition to highlight outstanding advances in the industry and the awards are judged by over 50, leading influencers from the world of sports and technology.

We're excited about this major validation of our esport capabilities and the success of our Lamont virtual last summer, reflecting our team's hard work creativity and vision delivering awesome content than community to our global fans.

We're now working on our second annual Lamont virtual event.

We will also benefit from our new ownership of our factor too.

We're focused on having vast audience again like we did last year, when we had record television and digital viewership numbers.

Are there Vince will include B T E sports NASCAR summer heat shut down.

N E NASCAR pool league season three events.

All are expected to raise awareness for the launch of NASCAR next.

And of course, we're starting to build audiences for our product launches of other serious problems later.

Lastly, we're launching traction platform to foster growth and allow our growing fan base to engage more deeply online and across our platforms.

[noise] attraction plays a key role in our esports business.

All of that will be featured and integrate it with the user base there.

We believe the future of the space relies heavily on innovation.

And we expect to deliver the next phase of traction integration into art equal system later this year.

Now Steven is going to say a few words about our product development progress. Thank you.

Thank you Dmitry and Hello, everyone I'm, Stephen Hood President of Motorsport games, we are pleased to announce the great development strides we are making this quarter, especially for our new flagship franchise game NASCAR next a major reworking of the NASCAR franchise, and who's closing stages of development as NASA.

So next into beta.

Jim will then enter a final significant development period prior to product hardening and submission to platform holders for testing and certification.

Due to our recent acquisition of studio 397 Nasco.

<unk> will include the leading racing simulation technology, all factor T brings real life physics to our development to books that we can integrate into the game and developed a much more efficient way.

We are working around the clock and anticipate launch found new NASCAR franchise in the back half of the third quarter. This year.

But we are not stopping there we are bringing NASCAR to the Nintendo switch platform, which remains on track for release later this year I platform not yet reached by Motorsport games will add useful exposure and revenues to our NASCAR franchise and pave the way for possible future franchise entries into the Nintendo market.

We are also continuing to build on NASCAR heat mobile using our expanded development team with ongoing quality of life improvements and our recently prioritized upcoming 2021 content update which should broaden the appeal of the product and the piece of existing fans and new fans alike.

Additional titles around the NASCAR license remain in development within our portfolio.

And include match, three and Nintendo switch products, we continue to work at pace to grow our fan base across multiple consoles and platforms to drive the joy of racing games to our fans wherever that he might play.

As you know we had our hands full seeking and completing strategic acquisitions to help bolster our development teams technology platforms and the overall gaming experience.

Much sport games, Australia with Conqueror did she did at 397 without effect to continue to integrate into motorsport games with all parties working together to harness and integrate staff processes and technologies.

Studios will be providing significant expertise and product capabilities to motorsport gains over the coming months and years.

For example off attitude from studio 397 will be Oh go to esports platform. So those series, we are yet to provide remote support games bespoke product for <unk>.

British drawing call Angela Moms will immediately benefit from this and our in house teams now have the confidence and control I'm very world class esports platform.

We have continued to expand features and content, both cockcroft and Aha too.

I want to shift to an update on our P. T C C content.

British touring car environments have now been laser scanned ahead of track content creation.

Laser scanner data allows for highly accurate recreation of surfaces, and environmental detail, which when combined with the M. S. G. M physics engine and off attitude provides the highest level of feedback for players, making every stretch of track is embracing an experience as possible.

But assuring call, which will utilize the upcoming Nasco next game platform has recently undergone creative planning designed to differentiate the product versus other offerings from M. S. G M and appeal to a wide audience of touring car fans all over the world.

Products will each carry unique traits, which can be selectively water food into subsequent titles and in order to drive food the mud spook gains product ecosystem this'll.

This allows for tightly controlled development expense, but with a focus on feature differentiation and technology reviews.

In the end our development teams can work more efficiently and still provide the highest quality product on the market.

Lastly high caliber of recruits continue to arrive and strength in our studios capabilities and experienced technical director joined the Silverstone UK studio in May as we continue to recruit the industry's best and brightest talent to turn to U K hub into a fully functioning development studio in its own right.

Positioned alongside our internal esports team Silverstone will ensure tight collaboration between the goes about development and esports operations additional hires from World Class Studios, such as electronic Arts and playground games continues apace.

The increased recognition of multiple games activities has served to accelerate the reach of our company.

Now, let me hand over to John you gave some financial highlights.

Thank you Steven.

We're pleased to welcome everyone to our 2021 first quarter earnings Conference call.

For the first quarter of 2021 revenues were $2 5 million as compared to $3 2 million in the first quarter of 2020.

The year over year decrease reflects lower sales of our console games and to a lesser extent a reduction in mobile revenues.

The NASCAR heat for game was released in September 2019 that was two months later and the respective calendar year compared to the release of NASCAR heat five in July of 2020.

This resulted in higher sales of NASCAR before during the first quarter of 'twenty 'twenty as compared to sales of NASCAR heat five during the first quarter of 2021 since the majority of sales from our new released occur closer to the release date.

Gross profit was $1 7 million for the first quarter, which was a decrease of about 22% compared to the prior year first quarter gross profit of $2 2 million gross profit margin was 68% of revenues in the first quarter of 2021 compared to 67% of revenues in the prior year period the DC.

Recent gross margin dollars is primarily due to the reduction in revenues, partially offset by the increased percentage of digital sales versus a physical units digital has higher margin operating expenses were $17 1 million for the first quarter 2021 compared to $2 3 million for the first quarter of 2012.

Yeah.

First quarter includes expenses of $2 9 million associated with our IPO $9 1 million in noncash stock based compensation relating to the IPO and 300000 of expenses related to acquisition activity in the quarter.

As a result, adjusted EBITDA was negative $2 8 million for the three months ended March 31, 2021 versus negative 0.0 7 million in the prior year period.

The quarter over quarter change reflects an increase in staffing marketing and game development to support new brands and new platform options for our upcoming games.

Let me finish by touching on our financial expectations. Looking ahead, we remain confident in our full year guidance, which is $22 5 million in revenue and adjusted EBITDA negative $7 3 million.

What's the anticipated release of NASCAR next in the back half of third quarter. This year launch related revenues are expected to spread over the third and fourth quarters.

We remain comfortable with our full year revenue forecast of $22 5 billion.

Thank you for joining us today and now let's go to questions operator.

At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Information from will indicate your line is another question queue. You May press star two to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key one moment, while we poll for questions.

First question comes from the line of Michael Graham with Canaccord. You May proceed with your question.

Thank you and thanks for all the updates guys.

I just wanted to start with one question on the on the NASCAR next launch.

We've always expected it to come in Q3. So your comments are consistent with that just wondering if you can give us a little color on why.

Why the second half of the quarter makes the most sense for that launch.

Also you know along with that just wondering if maybe you know Stephen appreciated your comments on some of the game qualities and features but if theres anything you can share about.

The deep the level of DLC that you expect this first launch to have would be interesting to us and then I have a follow up thanks.

Thank you Mike for the question Dmitry.

The reason is you know historically with NASCAR heat two three and four we have seen great results from launching these annual NASCAR game releases in the month of September So for the NASCAR next we are on target to launch in the second half of Q3.

As we continue to look at data points that will help us make this potentially the most successful NASCAR title yet in our company history.

So we.

Still remain very comfortable with our full year guidance of $22 five a M.

And now we're getting into more specific on the timing.

And Steve I think the second part of the question.

Sure I can I can pick up on the DLC. So yes, certainly the plan is to inject probably the easiest way to describe it as a greater variety of D. C content into NASCAR next though.

One of the key reasons, so wanting to rebuild technology platform.

And do all the work that we've been using.

Putting into Nasco next over the last couple of years is to prepare the platform for.

New DLC and future instead of just a paint schemes being injected into a product that we already know is incredibly popular.

Amongst our audience there are additional content opportunities around these schemes seems for UI.

Personalizing the product more possibly adding additional calls into the package into the future. So these kind of drivable components.

Even more value than what we have seen in the NASCAR heat franchise prior so.

And he believes that the door is open for a greater variety will get stronger.

Time.

It's one of the key reasons for changing the framework in Pasco next we own all of this technology. We know how it operates and we can react to the market and the interest and demands of players in the different types of D. O C into nasco next and the games of Tomorrow.

Okay. That's that's helpful and a good good color. So thank you for that and then the other one I just wanted to ask Dimitrios.

You're getting some good momentum in terms of esports viewership and events and I just wonder if you can share a little bit regarding how you are thinking about the potential for eventually moving from sponsorship revenue to a streaming right. So is that something that is.

Becoming a little more sort of in the <unk>.

In the near term as Youre thinking about the evolution of the strategy for your esports business.

So there's a couple of things there Mike So first of all we're super excited with the acquisition of our factor too because that enables us an additional revenue stream in the esports sector as we create these base spoke.

<unk> opportunities with the rights holder I'll give you. One example, we have created a esport activities with Formula E last year, but we were only able to create a moderate amount of revenue from such because we did not have a dedicated game title, which will allow us to collect.

Our game type of revenue stream now with our factor two platform being fully ours and under our control we're able to create these events and look for more revenue streams than just sponsorship side.

Chad.

Esports is a service since its now more of a platform play and with the right game related revenue.

To your other point, absolutely as we continue to compound the audience and we see as we go from season on season for example, in our NASCAR esports activities, we have grown our audience about fourfold from season once a season, two and we're here to engage on season.

Three later this year.

And similar results have been.

Monitored as we did with the Lamont esport. So as we continue to increase this overall viewership and aggregate. These viewership between the different esports series that compounding effect becomes an attractive offering for.

Media rights opportunity. So yes, we do believe that that is going to be something that we'll be able to derive opportunity sooner than we were perhaps discussing at the beginning of the year, but it's not something we are counting for right. Now we're just super excited about the fact that we could derive game revenue.

Problem.

Esport opportunities that we do not have a dedicated game title for it yet.

Super Okay. Thanks, so much I'll go back in the queue. Thanks, guys.

Yeah.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question comes from the line of Mike Hickey with the benchmark Cop kidney you May proceed with your question.

Hey, Dmitry, John Steven Congrats on the quarter guys are excited to here.

The continued development of Masco next.

John I guess, just curious on to Q, if you're comfortable with consensus I think last quarter you gave.

You are not just on the fourth quarter.

So I'm not sure if I'm going to give any more visibility on your current quarter or.

So your comfort level with consensus.

We're still comfortable with Q2.

It's out there.

Nice good.

Also a lot of deals here.

Headcounts increase I'm curious what your total developer head count is.

Today.

Considering all of these deals where you think it will trend and then broadly speaking just I guess philosophically to meet you think about.

The importance of culture and maintain a culture of growing.

The culture within your development studios rockets and spread out globally.

Now and how you think about managing issues just like crunch, there are still some sort of pretty ambitious games.

Thanks, guys.

Hey, Thanks, Mike for those questions. So.

We are as of 331.

22 head count the majority of that to be more specific 84 of that is our development resource which is exciting because that nearly increased from our last quarter reported numbers are our development.

<unk> capability by almost 30%.

And we continue to organically attract high level talent that are super passionate about creating and publishing racing games and that I'll speak to the culture, which I'll definitely give it to Steven to touch on <unk> and the fact that we're able to open more global presence.

Allows us to have.

This growth in geographical areas, where such high level talent exist I being that we're now such a wide footprint. So no longer do we have to look in a sort of restricted or smaller geographical areas like U S U K and let's say eastern Europe.

As we have precedent before but now with Australia that opens up another opportunity and this talent is surfacing all across the globe. So we're ready.

<unk> to not only organically attract but we're also excited about teams like digital tail coming in and the capabilities that they bring especially in a highly growth area like mobile platform.

So.

Yes, I think Dmitry you put it very well I mean, I'm mentioning that people are super passionate that is that goes a very long way too.

Impacting and reducing the need for crunch people are putting their hearts and souls into these products because it's something they enjoy it to do this as a hobby as much as that work for many of these specialists that we have engaged an employed around the world and it's been incredibly exciting to watch the growth of Masco next as the team has been built.

As the effort has been put into the product.

Think crunch, which is an.

And industry wide.

Challenge for many large operations in this day and age I think has mitigated through very careful planning.

And the culture of the company, which is one giant family that operates across multiple studios around the world. There are many new ideas and processes that are applied to my spoke gains outlook and when we took about growing the development head count people will dramatically imagine that we are hiring countless engineers to work on these projects, but an important part of the head.

Count increase is the production team the planning team the organized not only NASCAR next but the other products like pneumonia, but assuring calder already in development and appropriate planning does go a very long way to mitigating crunch. So I believe that we have the right culture, the right planning in place and the right head count.

To comfortably manage the projects of today and tomorrow and.

I'm very positive about them.

Thank you.

As I mentioned in nature in your prepared comments that you continue to seek additional racing.

IP and it looks like Brian and Gerard that to help you and of course, you have the motorsport.

Network as well, but I'm just curious if you could double click on.

Hum.

How aggressive you'll be for traditional life, you already got a bunch of it and then.

Last question when we looked at.

Full year 22 can you give us any visibility on the amount of games and you should expect a second game from a major incident.

Yes.

Thanks, Mike So as you rightfully noted and as we set out on our vision from the very beginning of time, even pre IPO right is we do want to hold a portfolio of racing games.

There are wide.

That's possible for a racing fan regardless of where they are and a global footprint that means we would have a portfolio that carries multiple racing disciplines and that's why we're so excited with car crash for example, adding an additional racing discipline and as I was saying in my remark.

Is that just can't wait to pair that with one of the world class eight piece.

So you will see some organic growth coming from US taking these types of disciplines pairing with I E. As we continue to see others and a platform such as our paths are to not only gives us a leap forward with the technological advances and the quality standards that our products carry but.

Also it gives confidence.

So the dose IP holders all the level of quality of product, we are able to bring with essentially their name on it. So that does continue to help us Gerard who is somebody that helps us deliver that message.

He understands deeply the industry as he has been there and developed a similar global footprint with Wells Endurance Championship and he was integral in our 24 hour Lamont virtual event as well.

And as we continue to talk to other race a serious these IP holders. He helps us translate their needs into what we could create from our products and esports experiences. So we're super excited and with additional access that Motorsport network provides sort of validation and.

In audience access.

We couldn't be more excited that.

Opportunity to scale our portfolio racing games.

Our most notable once a cast sort of the widest possible net to annual racing fans around the world.

As much near than it was before for us.

Nice to meet you can't.

Did you see what your 'twenty two pipeline would look like if you have another.

Major racing might be.

No.

In that time period is.

So on 2020 two as we set out the one we announced our British touring car Championship license that were obtained last year.

That is the game that is slated to come out. So we look to create an esport opportunity with British touring car championship.

Later this year.

And our product would release in 2022, so everything is still on schedule and as Stephen has reported in his remarks, we're super excited to have completed all the tracks are laser scans, which obviously adds a sort of an insight.

That's how detailed.

We approach each one of these raise serious and look forward to launching it next year on time.

Yes.

One last one for me guys.

On the last admin costs.

When you when you look at card I guess, maybe you add Mara other car. He has arguably the biggest racing game.

In the world.

And so when you look at.

Cart.

E Gaming Tech is there any sort of novel licensing opportunities.

Do you think that could add into the.

Mixed expand the market potential of that game.

Thank you for highlighting the fact that carding is definitely very fun and accessible and understood across multiple generations. You might have heard me speak before when I highlight the fact that when I can't for example go to theme parks Karting is one of those.

Traction that presents there and that is because it's fun and we believe but those are some of the characteristics of the example, like Mario Kart that translate into this virtual world we are.

<unk> multiple opportunities up the type of IP, we would pair car craft with I N.

And we want to make sure that once we do we continue to deliver upon aspect of a carding across the world.

But also address another cap the fan base as we like to do with each one of our license games that captive fan base allows us to have a foundation audience that then helps us spread sort of the excitement around these products that we launch so we.

Look forward to pairing it with the right IP and sort of starting that snowball effect in Karting is well just says that we have done with NASCAR and set out to do with other franchises in our portfolio.

That's great. Thank you best of luck.

Thank you.

Our next question comes from the line of Franco Granada with D. A Davidson you May proceed with your question.

Yeah. Good afternoon, everyone and thanks for taking my questions I've got two on mobile gaming.

So you've been talking about creating new games and mobile that span different categories.

Mentioned just match three.

Do you think the current team is large enough to look to expand this portfolio.

Thank you Franco for the question.

So short answer is yes.

Yes, but we continue to expand that team capability.

For example, we do have one mobile product in market today, that's NASCAR heat mobile and that has it's a mobile team.

<unk> attached to it.

However, we continue to attract high level talent, a high level I mean by experienced and.

And with this anticipated acquisition of digital sales that expands that team not just start ganic leap, but through such a sort of a accu higher if you may so once we pair our current team with digital tails. We do believe we would have capabilities too.

To expand beyond NASCAR franchise, and we're happy that digital tails actually brings an additional racing discipline alongside with our mobile experience and capabilities. So it's another license in another captive fan base that we could extend and expand upon.

But to your point of mobile development capabilities, we continue to grow that justice. Similarly, as we have done for the console and PC side, which we're now we're able to expand from sort of a single franchise of NASCAR into multiple franchises, that's why you're able to see our progress.

N D E and others that are in our pipeline.

Yeah Fair enough. Thank you for the color and then I guess on the similar line of questioning.

Obviously mobile market is that.

You can call it that is quite different from the console PC market.

It could be affected by other headwinds right right now, we're saying that's what I'm talking about the effect that I did say is having on the mobile gaming industry. So you know as you look at the different dynamics do you think youre going to have a larger emphasis as you kind of feel about that.

Our portfolio in terms of as it relates to M&A really Oh, I guess, how much time are you spending looking at M&A opportunities for the space I know you talked about some macro hires there.

So we are currently focused on launching NASCAR and mix.

And we currently have two other exclusive license says the BTC and the Lamont that would go on alongside that that we're developing console and PC products that is historically has been the core revenue driver for us. So we want to make sure that we expand that opportunity as much as possible.

Mobile historically has been a smaller portion of our overall revenue however that proves to be the largest growth sector. So to answer your question in a in a slightly different way our focus continues to be console and PC are on these core franchises that we're currently.

Half of which means that we won't be spending as much time thinking about mobile M&A opportunities as we are on how to perfect and better our console and PC products. Just so that we're able to constantly create an exciting pipeline of content and.

Like Stephen touched on and I believe my Gratefulness questions was.

Something we could evolved into more of a live ops model writer of games as a service so that would be a growth opportunity in more of a focus more so than seeking out additional mobile studios, but let me not discount should the opportunity present itself.

And it makes sense and it expands our racing disciplines, perhaps further.

We will definitely explore such.

Thank you Mr.

Thank you.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, one moment, while we poll for questions.

Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Dmitry Cosco for closing remarks.

One more time, thank you everyone for joining us today, we're very excited about the rest of the year and launching the most anticipated NASCAR game title yet in the history of our company.

And in addition to the several other priorities we have across our iconic IP esports and traction platform. So thank you again for joining us.

This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your evening.

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