Motorsport Games Inc. (MSGM) on Q3 2021 Results - Earnings Call Transcript
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Operator: 00:03 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-session. 00:14 I'll now turn the call over to your host Ashley DeSimone of ICR. You may begin.
Ashley DeSimone: 00:20 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 closed. This is available on the Investor Relations section of Motorsport Games' website at www.motorsportgames.com. 00:53 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. 01:27 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. 01:54 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. 02:15 And now, I'd like to turn the call over to Dmitry Kozko, Chief Executive Officer of Motorsport Games. Dmitry?
Dmitry Kozko: 02:25 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. 02:39 Please take a look at our Q3 highlights video and Q3 earnings slides posted on the landing page of our IR website. We shared some visuals from our just release NASCAR 21: Ignition game and influence 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. 03:15 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 choose 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 NASCAR 21 type. 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. 04:06 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 are able to release patch updates very quickly. In fact, for the Playstation and Pc platform, we're able to get the patch out to users earlier in the morning, also official October twenty eight, release in the U. S. And the Xbox users within forty five dollars after the U.S. release. Just ahead of the NASCAR’s race weekend. Where the gaming impact was featured at the NASCAR four fans took play on-site. 04:55 We thank our community for your patient, understanding and ongoing support. The world is not over though, and it is our commitment to continue to update the game with patch as we went more and implement feedback we are receiving. The game has been new installment in officially licensed NASCAR gaming franchise and physically more digitally for Sony Playstation four, Microsoft Xbox one and Pc through the same store. The console versions only the three hundred path for the Sony Playstation five and Microsoft Xbox Series X/S, with free downloadable upgrades available for those users. 05:42 This year's game comes complete with new update in addition sales upon the foundations of the previous iteration of our NASCAR. For example, we developed a brand new offering unparalleled level of optimization to create NASCAR paying scheme completely iconic race numbers, which we already bring fans crazy while creating from an amazing personalized team. When we first announced the pre-orders of NASCAR 21: Ignition on August twelve, we immediately saw great demand in few orders, which carry through all the way through the launch date. 06:20 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 multiple games from GameStop, Walmart, Amazon as buying them. Visual pre-order part of the revenue significantly in place year-over-year to approximately one hundred and fifty seven percent 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 due for twenty twenty one. 07:05 Launched date was very momentous occasion for us. It is clear to us how passionate our fans are about NASCAR 21: Ignition and racing gains 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 both to our next in the hedges life soon that address quality life and new future record. 07:34 We are pleased with the older caution and feedback pouring in across all of our social channel in particularly with state 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 practice for our platforms who saw other community sentiment and appreciation. While building our games for the future and we believe it's informed for us to invest in our community. 08:05 The launch of NASCAR 21: Ignition is an example of a primary growth strategy which is to create great rating games. That we just scale by expanding our portfolio brands since the multiple franchises with multiple games each paired with the dedicated Esports offerings. 08:24 Starting with our NASCAR partnership, we have officially announced we will be launching the first ever NASCAR title or Nintendo Switch platform. This is the first time we're expanding to the Nintendo Switch and are excited to invite all new audience of gamers and fans. Our fans have long weighted for Nintendo Switch version of NASCAR and we're excited to give them affordable version all such game. 08:53 NASCAR Heat Ultimate Edition+ or Nintendo Switch is targeted to launch on November nineteen with pre-orders currently live across retail and digital stores. Selling orders for this product have already exceeded our initial internal projections and will be ready to hit the shelves in prior for this holiday to you. NASCAR Heat Ultimate Edition+ or Nintendo Switch includes everything found in NASCAR Heat 5 Ultimate Edition to console plus the twenty twenty one NASCAR health series cars rosters and primary paint kits. 09:34 The previous twenty twenty official games drivers cars and schedules from the three NASCAR National series and extreme tour races featuring thirty nine authentic tracks remain in this games as well. Further future content includes twenty twenty throw back and paint schemes and Tony Stewart as a playable character last month. 10:00 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 learning 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 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 as additional content as well as use rFactor 2 to run our official before that. 10:50 Let’s dive a little bit more into the details about our esports initiatives. We continue to value their growing importance of esports through our business, which has funneled new users across our product base and driven prior fan engagement and new potential revenue stream from sponsorships. We dedicate ourselves of player in the and we believe that our combination of world class events around unmatched iconic IP and effective user engagement with our fans to help us get that. 11:26 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 has been completed with entertaining growth for the fans, and we are anticipating spectacular grand finale and then for the 24 Le Mans virtual has allowance and followed events from the twenty twenty two other sport international show on January fifteen to sixteen in twenty twenty two. We're incredibly proud of the level of the participants from famous drivers, world-class teams, manufacturers, and partners. 12:05 We welcome Thrustmaster as our official hardware partner. Rolex as Official Timepiece Partner, Total Energies as Official Energy Partner, Goodyear as 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 i did continue to bring awareness to a product offering, factors are rFactor 2 and the rest of the most core games. 12:38 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, ranks amongst others and volatile virtual racing figures. 13:05 Lastly, I would like to formally welcome Peter Moore to Board of Directors. Peter is no stranger to the gaming industry and brings us thirty years of gaming for entertainment and consumer industry experience. Formerly, COO of Electronics and head of EA Sports and currently deserves as Senior Vice President and General Manager of Sports and Life Entertainment at Unity Technologies. We're excited to have them on Board to give us the opportunity to leverage his career experience as we continue to grow from a single franchise company from multi franchise company in the racing game. 13:47 Now Stephen is going to say a few additional words about our product development. Thank you.
Stephen Hood: 13:51 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 expect and families, and I would like to echo Dmitry comments. While we're incredibly proud of the work by the development team, we acknowledge that remains 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 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. 14:39 As we see the rollout for NASCAR 21: Ignition, and NASCAR Heat Ultimate Edition+ or 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. 15:22 The experience of delivering our own product for 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 own products. 15:41 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 so complete technical management team will undoubtedly improve product stability. Furthermore, we will capitalize our matured tools set offered by KartKraft and Unreal Engine product to harness a more efficient product development pipeline which will serve to level up our outlook going forward. 16:16 These are the similar growth steps on software developers trade. The difference is that we are doing a much faster rate typically sound within organic game development. We are progressing in our roadmap as expected. As our tools and technologies involved, so must our QA testing tea, 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 part improving our help of going forward. 16:50 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 accretion of the Motorsport focused ecosystem, we're going to be testing as 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 and position ourselves in the front of the pack. 17:26 Now let me hand over to Jon New to review of our third quarter financial results.
Jon New: 17:33 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. 17:48 Revenues were two point one million dollars for the third quarter 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 one. 18:11 The revenues from NASCAR 21: Ignition game sales were 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. 18:31 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. 19:00 In picture (ph) 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. 19:25 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 ended September thirty, twenty twenty. 20:06 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 nine point two million dollars decrease in revenues driven by the timing of our NASCAR games releases I discussed above. 20:27 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. 20:44 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. 20:59 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 with 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. 21:25 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. 21:38 Looking ahead, as we move through the fourth quarter of twenty twenty one expectations for full year revenue remained at twenty point five million dollars with an updated adjusted EBTIDA 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. 22:06 Thank you for joining us today, and now let's go to questions. Operator?
Operator: 22:13 Our first question comes from Michael Graham from Canaccord. Please state your question.
Michael Graham: 22:37 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 was 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 for your overall level of exposure to returns at all? 23:12 And then I wanted to ask Stephen maybe make a comment on now that you have this first game out on the new engine, like how much heavy lifting sort of behind you at this point when it comes to releasing future games. And I'm just wondering if your experience with Ignition has led to any evaluation of sort of the future launch cadence and how you're thinking about that? And then I just have one more after that.
Dmitry Kozko: 23:40 Thank you Mike for that. I really appreciate it's Dmitry. I'll address the first question and then pass it on to Stephen. So as far as the refunds and those are concerned, platforms like steam, Playstation, Xbox, they do offer different methods of refunds and estimated revenue results for the pre-orders and launch date that we discussed on the call actually includes those refunds accounted for such periods. So without a doubt there 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.
Stephen Hood: 24:39 Thanks, Dmitry. Hi, Michael. Good question. When we’re talking about how much of the heavy lifting is behind us, and it’s very good question. So 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. 25:12 And 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 is already been updated with -- already had over three hundred fixes and improvements pushed into the light product, which is just over a week ago. And breaking ground with that kind of product, which was built from the ground up has gone through multiple iterations of texting, both internally and with first party, the likes of my stuff and Sony. There'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. And where we go from here, because the clock doesn't start over again I think as we set to zero is a continuation. So we're actually standing on the shoulders of Ignition to the future projects. And the way that I'd probably described is you can kind of expect a hockey stick trajectory towards product improvement. So subsequent to NASCAR products will be better off over the next two to three years or future product releases are better. 26:22 And then I would suggest that ultimately, we can expect probably significant improvements in out of the gate product stability and quality because of what we attained thus far is my brief summary?
Michael Graham: 26:36 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 dollars or seven million dollars for Q4. Could 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 gains and those other revenue streams?
Jon New: 27:16 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 was super excited about. And 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.
Michael Graham: 27:51 Okay. Thanks a lot and congrats again.
Jon New: 27:54 Thank you.
Operator: 27:58 Our next question comes from Franco Granda from D.A. Davidson. Please state your question.
Franco Granda: 28:04 Hi everyone. I echo the congratulations on the launch. It's good to see this it’s going finally out there and make and make waves the new cycle. And again thanks for let me ask a couple of questions here. So, I guess for the next several patches, we're not subscribed twenty one, how do you feel or how do you think about the balance between, ironing some of the current issues in the game versus potentially adding some future that some of the fan base might think that are missing.
Stephen Hood: 28:38 Hi, Franco. It's Stephen. Good question. I think the landscape for games is as you probably well know is the 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, work for particular machines in particular fashion. And it's super, super important for us in order to deliver a stable experience and enables everybody to play wherever they're playing here on the Playstation on Xbox and the Pc whatever their home Internet setup up is, it gets very complicated once you leave the full walls of not just developers and publishers, but first parties and 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 in play routinely versus how many features that we can add in the future, people and in our minds don't so much care about the features that we'll be added in the future. They want stability and enjoyment in the product that they have today. 29:55 As soon as they attainment, they start clamoring for, right this game is great, and I wish you could add X, Y, Z. And 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 feature can we add in order to improve the product further and is a long term proposition and probably something that Dmitry you could touch to on as well.
Dmitry Kozko: 30:30 Yeah. Thanks, Stephen. And the only thing I'd like to add which echoes what Stephen was saying is that we have a life product out there. We have a very vocal and passionate community, which were super proud that's actually helping a shape of what type of things go into improvement in 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, et cetera that are in the next version. But having the product if hands of many, many fans now it is helping to influence and shape and help us make better decision is what communities really desire between the two titles and NASCAR 22 is already in development as you would expect.
Franco Granda: 31:40 No. I appreciate it. Thank you so much for the color here. I guess that you have a game between now and in the end of the year in 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 you're kind initiative around NASCAR mobile less today?
Stephen Hood: 32:11 Hi, Franco, Stephen is here again. So I probably take that. I think touching on the mobile piece. Mobile I think we always maintain is the key part of the kind of future product portfolio, multiple games. It makes sense and my kind of unsurprisingly given the opportunity we have to leverage the assets that we put into the console and Pc products. The technology is trickle 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 Nintendo Switch platform. But mobile is the core priority. 32:59 And we've already seen that they've been updating the existing heat mobile title and that's heat mobile game with another update actually expected this month. So we're keeping that live and keep pushing that. We're also looking to kind of soft launch NASCAR match three title early next year, in Q1 twenty two, we continue to review plans around the British Touring Car and INDYCAR franchises that we have now board, whether or not that suitable for mobile. 33:30 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 set up in place so that once we're operating successfully, probably on the NASCAR side, we can more readily kind of a scaling the output to match the opportunity from with these other franchises. So we'll get it right the NASCAR and then I think looking can scale further.
Franco Granda: 34:09 Right. No thank you for that. And I certainly imagine that as you start adding IP through portfolio it'd be if you to put out titles around this IP and it would just not be and our ask experience. And then one very last one related to this, are you planning on sticking with unity for the next mobile titles? Are you making this such doing real for the whatever is not in the pipeline yet level?
Dmitry Kozko: 34:38 So the Heat Mobile title remains on Unity. And there's no need for us to kind of 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. Like 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 we do and then I do as a developer, but really, I'd like to simplify the whole thing. 35:12 And 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 has now shipped a product in NASCAR Ignition, that’s working together with our partners to deliver new targets to the NASCAR to the Nintendo Switch platform. And if we can start to align these products over time with the same technology base probably moving away from Unity where it makes sense to use Unreal, which were spear heading NASCAR Ignition and other titles with that would make allies that much easier and would now or could have been more efficient and effective in the future. But we do it where it makes sense. And right now, we are split somewhat on existing legacy mobile titles using Unity, but the future for us is firmly centered around Unreal.
Franco Granda: 36:11 All right. I appreciate extremely helpful and congrats again.
Operator: 36:17 Our next question comes from Mike Hickey from Benchmark Company. Please state your question.
Mike Hickey: 36:23 Hey, Dmitry, Jon and Stephen congrats on your launch. Just a couple of questions. The fear is on the pads it sounds like you've had a view and have been successful here and complaining that you have some of the products any noted sort of an inflection and player response. Obviously at launch should be given one this pretty critical buzz, and now that you clean that lot of see it shift your players Stephen again.
Dmitry Kozko: 36:59 Hi, Mike. Thanks for the question. Absolutely it's a short answer. We are monitoring the community sentiments very, very closely as you would expect us to -- we have as expected, a very robust support ticket to make sure that we're getting back to people and we did see numbers of those support tickets coming in drop significantly after the patch, so called one point two point one out that addressed a lot of the stability things and what that Stephen was mentioning in combined over three hundred different somewhere which even could be considered as feature sets. So because of that community sentiment change to majority positive, and actually we have started to see appreciation and start to see some folks in the community defending those that might have a feel will about the pre-release version of the game to start to defend us and say no, no check out the latest batch it address the concerns you might have. So it's great to see the passion of the community starting to get behind us and starting to recognize the fact that we really truly do care of not just delivering them the product that they expect, but I'll think that a little. So community sentiment has starting to flip both.
Mike Hickey: 38:29 Dmitry, are you looking to have your extended if you work with influencers, or are you looking to maybe adjust the marketing strategy, obviously you took out the holidays, whey they are hoping to so it seems factors performing better.
Dmitry Kozko: 39:00 Absolutely, our main part of that is to make sure that influence at our network that we are tapping into are aware of the tax release and there are installing and able to do updated content and so on. And we've been successful at that. There's definitely some that been vocal in the beginning when they were in a pre-release phase. We're able to even unveil the patch live on YouTube and Facebook and others and it was great to see that reaction. So, yes, absolutely we continue to inform the influences of everything that's going on and not just them just to 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 some of their desires so not just stability things, but feature sets and some things that hardcore NASCAR fans really want. We wanted them to know that one way of working on it or two has just been released. So for us, it's influencers and community all together.
Mike Hickey: 40:13 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 against that launch. And then broadly speaking outside of the bugs, is there other areas we concern of quality and we can test that as well. And I guess how do you sort of think about bridging the current experience recurring, where it's going to be
Stephen Hood: 41:11 Hi. It’s Stephen. I can probably take that one. Multiple question, so my answer to that is it's I mean these days on such complex products, you do work with internal and external development QA partners and I made reference earlier to wanting to expand that internal capability because as we increase 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. And that is the process that doesn't just happen at the end of titles that happens for the duration, and they do give a great stir, but the QA team are part of the overall team, part of the machine that launches a product. 42:03 And I think most gamers today are very technically savvy. We live in a very connected world and gamers certainly expect any products. Even software in motor vehicles, these days kind of being patched and update and improves over time. And it's kind of part and parcel of the live environment that we live in because everything is interconnected. So it’s easy for us to appreciate the feedback that we do get with NASCAR Ignition because games want the very best out the gate. But I think there also savvy enough to understand that there are issues that people can even read about today, even those that they're not encountering themselves, but years ago would have gone largely unnoticed. So people feed off what the community is saying they feel like they want to be current and I get that. 42:56 Our QA teams in my mind have done a fantastic job trying to steer this product from creation through to delivery. And they have wonderful important to what we should be doing, but there is really no substitute for our product going live into the hands and thousands and thousands of gamers that have their own kind of bespoke setup up. I mean, we encountered a couple of issues where we just didn't have the setups available internally at all with first parties to recreate the same kind of home network set that people had at home. But we got the feedback from the community and I think within hours, we start patching to fix these things and that's what the community expects. So that I don't think ultimately anybody expects perfection out of the door. 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 product cycle starts, which is product improvement, fixing issues adding features as Dmitry has previously referenced that's part and parcel of it. 44:02 And I think the challenge is always one of balance. But what is the state of the opening product versus the time of frequency and the measure improvement that you can roll into software once live and in the hands of players. And I think when it comes to improving that gap in the , we are understandably by all parties including the community and gamers directly compared to franchises that have a long history that in case is on one particular format is really the show piece for Microsoft Xbox. And that's great and that's a huge advantage for those guys and we don't have that. We're going as wide as possible because we're making games for gamers and for racing fans. And they can be on the Pc, they can be on the Playstation of which there are now different formats on the Xbox of which there are different formats. It makes it inherently more complex. 45:01 But it's not a challenge that I want us to shy away from. And breaking the feel as I've said earlier is all important in terms of improving that product. So as long as we're able to keep stepping forwards, what we're living through right now and what we're improving with NASCAR Ignition with the help of the community, And I think ultimately, we will win the hearts and minds of games. We are still the new kid on the block. There is a great deal of promising in NASCAR Ignition and we're rapidly improving that product. 45:32 And I think people will recognize that. And in each and every release, not just subsequent yearly sports releases, but the patches will improve the product and I think ultimately, switch that gap on the score, and there's no reason why we can't keep driving that up and eventually compete against the that have the advantage of operating on just one platform.
Mike Hickey: 45:59 Thank you, Stephen. That's great. Good luck, guys.
Stephen Hood: 46:03 Thank you.
Operator: 46:06 At this time, we have no further questions. Would you like to give any closing remarks?
Dmitry Kozko: 46:21 Sure. Always we'll take the opportunity, just want to thank again. First of all, the community right, which ultimately our fans and who we're going after and we're building and cultivating this. Secondly, obviously, our team who's creating and showcasing this passion of creating amazing and great racing games. I really want to make a dent and racing genre altogether and third in a 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 of our own build from scratch put together by the 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 sort of skyscrapers on top of that is not something we have before. I'm really excited and humbled by team being able to achieve this and just really thankful for the community, our internal team and the investment group of seeing this through and continuing watching our progress. So thank you.
Operator: 47:58 This concludes today's conference call. Thank you for attending.
