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Galaxy Gaming, Inc. — Third Quarter 2026 Earnings Summary

GLXZ

  • Financial Performance:

    • Total revenue increased 9% year-over-year to $8.0 million ($7,975,219) from $7.3 million ($7,325,142) in the prior year.
    • Recurring revenues, net of royalties, reached a record $8.0 million, up 10% from $7.3 million, representing over 99% of total revenue.
    • Core recurring revenue, net of royalties, increased 11% to $5.0 million ($4,959,111).
    • Digital revenue, net of royalties, increased 7% to $3.0 million ($3,004,538).
    • Net income increased to $5.1 million ($5,129,364) from $1.0 million ($1,039,139), driven by a $5.2 million termination fee from the terminated Evolution merger agreement.
    • Diluted EPS was $0.20, compared to $0.04 in the prior year.
    • Adjusted EBITDA was relatively flat at $3.2 million ($3,221,792) compared to $3.2 million ($3,238,495) in the prior year.
    • Free Cash Flow increased 9% to $1.4 million ($1,434,708) from $1.3 million ($1,319,933).
    • Interest expense decreased 16% to $0.7 million ($729,544) from $0.9 million ($872,101).
    • Income from operations was $0.7 million ($664,738), down from $1.9 million ($1,903,652), primarily due to $1.2 million in merger-related costs.
    • Cash and cash equivalents were $9.1 million as of September 30, 2026, up from $4.3 million as of December 31, 2025.
    • Total long-term debt, net of debt issuance costs, decreased to $37.4 million from $39.3 million.
    • Total leverage was 2.75x as of September 30, 2026, compared to 2.79x as of June 30, 2026.

  • Guidance and Future Outlook:

    • The Company expects perpetual license sales for the full year 2026 to be lower than the prior year due to a strategic prioritization of recurring revenue.
    • Management anticipates growing Free Cash Flow to reinvest in the business.
    • The Company is well-positioned to continue investing in growth while returning value to shareholders using remaining termination fee proceeds and Free Cash Flow for share repurchases.

  • Business Segments and Product Lines:

    • Core business growth was driven by new game placements in the U.S. and higher participation-based revenue in international markets, fueled by the Galaxy Operating System® and MONOPOLY®-branded progressive systems.
    • Perpetual license sales of progressive gaming systems in the Core segment decreased 83.2% to $11,570 from $68,714 in the prior year.
    • Digital revenue is entirely recurring, with royalties increasing 20% to 31% of gross revenue from 29% in the prior year.
    • The Company unveiled Galaxy Link, an all-table linked progressive launching with MONOPOLY® Building Riches and Spotlight Spin in Art Deco themes.
    • Investment in internally developed software increased 65% to $1.2 million, and investment in gaming systems deployed at customer locations increased 51% to $1.4 million during the first nine months of 2026.

  • Market and Competitive Landscape:

    • The MONOPOLY® Table Games Progressive was named Product Innovation of the Year at the Global Gaming Awards Americas 2026.
    • Galaxy Gaming Digital is described as the world's leading licensor of proprietary table games to the online gaming industry.
    • The Company holds over 140 licenses worldwide, including in 28 U.S. states and more than 30 countries.
    • The Galaxy Operating System® and MONOPOLY®-branded systems are driving new placements in the U.S. and internationally.

  • Risks and Challenges:

    • Risks include changes in trading price impacting share repurchases, effects of the terminated Evolution merger on business and stock price, and the ability to enter strategic alliances or secure licenses in new jurisdictions.
    • Regulatory risks involve compliance with gaming statutes and regulations affecting customer revenues.
    • Economic risks include unfavorable conditions in the US and worldwide.
    • Operational risks include dependence on major customers, intellectual property protection, and potential cyber-attacks or IT system failures.

  • Management Commentary and Tone:

    • CEO Matthew Reback described the quarter as a "milestone" with recurring revenue reaching a record and comprising essentially all revenue, reflecting a deliberate shift away from one-time sales.
    • CFO Steve Kopjo highlighted a stronger balance sheet, noting that operations generated enough cash to fund product development and debt reduction while returning capital to shareholders.
    • Management expressed confidence in converting operator interest in Galaxy Link into placements in coming quarters.
    • The tone indicates a focus on building momentum following the completion of the merger process.

  • Other Key Points:

    • The Company returned $1.7 million of capital in Q3 by repurchasing 330,758 shares and cancelling all 778,320 outstanding warrants, reducing the diluted share count by 4.2%.
    • A share repurchase program authorized on July 22, 2026, allows for up to $4.0 million of stock and warrants; approximately $2.3 million remains available.
    • The Company received a $5.2 million termination fee from the terminated Evolution merger agreement.
    • On October 21, 2026, Meredith Brill stepped down as a Class II Director, and John M. Boushy was appointed to succeed her.
    • The Company generated $11.9 million of cash from operations during the first nine months of 2026.
    • The Company paid $2.1 million for debt repayment and $3.1 million for capital investment during the first nine months of 2026.