Galaxy Gaming reported an 8.1% year-on-year increase in net revenue to a record $8.0m (£6.4m/€7.4m) in Q1, while the group also noted an improvement in net profit.
Revenue was higher across both the GG Core and GG Digital segments at Galaxy Gaming in Q1. While the GG Core land-based business remains its primary source of revenue, the GG Digital division posted more growth.
Galaxy also reported increased operating and finance-related costs in Q1. However, such was the impact of revenue growth that net profit also increased year-on-year.
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Reflecting on the quarter, president and CEO Matt Reback praised growth at both the top and bottom lines. Q1 represents Reback’s first full quarter in charge at Galaxy, having taken over as CEO in November 2023.
“Both gross and net revenue were records, and by significant margins,” Reback said. “We have been hard at work on product development under the leadership of Michael Ratner. I expect we will have some interesting product innovation news to announce in the coming months. This has been a principal area of focus for me since I joined Galaxy late last year. I am proud of the momentum our entire product team is gaining.”
Recurring licence revenue drives growth in Q1
Breaking down the Q1 figures at Galaxy, as mentioned by Reback, gross revenue also hit a new quarterly high. For the three months to 31 March, gross revenue topped $9.7m, a rise of 18.3%.
Of all gross revenue, $8.9m came from recurring licence revenue, up 29.0%. The remaining $805,193 was generated from the sale of perpetual licences, down 36.5%.
Net revenue is calculated by subtracting royalties netted against gross revenue from total gross revenue, which in Q1 was $1.7m. As such, net revenue for Q1 hit $8.0m.
Looking at each segment, GG Core gross revenue increased 19.2% to $6.2m. Here, recurring licence revenue jumped 38.5% to $5.4m, but perpetual licence sales revenue dropped 36.5% to $805,193, as noted in the total gross revenue figures.
When taking off $806,280 in royalties netted against gross revenue, net revenue from GG Core was $5.4m, still 3.9% higher than in 2023.
“Our distribution of EZ Baccarat, which commenced in September 2023, accounted for the bulk of the increase in recurring license revenue in our Core sector,” Reback said. “Also, our GOS product continues to gain momentum with over 100 installations, and development of GOS 2.0 continues on schedule for release later this year.”
As for GG Digital, gross revenue jumped 16.7% to $3.5m in Q1, with all this coming from recurring licence revenue. After taking away $852,528 in royalties netted against gross revenue, net revenue hit $2.6m, a rise of 15.6%.
“In our igaming sector, revenue was up on a gross basis and 16% after netting out royalties,” Reback noted.
As for geographical performance, the Americas remains the core region for Galaxy. Here, net revenue topped $4.7m, a rise of 4.4%. However, the group reported more growth in Europe, the Middle East and Africa, with revenue up 10.0% to $3.3m in Q1.
Net profit rises at Galaxy despite higher costs
In terms of spending, total operating costs in Q1 were 9.6% higher at $5.7m. The primary outgoing for Galaxy was selling, general and administrative expenses, which hit $4.2m.
Finance-related costs were reduced by 3.1% to $2.1m in Q1. As such, pre-tax profit hut $235,233, more than double the previous year’s $116,269 total.
Galaxy paid more in tax ($26,325) this year and also noted a $30,394 negative impact of foreign currency translation. However, bottom line net profit was still higher year-on-year, with the $178,514 reported being 40.2% higher.
In addition, adjusted EBITDA edged up 2.8% to $3.2m for the quarter.
Galaxy hopeful on full-year guidance
While growth in Q1 is good news for Galaxy, exterior factors could still impact performance in Q1. As such, chief financial officer Harry Hagerty said that it will not make any changes to earlier guidance until after Q2.
“Our Q1 2024 results strongly support the guidance that was given when we released our Q4 2023 earnings,” Hagerty said. “However, we will wait until we have Q2 results in hand and better visibility into the second half of the year before considering whether any changes to guidance would be appropriate. As stated previously, our guidance assumes no impact to our business from the wars in Ukraine and the Middle East, no economic recession or pandemic, and is a forward-Looking Statement subject to our safe harbour language below. Finally, the forecast is based on currency exchange rates that we experienced in the fourth quarter of last year.”
