A ‘perfect storm of rates’ masks ‘excellent’ Galaxy Gaming Q2 & H1

A slew of external conditions, such as foreign exchange, interest and inflation rates, have been described as a “perfect storm” by Galaxy Gaming which “masked what was an excellent quarter and first half”.

With the latter bringing “significant increases” in travel expenses and wages and the former dropping further following the close of the second quarter, the gaming systems and content developer is also lowering its full-year expectations.

This comes as the group details its Q2 and H1 performance, with the former seeing revenue and adjusted EBITDA increase 20 per cent and ten per cent to $5.67m (2021: $4.74m) and $2.35m (2021: $2.14m), respectively.

However, net loss swelled to $1.11m from an income of $550,000 one year earlier, with total long-term debt dropping to $59,868 from $60,500.

Furthermore, revenue and AEBITDA also detailed upticks of 28 per cent and 31 per cent through the first half of the year to $11.59m (2021: $9m) and $5m (2021: $3.84m). Net loss grew to $1.13m as opposed to Q1 2021’s $639,000 income.

“The external conditions that Harry described masked what was an excellent quarter and first half,” explained Todd Cravens, President and CEO. “On a constant currency basis, revenue increased by 24 per cent in the quarter and 32 per cent in the first half as compared to the same periods in 2021.  

“And we have some exciting things happening in the second half. In Galaxy Core (our land-based business), one of our high-end UK customers will launch the first three-meter progressive, with a top side bet of £100 – the first in the world. 

“We started installations of our new Triton 1.0 progressive platform in the US in the third quarter and will demonstrate Triton 2.0 at G2E in October.  

“Galaxy Digital (the online business) continues to do well. With our partner SPIN Games, we launched the first online 21+3 progressive, and we will release our own online roulette and baccarat titles in the second half of 2022 to complement our strong position in blackjack side bets. 

“I’m excited about the fundamentals of our business and am confident we’ll manage through the wider macroeconomic issues. We focus on the things we can control.”

Due to the factors outlined above, the company is lowering its financial expectations for the full-year, which comes after a buoyant Q1 saw financial projects raised for 2022.

Revenue is now forecast to fall between $22.5m-$23.5m from $24m-$25m, with AEBITDA anticipated to come in at $10m-$11m from $11.8m-$12.5m.

This, said the group, assumes that there’s no new lockdowns from COVID-19, as well as zero impact to the business from the war in Ukraine and no economic recession

“Despite the headwinds, our liquidity and balance sheet remain in good shape,” added Harry Hagerty, Galaxy Gaming CFO. “We had more than $17m in cash at quarter-end and were comfortably in compliance with the net leverage covenant in the Fortress Credit agreement.

“Unfortunately, current exchange rates are even lower now than they were in Q2. On the assumption that these rates will be with us for the rest of the year and that the cost and wage pressures will also continue, we are lowering our guidance for the year.”