Galaxy gaming reports 2nd quarter earnings, personal writing on a changing moral philosophy

A few days ago, I received the text message “Are they actually growing?” in relation to Galaxy Gaming. I pointed out that the sale of perpetual licenses inflated prior year’s revenues, masking any development at the topline for recurring revenue growth. But now I have a better answer.

Today Galaxy led todays IR press release with this with this:

“Recurring core and digital revenue, net of royalties hit a record $7.9 million, up 8% year over year and 12% from the second quarter of 2024, now representing 99% of total revenue compared with 82% two years ago — a fundamentally more durable and predictable base.”

It may just be me, but the above reads like Matthew Reback is ribbing Todd Cravens for the decisions made with respect to the sale of perpetual licenses.

2nd Quarter IR release continued:

"Our operating momentum is compounding with the progress we made in strengthening our balance sheet. Since refinancing in January 2025, we reduced quarterly interest expense by nearly two-thirds; and this quarter we moved below 3.0x total debt leverage, stepping our interest rate margin down to SOFR + 3.0%. That flows directly into Free Cash Flow, which grew 25% to $1.7 million.”

In summary, the business is growing, deleveraging the balance sheet, and returning capital for the very first time since they got into the mess with fortress debt. These are not the financials that will make Leopold Aschenbrenner excited or something that’s going to trade 10x higher, but the stock is almost certainly going to achieve an above market return due to its current price.

On a personal note, I would generally prefer holdings to not be parasitic in nature (as gambling is). But after encountering individuals who are quite literally using time and the arbitrary nature of patent law for extending exclusivity via reformulation to fit a market release of a “new drug” under a curve of best fit, making some cash off your average gambler doesn’t exactly register.

If you want to pester Hari Seldon over this he’ll know exactly what I mean. And, hoping to burn a hole in his stomach for introducing this cancer to me, I’ll encourage him to look at Biosergen, who appears to be taking the same market approach to launch as Moberg Pharma.