Galaxy Gaming, Inc. Annual Report: A Simple Breakdown

I’ve put together this guide to help you understand how Galaxy Gaming performed this year. Think of this as a plain-English breakdown to help you decide if this company fits your investment goals.

1. What does this company do?

Galaxy Gaming is the engine behind many table games you see in casinos or on betting apps. They design and license popular games like 21+3, Lucky Ladies, and Casino War. They also provide the technology, such as the Galaxy Operating System, that helps casinos track bets and manage jackpots. They operate in two areas: "Core" (physical casino tables, about 85% of revenue) and "Digital" (online gaming content).

2. How they make money

Galaxy uses a subscription model, similar to Netflix. Casinos pay monthly or annual fees to use their games and systems. Because they license intellectual property rather than manufacturing physical goods, they don't have heavy production costs. Once a game is built, the cost to license it to another casino is very low. This keeps their profit margins high, usually around 70% to 75%.

3. How they performed this year

In 2025, Galaxy saw two different trends:

• Digital is growing: Their online business is a bright spot. Revenue reached $5.8 million, up 13.2% from last year. This shows their strategy of expanding into new online markets is working.
• Core business is shifting: Their physical casino revenue dipped 10.4% to $21.9 million. This was a strategic choice. They are moving away from one-time system sales to focus on steady subscription fees. These fees now make up over 95% of their total revenue.
• Profitability: Despite total revenue dipping to $27.7 million, the company turned a $1.48 million profit. This is a big improvement from the $2.6 million loss in 2024. They achieved this by cutting $3.1 million in operating costs, including lower legal fees.

4. The "Waiting Room" (The Evolution Merger)

The biggest news is the pending acquisition by Evolution AB.

• The Deal: Evolution agreed to buy Galaxy for $3.20 per share in cash, valuing the company at about $85 million.
• The Delay: The deal has been delayed several times due to complex regulatory approvals. The current deadline to close is July 17, 2026. Until then, the company is in a holding pattern, running business as usual while waiting for the green light from regulators.

5. Key risks

• Merger Risk: The stock price is now tied to the $3.20 acquisition price. If the deal fails, the stock could drop significantly.
• Regulatory Hurdles: Gaming is strictly regulated. Losing licenses in key states like Nevada or New Jersey would hurt the merger and the company’s ability to operate.
• Penny Stock Status: The stock trades on the OTCQB market. This means it has lower trading volume and wider price gaps, which can make it harder to buy or sell at your desired price.
• Operational Constraints: Because of the merger agreement, Galaxy cannot take big risks or change its strategy. Their growth is effectively frozen until the deal closes or ends.

6. Future outlook

The future depends on the Evolution merger. If it closes, shareholders get $3.20 per share. If it doesn't, the company must return to its standalone strategy. That plan relies on moving more physical games to digital platforms and growing their subscription base.

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Final Thought for Investors: If you are considering an investment here, remember that the stock is currently acting as a "merger arbitrage" play. Your potential return is largely defined by the $3.20 buyout price. Before buying, ask yourself if you are comfortable with the risks of the deal falling through and the potential for the stock to trade based on its standalone performance if the merger is cancelled.