Galaxy Gaming Posts Record Recurring Revenue With Evolution Deal Behind It

Galaxy Gaming reported second-quarter results on August 10, 2026, its first full earnings release since Evolution walked away from its two-year pursuit of the company, and the Las Vegas table-games licensor used the moment to make its case for life as an independent business. Total revenue rose 5% year over year to $7.9 million for the quarter ended June 30, 2026, recurring revenue hit a record, and the company confirmed it has collected a $5.2 million termination fee from Evolution.

The results show recurring revenues, net of royalties, up 8% to a record $7.9 million, now representing 99% of total revenue. Net income rose 5% to $1.0 million, or $0.04 per diluted share. Adjusted EBITDA climbed 11% to $3.5 million, and free cash flow rose 25% to $1.7 million.

The balance sheet delivered its own milestone. Galaxy’s total debt leverage moved below 3.0x during the quarter, which under its credit agreement steps the interest rate margin on its senior secured term loan down to SOFR plus 3.00% from SOFR plus 3.50%. Interest expense fell 10% to $0.8 million, and the company says quarterly interest expense is down nearly two-thirds since it refinanced its debt in January 2025. Total long-term debt stood at $37.9 million as of June 30, 2026, down from $39.3 million at the end of 2025, against $4.8 million in cash.

“Our Second Quarter results demonstrated yet again continued momentum for the business,” said Matthew Reback, Galaxy’s chief executive, in the release. “We continued executing our plan through the merger process with Evolution, and the results show it.”

The first report card after the terminated Evolution merger

The quarter lands three weeks after the deal’s collapse. On July 21, 2026, Evolution formally terminated the merger agreement the two companies signed on July 18, 2024, after the transaction’s outside date passed without the remaining US regulatory approvals. As Gaming.net reported when Evolution dropped the Galaxy Gaming deal after the approval delays, the companies had extended the deadline repeatedly as approvals slipped, ultimately settling on the July 17, 2026 date with approvals in two pre-close jurisdictions still outstanding. Under the merger agreement’s terms, Evolution was required to pay Galaxy a $5,234,678 termination fee within two business days, and Galaxy confirmed in the Q2 release that the fee was received after quarter end.

Reback framed the quarter against that backdrop, comparing results to Q2 2024, the last quarter reported before the deal was announced. Recurring core and digital revenue, net of royalties, is up 12% from that period, he said, and now represents 99% of total revenue compared with 82% two years ago. The installed base of recurring-revenue progressive systems grew 11% year over year and 40% since Q2 2024, driven by the Galaxy Operating System and early placements of the MONOPOLY-branded progressive systems rolled out earlier in 2026.

The merger’s fingerprints are still on the numbers. Net income for the quarter includes roughly $0.2 million of professional fees and transaction-related costs tied to the proposed acquisition, and the $4.2 million of operating cash flow generated in the first half of 2026 came net of about $0.3 million in retention bonuses paid in connection with the terminated transaction.

Where the quarter’s growth came from

The Digital segment, which licenses Galaxy’s proprietary table games to online casinos, grew revenue 11% to $3.1 million on higher play volume with existing operators and content launches with new customers. All Digital revenue is recurring, and royalties paid on licensed titles grew more slowly than gross revenue, falling to 28% of gross revenue from 30% a year earlier.

Core segment revenue rose 2.3% to $4.8 million, with core recurring revenue up 7.0%. The one soft line was deliberate: perpetual license sales of progressive gaming systems fell to $51,182 from $256,421 a year ago, a drop Galaxy attributes to its stated strategy of prioritizing recurring placements over one-time sales. The company expects perpetual license sales for full-year 2026 to come in slightly below 2025.

One charge worth noting: income from operations absorbed approximately $0.5 million of state tax expense tied to the preliminary results of a managed audit the company voluntarily initiated, largely covering sales and use tax not charged to customers, substantially all of it attributable to periods before 2026.

What Galaxy is doing with the cash

The company moved quickly after the termination. On July 22, 2026, the day after the deal died, the board authorized a share repurchase program of up to $4.0 million, superseding a prior $750,000 authorization under which no shares were ever bought back. On July 31, 2026, Galaxy repurchased 330,758 shares, roughly 1.3% of shares outstanding, in a privately negotiated transaction at approximately $1.55 per share for a total of $514,202.

Investment is rising alongside the buyback. Galaxy put $2.1 million into the business in the first half of 2026, up from $1.2 million a year earlier, including a 50% increase in spending on internally developed software to $0.7 million. In July 2026 it hired Anand Singh as chief technology officer; he brings nearly 20 years of experience from Light & Wonder. The next wave of games and progressive systems is scheduled to debut at G2E this fall, and several new products are in field trials with major operators, the company said.

With the termination fee banked, leverage below 3.0x, and free cash flow growing, Galaxy’s first standalone quarter reads as the argument management wanted to make: the business Evolution agreed to buy two years ago is now funded to run itself.