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Galaxy sees Q1 revenue fall 15.9% amid Covid-19 closures


Table games supplier Galaxy Gaming has reported a 15.9% year-on-year decline in revenue for the first quarter of 2020, primarily due to the closure of land-based casinos as a result of the novel coronavirus (Covid-19) pandemic.

Revenue for the three months through to March 31 amounted to $4.5m, down from $5.3m in the same period last year.

The land-based supplier put this drop mainly down to the closure of the majority of its customers’ casinos in regions around the world from mid-March due to the Covid-19 crisis.

Galaxy on March 17 suspended billing to customers that had closed their doors due to the outbreak, and, as a result, the supplier did not earn revenue for the use of its games by physical casino customers during the time that they were closed.

However, online gambling customers that licence Galaxy’s games through its distributor remained operational during the quarter and, as such, Galaxy was able to generate revenue from this channel.

In terms of geographical performance, revenue from North American and the Caribbean totalled $3.1m in the quarter, down 18.4% from Q1 of last year, while Europe, Middle East and Africa revenue was also down 9.3% from $1.5m to $1.4m.

“The industry we serve experienced unprecedented disruption beginning in the middle of March,” Galaxy’s president and chief executive Todd Cravens said.

“During this time, our focus was on the health and safety of our team who, while working remotely, went above and beyond to assist each other and our clients in working through these new challenges and constraints.

“We were pleased that online gaming continued to perform well during the shutdown, and we expect this business line to increase in importance to us.”

Looking at spending for the quarter and total costs amounted to $3.8m, down by 17.4% from $4.6m last year. Selling, general and administrative expenses – the main outgoing for Galaxy – fell 15.6% to $3.0m due to a drop in expenses driven by revenue, such as bonuses, commissions, distributor fees and royalties.

Research and development expenses were reduced by 48.0% to $155,653 due to a reduction in headcount and other compensation-related expenses, while share-based compensation costs were down 29.5% to $157,596. Galaxy also noted that depreciation and amortisation expenses fell 2.5% to $469,805.

Lower revenue and spending meant that income from operations for the quarter stood at $697,400, down 3.0% from $718,642 last year.

However, when taking into account $544,833 in other costs – including interest expense and foreign currency exchange loss – this meant profit before tax was $152,567, a drop of 72.8% in last year.

After paying $35,962 in income tax, Galaxy ended the period with a net profit of $116,605, compared to $460,664 at the end of Q1 in 2019.

“We were fortunate to have a significant amount of cash when the shutdowns started,” Galaxy chief financial officer Harry Hagerty said. “In addition, we drew down the full $1m available on our revolving line of credit to supplement those balances.

“That liquidity allowed us to keep the team intact and to meet our financial obligations during the shutdown.”