Gentoo Media: Stable growth outlook
Research Update
2025-02-19
06:56
Analyst Q&A
Closed
Hjalmar Ahlberg answered 2 questions.
Redeye updates on Gentoo Media post Q4-results where we see continued growth potential in the coming years supported by organic growth and additional upside from M&A. Still, we have slightly lowered our topline growth forecasts and we trim our EBITDA estimates as we assume somewhat lower EBITDA-margin expansion over 2025-27E.
Hjalmar Ahlberg
Anton Hoof
Gentoo Media reported topline of EUR35.9m in Q4 2024 which was in line with our forecast of EUR36.0m. EBITDA-margin was softer than we expected coming in at 40% compared to our estimate of 49%. However, the company saw above average marketing costs in the quarter and looking forward, Gentoo continues to see potential for an EBITDA-margin in the range of 45-50%.
Gentoo remains positive looking into 2025 where it expects to achieve double-digit organic growth. The company expects the growth momentum in its core markets to remain while product improvements, including a revamp of Casinomeister and launch of AskGamblers in US, further underpins the growth potential. Gentoo also sees continued potential for M&A which could provide additional growth upside.
While Gentoo’s growth outlook remains solid, we have slightly trimmed our growth forecasts for 2025-27E where we now expect organic growth of 10-13% (previously c15%). We also assume somewhat softer margin-expansion where we forecast an EBITDA-margin of around 45-47% in 2025-27E (previously 48-50%). Our base case is lowered to SEK45 (SEK51) on the back of the updated forecasts. The share currently trades at c4-5x 2025-26E EBITDA which is in the lower end of its historical range of c4-12x EBITDA while our base case implies c8-9x 2025-26E EBITDA.
| Key Financials | |||||
|---|---|---|---|---|---|
| EURm | 2023 | 2024 | 2025e | 2026e | 2027e |
| Total Revenue | 89.1 | 124.6 | 142.4 | 160.2 | 176.2 |
| Revenue Growth | 44.1% | 39.9% | 14.3% | 12.5% | 10.0% |
| EBITDA | 40.3 | 55.7 | 64.5 | 75.7 | 82.8 |
| EBIT | 27.8 | 37.8 | 47.7 | 56.9 | 64.0 |
| EBIT Margin | 31.2% | 30.3% | 33.5% | 35.5% | 36.3% |
| Net Income | 12.5 | 25.7 | 32.5 | 42.3 | 51.2 |
| EV/Sales | 4.5 | 3.0 | 2.2 | 1.8 | 1.3 |
| EV/EBITDA | 9.8 | 6.7 | 5.0 | 3.7 | 2.7 |
| EV/EBIT | 14.3 | 9.8 | 6.7 | 4.9 | 3.5 |
Gentoo Media reported revenue of EUR35.9m and adjusted EBITDA of EUR14.3m where the topline was in line with our forecast of EUR36.0m while EBITDA was somewhat soft compared to our estimate of EUR17.6m. Organic growth was solid at 18%, up from 12% in Q3 2024 and somewhat higher than our forecast of c15%. Regarding the lower-than-expected EBITDA-margin, the company commented that some costs were related to periodization of previously incurred expenses, and some were due to higher-than-usual marketing costs. The latter is partly driven by Paid Media which saw a strong FTD intake in the quarter. Overall FTD intake of 112k was in line with Q3 2024, and while this was down YoY, this is due to the company’s strategic shift towards higher value markets. This was illustrated by value of deposits which increased from EUR157m in Q4 2023 to EUR200m in Q4 2024.
| Gentoo Media results outcome | |||||||
| EURm | Q4 23 | Q1 24 | Q2 24 | Q3 24 | Q4 24E | Q4 24A | Diff, % |
| Revenue | 26.5 | 28.0 | 30.3 | 30.4 | 36.0 | 35.9 | 0% |
| COGS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | n.m. |
| Marketing costs | -8.5 | -6.8 | -8.4 | -6.9 | -9.3 | -10.1 | 9% |
| Other opex | -6.4 | -7.7 | -7.1 | -8.9 | -9.1 | -11.4 | 25% |
| EBITDA adj. | 11.5 | 13.5 | 14.8 | 14.6 | 17.6 | 14.3 | -18% |
| EBITDA-margin | 44% | 48% | 49% | 48% | 49% | 40% | n.m. |
| EBIT | 7.4 | 10.2 | 7.8 | 10.0 | 13.4 | 9.8 | -27% |
| EPS, EUR | 0.03 | 0.08 | 0.02 | 0.04 | 0.06 | 0.06 | -7% |
| Source: Redeye Research |
Disclosures and disclaimers