* Q1e: 3% revenue decline y-o-y * '26e EBITDA toward bottom end of guidance range * Trading ~50% below peers at 3.5x '26e EV/EBITDA
Challenging sports outcomes & volatile casino data
We expect Q1 revenue of EUR 24m, implying a 3% y-o-y decline. This means that we expect adj. EBITDA of roughly EUR 11m, corresponding to a 47% margin. North American operators have highlighted sports outcomes that are largely player-friendly (negative for operators from a financial perspective). We believe that this will adversely impact Gentoo's Q1 figures. Moreover, changes in iGaming tax regimes in Europe and volatile markets in casino (primarily due to regulatory action) are likely to be additional headwinds.
Estimate revisions
Our updated estimates imply relatively minor estimate changes, as we raise '26e and '27e adj. EBITDA by 3% and 2%. Our updated estimates imply that we are in line with the lower end of the company's '26 guidance for revenue and EBITDA. However, on cash flow, we expect an outcome toward the upper end, as there is potential to optimise working capital. We have taken a somewhat more cautious stance on the revenue growth in '26e-'28e, as the company's cash flow is likely to be deployed toward reducing the leverage.
Trading at 3.5x '26e EV/EBITDAGentoo is trading below 6x '26e EV/EBITDA, well below Better Collective (8.2x) and Gambling.com (5.2x). This means that Gentoo is trading 10% below the average of Better Collective and Gambling.com. Moreover, we highlight that Gentoo is trading at a '26e lease-adj. FCF yield excl. M&A of over 30%, as it should be noted that the company is largely focused on deleveraging.