Gentoo Media: Strong organic growth, higher opex - ABG

Strong organic growth in Q4 at 18%, albeit 2% below ABGSCe
Q4 adj. EBITDA miss on elevated opex
Reassuring '25 outlook, expecting double-digit revenue growth


Q4 saw strong top line growth, slightly lower margin

Gentoo reported 18% organic growth in Q4, arriving at the low-end of its ambitious FY'24 sales guidance, and was 2% below our sales estimates (1% below Factset cons). While the sales growth came in slightly short of our expectations, and at the low-end of the guidance, we highlight strong growth in comparison to peers in a tough market. The adj. EBITDA margin was 40%, 6-8pp below ABGSCe and Factset cons, where the main miss versus our estimates is stemming from high other opex in Q4. On FY'24, Gentoo delivered a margin in line with its FY'24 guidance range. Some costs are reported as special items such as the split related costs that are still burdening the margin in Q4, but we also interpret the comments some costs not reported as special items might be elevated due to integration of several acquisitions, and we note that Gentoo highlights that it expects to further leverage synergies from e.g., the Titan acquisition in 2025.

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