Gentoo Media: Tricky market conditions no problem - ABG

Solid outlook remains for an acceleration in Q4
Limited sales and adj. EBITDA revisions '24e-'26e
Trading well below affiliate peers at 5x '25e EV/EBITDA


Outlook sustained for best-in-class growth and margins

Gentoo delivered sales in line with the pre-announced figures for 12% organic sales growth and an adj. EBITDA margin of 48%, which was in the upper part of the guidance range. The top line was also hurt by >EUR 1.5m from a lower sports win margin, where we believe the underlying organic growth could be closer to 20%, plus a good drop-through to earnings given its scalable characteristics. In a sector full of uncertainty from key peers, Gentoo delivered solid results, which appear to be very stable by comparison, with a significant part of revenue from recurring characteristics (~60% on rev-share and ~30% on listing fees, with only ~10% on CPA). October was said to start a bit slower than Gentoo expected, but the start of November improved, while December is expected to improve significantly on seasonal effects. The guidance was reiterated for a strong end to the year, and we estimate Q4 sales up 22% q-o-q for 22% organic top line growth. We make limited estimate revisions to sales and adj. EBITDA, but lower D&A and raise our tax rate on revised run-rate assumptions for '24e-'26e.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/gentoo-media/Equity-research/2024/11/gentoo-media---tricky-market-conditions-no-problem/