Gentoo Media shares tank 23%, hit 52-week-low after weak Q1 results
Shares of Gentoo Media Inc. (Nasdaq Stockholm: G2M) experienced a steep 23 percent decline on Wednesday, 14 May 2025, hitting a new 52-week low of 13.14 SEK. This sharp sell-off directly followed the company’s announcement of its first-quarter 2025 financial results, which fell short of market expectations.
The market’s reaction could also be amplified by the fact that this weak first quarter abruptly ended an impressive run for Gentoo Media, which had posted its 16th consecutive quarter of growth in February 2025 (Q4 2024).
Gentoo Media Q1 performance
Gentoo Media Q1 2025 revenue of EUR 24.8 million. This represented an 11 percent decrease compared to EUR 28.0 million in the first quarter of 2024, signalling a contraction in its top-line performance. More strikingly, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) before special items plummeted by 39 percent to EUR 8.2 million, a steep drop from EUR 13.5 million in the year-ago period. This profit decline led to a substantial compression in the EBITDA margin, which fell to 33 percent in Q1 2025 from a robust 48 percent in the corresponding period of the previous year.
Further down the income statement, EBIT for the quarter was reported at EUR 2.7 million. The company ultimately posted a negative Earnings Per Share (EPS) of -EUR 0.02 for Q1 2025, indicating a net loss for shareholders during the period. The company’s net cash flow was also affected by deferred payments totalling EUR 22.5 million, linked to acquisitions from previous years and costs associated with its recent demerger.
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Brazil headwinds
In the press release that followed its income statement, Gentoo Media cited “market headwinds in Brazil” as a primary cause for the disappointing quarter, noting that regulatory disruption in the country was “more disruptive than initially anticipated“. Specific impacts cited included a sharper-than-expected drop in active players due to new reactivation requirements, some operators exiting or pausing operations in Brazil, higher player activation costs, and a decrease in deposit values, which negatively affected revenue share income. This was reflected in the geographical revenue breakdown, with revenue from the Americas decreasing by 26 percent year-over-year, primarily due to the challenges in Brazil, though Europe and the Americas still represented the core markets, accounting for 63 percent and 18 percent of quarterly revenue, respectively.
The company’s heavy emphasis on Brazilian regulatory issues as a primary cause for the downturn has raised questions about its geographical risk concentration and the robustness of its market forecasting. The admission that the disruption was more severe than expected could suggest an underestimation of the inherent volatility in key emerging markets, a factor that may lead investors to apply a higher risk premium to the company’s future international growth initiatives.
Concurrently, Gentoo Media undertook a “deliberate move away from lower-margin business activities” and a “reduction in some low-margin activities“. This realignment followed the company’s demerger from its Platform & Sportsbook business. CEO Jonas Warrer (depicted in the featured image) characterised Q1 as “a quarter of change – and a necessary one,” adding, “We faced external pressures and made deliberate decisions to position Gentoo Media for what’s ahead. The result is a more focused company with a clear growth strategy and the leadership in place to deliver it“.
While aimed at improving long-term profitability, this pruning also contributed to the Q1 revenue decline. However, the precise financial impact of these exits on the quarter’s top line and margin compression remains somewhat opaque, making it challenging for external observers to fully gauge the short-term costs versus the anticipated long-term benefits of this restructuring.
Also read: Gentoo Media expands portfolio in Sweden and Germany
Management aims for H2 recovery
In response to the Q1 performance and as part of its post-demerger strategy, Gentoo Media has executed five strategic initiatives after the quarter’s close. These include: right-sizing the cost base with an expected annual run-rate saving of EUR 8-10 million, reorganising for future growth, further developing the company’s performance culture, refining commercial excellence, and strengthening its tech platform. A central component of this restructuring was to enhance organisational strength, and this was evidenced by the hiring of a new CFO and other senior executives.
In spite of a tough opening to the year, Gentoo Media’s board reaffirmed its full-year 2025 financial guidance of revenues being “broadly in line with 2024” and an EBITDA margin of 40-45 percent. Reaching these objectives from here requires a heroic operational turnaround and revenue ramping-up in the last three quarters, especially in the second half of the year. This creates a very high performance benchmark and creates a lot of pressure on the company to succeed in its recovery plan. The company anticipates a “resumption of growth in H2 2025” and views the current headwinds as “temporary“, expecting the new foundation to create a platform for growth in 2026 and 2027.
Management also pointed to some positive operational developments, such as a “net positive impact” from Google’s March core update on its publishing portfolio, record monthly revenue for WSN.com in March, and strong organic traffic growth for Casinomeister.com. Most importantly, since the key strategic initiatives were mostly instituted or finalised after the end of the first quarter, Q1 did not share in their benefit, and the market will be looking eagerly for their actual effect in Q2 and subsequent periods.
Also read: Gentoo Media launches Sitebee
Analyst insights
Financial analysts responded to Gentoo Media’s Q1 report with negative revisions to their forecasts. Analyst firm Redeye, for instance, were substantially below its expectations and consequently anticipates lowering its 2025 EBITDA estimates for Gentoo Media by 15-20 percent. Redeye specifically attributed this discrepancy primarily to the unexpectedly severe impact of the online gambling market regulation in Brazil. Looking further ahead, Redeye also expects to lower its 2026-27 forecasts by around 10-15 percent due to a lower revenue base for 2025.
While Redeye’s commentary also suggested the headwinds could be “temporary” and that “revenue and profitability should recover in the coming quarters“, such a material downward revision to full-year forecasts signals financial impact of the Q1 performance. This could mean that any recovery may not fully compensate for the early-year shortfall within 2025. Another period of weak performance or continued struggles with the same cited issues could severely undermine investor confidence in a swift recovery.
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Delisting and insider activity
The Q1 results were announced against the backdrop of another corporate development: Gentoo Media’s planned delisting from the Euronext Oslo Børs. The last day of trading on the Oslo exchange will be 24 July 2025, after which the company will maintain its listing solely on Nasdaq Stockholm. This decision was approved by shareholders on 13 March 2025, and by the exchange on 2 May 2025.
In a notable counterpoint to the overwhelmingly negative market sentiment on May 14, two company insiders made share purchases. , Senior Director of Marketing and a primary insider, acquired 14,753 shares in Gentoo Media at an average price of SEK 13.44 per share. Furthermore, , a Board Member and key insider, bought 7,200 shares for an average price of SEK 13.78 per share. These buys, made close to the day’s low and the recently set 52-week low, can be seen by some as a sign of in-house confidence in the firm’s long-term worth in the face of current market upheaval.
The shares of Gentoo Media closed Wednesday 19.67 percent lower at 13.64 SEK on the Nasdaq Stockholm exchange.
