* Top-line pressure persisting, better cost control * We cut '25e-'27e adj. EBITDA by 17-16% on 11-15% lower sales * Trading below peers at 5.6x '25e EV/EBITDA Top-line pressure continues, better on opex control We note that Q2 is, if anything, a soft seasonal quarter, but we did believe Q1 was extraordinarily weak temporarily, which is why Q2 was estimated to improve. On the positive side, looking ahead, FTDs recovered strongly driven by Paid, which we believe is supported by the q-o-q marketing increase. This should support top-line improvements ahead assuming they were sent on rev-share contracts, with a slight lag. Also, we saw positive comments regarding the Google update, which supports our view of gradual publishing improvements. The Q2 sales decline of 19% y-o-y came in the face of tough comps from the Euros and Copa América, while the Brazil headwinds are not annualised until 2026. We expect small gradual y-o-y improvements in H2 on the aforementioned factors, and '26e to return to black figures, supported by annualised comps and better market tailwinds from sports events. On costs, G2M was in line with our estimates, but we note that personnel expenses and other opex were lower, while higher marketing offset. Assuming a more normalised marketing-to-sales ratio, we expect a strong margin recovery in H2, followed by positive operating leverage in '26e with a lower fixed cost base and a return to top-line growth. Significant downgrades on lower top line We adjust '25e in line with the updated guidance, for cuts of 11-17% on sales and adj. EBITDA, respectively, arguing that the updated guidance appears fair. In '26e, we lower our top-line growth by 4pp on more cautious assumptions, but we cut opex more than in '25e due to the demonstrated cost control, for cuts of 14-16% on sales and adj. EBITDA. Trading at 5.6-3.6x '25e-'26e EV/EBITDA Gentoo is trading at 5.6x '25e EV/EBITDA, significantly below Betco and Gambling.com at 7.5x FactSet consensus '25e EV/EBITDA on average.
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