* Q2 adj. EBITDA 25% below consensus on 12% sales miss * FY guidance cut; cons '25e EBITDA to come down ~15% * Better-than-expected Q2 costs vs cons, and player intake looks decent Big Q2 miss on soft sales Gentoo reported Q2 sales of EUR 24m, which is down 19% y-o-y and -2% q-o-q, 12% below ABGSCe and Factset cons. The soft Q2 sales was impacted by e.g., tougher market conditions in Brazil compared to early Q2 expectations, delays in key websites' technology projects, and a sharp focus on cost ('strategic realignment') execution (rather than top line). Adjusted opex was in line with ABGSCe, and slightly better consensus expected, but given the operating leverage on the big sales miss, Q2 adj. EBITDA was 32-25% below ABGSCe and cons. We note the q-o-q marketing cost increase, which resulted in a strong uptick in FTD's q-o-q, mainly in Paid, which supports the top line ahead (but likely small top line contribution in Q2). Looking forward, Gentoo highlights that "Q2 should therefore be viewed as a transitional quarter, with the dominant theme being recalibration rather than growth", and expects a better H2 than H1, particularly on margins following the realignment. '25 EBITDA guidance mid-point 14% below cons Gentoo downgrades its FY'25 guidance of ~flat revenue y-o-y, i.e., ~EUR 123m, to EUR 100-105m which is 11% below ABGSCe and 14% below consensus looking at the mid-point. Furthermore, it expects an adj. EBITDA margin of 40-41% (40-45%), which implies FY'25 adj. EBITDA of EUR 41.5m looking at the mid-point, 16-14% below ABGSCe and cons, respectively. Positive Google update On the positive note, Gentoo highlights that the late Q2 Google update was positive, and that Publishing ends Q2 with improving performance in key assets which can support an improving second half for Publishing. We look forward to hearing more details on the conference call at 10.00 CET. Link to the webcast here.
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