Refinancing lowers risk, focus on execution - Q3 preview

We adjust our 2026–28 estimates ahead of the Q3 report, reflecting the regulatory changes in Brazil and softer-than-expected player activity during the latter part of the quarter. Furthermore, the refinancing is now complete (post quarter-end), lowering the financial risk, in our view, albeit at the cost of significant shareholder dilution. We cut our fair value range to SEK10–15 (11–19), with increased focus on operational execution.

Expecting flat adj. EBITDA Y/Y in Q3. Gentoo on 1 October announced reduced 2026 guidance (with the regulatory changes in Brazil prohibiting online gambling in the country being a major reason), lower than previously expected activity (and revenue) during the latter part of Q3, as well as its plans for refinancing its 2023/2026 bond. We now expect the company to generate revenue of EUR21.2m in Q3 (-6.8% Y/Y growth) and adj. EBITDA of EUR8.7m (margin of 41.3%) – in line with Q3 2025 and Q2 2026. After quarter-end, Gentoo completed its directed share issue of EUR50m and agreed a EUR50m senior secured term loan from a major shareholder, together covering the EUR91.5m bond maturing in December 2026. In our view, this significantly lowers the financial risk in the company, and should reduce financing costs in absolute terms, but has resulted in significant dilution for shareholders.

Mixed revisions. Following the negative changes in the Brazilian market and reflecting a somewhat soft Q3 with lower activity and sportsbook margins in the latter part of the quarter, we cut our 2026–28e sales by 7–16% and adj. EBITDA by 8–13%. We also lower our financial expenses and tweak our tax calculations, resulting in positive 2027–28e net income revisions.

Focus on execution. We slightly reduce our fair value range to SEK10–15, incorporating the reduced financial risk, in our view, and a somewhat softer outlook relating primarily to the updated regulatory situation in Brazil. We now forecast 1% sales growth in 2027, but with maintained cost control, we expect adj. EBITDA to grow by 9–12% Y/Y in 2027–28.