* Guidance downgrade following Brazil ban
* New financing includes both a new loan and an equity raise
* Trading at 4x '27e P/E at the subscription price of the equity issue
Brazil ban leads to guidance downgrade
Following the Brazilian President's decree banning sports betting and online gaming, Gentoo Media downgraded its 2026 guidance. The ban carries immediate effect but has to be approved by Brazil's Congress within 120 days prior to becoming official legislation. This means that there technically is a chance that Brazil's Congress rejects the President's decree. However, it is difficult to quantify that probability. During January-August '26, Brazil contributed to just shy of EUR 4m in revenue. On an annualised basis, that implies nearly EUR 6m in revenue. Unlike its peer Better Collective, Gentoo's earnings contribution from Brazil was lower due to its investments in the country. Moreover, Gentoo's exposure to Brazil was relatively smaller at around 6% of revenue (Better Collective's was 2x that). Gentoo's lowered guidance for 2026 is as follows: revenue of EUR 92m (97-100m), adj. EBITDA 40m (44-47m), and operating cash flow of EUR 30m (32-36m).
Our updated estimates exclude Brazil
Following the news of the guidance downgrade and new financing arrangement, we have revised our estimates. We cut '26e-'28e revenue by 8% and adj. EBITDA by 11-12%. Even though there is a chance that the President's actions are overturned by Congress, we are unable to assess the probability of that and have therefore incorporated a Brazil ban in both '27 and '28.
New financing coming up
The new financing consists of a EUR 50m loan (EURIBOR 3m + 7.5% with a 2% EURIBOR floor) and a fully subscribed directed share issue of EUR 50m at a subscription price of SEK 6.16 per share (nearly 60% above the closing price on 30 September). The loan matures in December '29 and is amortised 10m each year, with the remaining EUR 30m due at maturity.