Gentoo Media: We expect deleveraging to start in Q4'25 - ABG

* Faces similar issues to Betco, indicating market-wide issues* '26e-'27e EBITDA down 3%* Trading below peers at 4x '26e EV/EBITDAKeeps guidance after weak September sports win marginQ3 was a bit softer than we had expected. Revenue was 3% below our expectations, while adj. EBITDA was 9% below our expectations. The revenue decline was ~25% y-o-y, however, we expect Gentoo to return to growth early next year, as the comps become significantly easier. We note that the company's restatements were positive for both revenue and EBITDA for H1'25. Considering a mechanically stronger H1'25 revenue and EBITDA due to the restatements, a maintained guidance with respect to revenue and EBITDA technically implies a downgrade for fiscal year '25. Importantly, cash flow excluding M&A was nearly EUR 4m in the quarter. From a leverage perspective, this is positive, as Gentoo should start deleveraging in Q4'25e, and reach a leverage ratio closer to 2x by the end of '26e, according to our updated estimates.Minor estimate revisionsWe make minor estimate revisions, cutting '26e-'27e revenue by 1% and EBITDA by 3%, following the report. Given that Gentoo's sports margin was weak in September, like that of Better Collective, we argue that the miss shouldn't necessarily be fully extrapolated, even though it is a business reality. In contrast, Better Collective's wording was more positive regarding Brazil (notably the most optimistic on Brazil in the sector). Moreover, readers should note that we raise EBIT in '25e-'27e mechanically due to changes in D&A assumptions following the report.Trading at 4x '26e EV/EBITDAGentoo is trading at 4.0x '26e EV/EBITDA, approximately 35% below Better Collective but around 10% above Gambling.com at 3.6x FactSet consensus '26e EV/EBITDA on average.