Gentoo Media Inc.

Hi, and welcome to today's presentation of Gen2 Medias Q1 results. We are joined by Jonas Borg, who will present the quarterly results, and then we will have a Q&A session afterwards moderated by me. And if you have any questions for the Q&A, please send them through. But with that, I will leave over the word to Jonas. Please go ahead with the presentation.

Hi. Welcome to Gen2 Medias Q1 2036 presentation. My name is Jonas Rohrer. I'm the CEO of Gen2 Media, and I will take you to the presentation today. Following the presentation, there will be a Q&A session where you, the audience, can ask questions to the presentation and to our numbers. Let's get started with the presentation. Before we start going into numbers, I would like to just spend a bit of time on talking about the business and what it is we do in Gentle Media for those of you that are new to the company. Essentially, Gentle Media is about connecting high-end players with leading iGaming operators worldwide. We are leading affiliate marketing company in the online casino and sportsbook industry with a diverse portfolio of websites, products, and campaigns. We help online sportsbooks and casinos acquire high-value players at scale through premium lead generation and compliance solutions. This also means that another way to describe it is that essentially we are the biggest storefront for the iGaming industry. We have these online stores where people come in and browse around before they choose to make a purchase. This is then how we connect high-intent players with leading operators. We are a multi-channel affiliate using a mix of own websites and paid campaigns. We have performance-based recurring revenue share earnings supported by listing fees and CPA agreements. Also, I would like to briefly talk about our strategy, our strategic ambition, what we want to achieve, and our strategic pillars, how we will achieve them. So, in ambition, we want to build a leaner, more scalable, and cash-in-the-tiff affiliate business. We want to focus capital and resources on the highest performing frames, markets and channels. We want to increase revenue quality and player value through improved monetization, partner optimization and disciplined execution. We want to strengthen our flagship brands and we also want to strengthen our local champion sites across key markets. We want to expand our monthly channel acquisition model across own websites, paid media and also emerging AI driven discovery channels. We want to transition fully into an AI enabled operating model across technology, product, content, automation and commercial decision making And I would say the overall theme here is of course to improve scalability and operational efficiency. Going into the Q1 2026 Executive Summary, Q1 was a stable start to 2026, where gentle media demonstrated a more efficient operating model, smarter resource allocation, and also demonstrated being a more profitable business. Profitability was supported by cost reductions, with quarterly costs down approximately 3 million year-on-year, equivalent to around 12 million in analyzed run rate savings. This is ahead of the targets that we communicated when we announced our strategic realignment in Q1 2025. EBITDA before special items increased 19% year-on-year to 10.5 million. Revenue was relatively stable, but impacted by weaker February sports margins. However, underlying commercial momentum remained positive, with value of deposits, traffic and player sign-ups developing well in higher value segments during the quarter. Strategic investments continued across sports, products, technology, automation and monthly channel acquisition capabilities. And I think you can see here that the overall theme is transitioning toward being a more and more AI driven and AI supported business. Financial flexibility improved to the new shareholder backed loan facility and repayment of the revolving credit facility. Net interest bank debt and deferred consideration liabilities decreased by 3.6 million during the quarter. Going into Q1 quarterly highlights, Revenue ended at 24.0 million euros, 5% below Q1 last year. However, EBITDA grew 19% year-on-year, ending at 10.5 million, with margin expansions to 44% versus 35% in Q1 2025. Operating cash flow improved 61% year-on-year, supported by stronger profitability and improved cash conversion, but also being negatively impacted from working capital adjustments. FTDs impacted by disciplined paid media spends, portfolio realignment and focus on higher value players. Underlying commercial momentum remained positive, with value of deposits remaining strong above 200 million throughout the quarter, while traffic and player sign-ups progress well in higher value segments during the quarter. I think you can just tune in here on the value of deposits, very positive to see that in Q1 we are basically on level with last quarter, which is traditionally the strongest quarter of the year in terms of seasonality. Going into the financial highlights, revenue at 24 million, down 5% year-on-year, impacted by softer sports margins in February. Marketing spent at 5.5 million, down 20% year-on-year, reflecting the 2025 strategic realignment with fewer higher performing campaigns, websites and markets. Personal and other operating expenses were 8.1 million, down 17% year-on-year, with headcount reduced from 404 to 292. These costs were reduced by approximately 3 million year-on-year, with further operational cost reductions expected to support additional annualized savings going forward. EBITDA before special items increased 19% year-on-year to 10.5 million, with margin expansion to 44% versus 35% in Q1 last year. Special items totaled 1.6 million, primarily related to the closure of our UK office, operational simplification initiatives, fewer members in management, and refinancing related activity. Operating cash flow improved 61% year-on-year to 7.4 million, supported by stronger profitability and improved cash conversion. Going into revenue, 60% of revenue came from recurring revenue share agreements, 26 from listing fees, and 14 from CPA arrangements. This is very much in line with the previous quarters and also how we expect things to progress going forward. Europe, the Americas, and the rest of the world contributed respectively 59% of revenue, 18% of revenue, and 23% of revenue in the quarter. Nordic revenue increased year-on-year, while revenue from the rest of Europe declined. Revenue from the Americas remained stable year-on-year, with slight growth in North America, and revenue from the Western world increased year-on-year. Revenue for the quarter was impacted by softer sports margins in February and of course normal seasonality, notably when we compare to Q4, the previous quarter. Despite this, revenue development continued to improve compared to the low point reached in Q3 2025. And this is something I would say myself and management are very positive to see that we have changed the trend and the trajectory that we were on in 2025 and can now see that we are moving, going back towards growth. Going into player intake and value of deposits, player intake reached 81,400 FTDs in the quarter, decreasing 14% compared to Q1 last year, driven by lower investments in Brazil, and of course the strategic realignment. Player intake in the Americas remained stable here and there, with North America growing 150%. Player intake in Europe declined, with digital media executing a more narrow website portfolio. The strategic focus here continues to shift from value driven growth towards higher quality players and higher quality revenue. This is of course very much in line with the strategic realignment where we will be fewer people working on fewer websites and fewer products, but with a much stronger focus, hence expected to benefit long-term revenue growth and, of course, profitability. I think we can see here that despite a decrease in player intake, we can see that our value of deposits are progressing very positive, meaning that we are generating more and more players that have a higher value. That being said of course we would like now to see also that we start improving player intake going forward and are optimistic for the period ahead of us of course with the World Cup and also looking into the second half that is traditionally more positive than the first half of the year. In the player intake part, I would also like to mention here that during the quarter, I said we have seen improvements, and also in higher value segments, and the quarter also ended with a Google Core update that was positive for us. Looking into what I would call being a leaner and more scalable operating model, Total expenses, OPEX and marketing, reduced by approximately 3 million, equal to around 12 million in analyzed one-way savings. People cost declined 16% year-on-year, with headcount reduced from 404 to 292. Other operating expenses declined 19%. Marketing spend reduced 20% year-on-year, reflecting a more focused website portfolio. As trained and in line with our strategy, Further operational simplification initiatives were executed during the quarter, including closure of the UK office, reduction of support functions and management layers, which is expected to reduce quarterly costs by approximately 0.9 million going forward. Besides this, looking even a little bit further ahead, we also expect to see that increased AI adoption will support further execution quality and efficiencies in the second half of 2026. Since the start of 2025, interest-bearing debt, including deferred payments, has been reduced by 18.1 million. Cash has been used to deliver to the business. Hence, net interest-bearing debt, including deferred payments, has been reduced by 9.3 million. If we look at Q1 2026 specifically, This has further improved the company's financial position. We have done repayment of deferred payments of 1.6 million. We have repaid 2 million under the revolving credit facility in January and February. And we have done full repayment of the 18 million revolving credit facility through a shareholder loan in March. Deferred payments continue to decline are expected to be eliminated with last payment during August 2026. Shareholder-backed financing improves financial flexibility, while management continues to evaluate refinancing alternatives for the outstanding bond deturing in late 2026. And I think if we look at our leverage ratio here and look ahead, we will of course in the next quarter expect to see that decline further, which of course as management we are very positive about, that we continue now to show that we can de-risk the company. Operational highlights, starting with publishing. Publishing revenue remains relatively stable, despite a more focused website portfolio following the strategic realignment. Revenue was largely on par with the previous quarter, which is a quarter that traditionally benefits from strong seasonality. During the quarter, traffic and player sign-ups improved across several high-value markets and flagship frames. We worked a lot on conversion rate optimization and A-B testing initiatives, which actually delivered promising results, which supports improved monetization going forward, essentially in layman's terms. If we can improve the conversion rate and click rate of our website, we will make more players with the same traffic that we have. Hence, we will make more revenue going forward. We have seen positive results here, although we have to say that rollout to the wider portfolio has progressed more slowly than anticipated. So I think you can say here that we are not there yet where, you know, all the good things have come. The best is yet to come. Product investments continued across as gamers, sports and UX and platform improvements. I want here especially to highlight sports when I think we have established a very strong and experienced sports team that will help us and drive the growth forward in this attractive vertical in the industry. We also saw a continued rollout of Gentoo Media's Next Generation WorkPress platform across the portfolio, which is contributing to more efficient AI-assisted content delivery, improved site performance, and faster SEO execution. Our Next Generation WorkPress platform we have worked on for quite a few years now, actually. It's growing really strong. And now when we are integrating it with AI and AI enabling it, it's doing even stronger. There are still only a few handfuls on our site that aren't that platform. So of course, to the degree that we can onboard more and more sites to the platform, it will have a positive benefit going forward. We are working now to migrate one of our factory brands, Casinomeister, and I'm very excited to see what that can bring. And then also in the realization that the migrations have taken longer than anticipated, I think also the team has changed approach a bit for some of the wider a portfolio of websites that we have where some of them are smaller. I think migration will be more focused and more of a one size fits all versus making all sites unique. So what I'm trying to say here is that I hope to see an acceleration in our migration efforts here. So our WordPress next generation platform can benefit publishing business sooner than later. AI adoption. accelerated across publishing, improving workflows and efficiency. Work also progressed to secure visibility across emerging AI discovery channels. In terms of traffic from AI discovery channels such as ChatGPT, we don't still see any notable traffic. However, we believe that this is a strategic important area for us to excel in, and we believe, of course, that we want to be there the moment that we start to see a change in user behavior. The way we work within publishing is that we are, of course, doing traditional search engine optimization, and now we are also doing optimization to what's LLL-driven models or AI-driven discovery channels. There's a big overlap between the two activities, and then there's some things that are specific in terms of working towards optimizing for AI discovery channels. We are working there now, and we want to ensure that, you know, gentle media is not called in a Kodak moment where the industry changes. If there's a change, we want to be at the forefront of it, and we want to lead it. Going into paid, paid entered Q1 with positive momentum supported by you can say a seasonally strong US market during January. Revenue share performance was however impacted in February by player friendly sports outcomes. Revenue for the quarter ended at par with the previous year with value of deposits also stable. Improving channel economics remained a key priority during the quarter, particularly across P2C and social media activities that have not yet fulfilled expectations. We are addressing this through new AI-driven tools launched during the quarter, enabling real-time landing page optimization and faster campaign deployment, expected to improve conversion performance, picture rates, and you can say just overall operational efficiency throughout 2026. It is very important for us to improve the channel dynamics here because that will allow us to invest more in marketing to drive more revenue growth going forward. If we don't fix these channel dynamics or economics, you can say we will still hold back on marketing spend because essentially we are here to generate profit, necessarily not revenue. Going into summary and outlook, Over the past year, Gentle Media has transformed into a leaner and a more focused organization with a lower cost base, stronger operational processes, and being a more profitable business. The company continues to strengthen flagship and local champion sites while investing in sports and sports-related acquisition capabilities to strengthen its position within one of the industry's largest and most attractive verticals. The company has made material progress in AI adaption and automation, expected to further improve operational efficiency and execution quality going forward. I would say this is the first quarter where I see and feel that we are starting to see a wider effect from AI, using AI internally, working smarter with AI, just working faster with AI. In terms of internally, seeing a change in search behavior from AI. We have yet to see that, but as I said earlier, we are working hard, of course, to be at the forefront of this, and already now I think we have a strong position, and it's an area we will also focus on going forward. In short, I think we have moved far on AI adaption in Q1, and I'm very happy to see that. Q1 revenue. reflects seasonality, making it encouraging to see the positive trend reversals since Q3 2025. If we look at 2025, there has been a trajectory here with decline in revenue, and very happy to see now in Q1 that we have demonstrated that we have changed that trajectory, and also that we have demonstrated that we have restored profitability and margins back to the levels that we are used to. Revenue in publicing was in par with Q4 2025, while PEG has established a scalable acquisition model to support continued growth. Overall, we are entering the rest of the year with strong momentum across the business. Management, myself, are proud to see that we have successfully delivered on the strategic realignment that we communicated during Q1 2025. Our organization is well positioned to support our strategic ambitions and we are heading into summer with the World Cup and traditionally a stronger second half of the year compared to the first half. Thank you for tuning into this presentation and let's go to Q&A.

Okay, thank you very much for that presentation. I will start with your question. We also have some from the webcast. Maybe starting with the guidance. I mean, I think you mentioned that you saw that the Q1 trend indicates that you're coming towards your guidance for 2026. Do you see that in all the metrics mentioned in Q4, top-line EBITDA and cash flow?