Gentoo Media Inc.

Hi and welcome to the day. Today we are joined by Gentoo Media who will present their Q2 results and this will be followed by a Q&A moderated by me and if you have any questions please send them through on the web. With that I will leave over the word to Jonas Borer.

Hi, welcome to Gentoo Media's Q2 2026 presentation. My name is Jonas Rohr. I'm the CEO of Gentoo Media, and I will be taking you through the presentation today. Gentoo Media connects high-intent 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. Our business model is essentially functioning as the digital storefront for the iGaming industry, where we connect high-end players with leading operators using a mix of our own websites and paid campaigns. We do this to generate performance-based recurring revenue share earnings supported by listing fees and CPA agreements. Going into our strategy, our strategic ambition, what we want to achieve. We want to build a leaner, more scalable and cash-generative affiliate business. We want to focus capital and resources on the highest performing brands, markets and channels. We want to increase revenue quality and player value to improve monetization, partner optimization, and discipline execution. We want to strengthen our flagship brands and also our local champion sites across key markets. We want to expand our multi-channel acquisition capabilities across owned websites, paid media, and emerging AI-driven discovery channels. Then we want to transition fully into an AI-enabled operating model across technology, product, content, automation, and commercial decision-making. We want to achieve this through our strategic pillars. One, reduce complexity in the business. Two, build and expand our flagship brands. Three, win with our local champion sites in local markets. Four, expand and strengthen our multi-channel acquisition capabilities. Five, continue to drive higher player value. And six, continue to invest and expand our superior tech, product and design. Going into the quarter, Q2 2026 showed continued operational and financial progress, although revenue came in below expectations. Player intake and player activity increased quarter over quarter, supported by the World Cup and by higher marketing investments, but this does not translate into an immediate revenue uplift. Our cost, marketing spend, people cost, and other OPEX decreased by 16% year-on-year, reflecting our continued cost discipline and our structural lower operating cost base. Operating cash flow remained resilient, impacted negatively by 2 million in accelerated supply payments, and if we exclude for these payments, operating cash flow increased 13% year-on-year. Investment continued across sports, product, technology, AI adaption and acquisition. Deleveraging continued in the quarter with net interest bearing debt being reduced, including deferred considerations, and with the leverage ratio improving also. Quarterly highlights, what I think here is the main absolute things to mention. If we look at player intake, this is a quarter where we are growing player intake quarter over quarter. And as you can see, we have gone through a period with decline. to some degree expected to the strategic realignment where we have focused efforts on higher value markets. But of course, nice to see that in Q2, we grow player intake now, both in publishing and in paid quarter over quarter. We also see growth in player activity, in value of deposits, both growing year over year and also growing quarterly. Unfortunately, we do not see this increased player intake and activity translating into revenue growth. So revenue declines 9% year-on-year. But what we see is that despite lower revenue compared to Q2 2025, we see EBITDA growing and our EBITDA margin expanding. Cash from operations remained resilient, notably when we adjust for the 2 million that we did in accelerated supplier payments. Financial highlights, revenue at 22.9 million, down 9% year-on-year, as higher World Cup player activity did not translate into an immediate revenue uplift. Marketing spend ended at 6.8 million, down 19% year-on-year, but up 25% quarter-over-quarter, reflecting increased investments around the World Cup. Personal and other operating expenses ended at 7.2 million, down 12% year-over-year and 11% quarter-over-quarter. Combined marketing spend, personal cost and other OPEX decreased by 2.6 million or 16% year-over-year. EBITDA before special items increased 5% year-over-year, ending at 8.9 million, also with the margin expanding to 39% from 34% in Q2 last year. Operating cash flow remained resilient, ending at 6.4 million in Q2 2026. Looking into revenue, recurring revenue share remained the largest revenue source at 60%, with listing fees and CPA contributing respectively 28% and 12%. This is very much in line with previous quarters. Europe contributed 59% of revenue, the Americas 18%, and global 23%. If I have to highlight one thing here, I would highlight our global revenue or revenue from global markets that increased 14% year-on-year. I think this is very much driven by our flagship brands that are becoming better and better at monetizing worldwide traffic. If we turn to player intake and value on deposits and look into the details there, we can see that player intake increased 25% quarter over quarter, driven by growth across both paid and publishing. Player intake ended 25% below last year, driven by lower marketing investment and stricter focus on higher value markets and players. Value of deposits reached an all-time high of 207 million, increasing 3% quarter over quarter and 6% year over year. The combination of growing player intake and record deposits demonstrates stronger player activity and provides a foundation for future revenue growth. Looking into our cost base, we continue to become more and more efficient. Our total cost decreased by 2.6 million, or 16% year over year. Marketing spend increased throughout the quarter, up 25% from Q1, reflected increased investment around the World Cup, while remaining 19% below Q2 2025. Combined people cost and other OPEX decreased by 12% year-on-year to 7.2 million and by 11% quarter-over-quarter, equivalent to 0.9 million. This is in line with the outlook communicated in Q1 2026. What we can see here is that we are fewer people, meaning that we see a big reduction in people cost, and then some of that people cost being moved to other OPEX. But essentially, at the end of the day, a leaner, a more focused business with a more scalable operating model. In the quarter, we also continue to de-risk and de-leverage the business. Since Q2 last year, net interest-bearing debt, including deferred payments, has been reduced by 10.6 million. And in this quarter, we did 1 million of deferred payments, and we also reduced 1 million in loans. This also means that our leverage rate improved to 2.58 from 2.99 last year. So essentially you can see here that the deleveraging of the business continues as our refinancing process advances. Our profitability and credit metrics have improved over the past 12 months. With adjusted EBITDA last 12 months increasing 6% and our net interest bearing debt decreasing 9% year over year. Leverage ratio improving from 2.99 to 2.58%. Looking into our debt structure, we can see that we have sort of three facilities here. Our bond that matures in December this year at 91.5 million. And then we have our shareholder-backed loans with the bulk of it maturing end of next year. The board and management are evaluating a range of refinancing alternatives, including a new bond and private debt structures. The objective is to secure an appropriate long-term solution with sufficient flexibility, including the ability to distribute cash while maintaining disciplined cost of financing. No preferred structure has yet been selected, and the market will be updated no later than 1 October 2026. Going into the operational highlights. Our websites in our publishing business execution remain focused on strengthening core brands, improving monetization, and allocating resources to the highest potential markets and products. Product development centered on Ask Game Plus, Casino Meister, and enhanced sports products and features targeting the World Cup. The casino platform migration continued and was completed after the quarter ended. Also, further websites were migrated to our next generation content platform, reducing complexity and enabling faster product content and SEO execution. AI adoption also advanced with the launch of an internal assistant, increasing content production and editing efficiency across our publishing business. I'm very excited to see when we do these kind of steps forward using AI how much it can transform the business, and how much it can sort of increase efficiency. And this is very much a theme that we have been working on since last year. We're so excited to see what we can continue to do there, being more and more AI-adaptive. Looking into paid, in all of our paid campaigns, player acquisition accelerated during the quarter. with FTDs increasing 46% quarter over quarter, while the CAC, the Custom Acquisition Cost, what we pay for one player, remained broadly stable. Higher operator bonuses and acquisition incentives reduced the initial revenue contribution from all the newly acquired revenue share players that were generated and paid. The expanded player base is expected to generate recurring revenue share values as players remain active over subsequent periods. In paid, similar to in publishing, we also saw continued AI adoption, AI-driven site creation and real-time performance optimization became fully operational, improving execution speed and supporting further scalable growth. Revenue in Q2 was below expectations and did not yet reflect the positive development in player intake and player activity. The company continues to advance initiatives aimed at improving monetization and supporting a return to revenue growth. So just wanted to take the chance here to speak in broad terms about the key drivers that we are working on here. First of all, Partner Optimization. This means strengthening commercial terms and relationships with leading operators across priority markets, supporting stronger and more resilient monetization as player activity grows. Traffic Optimization. Directing traffic towards partners delivering the strongest conversion, the highest player value, and the strongest or most sustainable long-term revenue contribution. We also invest in brands, products and technology, in our flagship brands and also in our local champion brands, in sports products and technology and higher value markets to strengthen traffic, engagement and player value. And then we are scaling paid acquisition selectively where campaigns demonstrate attractive conversion, monetization and payback. In a quarter where we see that we have grown player activity, and if we look back over the last period where we have continued to grow player activity, it is of course a key focus point for management and for gentle media to see that we also grow revenue when we grow player activity. So this is absolutely a focal point for the second half of 2026. Summarizing the quarter and looking ahead, revenue declined 9% year over year, while EBITDA before special items increased 5% to 8.9 million. The margin expanded by 5 percentage points to 39%, reflecting our structurally lower cost base. Player intake and player activity increased during the quarter, supported by higher marketing investments and the World Cup. However, this increase in player activity did not translate into a short-term uplift in revenue in the quarter. PeopleCost and other OPEX developed as expected. The cost base is expected to decline further during the remainder of the year as processes are optimized and AI adoption continues. Cash generation remains strong while the de-risking and the de-leveraging of the business continued. Looking ahead, we will continue to invest in our flagship brands and in our local champion brands, continue to invest in sports products and sports-related acquisition capabilities, and we will continue to invest in paid acquisition capabilities. All of this, of course, to support future revenue growth. Commercial optimization is a key priority for second half of 2026, focusing on improving partner terms, partner relationships, and not the least focusing on converting growing player activity into revenue growth for gentle media. Following the completion of first half of 2026 and notably the revenue in Q2 coming in significantly below expectations, Dental Media is revising its full year guidance. We are guiding now revenue at 97 to 100 million for 2026, adjusted EBITDA at 44 to 47 million and cash flow from operations at 32 to 36 million. Lower-than-expected first-half revenue reduced the full-year outlook, partly upset by continued cost reductions and resilient margins. This concludes our presentation. Thank you for tuning in. Adding a bit of afterthought to the presentation, in Gentoo Media, we know what steps we need to take in the next period ahead of us, We have done many things correctly. We have seen financial and operational progress. We are growing player activity. But of course, we need to deal with the fact that we have not grown revenue. This remains a focal point for the organization and for management going forward. I want to thank both investors and employees for the support in the last period that we have gone through. And I can say on behalf of all of Gentoo Media that all of us are looking very much ahead to see what we can achieve in the remaining months of 2026. Thank you.

Okay, thank you for the presentation. Then moving over to Q&A. Starting with maybe the revenue here in Q2, also get a few questions here from the webcast. Maybe trying to explain, I mean, as you say, we saw a good after the intake revenue deposits grew, but you didn't see any revenue growth quarter for quarter. I mean, you mentioned the bonus effect to some extent, but could you give some more flavor on why we didn't see any kind of revenue growth in the quarter, if you can put some color on that?