Gentoo Media CEO Jonas Warrer has said questions were raised internally over whether the affiliate should remain in Brazil due to Q2 group revenue falling 19% year on year (YoY) on the back of “market softness”.
The firm’s revenue declined to €24.4m (£21m), with management pointing to “deliberate operational recalibration” and lack of major sporting events as the main drivers behind the slide.
The decline in revenue sparked a sharp sell-off among investors as Gentoo Media shares shed 19%, falling to SEK8.98 (69p) in early trading in Stockholm.
When discussing the negative impact the Brazilian market had on Gentoo Media for the second quarter in a row, bosses noted that ongoing regulatory adjustments caused a sharper-than-expected fall in active players on the back of reactivation requirements during Q1.
Though recovery signs emerged as the quarter ended, it wasn’t enough to positively impact Q2 results due to operators deploying higher-than-normal player activation costs.
Deposit values also dropped, though Gentoo Media said a strong player intake and operator activity began to “normalise” at the end of Q1.
Speaking during the Q2 investor call, Warrer admitted there had been deliberations over whether continuing in Brazil would be beneficial.
The affiliate said it had lost 90% of its player base due to customers having to reregister with operators following the regulated market’s launch on 1 January 2025, with there also being a ban on welcome bonuses and players taxed 15% on their winnings above BRL2824 (£386).
There are also several bills proposed that would raise the minimum gambling age from 18 to 21, introduce advertising restrictions including no betting ads during live sport broadcasts, and increasing tax on operators from 12% to 18% of gross gaming revenue.
Despite this, Warrer said the decision was made to continue investing in the country and that long term, Brazil is an “attractive” market.
He remarked: “The loss of the player base and the reactivation of the player base was surprising and much more severe than we had expected.
“We lost 90% of the player base. When you lose 90% of the player base you generate in a market, you lose revenue instantly.
“That has an 100% effect on EBITDA. Then at the same time, we had to take a look at numbers in Brazil and say: ‘This was surprising. Do we want to stay here or do we want to exit?’
“When we looked at it, we still think it’s a very attractive market long term. So we took the decision to invest in the market.
“We need to invest in the market to rebuild the player base. That also has a very direct effect on EBITDA.
“It had a double impact, that was surprising.
“When we look at numbers now, if we adjust for Brazil, our EBITDA margin would have been closer to 40% than closer to the 30% that it is now right. So it had an effect.”
Q2 marks the second consecutive quarter of decline in revenue for Gentoo Media, after 17 successive quarters of growth.
The affiliate reported that EBITDA before special items also dropped, from €14.8m last year to €7.5m.
EBITDA margin for the quarter stood at 31%, down from 49% the previous quarter.
The firm highlighted that EBITDA margins returned to above 40% in June, with material costs reductions “executed as planned”.
Marketing investments led to a 43% quarter-on-quarter increase in player intake, which elevated deposit values to €195m for Q2.
In an update of its full year 2025 guidance, revenue is now expected to stand at €100m to €105m, with EBITDA before special items coming in at €40m to €43m and an EBITDA margin of 40% to 41%.
Previously, the affiliate said full-year revenue was expected to fall in line with 2024, €122.8m, with an EBITDA margin of 40% to 45%.
Free cash flow from operations is expected to land at €27m to €30m.
Commenting on the results, the affiliate said in a statement: “Gentoo Media enters the second half of 2025 as a leaner, sharper and more agile business.
“The foundation laid in Q2 is already translating into stronger underlying performance. Growth in player intake, improved marketing efficiency and positive post-quarter signals from the Brazilian market all reinforce the outlook for H2.
“Optimisation across our publishing and paid media portfolios – including a positive Google Core update and recalibrated acquisition model – further strengthen our position for the second half of the year.”
The post Gentoo Media admits Brazil exit was considered, as Q2 revenue drops 19% YoY first appeared on EGR Intel.
CEO Jonas Warrer reveals the affiliate “lost 90% of the player base” in the country from users having to reregister with operators, while the affiliate’s shares plunge by almost a fifth on the back of the financial results
The post Gentoo Media admits Brazil exit was considered, as Q2 revenue drops 19% YoY first appeared on EGR Intel.