Gentoo Media reported revenue of €24.8m for Q1 2025, an 11% year-on-year decline.
The dip was driven primarily by regulatory disruption in Brazil — one of the group’s largest markets — as well as the discontinuation of certain lower-margin activities.
The biggest development, however, was the implementation of a “broad reduction” in headcount in April, though CEO Jonas Warrer did not disclose the number of roles affected during the earnings call.
Media reports last week suggested that up to 100 employees were let go. Gentoo Media has not responded to NEXT.io’s repeated requests for confirmation — either last week or following the Q1 results announcement.
Following publication of the original article, however, a company spokesperson told NEXT.io that Gentoo Media reduced its “global workforce by under 10%.”
“This includes a mix of full-time employees, consultants, and freelancers across different parts of the business. Gentoo Media currently employs more than 500 people across multiple markets.”
The revenue decline was largely attributed to regulatory disruption in Brazil, alongside the company’s deliberate exit from several lower-margin business areas.
EBITDA before special items dropped to €8.2m from €13.5m in Q1 2024, reducing the margin from 48% to 33%.
Net cash flow was further impacted by €22.5m in deferred payments tied to prior acquisitions and liabilities linked to the group’s demerger.
Despite the downturn, Gentoo pointed to a stable core business built on recurring revenue streams and a cash-generative model.
Revenue share agreements made up 59% of the company’s total income (down from 65%), while revenue from CPA deals rose to 13% (from 8%).
Paid media declined to 18% (from 24%), with listing fees and other services comprising the remaining 28%.
Expected savings
Following its spin-off from the GiG Platform & Sportsbook business, Gentoo said it conducted a comprehensive strategic review, completed shortly after the quarter-end.
The company described the result as a leaner, more focused organisation, repositioned for scalable and sustainable growth.
Key changes included exiting underperforming verticals, resizing its cost base, and shifting focus to higher-value initiatives.
The company has narrowed its active website portfolio to around 70 high-potential domains and expects to generate annualised run-rate savings of €8m–€10m.
The firm’s executive capacity was also bolstered with senior hires, including a new chief financial officer, to support the company’s new phase of development.
Gentoo informed NEXT.io that it is not disclosing the exact number of roles affected by the headcount reduction, but described the move as part of a broader plan to simplify operations, improve efficiency, and focus on areas where the company can deliver the most value.
“While this transition has been challenging, we have also continued to invest in areas that are critical to our long-term strategy, including a number of new hires to support growth in key functions.
“Most importantly, we are deeply grateful to the colleagues who have moved on. Their contributions have helped shape Gentoo Media, and we’ve done our best to support them during this time,” the spokesperson said.
A tough quarter
CEO Warrer described Q1 as “a quarter of change.”
“We faced external pressures and made deliberate decisions to position Gentoo Media for what’s ahead.
“The result is a more focused company with a clear growth strategy and the leadership in place to deliver it.”
During the earnings call, Warrer acknowledged that several experimental initiatives launched in Q4 2024 had failed to deliver meaningful margin, and in some cases received negative feedback from operator partners.
“Personally, I was quite invested in some of the Q4 initiatives, but we just had to close them down,” he said.
“They were not working, and we had to focus on other things going forward that will grow the business.”
He also revealed that regulatory changes in Brazil had led to significant customer attrition: “In some areas, we lost 90% of the player base,” he said, adding that this meant Gentoo lost revenue instantly.
The CEO added that while some disruption is to be expected when a market regulates, the requirement for customers to reactivate their accounts created significantly stronger headwinds than anticipated.
Despite these setbacks, Warrer said the company had opted to stay and reinvest in Brazil, which he described as a still-attractive market with long-term potential.
Sweepstakes: A window of opportunity
Asked about Gentoo’s strategy in the US sweepstakes market, where regulatory scrutiny is rising, Warrer was cautious but optimistic:
“I think it’s a very attractive opportunity in the next few years, I think it wouldn’t be an area where I would invest all of my money, but I think there’s a window of opportunity there that Gentoo Media should definitely exploit or leverage,” he said.
However, he added “we are not going to go all-in and become a sweepstakes affiliate.”
Looking ahead
Gentoo said it enters Q2 with clearer strategic direction and renewed operational focus. Despite short-term disruption in Q1, the company expects revenue growth to resume in the second half of the year.
Full-year revenue is projected to be broadly in line with 2024, with EBITDA margins expected to land in the range of 40–45%.
Investors appeared unconvinced, with Gentoo’s shares trading nearly 20% lower at the time of writing.
The stock has seen a steep decline over the past year, down 57.3% over the last 12 months and nearly 45% in the past six months.
