With that, thank you, and welcome to this Q3 2022 Asetek A/S earnings call. My name is Peter Madsen. I'm the CFO. Next to me is sitting André Eriksen, who is the CEO. Hello, André.
Hello.
Our board met yesterday for one of the annual strategy sessions with the full management team and then the board met this morning again for its ordinary board meeting and they processed and then approved the report that we issued a few hours ago. We're gonna go through the presentation and as the operator, Daisy said, there's the option for you to call in and pose your questions verbally, but there's also in front of you on your computer, there's the option for you to type in a question as we go and we will then gather those questions and go through them at the end of the presentation. With that, please change the slide a couple of times, so we'll get to the Q3 highlights. Thank you. With that, André, over to you.
Yes. Hello, everyone. First of all, if I sound a little bit strange, it's because I've been sick the last few days, so I'm not 100% up to speed, but here we are. It's about Q3, and then the highlights here is revenue of $10.4 million compared with $13.5 million same period last year. Gross margins of 42% compared with 39%, again, compared to last year. We have an EBITDA of -$0.6 million improved from -$1.4 million against same period last year. We have a nine-month revenue this year of $41.2 million, and an EBITDA of around zero, negative $0.2 million.
Our cost cuts are coming into effect and we are now seeing a reduced 35% OPEX, obviously because of the right sizing of the organization and as well on top exchange rates. We have kept our focus on product development and we have next generation liquid coolers as well as new SimSports equipment ready for pre-order and perhaps even shipping this quarter. Our full-year revenue is expected in the $50-$52 million range and our operating loss in the $5-$6 million. Please change the slide. To no surprise, I assume, we are seeing a lot of headwinds still in the gaming markets as well as on the supply side.
If we take a helicopter perspective for a second, we are seeing market averaging, which is delaying the, let's say, let's call it the normalization of our business. We, I guess needless to say, but let's do it for the sake of good order. The war in Ukraine, COVID-19, still lockdowns, supply chain disruptions, U.S. tariffs, you name it. We are pretty much hit by it all. On top of that, our end customers, our consumers are obviously reducing their spendings on, let's call it luxury equipment as high-end gaming equipment really is. Just a single data point, just in Q3, worldwide PC shipments declined 15%. Obviously that hits us, since every liquid cooler we sell goes inside a PC. How does that impact us and the industry in general?
Of course, we are seeing a reduced end user demand, and that's true both for liquid cooling and SimSports. SimSports business still being very small, obviously, but we can see it there as well. We never had a big visibility or long visibility in our business and right now it's just even shorter due to the even higher volatility in the forecasts provided by our customers. Our customers, when I say our customers, in this case it's our OEMs, they are busy reducing their inventories. As I think a lot of people also know and understand that due to COVID, where all of a sudden there was a shortage of everything, everybody just bought like crazy, and now they're trying to get rid of it all again.
We, as already mentioned, expect $50-$52 million revenue this year, which kind of implies a Q4 that's more or less equal to our Q3. We are expecting an operating loss for the year. I think that's also no big surprise. You can say, "Okay, so what are we doing about all of this?" Because at the end of the day, we cannot call up our PC customers and ask them to fix their business. It is what it is. What we can do on our side is we can short-term focus on cost reductions and we have taken the necessary measures. We did that early. As with anything, there is a inertia in it, of course. People have severances, et cetera.
We can't just force people to stop from one day to the other. Well, we can, but we will have to pay them continued salaries. Therefore, we are just starting to see the result of that. Of course, we are looking towards the future as well. I personally believe that's the most important. We keep focused on product development and launching new and more products. Needless to say, although sales is slow, the bigger portfolio of products you have with the slow sales, that's obviously bigger than a smaller or better than a smaller portfolio with slow sales. We keep focusing on that. Yeah, we are starting shipments from our Malaysia facilities in Q1 2023.
The good news here is that it's with our existing contract manufacturers, so it's not new partners per se. Please change the slide. If we look a little bit on the cost reductions, where we are and where we have gone through, or what we've gone through. Here in Q3, we reduced OPEX 27%. A lot of that was unfortunately saying goodbye to a lot of good employees, but that's how it is. On top of that, we've had a favorable exchange rates. Sometimes they go up, sometimes they go down. I believe last year we were hit by them, so this year it's the other way around. But as we look at it right now, we have achieved annualized cost savings of $6 million compared to the second half.
Completed in the second half with a full effect from first quarter 2023. We have kind of, let's say, said goodbye to everybody that we needed to say goodbye to. On top of that, we have, as you know, those of you who follow us know, we have spent quite a substantial amount on lawsuits over the last year. With the benefit of hindsight, it's of course always easy to say what's right and what's not right. But the fact is that most of these lawsuits were initiated prior to COVID-19. Because of that, they have been dragging out and there's not really an escape valve in the middle of it all. You kind of have to come through with it one way or the other.
We decided to settle the most significant case that we had. The good thing about that is, of course, that our legal costs will be significantly reduced going forward. As you can see on our projections here for the year, it's also not free to do a settlement. There's a lot of lawyer hours and a lot of effort involved in that. I would say from Q1 2023, there will be a significant discount in that or reduction in that. Of course, it does not mean we just bend over. We will still defend our IP to the extent we think is reasonable and possible. I don't personally expect the legal cost to go to zero, but not anything near what we have been spending so far.
All in all, I think on the more positive side, we have reacted quickly to the headwinds that we have seen and we have done our best to reduce cost. I think we have and we are succeeding with that. Next slide, please. What does it all mean in terms of both, I would say liquid cooling and SimSports as well? What it means is that we have done the cost cuts that was needed to get to a level what we believe is right. It's of course very difficult to predict the future in, especially in these circumstances. We have not cut deeper than we still have a functioning company that can develop new products. That's what we have done.
We are looking long-term or longer term, not necessarily 2050, but not necessarily 2023 either. We are receiving a strong interest both from end users and reviewers, et cetera. To us, this is temporary. In the bigger scheme of things, we haven't really changed much on our plans, internally. We are widening the product program. We are launching new products and we keep launching new products and try to stay faithful to the strategy we laid out that, for example, in SimSports, we want to develop a full ecosystem. That's what we are driving and striving towards. Please change the slide.
It's a little bit more of what I just said that our current focus is on the liquid cooling side. Just a small footnote here. That's previously what we referred to as the gaming and enthusiast segment. It is a little bit confusing to some, including myself, because SimSports is also gaming. De facto, as it looks right now, Asetek is a gaming company and a gaming company with two segments, liquid cooling and SimSports. That's the nomenclature we are going to use going forward, and that's what we focus on. Then all the way to the right, you can see we still have the data center option, which is an option for now.
I can just, as this is the only moment in this presentation I'm going to touch on it, just repeat that we are still focusing on the legislation side in Brussels. That effort is still ongoing, but other than that, we are not spending time and energy on that option. Please change the slide. Not much is going on new on this slide. It's basically how we are organized. I think it's just perhaps interesting to see our Malaysia facility now where we are in full swing. As you can see, it is actually close to both our China and Taiwan facility. Needless to say, the number of employees is obviously less than it used to be. Please change the slide. One more time. Thank you.
We will now dive into the liquid cooling portion of our business, which of course by far is the largest and is our core business. We had nine new products starting shipping in Q3, and four of them is based on our new eighth-generation liquid coolers with the most advanced technology and performance we ever developed in the history of the company. Of course, it's great to get it out there, but right now everybody is in a wait and see position, both because of end user demand, because of excess channel inventories, et cetera. Nevertheless, it shows that our customers also, our direct customers also believe in the futur and we are cranking ahead with new products and new opportunities all the time.
It's not like on our side that we don't know what to do or the world is standing still by no means. Please change the slide. Looking a little bit on our customer base on the liquid cooling side, we are currently shipping to more than 20 OEMs. Top five represented 85% of our revenue versus 83% last year. There's not really any conclusions to be made by that. That's more an explanation of how things are and of course, our ambition is to increase the diversification over time. Please change the slide.
Sometimes it's useful to remind ourselves about how is the core business doing if we only look at that and shave off, let's say, investments in other business opportunities, lawsuits and what have you, and just look at the business. I think it's pretty important to realize that our core business is actually healthy business even these days. In the last four years, we have generated $78 million of EBITDA, which is not bad. If we were happy with that, we could just stick to that, but of course, we are not happy with that. We wanna grow. We want to diversify the company, the business. That's why we're investing in SimSports. That's why we did invest heavily in the data center market.
It's just not always easy to dissect the numbers. We made it easy for you here to see that even this year, you can always say if and if and if, but even this year, if we had not invested in the lawsuit, if we had not invested in the SimSports business, we are still running a pretty decent business here, I would say. Please change the slide. If we look at the more strategic side of the things, due to the previous slide, there's no really big desire or urge to change things that are working. There's not much new on this slide. Of course, we want more business. We want to sell more. We want more customers. We do that by putting an effort into relationships with the customers.
I think we just had our VP of marketing, VP of sales in Taiwan for the first time post-COVID being able to meet with both existing and new customers. That was very fruitful and very useful. That just also shows you that it's been a significant time since we've been able to actually physically meet with our customers. Most of our customers, no matter if they're European or they're U.S.-based, typically they have headquarters, commercial headquarters and R&D, etc., in Taiwan. That's the first opportunity. That's what we're focusing on. That's what we focus on. I think no reason to repeat the story. We keep doing what we do and it seemed to work. Next slide, please. One more.
If we dive into the SimSports business, it's of course frustrating to build a new business in these business environments. I'm not going to lie about that. That's how it is. If you get lemons, you need to make lemonade, and that's what we try to do here. We still get a lot of positive feedback, a lot of interaction, a lot of interest from the sim racing community. That being reviewers, influencers, end users and what have we. We did crank out $0.5 million of SimSports revenue in Q3. That is, depending on how you see it, an okay number given the circumstances.
Of course, it could have been much better if we had a little bit more headwind in on the macro situation, of course. We have still been fighting supply chain issues of all sorts that has far exceeded our, let's say, ability to ship more products. I would say though that on the supply chain side, we are largely getting there. It's getting easier to get what we need and get it on time and at the right cost and it's also easier. I'm not sure if that's good or bad, but shipping prices have obviously come down significantly. The reason I say I don't know if it's good or bad, because the reason, in my opinion, is actually because the demand has faded off tremendously. We have
I mean, we are working hard on the marketing side and on the sales side and developing new products. During the quarter, we exhibited new wheels and wheelbases at Gamescom in Germany. I think that's actually a great illustration of how far we are willing to go to get out there because we did not have the real products because of the supply chain issues, so we actually made 3D-printed products that we could bring to a trade show. It shows a little bit about our confidence that we are willing to actually go to a trade show with 3D-printed products instead of the real deal. It worked out quite good.
There was a big interest and we are attending a big show here in early Q4, or sorry, early December, where we hopefully will be able to bring the real and the new products. Speaking of SimSports products, next slide, please. To give you an idea and a feel for where we are, we started shipping the Invicta pedals earlier this year, Q1. In Q3, we then started to ship our next stage of pedals, which is the Forte pedals. We started to ship the Pagani Huayra pedals and at least five new products and families we do expect to be ready for pre-order.
Actually, we are probably going to open for pre-orders next week of our Invicta wheelbase, our Forte wheelbase, our Forte steering wheel, our S-Series pedals, as well as La Prima entry-level series. I'll get a little bit back to that. We are looking at a year next year where we'll be hopefully able to launch rigs, seats, shifters, handbrakes and all other kinds of accessories. We are actually getting closer to our ambition of having a full ecosystem. We are very much on track to have developed five set of pedals, two different steering wheels and three different wheelbases only two years after we actually decided to enter this space.
If any of you just have a little bit insight into developing electromechanical products, this is really fast and it's really fast when you, at the same time, consider the headwinds we and everybody else, for that sake, are seeing right now. Despite the financial figures are perhaps not what we would like to see, I'm actually extremely proud that we've been able to do this. It has not been easy and it is not easy. Next slide, please. What we are trying to do, of course, is to come up with the best offering in the SimSports market that is a growing market. The way you can see it, of course, is the number of people online, the number of people who's playing the sim racing, et cetera.
We started out in the high end of the market. That's where the enthusiasts are. That's where the biggest buying and spending power is and our plan is to offer bundles with wheel, wheelbase and pedals for between, let's say $2,000-$3,000. It's also no secret that in an environment like right now, of course, it's the high end that suffers the most. We've been looking at what can we do about it or can we do anything about it? Because playing in the lower end of the market was something that we had planned for, let's say, years out. If we look a little bit on the competition, that is typically targeting the console market, PlayStation and Xbox of course.
If we look at Fanatec products, I would say between $700 and $1,000. Logitech just came out with a new DD, so direct drive system, around $1,400. Then there's a new Chinese player, MOZA. They are, to no surprise, the cheapest with $600. As you can see from, let's say between $600 and $1,399, we are far from it. That's no surprise because that's by design. We have actually looked at and worked very hard to see what we can do.
With the building blocks we have, we have actually been able to develop a product series that we call La Prima with a bundle price of $1,350, and I would argue at a much higher both quality and feature level than any of the competitors that I just mentioned. It's still in the high end of the low end, but in my opinion, the products do not compare. That's also something we are going to launch very soon. As a part of, let's say, enabling this, we have looked at a business model that pretty much is close to, let's say our closest competitors, which is to sell directly to the end users. In this La Prima version, there is simply no margin room to enable a reseller link.
We do that on the mid end and on the high end, and then in the low end, we are going to sell direct. It'll be very interesting to see how that takes off and if it takes off. I think before it can really take off, we need to have console support. We need to have support for PlayStation and Xbox, and there are essentially two reasons why we don't have it today. Well, there are three reasons. It was never in the plan this early. Secondly, we laid off the people who was able to work on it. Number three, both Sony and Microsoft, because of chip shortage, has not really shown any, let's say, great interest to enable more hardware partners.
That is, of course, something we will keep in mind and something that we will be focusing on going forward. Next slide, please. From a strategic perspective, I want to move to the right immediately and say, okay, what we are doing here is we are focusing on getting new products out, as many as we can, as soon as we can, without compromising features, without compromising quality, et cetera. We are building a new brand, so we have to do it right, and that's what we do. With that in mind, I will hand over the mic to Peter, who talk a little bit more about the hardcore numbers.
Yes. Change the slides twice, please. Thanks, André. As André alluded to, yes, we do have a strong core business. Let's not forget about that. This is showing the revenue, total revenue of the company, and it's showing the EBITDA of our liquid cooling business, our bread and butter business, our traditional business. I can see that the numbers are going up and down. Of course, some would say that the revenue numbers are volatile, some would say that they're declining. Yes, that's all the facts. Please take a look at the EBITDA margin, over to the right, 24%. I think it is. I'm glad to report that even though the business is contracting, we're able to deliver cash from the G&E liquid cooling business, sorry, of 24%.
I could see another company, another scenario where that number would be reduced as the market is contracting and the company is struggling to reduce and right-size, as it's sometimes called. I'm happy to report the 24% here. Next slide, please. Looking at the income statement. We have talked about the revenues, $10.4 million in this most recent quarter versus $13.5 million same quarter last year. That's 20% down. Yes. $41 million in total for the first three quarters of this year versus a whopping $62 million last year. That's 33% down, even more down. Of course, that's the logic here is that we in 2019 and 2020, and 2021, sorry, we saw a very large revenue during the COVID-19 crisis.
That started reducing that revenue bubble, some would call, reducing Q3 and onwards last year and continues for now. In a little while, I'll come back to the gross margins. Just a quick word more on revenue. We sold 155,000 sealed loops in Q3 versus 237,000 loops last year. That's a reduction of 35%. That's more than the revenue is going down, some would argue. That's because the average sales price is increasing to, in this quarter, $58 per unit versus $50 the same quarter last year. That's not out of the range, that's not out of the normal. ASPs go up and down, and that comes back to product mix.
We have simply sold products of higher complexity this quarter than in the same quarter of last year. No magic in that, I would say. André talked about the destocking by our customers, we certainly see that also in the revenue numbers. Changing our focus to the operating expenses, we spent $6.1 million in this quarter versus a very high number same quarter last year, $9.4 million. A million of the $9.4 million last year was one-off. Let's say that it was $8.5 million or $8.4 million that we have then reduced by those 27%. André also talked about down to $6 million.
That's staff reductions, legal cost reductions, and of course, the fact that the Danish krone has appreciated versus the dollar. A dollar these days costs 7.5 Danish krone approximately versus 6.4 the same quarter last year. That's a 17% change in that. Of course that helps us quite significantly. We laid off the last people. They stopped here at the end of September. That means that there's a little bit more to come, of course, savings, possibly in Q4 this year, but not a significant amount more.
All this means that we had in Q3 an operating income of negative $1.7 million versus a negative $4.1 million in the same quarter last year. Keep in mind, though, that the third quarter 2021 was heavily impacted by one-off expenses. We were then being helped a little bit by financials $700 thousand in this quarter. Again, the US dollar versus the Danish krone helped us quite a lot. That means that we came out of the quarter with an income before tax of a negative $1 million for the quarter and approximately $2.1 million in the loss for the full year of the first three quarters of this year. Change the slide, please.
Our gross margins, just a little comment on that. 42.5% aggregate for the quarter versus 38.8% last year, same quarter. Of course that's good, and of course that's worth celebrating. Let's keep in mind though that the 38.8% last year was heavily impacted by very high shipping rates at that point. Shipping rates have lately or recently improved. The Asia to U.S. lane is pretty much, I don't know if it's back to normal, but at least it has reduced significantly in the last quarters. It's still very expensive to ship products from Europe to U.S., but our main shipping line is out of Asia and then arriving in U.S. It certainly helped us.
Of course, the CNY, the Chinese money has always also helped us. The CNY has changed about 10% in value compared to the same period last year. That alone, of course, should help us by 3% or 4% in margins, and that's what we're seeing here. Adding to that, we are helped by shipping, and we are helped by actual cost savings, cost reductions on the part of our raw materials and components. Yeah, I think that's what to say here. It's within the range. It's within the good number. It's above 40. Changing the slide to the balance sheet, just a few words on this one.
We are on a stable cash position here in Q3. At the end of Q3, we saw a big reduction, significant reduction early in the year. We are at $11 million of cash position here in September. We are continuing to draw on our construction line. Still it remains that we are solid and attractive partner. We are still having our flexibility, and we are still having a platform for expanding the gaming product portfolio. Next slide, a couple of words on our domicile building development center HQ. Call it what you want. It is perfectly on schedule for completion in mid-2024. We have seen very limited inflation price increases. There was a lot of talk early in the year about how construction materials are increasing in price, at least here in this part of the world.
We heard all that noise also, but it's actually quite limited what we have seen. We are at this point, at the end of September, about $17 million into the investment, as per plans. We are working on finalizing the funding for the development period and structuring long-term post-delivery financing. At this point, we have drawn about $8 million on the construction line. We're working actively with Aalborg-based real estate agents on marketing a portion or portions of the facility there for other tenants. It's obviously clear for everyone right now that we don't have the physical need for all the space that we have out there in that new upcoming development center at this point. Let's see what we can do about it.
The good thing here is that the construction, the building is, or the buildings are four individual units, which makes it easier to market to other tenants. With that, change the slide, please. Not so much, not any changes here, of course. My focus and our focus is on rightsizing the organization, while of course still maintaining our ability to develop both the products and markets. I don't think we have jeopardized any of that, even though we have cut significantly into our staff and our resources. We are still very much an operating entity. Apart from that, cash conversion and balance sheet optimization is of great focus on my desk. With that, André, change the slide, operator, please. There you go. André, over to you again.
Yeah. Just, on headline, level summary. Challenging markets, with limited visibility as always and even more now going forward. We have and we still are optimizing our cost base, and try to work even smarter every day to emerge as a stronger company. When the conditions normalize, I'm sure we are. We are focusing hard on expanding our SimSports offering. As you will see soon, if you follow us on SoMe or our newsletters, you will see we are coming out with a lot of new exciting products very, very soon. We still see a maintained and increasing interest from end users. Personally, I'm not a second in doubt about the opportunity. We just need the market to stabilize a little bit.
For those of you who are really sharp, you can see we have taken away our long-term guidance. Of course, we've done that because as the market is right now, it doesn't make much sense. For sure, our long-term ambitions are that as soon as we get back to normal, we still have an ambition of at least 15% growth. Since we have no visibility and when it happens, then of course we cannot put down a number and say in year this and this, we will reach this and this, because that kind of assumes a normalized markets. For sure, the ambition is unchanged. With that, I think we will fly over to the Q&A session.
Yeah. Operator, if you could facilitate that.
Of course. If anyone would like to register a question on the phone line, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure you are unmuted locally. Alternatively, if you are on the webcast, you may use the chat box written on there. We have a question registered from Yiwei Xu from SEB. Yiwei, please go ahead. Your line is open.
Hi, André and Peter, thank you for taking my question. I have three here. Firstly, just trying to understand the market. The volume decline over recent quarters. Do you have any insight from your customers? Is it fully driven by a lowered end market demand or there is additional impact from them sort of destocking or reducing inventory? I just want to understand the magnitude of the market demand here. I will do one question at a time. Thanks.
Yeah, thank you. As you have asked many times, and as I have addressed many times, our customers do not share their insights of sell-through because we are basically selling to all of them. They are all competitors, so they don't share that level of detail with us. but I think, if I were to guess, I cannot say anything about the distribution, but I think they are facing both problems that, as I already mentioned earlier, they have huge inventories. On top of the inventories, for sure end user demand is down. I think that everybody knows that high-end consumer electronics is down. I think they are challenged with both.
Okay. Okay, fair enough. Thanks. My second question is regarding SimSports. One of your competitor, they're saying they have benefited quite a lot from the gaming release from one of its partner. Yeah, any comment would be appreciated.
Yeah. It's Fanatec that you're talking about and the release of the new racing game. For sure that is something we would be interested in doing as well. As I mentioned earlier, it really comes down to having console support. It's the Gran Turismo seven game launched on the PlayStation. For sure, but we are just not there yet. We need to have the console support before that would make sense. Yes, obviously it's something we would like to do.
Okay. Interesting. Thanks. Last question, maybe a question to Peter. You have mentioned your balance sheet, cash position and debt level. I understand, but considering the investment needed for the new headquarters, total $50 million. Also considering next year, we are heading to recession and market will probably still not coming back. Do you see the need of capital raise?
There's no decision on the capital raise at this point. I think that's the closest I can get to it. We're working on finalizing the loan package.
Do you have an updated target of the financial leverage? What level are you looking at in terms of net debt to EBITDA?
No, not at this point, Yiwei Xu.
Okay. Okay, fair enough. Thanks. I'll jump back to the queue.
Thank you.
Thank you. As a reminder, if anyone would like to register a question on the telephone line, please press star followed by one on your telephone keypad now.
Actually go to the written questions.
And let's just-
We have no further questions on the telephone line. I'll hand over for the questions on the webcast.
That's perfect. Thank you. André, maybe you can simply read the questions and then. One is in Danish here, but it's basically saying whether the data center legislation has passed in the EU. No, it has not. That's what we are working on. If you go back and look at some of our previous quarterly statements, that's one of the reasons why we stopped actively investing in it, is because it takes forever. At least it feels as it takes forever. It's still an active and ongoing effort, and our focus is on that exactly on the legislation side. Yes. Are Q4 wheelbase shipments as well as the other SimSports product launches factored into the updated revenue guidance already? Let's say we have taken a reasonable middle ground.
What does that mean in English? That means that we have not made any crazy assumption of we are going to sell thousands of wheelbases and steering wheels and so forth. On the flip side, the number is also not zero. I would say it's within the guidance. I can also say that the products are essentially developed. What will determine whether we ship in this quarter or not is really if we can get the components from China in before New Year or not. It's going to be close and we just can't say right now. We are doing everything we can, obviously.
Next question: How much does EVGA leaving the GPU market affect your revenue-wise? What are you seeing as the next catalyst for return to growth in the market? I'm not sure if you mean the GPU market or if you mean the enthusiast market altogether. If we look at it from a GPU perspective, it has impacted us. I would say not just EVGA, but it has impacted us a couple of million dollars, I would say. It's between $1 million and $2 million. I would say, I don't have the magic formula to get the market going again. If I had, I would tell you what it is. I think we just need to wait. What initiatives could management do to support the share price at these depressed levels?
Let's be 100% clear. My job is to run the company, and that's what I'm trying to do to the best of my ability. I never do any specific measures to speculate in whether the share price goes up or down. That's not my job. I think there's little management can do to support the share price other than what we are doing. Any update about CPU, about cooling CPU's market opportunity? No. I don't really know what update that's referred to. We have been in this market for 20 years, and I'm not really sure what it means. Even hyperscalers feeling the pressure from rising energy costs, why even without movements by regulation, there is nobody focusing on liquid cooling as one way of solving the problem?
I think it's obvious that's not a question for me. That's a question for the hyperscalers. I think we are on the same side here. I wish they would do that as well. I don't know why they are not other than I have mentioned many times. First question. That was this one related to. Then it makes more sense if there's any update about cooling GPUs. Well, I think the biggest update we have is not good, because at least one of our customers seems to be folding and is pulling out of it. I would say there's not really any positive updates. Last quarter you reported construction loan to be in place.
Now you say you're working on finalizing funding on the development period. What changed? That's actually very easy to answer. I can see you are Danish, so I'm not really sure it'd make a lot of sense to everyone, but I'll do my best. The Danish mortgage system, as you know, is really based on they give you an assessment and evaluation of the building. In our case, that is heavily linked to what happened if Asetek was not around or what happened if Asetek needed to move to even bigger facilities, how easy would it be to sell this property off, and make a business out of that in a sale or lease back situation? That changed because the financial markets have changed, the interest rate has changed.
Their assessment and valuation of the domicile has gone down. As that has gone down, that have obviously impacted the construction credit lines. That's what changed. Yes. Let's see if there. I'll just refresh and see if there's more. I don't think there's more to give a meaningful answer to at this point. Good. I am refreshed again. That then ended the Q&A session, and that ended our presentation for this time. Thank you for your interest in Asetek.