Last year, and an EBITDA adjusted of $6 million compared with roughly $1 million in the same quarter last year. We have made more money than ever in the second quarter on the liquid cooling business. We have achieved a SimSports revenue of $2.4 million in the quarter, compared to $1 million same time last year. Our half-year revenue increased just shy of 30% to $39 million, and EBITDA rose to $9 million from $0.4 million half year, or compared to same time last year. We completed our listing on Nasdaq in Copenhagen, and we raised $16.1 million.
Our full year guidance was updated a few days ago with an expected increase in revenue for this year in the range of 40%-45% compared to last year, and a projected operating income between $7 million and $9 million. We are obviously seeing a positive momentum compared to where we came from, and despite the market challenges that are still there, actually. What we have seen so far is a strong interest in our products, both segments. Obviously, liquid cooling is the dominant factor here, simply because of its size. We see a continued improvement in the liquid cooling market with, you know, higher order activities, more orders, bigger orders, and of course, high focus on execution, both with us and our customers of product launches.
Our recent forecasts from customers indicate, let's say, a normalization of inventories and business activity for at least some of our liquid cooling OEM customers. The rhetorical question here, of course, is what is normal? If you look back from today and three, four years back. We also see an increased shipment rate on the sim sport side, and we'll get back to all of this, of course. I think we have been relatively successful in building a relevant brand and positioning in the sim market communities. We have a focus on product development, launch of new products, launch of more products. We are focusing on efficiency, supply chain, both capacity and also our capabilities, obviously strengthen our balance sheet.
We have started now successfully shipments from Malaysia in cooperation with our existing contract manufacturers from China. We are in the process of actually increasing our capacity in Malaysia, both on liquid cooling as well as SimSports. I think the war in Ukraine, supply chain issues, inflation, interest rates, it's some monsters that are out there. Nothing we can do about them. It's just how it is. In terms of visibility and high volatility in our OEM forecasts, I would say that's more or less the same as it's always been, and it's still there. Which leads me into the next slide that shows this perfectly.
I was spending some time this morning looking at it myself and see if there is anything you can read out of it in terms of seasonality and periodic quarters, et cetera, et cetera. My, my key takeaway for myself is that the only thing that's certain is that it's uncertain. There is simply no pattern in this. That's just how our business is laid out or how it's functioning. I think it's also obvious that the more we sell, the more money we make, also in, in terms of percent. Nothing to complain about today, though, I would say. In terms of business focus, where we are focusing right now is on the gaming hardware.
Right now, we are gaming hardware company, and our focus is on liquid cooling for OEMs and for our channel partners. On the SimSports side, we focus on just being the best at what we do, having the best products out there, designing the best products we possibly can and get them out in the market. I don't want to spend a lot of time on the slide we're going into. Perhaps, I could and should mention that we are actually shutting down our Silicon Valley office. That was a part of the cost reduction initiative that we did last year. Don't panic because our people over there are scattered all over the map and the state anyway, so they were not really using that office a lot.
We will keep our employees, but we are just shutting down the, the physical office. Then perhaps I could mention also that now we have Malaysia on the map as well, since we have started manufacturing there. To recap, for those who may be in doubt, we are having the Malaysia facility to... I don't know necessarily know if, if the word circumvent is the right word to use, but to, to, to not have the U.S. tariffs. For our U.S. customers, we manufacture in Malaysia. Don't be fooled, it is still more expensive to manufacture in Malaysia than it is in China, but it's not 25% more expensive. As such, it's a, it's a win-win.
We are, as we speak, outsourcing assembly of our SimSports products to Malaysia as well, because despite being more expensive than China, it's still significantly cheaper than Denmark, where we're doing it right now. If we jump a little bit into the, into the segments and, and we look at, at liquid cooling, then I think there are three key takeaways. One is, even when we were struggling a bit last year, looking from a overall perspective of the company, as you can see from this, the liquid cooling business was actually still pretty strong and, and, and profitable. The second takeaway is that exactly from now and four years back, the, the liquid cooling business have actually generated $80 million in EBITDA, that's something I'm proud about.
Of course, what I'm even more proud about is that Q2 this year we made almost $9 million of EBITDA. That's a strong quarter right there. What we see is that the revenue, of course, is driven by new products, and that's not a surprise, because during the COVID-19 and during last year, et cetera, it was things were slow. We have actually start shipping 12 new products in the second quarter. I don't really want to list them up, all of them, because you can read it yourself. We have 11 new products estimated to ship in Q3. Our investments in product development and branding, for that sake, has paid off and is paying off.
I'm glad that we, we chose to buckle down and, and focus on these activities and, and, and kept the faith that it would come, because it is coming for sure. In terms of our liquid cooling customers, not really much to report there. We are shipping to more than 20 different customers right now. It's still top five, more or less buying it all. Of course, our ambition is to increase the diversification over time, we are launching a new significant customer later this year. Something that we've not spent a lot of time on earlier, that we have taken a little bit more serious now, or seriously now is, yeah, basically because we see it as low-hanging fruit, is to look a little bit more on the regional OEMs.
What is a regional OEM? That's also what's called a system integrator. It's not Dell and HP and, and these guys, it's, it's smaller ones. For example, now that I'm in Denmark, I can say Shark Gaming in Denmark, which is a big local player, and we have now developed a range of coolers specifically for these customers, where they can also do their own branding and not just take a product from one of our big OEM customers, and that seems to be paying off also. Not much have changed from a strategic perspective on the liquid cooling. Our goal, of course, is to develop and further expand our leadership, getting more market share, getting more customers.
The way we do that is, obviously investing in R&D to be on the forefront in terms of technology and performance and price, for that matter. Growing existing, existing accounts, so having more of the same customers buying more, but of course, also getting more customers. Of course, making sure everybody know who we are and what we stand for. The development and the outlook or the status of that is, yeah, basically what I just said, I don't think there's any, any reason to, to name it again. Moving over to SimSports. The focus there, of course, other than revenue, that's always a focus, but is, of course, to expand our product program so that we can claim we have a full program.
We are, I would not even say slowly, because it's moving fast, but we are getting there. We had four new products that started shipping in the Q2. One thing that I believe is going to be a game changer over the next years is a lot of our competitors, they have a very integrated ecosystem, and I guess the thinking is if we can lock all end users into our ecosystem, then they are forced to buy our products in the future. To me, that's a wrong thinking, especially because steering wheels, there are probably, I don't know, 100 steering wheels out there in the market. There is no way one vendor can accommodate all of that and satisfy all users.
What we have done is we have designed, and patented it, by the way, a Universal Quick Release where it will fit on our wheelbase, but you can take pretty much any competitor steering wheel and apply to this quick release, and it will work. It will work wirelessly, actually. To me, that's not a lost sale of a steering wheel, to me, that's a one sale of a wheelbase. That's, by the way, five times more expensive than the steering wheel. We are actually launching the first reviews as we speak. I think there will be a series of reviews out on Friday, but some of the reviewers already tested it, and they are very happy with it. That's something I'm very excited about and looking forward to see how that will actually impact things.
We have more products coming in the second half. We already talked about the revenue. Gross margins, nothing to brag about, but it's a very natural course, and everything is new. Just to give you an example. Let's say we get products out of China or out of Malaysia, then we can choose to put them on a boat and wait three months to have revenue, or we can fly them in and start selling immediately, which, by the way, is what we have done. But of course, air shipping versus sea shipping is a big difference. So there's just a lot of, let's say, teething issues and growing pains, but that's how it is to start up a new business. We've been there before. The focus is really on growing a profitable business
Despite we've had a couple of good quarters now, we have not really hired more people into the sim racing operations. We laid off a bunch of people there as well last year, as you may remember, and it would be naive to think that that, that does not affect the pace of our product launches and also the revenue generation. Obviously, it does, but we are cool about that, and, you know, I would not say we grow it organically because we're also not stupid. You have to take an opportunity when it's there. But overall, we are taking a conservative approach, and, the rate of new product launches is a little bit slower than, than we would have anticipated, but we all know why.
It's, of course, all about building a relevant brand on, on the, on the sim sport. Again, I don't want to go through all of this text, but we got a design win with Micro Center in the U.S.. They have, I believe it's 25 or 26 stores across the U.S.. It's an experiment. That's the experiment I referred to at our last call, and the reason it's an experiment is that for everybody to make money is a challenge when we have competitors selling direct. We have gotten off the ground now. They are selling a first series of Tony Kanaan-branded steering wheels, wheelbases, and pedals, and we made this bundle specifically for them.
We are, of course, sponsoring and are participating in all kind of activities, for example, Racing Prodigy, which is really a sim effort, which can lead to real motor racing. On the right side here, we have an example of a sim arena in Saudi Arabia, where there are Aramco, who's a sponsor of a big Formula One team. They have this big sim center, and it's all based on, on our equipment. The strategy on the, on the sim sport is not really that different to the, to the strategy of the, the liquid cooling. Or, or sorry, it's different customers, it's different challenge, or channels, and thereby also different challenges.
At the end of the day, it's about getting the best possible products out there and then, of course, use the, the, the capabilities we have in-house to get it going. So far, so good. We are, we are happy. There are, of course, challenges, but yeah, so far so good. With that, I will leave Peter to talk a little bit about the numbers.
Yep. Thank you, then I will come back to you after this, after this. Numbers, income statement, starting from the top, André, you, you, you already disclosed that we grew our quarterly revenue by 45% and our half-year revenue by 28%, up to a total of $39 million versus $31 million the same half year last year. That revenue consists of three segments, no surprises. One is the cooling business, which we actually grew by, I think it was 54% for the quarter and 34% for the half years, for the full half year. The SimSports that we grew from $1 million in the last year, second quarter, to $2.4 million this second quarter.
So that leaves something out, and that's the third segment, and that is the data center segment, where we are close to being inactive, I would say, revenue-wise, close to zero this year. But we actually did $3 million of revenue for the full half year last year. So when you compare the two half years over each other, keep in mind that out of the $31 million last year, there was $3 million of data center that's not included in the $39 million this year. On cooling business, we obviously also grew the number of units.
However, the units sold, not as much as the revenue. That means that's, that there must be another component, and that other component is the average sales price, ASP, that has gone up somewhat between the two periods. In Q2 last year, the average sales price was $56, whereas this year it's up to $60, so an increase right there. Gross profits of $11 million in the quarter and $18 million on the half year, compared to $7 and $12, same periods last year. I'll come back on a slide in a little bit to the gross margins, so bear with me on that one. Operating expenses for the quarter, $7 million, versus $7 million same quarter last year. That appears to be flat.
However, keep in mind that this quarter here, we spent, spent $800,000 on what we call special items, and those special items all relate to the moving of the shares from, or the dual listing, as it's officially called, of listing in Copenhagen. We are listed both in Norway and in, in Denmark. There were also expenses related to the issue, the rights issue, the capital raise, that those funds are not on the profit loss. Those funds are, or those expenses are taken directly out of the equity. With that, allow me to take the $800,000 out when we, when we compare the operating expenses, that means that the operating expenses for the quarter were $6.1 million versus $6.9 million, almost $7 million last year.
A very significant decrease of operating expenses. Of course, that's all related to the complex and, and the, and the painful cost reduction we went through in late 2022 and early 2023, I would say. For the half year, we spent $12 million this year, including the $800,000 special items and $14 million for the half year last year. It's very easy to see there that we have gone through a cost-cutting exercise. If you dive into the numbers and start up your calculator, you will see that our overhead expenses in Q2 specifically, were actually a little bit higher than they were in Q1 of this year, in all in full disclosure. The reason for that is, of course, because there's been some, there's some effect of the very much higher revenue.
Then there is some effect from us releasing more products, meaning we have spent more money on, for example, testing and stuff of that nature. The big driver is actually that we have been capitalizing, that's an accounting exercise. We have been capitalizing less money in Q2 than we did in Q1, because we released. Remember that we released, finished quite a significant amount of projects becoming to products in Q1 and Q2, and that means that then there is not so much to be capitalized, and that drives up the reported operating expenses in these lines here.
That means that we have an operating income, EBITDA at $4 million for Q2 versus $100,000, same quarter last year. For the half year, $5.2 million versus $1.8 million in the negative, same period last year. That is an improvement of $6.77 million year-over-year. Of course, we are very happy to report that. Yeah, changing to the gross margins, I promised you a couple of comments on that. We are reporting Q2 gross margins of 45% versus 42, same quarter last year. For the half year it's also 45 and versus 40, 41 last year.
Good improvements, not unanticipated, not unexpected, because as you can see with the yellow line here, our Forex currency impact between the U.S. dollars and the CNY has been to our benefit for a while, and the trend in that currency cross, of course, has been helpful to us. It seems to have flattened out a little bit, going forward, we shouldn't expect the same kind of increase, but at least it's been nice to recognize so far. Other than the foreign exchange rate impact, we have seen a little bit of sales price increase, yes, coming back to the average sales price. More importantly, we've seen reduced input cost or cost of goods from our suppliers, which has been quite helpful in the period. We are very happy with the gross margins.
The gross margins here also include the gross margins for SimSports, which is impacted by ramp-up efforts, natural ramp-up efforts, I would say. Brings me to the balance sheet. We have $7.1 million in the bank at this point, comparing to $7.4 million at year-end and $5.3 million at the end of March. Relatively flat, I would say. We had $16.1 million net coming in from the rights issue in May. We have, in general terms, spent that on the investment in our domicile by $15 million for the half year, and then we've repaid a portion of the construction loan by $1.8 million.
Other impact as to the balance sheet is working capital, which is increased, I believe, by approximately $4 million, when you measure at the end of Q2 compared to the year-end 2022, and that's only natural, I would say. With the increased activity comes increased accounts receivables and accounts payables. A good thing here is that our performance on the working capital, meaning the days sales outstanding and days payables outstanding, are actually helping us. We have a cash conversion cycle of three days, not three months, not three weeks, but three days. Of course, that means that if you have a good Q2, then the cash effect of that will be seen in Q3.
That also means that, yes, the working capital has driven up a little bit at the end of Q2, but nothing alarming. There's also a little bit of extra inventory. Our inventory terms are absolutely also respectable, but there is a change in the way we do business in the sense that we do have a web shop, we do sell to, to end users, et cetera, and that requires some level of, of inventory, and that's what we are seeing here. One more comment on the balance sheet. If you've been following us, then you will have recognized that we had a, what was classified as a short-term construction loan in this period during May, that was reclassified via our banks to becoming a long-term loan that materializes at the end of 2024.
At the end of June 30, we owe $17 million on that construction line. I'm coming back to the building construction in a second. Just a quick word on the Nasdaq listing. We were, as you can see on the picture to the right, celebrating on May 17th. Thank you, Nasdaq Copenhagen, for celebrating us and hosting us and our board on that day. We are trading in Copenhagen. I think the trading goes well. There seems to be quite good recipients of us trading in Copenhagen. We, at the same time, seeking to delist from Oslo. That's an ongoing process. There will be an extraordinary general meeting called for at some point relatively soon, I believe.
The time frame, sorry, the time frame for the delisting in Norway is probably the end of 2023. It's a matter of months rather than years before we do the delist from Oslo. We do encourage our shareholders in Norway to move their shares to Copenhagen. We will see more and more action, more and more trades going on in Copenhagen, and presumably less and less in Norway. We have moved, at this point, around 80% of the shares, but there are still quite a significant amount of smaller shareholders in Norway.
We will be reaching out via good old-fashioned surface mail to, to our shareholders, informing them, to the extent they don't know already, that we are delisting from, from Oslo and then encouraging them to, to move to, to Copenhagen. We, we, we cannot, at this point, force anyone, but we will see what options there are to serve the shareholders best and have them, at the same time, move to, to Copenhagen. You can find more information on the, on the moving process and the process in general on our website. A little bit more on the construction. It's on plan. You can see a picture here. You can see it's a prime location. Should you be interested in renting, then we have available space, at least for, for now. It's a prime location.
You can see the Pan-European Highway up on the right, going from Norway through Denmark to Germany. There's a ramp 500 meters away. We have space for now at least. We are actively talking to both landlords and other people to see what kind of development we can do on taking in additional tenants. It's on schedule for completion mid-2024. I think we have said that it was three, four weeks delayed. That's old news at this point, and that still remains to be the case. There's no news on the inflation, meaning the cost, meaning that we're still aiming at a total construction sum for the whole thing, including land, at about $51 million or thereabout.
We are at 41 today, and that means that we have 10, 11-ish to go between now and mid-year next year. That is all within the limits of the credit line we have with our banks. We've drawn, I said, $17 million at this point, and our credit lines in total are around $28 million, so there's plenty of room. Even with us, of course, having a positive cash flow from operations, it all helps on the balance sheet picture here. When we have these lines or these long-term lines with our bank, there are, there are also covenants included in those or attached to those, and we are well within those covenants also at, at, at this point. Well, financial strategy, not so much to say.
Of course, financial strategies normally are about evolution and optimizing, I would say, rather than handling larger transactions like the ones we have been going through. Recently, we have had two big transactions, or what you could call them. One is the very significant and complex cost-cutting exercise last year, and then, of course, the rights issue and move to Copenhagen also. We are reverting back to a modus operandi of evolution and optimizing more than these bigger transactions. I think that was my update. André, coming back to you for summary.
Yeah. Just to sum things up, we see a good interest, of course, obviously in our product right now, and that's that concerns both our segments. We see an improved market with high customer activity. Beyond 2023, our visibility is very low. I would say it is as usual. It is like it's normally is at this time of the year. We focus on scaling the SimSports business, of course, both in terms of products and of course, also where you can buy it. We are focusing a lot on our cost base. We always are, we always have been, but of course, the last year, more, more than ever.
We expect the revenue for the year to, to grow between 40% and 45%, compared to last year. We expect to, to make between $7 million and $9 million, in income. As you may remember, we have said for many years that we believe our business can grow on, on average, 15% per year. Again, the key question is, what is normal nowadays? One thing I do remember I said at the last call is that it wouldn't surprise me if we take the extra sales during the COVID-19 sale and remove, and then put on top of the-
... let's say, not so positive effects of Corona, and then you have more or less a, a straight line. If we keep our guidance for this year, then at least what I can see on the graph is, if you draw a line from 18 to 23, I don't think I was too far off. That's how it goes. That was the, the summary and, and outlook, Peter.
Yeah, very good. We will go back to the operator, and he will ask if there are any verbal questions via the phone. Mr. Operator?
Thank you. Thank you so much. If any participant would like to ask a question, please press the star followed by the one on your telephone keypad. That's star one to ask a question if you're participating via the teleconference. One moment, please, whilst we register for questions.
All right.
We have our first question.
Only one.
Yiwei Zhou from SEB. Please go ahead with your question.
Hello, it's Yiwei here from SEB. Thank you for taking my question. I have two. I'll do one at a time. Firstly, the new guidance range, if we are sort of applying the midpoint, I can see you still assumed a slower or a lower top line or so earnings in the second half than the first half. Is there any reason you have assumed a slowdown?
Yes, there is, and as you have seen from the, the slides that I showed earlier, there is a big volatility in the numbers. What we have tried to do... Well, let me rephrase that. When we come out with a new guidance, one thing I want to make as close to 100% sure as I can, is that there will not be a negative surprise where we'll have to go back and say, "Remember that guidance? We didn't really mean that." When we look at our forecast now, you can apply a mathematic model on it and see within the next two quarters, the last two quarters of the year, what room does our customers have to postpone, to change, to cancel orders?
That is what's directing our guidance much more than what we think and what we believe or what we can read in the newspapers. Therefore, we believe that.
Mm-hmm
... that our guidance is conservative, and if no customers move their orders, if no customer cancel their orders, then who knows? That's all speculation at this point in time.
Add to that, I believe.
Right
mathematically, as volatile as our revenues have been in many recent quarters, it would be dangerous just to assume that 1 good high quarter Q2 is a new normal.
Mm-hmm. Mm-hmm. Cool. Thanks a lot. Very clear. My second question is relating to the CapEx spending. Peter, would you be able to provide a guidance on the sort of both for this year, also maybe a long-term CapEx spending, excludes the cost for the new headquarter?
Yeah.
I mean, as a percentage of sales, it will be easy to for you to guide.
Not a, not as a percentage of sales, because those things tend not to correlate as all a lot. You've seen our revenues go up and down, so everything related to sale is would be would not be a good guidance here. We have traditionally spent CapEx on two things, excluding the building. One is capitalized R&D, where we have been between $2 million and $4 million, probably closer to $4 million recently, and I don't see that changing significantly. Of course, we're spending funds on fixed assets, PP&E, and there we are running around. That's a good question. That's around $3 million on average per year, and I don't see that-
Mm
... changing significantly either.
Okay. Okay, cool. So if you continue to grow, then, I guess the CapEx to sales ratio should trending down even. Is it a fair assumption?
Yes. I'm not, I'm not saying that CapEx will be flat, because of course, there is.
Mm
... the correlation that when the business grows, then of course, also the CapEx grows, but there's not a one-to-one. We have, we have for many years had a, the rule of thumb on our operating expenses, that if you grow revenue by 10%, then OpEx grows by half of that, meaning 5%. That is because there's-
Yeah
... leverage to be counted in here or be factored in here, and that also certainly goes for CapEx.
Mm.
And that factor-
Cool
factor of 50%, don't use that anywhere. It was just a figure.
Yes. Great. Very clear. Thank you very much. I'll jump back to the queue.
Sure.
Thank you. We have no further teleconference questions. If you'd like to take webcast questions.
Yeah, sure. We have a few questions. André, will you-
Yeah. The first question is, to what extent Asetek is benefiting from the current AI hype and demand right now? That's two interesting remarks because hype and demand does not really correlate well here. What business opportunities we see, to me, that is exactly that. That's just a new trend that I'm sure investors find very appealing, but there's been so many trends. You know, two years ago, I guess it was the Bitcoin mining and what business opportunities we saw there, and my answer was the same. We don't benefit from these hypes, and we also don't benefit from AI. I have no reason to start focusing on AI. We are gaming hardware business right now, and if there are business opportunities, we will of course look at them, but it's not something we spend time on.
It's whether we can comment on the timing of when the net savings of moving manufacturer to Malaysia is visible in our reported financial numbers. I, I think there may be a misunderstanding here. You know, we are not the ones responsible for paying the tariffs. That's our customers. What it means is we will be more competitive, and then, of course, we have helped our customers to share some of the pain. I think the net effect of Malaysia is what you are seeing right now. That's also a factor in why our margins are going up. There is a question about our target average growth over the next five years. I think I answered that earlier by coincidence, that we have this stated goal of 15% average growth.
If I can comment on how much a general market rebound in liquid cooling is driving your growth relative to market share gains, I think we can say right now that everything is a general market rebound, because when we land new customers, keep in mind, that's a year-long process, so we have not seen the effect of that. We are launching a new customer in, in Q3 that we do believe, I believe, will be a top five customer right away. That's an example of something that's not, let's say, on the back of, of general improvement, but for now, that is a market rebound that we are seeing. In previous quarters, you disclosed figures on the size and development of the order backlog, whether we can provide any information on how that's developed in Q2.
Keep in mind, when we had a backlog, it's because people were doing pre-orders, and we could not supply, et cetera. There, there is not really a noticeable backlog to talk about. We try to get the product out of the door as soon as we can. That's why we don't comment on that right now because it's really not applicable. Could you talk a little bit about seasonality in your business? I think I just mentioned that when we looked at the, let's say, last 16 quarters, that there is no seasonality. I wish there was, but there's not. Any chance to do a sale and leaseback of the building in the future? If so, how would you use the cash?
First of all, I'm not a fortune teller, so what happened, several years down the road, or 2 years down the road, I have no idea about. What I can say that, of course, sale and leaseback is an opportunity we'll pursue. Let's just, again, remind ourselves it's 12 months until the building is done. The sale and leaseb- leaseback market in Denmark right now for this sort of building is not interesting at all, also driven by the interest rates. That may change, 12 months from now, and of course, if it does, that is something we are, we are going to pursue, no question.
Yep. Actually, it was in my slide deck. I forgot to talk about the sale and leaseback idea about, yeah. There was one more question.
Yeah. Whether we are expecting to raise capital through the rest of 2023, I can say with 100% certainty that we are not, because we could simply not do that in the remaining month of the year. We just learned that that's an 8-month process, and since we have 4 months left, the clear answer is no.
We are healthily, cash flow profitable also at this point there. We have the, the, construction lines and the construction of the domicile within the, the credit lines, and the covenants are in, in a, in a safe place also. I don't-
I think another way of putting it is we upgraded our guidance twice this year.
Yeah. Yes. That was... I'm frantically hitting refresh here. Those were the last questions that we have received, and that means that we will, we'll say thank you. We are, of course, available via our website and our emails, et cetera, if you should have questions coming up. With this, thank you for your interest in Asetek.
Thank you.