Hello everyone, welcome to this presentation of the Q1 results for Movinn. With us today we have Patrick Blok, the Managing Partner of Movinn. First, there will be a presentation, and afterwards, we will go into a Q&A where Patrick will answer all questions. We have already received some questions on Stokk.io and the Q&A is still open. Underneath the video you can ask questions if you have any and without further introduction, I will hand over the mic to Patrick Blok and let him do the presentation. Here you go, Patrick.
Thank you, Anders. Thank you for the intro. Thank you for hosting this event. Yeah, we recently published our Q1 results. It was a result of mixed emotions, so to say, as we also explained in the more detailed version. This is a shortened version, this presentation one, where I'll dive into some of the key highlights, going and walking through it. Yeah, mixed emotions I would say. We continue to display some fairly strong top-line growth. We've realized revenues on group level of DKK 20.6 million, which is a 27% increase from the comparable period last year. It's not as much as we would have liked.
The ones that has been following us for some time know that a top line value driver is the vacancy level that has a negative inverse relationship, the two. We had a very crazy 2022, a lot of bottlenecks here and there. A lot of, a lot of growth, a lot of, you know, running around like crazy. It's not as well as we had hoped. If I should to kinda put some details behind that, we have...
Q1 has kind of felt like a sort of a transitional period where we see pick up in demand starting from late January, early February, that has been postponed a bit. That's why we have been, we have not been as efficient as we used to and, you know, completely on my end and, we're working extremely close to getting the vacancy levels back to something that we know that we are where we normally are and where we used to be. On the more positive note, Sweden is progressing extremely well. We've reported a slight loss on EBITDA level of 200,000 SEK. The operations in Sweden is approaching the break-even point, which is a very good achievement.
The local team in Sweden is doing very well and that kind of gives us, you know, the faith in that the overall kind of proof of concept is there and it is there internationally as well. Sweden is a very important proxy for us, continuing on the growth plan and continuing on the overall strategy which is completely unchanged. In the last couple of quarters we have communicated this change in sourcing strategy. Historically, the way we've grown our portfolio is by adding single-digit units here and there, and then take that to a full year and it comes to a significant kind of bump. In the last year, you know, we added 140 units, which was quite a lot.
It was more than we expected. That's also why we had expected a higher reported revenue in this quarter. We've also kind of learned that it is extremely inefficient when scaling at a higher pace than normal to do this sort of unit increase. That's why we have, as we've reported earlier, changed the strategy. We're now working on larger projects that come in in one go. It'll be easier to do procurement, it'll be easier to do staffing, it'll be easier to do a lot of kind of practical operational planning. It is more efficient to operate, you know, larger properties with a lot of units under the same roof.
The downside to this strategy, as we've also mentioned earlier, is that the lead time is longer on these massive projects. You know, you won't find someone just around the corner lying around with 100 or 80 or 50 units in the same property, just waiting for you to grab them. The lead time will be longer but we think that that's an overall positive. It will allow us to when, you know, our vacancy count is back to normal levels, it will allow us to generate some free cash flows and some improved bottom line metrics up until we then do the new growth leaps. Sweden is progressing nicely. We've added a couple of units over there. We'll still be doing it.
In Denmark we have some projects in under kind of negotiations and things like that. Nothing is certain, but this is completely as planned. Not adding these small increments of units, that is inherently inefficient when you want to do this on a big scale. Long story short, bottom line metrics is not performing as we want to see it in Denmark. In Sweden, we are following the plan, which is good but that takes the overall kind of performance that being a bit disappointing on bottom line metrics. The group structure is unchanged since last session we had. We still have the subsidiaries in Denmark and Germany and Sweden of course, sorry.
In Sweden there's commercial activity, in Germany the legal entity is in place and we are in some negotiations still on locating the assets. We are not, we don't wanna grow. There's like different ways to do this. You can, you know, put in a massive organization, you can create a huge cash burn, and then you can try to identify the assets that you inherently need to operate and to generate revenue. We're not doing it in that order, we're doing it in the other order where we get the assets in place. We'll have a launch date sometime into the future that will allow us to plan staffing and plan procurement and all these things, thereby limiting the cash burn and et cetera from the operations.
It's still going according to plan, and we still kind of maintain the long-term strategy. If we segment and go into details or do a deeper dive into the P&L, we have again some fairly substantial top line growth. Not as much as we wanted to see. We are working on our cost base. You know, the variable costs have increased more than the revenue, and that is because we have this semi-variable structure where, you know, when we add 140 units, we service the rent levels and if the revenue is not or the vacancy is too high, you know, the revenue is not keeping up.
That's why, you know, the variable cost is higher than compared to last year. Again, the semi-variable cost structure of the rent payments that we do is the main reason for this. The fixed cost is as expected. Staffing cost is also a bit as expected, thereby meaning that, you know, the organization has been put under some strain last year. We are, you know, doing two things at once really. We're trying to manage our cost base, which is important, and then obviously we are driving in the revenue to the best of our ability and there is some adjustments we need. We've needed to catch our breath and consolidate a bit, going into the new year.
That comes to an EBITDA level on the Danish operation of DKK 960. That is fairly lower than the comparable period last year. Not satisfactory, not happy with that at all. The Swedish one is on the EBITDA level is negative SEK 217, and that comes to a total of DKK 770 on EBITDA level that then trickles down, you know, after depreciations and et cetera. Making us report an EBIT of DKK -750. Not what we wanted to see, but we can see that demand is picking up, and we are, you know, chasing normal conditions I would say.
The balance sheet as has shown we are servicing debt. We are maintaining a strong kind of equity ratio. All in all we believe this is a strong sheet and this is, you know, book value and compared to the assets. All is good. It's not that we are burning through piles of cash. We have done some investments both in our continued development in IT and we've also done continued investments in the portfolio. We've also launched Collective Yoyo which is the... I'll come back to that later but that's like the third product, the furniture product that has also carried a bit of investments here in Q1 as we got that launched.
Yeah, but cash flow from operations is affected by, you know, both the operational loss in Sweden but also the kind of subpar performance in Denmark for sure. Key ratios is also shown here on a segmented basis and consolidated on a group level. You can see just looking at the EBITDA, you know, last year we did an 11.5%. That was within the range of what we kinda could accept at that point and that's because Q1 is historically a worst performing quarter. That's also something we continuously communicate but as you can see it's been subpar. That's on us, you know?
It's, we need to be more efficient, we need to be more hungry and we're not, we're not, you know, removing our focus on any markets. Right now, you know, the all eyes are on what's there and then we have the long-term pipeline that we're working on in parallel which will secure the long-term growth. Return on invested capital has deteriorated from 6.3- 3.3. Cash conversion ratio is also being affected by subpar performance. Equity ratio, quick ratio remains strong, you know, so we our financial stability is still very good. The, but like the value driver bottom line metrics is not, is not up to scrap in this quarter, unfortunately.
Again, the unit growth is as we've already mentioned, it's not gonna be substantial, and it's not gonna be substantial for the foreseeable future. We are focused on the products we're already in discussions on. Should some opportunity arise out of the blue that is too good to pass up on, we will obviously move on that. Until that happens, we are, you know, totally focused on the current work we're doing on the pipeline. Not adding five, 10, 12 units here and there across the country. It is killing the organization. It's inefficient. That is the reason for this.
Because we added so many units last year, we will still keep up some attractive growth rates. Because when we add new units, it should be bigger bucks, we should be able to maintain attractive growth rates anyway. You know, fast-forwarding to the end of 2025, I would say that our long-term guidance and kind of value driver guidance is intact. In the short run though, we won't display this linear stuff. You know, taking me to the guidance, we are maintaining the guidance for the full year. You know, we can see improvement on demand and in our efficiency to deliver. We are expecting to kind of chase it down throughout the year.
The guidance in general is unchanged from the annual report. I won't be going into further details. It is the same. The product portfolio has evolved a bit. Again, we are trying to segment our offering ongoingly. You know, we have close relationships with the big clients. We're trying to get feedback from what they expect from us and want to see from us. The three products that we've had in place has kind of great synergy effects across the three. Serviced apartments is, or Corporate housing is still the main, the main sub segment or sorry, the product group and the most substantial product group, still delivering a 93% revenue share.
We can see that the Co-living sub-brand is increasing as well. It's displaying some good growth. The Co-living is targeted the younger crowd, you know, the newer generations. They don't need that much space. They wanna shared accommodations. They wanna get a social network, you know. Co-living is a very big trend, mega trend, flushing over Europe and we're on that, on the right side of that, and it's working fairly well, that product as well, I would say. The furniture rentals is a minor one, but it is now kind of generating 1% of our total revenue base. It is a very good supplement to... I can tell you a little anecdote or a user case.
We had a big client in one of our markets. They went down to work on the bridge connection to Germany. The market down there is a bit immature, to be fair, so they needed a kind of, we can call it a Frankenstein model of our core business. They found some houses and stuff, and we then delivered the furniture rentals. They're paying the, you know, monthly rent. It's some attractive margins that kind of segment is representing, we hope to do more in the future. The client concentration is also something that we monitor closely. We've done this since the beginning of our life here in the exchange.
It is an important risk management tool for us to keep monitoring. It looks a bit boring when you look at the slide. There's a lot of, you know, percentages, and they're not really talking to everybody, but they're talking to me. I'm a statistician by education, so I can't help myself. There's like two key takeaways. One of them is that we can see that the client concentration, you know, the revenue share per client is increasing a bit. We are still well diversified, but we can see increases in the share.
That means that the clients we already have in the portfolio are loyal, and they trust us and they can kind of increase their share without them having too much buying power or having too much exposure or that we don't have too much exposure towards just one of or 10 or a few clients. It also allows us to play the cycle a bit. I know this becomes fairly theoretical, but there are industries. We are a big B2B provider, and we have a large amount of big corporations in the client portfolio. You know, the industry, some of them are defensive and cyclical, and some of them are defensive, and some of them are more cyclical.
You know, you could argue that we are on maybe, you know, the, the peak of the cycle or that, you know, they've been murmuring about recessions. They've been murmuring about, you know, the inflation numbers are still higher than normal, et cetera, et cetera. You know, this allows us to then target the industries that we know are defensive. Medicine technology, consumer goods, energy, et cetera. We kind of target our marketing efforts and our client care efforts when we can see that the cycle is kind of not in our favor. Loyalty, playing in the different industries and then, you know, still maintaining a good diversification of clients which I believe is extremely important. Technology, you know, it's the same slide.
We've had it with us for some time. I just wanna keep stressing that, you know, this is a big, big, big strategic focus for us. It's running in parallel tracks. The one track being improvement, you know, getting the current system, adding new features, you know, making our product and quality and reporting and, you know, planning and all that even better, making our sales more efficient. That's like track one. We have the little parallel track where we are slowly starting to in our roadmap to map out, you know, how can we commercialize all this good stuff we've done over the years. I have colleagues in the industry who are impressed with what we've done.
I have, you know, partners that, stakeholders in the industry that thinks it's extremely clever what we've done, so we need to at some point figure out how can we utilize that better instead of it just being part of our infrastructure as a tech-enabled company. We wanna transition more into having, you know, also, earning revenue from our technology, so that is something that we continue to work on in parallel. We have the good old, improving our ROIC slide. Of course, you need the revenue to keep up, but when that's, that being said, limiting your investments or your cash flow, managing your cash flow is, of course, of major importance.
One of the party tricks that we pulled out was to, you know, design furniture in-house and produce furniture in-house, thereby cutting out a lot of middle links in that supply chain. It allows us to deliver a good quality product, an exclusive feeling but still remain extremely competitive in pricing. You know, instead of going to a discount furniture shop, we can deliver a higher end product but at rates that are very comparable out there or cheaper, you know, than the majority of the providers. The current markets unchanged. We are operating in five key markets in the North. Still, you know, working on improving that coverage. Again, we have two markets in, or two countries in continued focus.
The one is, obviously branching into Sweden more, covering more of Sweden. Sweden is already set up. You know, we have a client portfolio that's keeps getting stronger. We have a super good managing director in Stockholm who's just, you know, kicking ass. Of course, we wanna be present in the Nordics, in the north of the country as well. Göteborg and Stockholm being the most important markets in the short run. There's a couple of others, but you know, those are, has, the key focus. Then of course looking to the South, Germany, the engine of Europe, biggest, 5th largest economy in the world. huge, hugely important market, that is...
I've been spending a lot of time the last six months, the last year, developing the German relationships and pushing towards the launch. We're doing good progress in Hamburg. That's like our focus area number one, and then focus area number two is gonna be Berlin. We're also taking feedback from the clients that's like, "Okay, you need to focus here. You need to focus on Hamburg and Berlin. They're big. We could really use your services in these destinations." That's why we're doing it. Hamburg is a massive trading post of Europe with the harbor and all that activity there. We see a lot of our current clients having huge subsidiary operations in the city.
We're hoping to kind of piggyback on those relationships as we've done in Sweden when we kinda are ready to do a launch. Berlin, of course, the capital regions in every country is always an interesting market as well. Those are the two that we're focusing on in Germany. The roadmap, this is the same as it's been throughout unchanged. This is where we've broken the long-term or midterm or whatever you wanna call it. End of 2025 is close by all of a sudden. They are unchanged. This is the long-term value driver guidance. We want to, you know, we need to add, keep developing the portfolio and growing the portfolio.
This is what will happen in larger chunks and not as linear as we've been used to. Again, looking at the current pipeline, I think that at the end game will be the same. It's just the road to the end game is probably gonna be a bit different. In a good way. I'm totally committed to this and have no doubt that this is the way to go. New markets, one or two new markets a year, that is also unchanged. Again, it might not be as linear as we see here, but you know, in the end game we should be where we wanna be. The unit metrics, you know, revenue per unit, also an important value driver guidance.
You can reconstruct our top line if you want. You know, if you measure our number of units and then time it up by the revenue, you should be able to forecast on our revenue targets if you wanna do that exercise. EBDA margin of 15 or above, operational vacancy below 10% and the return on invested equity, sorry, Return on invested capital on 18 or above. That is, that is where we wanna be and where we should be, you know, in the longer run. We have been historically in the quarters we have reported earlier on. We have been kinda been to this. We have had our vacancy in good levels.
We've had our EBDA margin, some quarters they've been higher than 15, some quarters they've been a bit below, you know, kissing the border. The same with the return, you know, there's been some fluctuations, but we've seen general improvement. This quarter again is in the red. You know, we've promised you guys to be candid and not trying to wrap up when we're failing. Kind of shifting focus towards new stuff. We're focused on this. This is the six value drivers we're looking at and you can always expect, you know, us to report honestly and candidly when we're not happy. Again, looking at the bottom line metrics, we're not happy with the performance.
That was it for me. You know, mixed emotions. Super focused on getting the Danish numbers to look right again, as we know they can be. We have seen it earlier in earlier quarters, so we just need to get them back on track. Sweden is kind of taking care of itself, which is great for me, and then pushing towards the Germany launch before long. That was it for me. For this time, we have a little disclaimer because there's some forward-looking stuff, but, please feel free to ask me any questions you might have.
Perfect, Patrick. Let's move directly into the Q&A and just take all the questions from the top. You have probably already answered some of it, but let's just make sure that we go through everything. Starting with the first question. Vacancy went significantly up in Q1 compared to last year. What is behind this increase in vacancy, especially in Denmark as an established market, and do you see an improvement going into Q2?
Yeah. Great question. I think that there's as a person and as a type and as a manager, I don't like, you know, blaming external factors. Now I'm, you know, being the politician in this exercise and I will say that we probably have seen coming out of a super crazy 2022 where, you know, people have been trying to catch their breath, et cetera. We probably have seen a small shift in like the pickup again, where all the big accounts or the general market had to, you know, look at some of the uncertainties and some of the macroeconomic uncertainties and stuff like that. That being said, I hate that.
I've never in my life, you know, when I'm talking to my sales team or whatever, allowed them to blame the market. You know, if we are behind on vacancy, it means, in my opinion, it means that, you know, some of the clients are going elsewhere. You know, the market is not down by whatever, 10% in the, in the quarter. We just need to be better at competing and still being a growth company and the company where we are. I guess that's part of the risk profile and this end of the indexes. Still trying to... We're still learning as we go, you know, and I think that we've had some fatigueness internally, just to be honest with you guys.
I think that some of the staff members we have in place have been, you know, a bit overwhelmed, maybe lost track of stuff. I've been focusing a lot on the big picture and, you know, the international expansion because I know this is gonna be extremely important in the long run for us for us to keep to deliver value. I've been kind of forced to kind of take a deep breath and kind of refocus and say, "Okay, guys, let's... I'll bring my, you know, my skills to the Danish stuff." We see improvement.
Went to again, it's a bit anecdotal now, but a couple days ago went to a very good meeting with one of our key partners, and they are kind of threatening us with a lot of demand coming in. We see improvements in Denmark. Copenhagen is strong now. Odense is. The market drivers in Odense is a bit tied to there's a lot of infrastructure projects driving demand in Odense. We've seen a couple of big clients where the project, you know, they're doing a tram light rail thing. There's a data center being built for Facebook. These big infrastructure. The harbor has been expanded, et cetera, et cetera.
It's so, you know, we might have a big client over there, who's been sitting on 15 apartments or something like that, and then, you know, the project is done, and thank you so much. They give us flowers. They loved everything. You know, they're going back to Belgium or wherever they came from. We've been a bit too complacent in my opinion on how Odense has kind of developed. It's been more or less taken care of its own. Now we have strengthened the sales team. We've hired a local go-getter, key account manager who will make sure that, you know, the relationships in Odense is not tied down to, you know, infrastructure projects that has a deadline. We're still working on getting Odense up to full speed.
Aarhus is kind of the same as in Copenhagen. We saw that the influx in Aarhus was a bit postponed, without, you know, being able to give you a perfect answer to why that was the case, but, you know, added focus. We also have a local team in place now there to help just, you know, drive demand and be more efficient with demand. That is big for us. Having a local presence, you know, I don't know where the listener, the audience is from, but just, you know, there are this regional stuff as well. You know, me being a Copenhagener, or the head of sales being a Copenhagener, ringing up a company in the other side of the country, there is this, you know, regional bands of thing going on.
Now we've strengthened locally to get those markets up to scrap. We see Copenhagen now really moving fast. We also have a good forecast on Aarhus, I'm not worried on those two markets. Odense needs a bit of love, that's what we're giving it now.
Perfect. The next question maybe has something to do with vacancy as well, but the variable cost usually either follows the increase in revenue or increases less than revenue. In Q1, variable costs increased significantly more than revenue. What is the reasons behind this, and how do you expect it to develop the rest of 2023?
Yeah, we should the variable cost is, you know, if you read if you open up your textbook, you know, from your accounting class, you know, back in when you were in business school, our variable cost is a two-tier thing. One of them is proper variable costs that follows the revenue one-to-one, and then we have a couple of costs that are sticky. So for example, you know, the increase in, you know, utility bills, that's sticky. It's something that will not normalize from one day to the next. Obviously we have the rent that we pay for the assets. We can, we call it semi-variable cost because we can if we want to resize the entire portfolio.
We can say, "Okay, we have units that are performing subpar. We wanna cut them off. We don't want them in the portfolio anymore." Now we are super optimizing on, you know, margin, margins. We are not, you know, that's not an exercise that we or a leaf that we wanna turn at this point. We could, you know, get rid of a lot of units if we wanted, but that will then hurt our long-term revenue potential. That's so it's not a focus we have. Because we added 140 units last year, you can kind of do the math yourself. The rent that we pay for those has increased, so that is mainly why the variable cost base is up.
You know, if the revenue then follows along, then, you know, it would be no problem. Everybody would be happy. The, you know, leverage effect would be intact, and everything would be good. We've been caught in a, you know, poor performing top-line quarter with still having a semi-variable cost base. Answering the second part of the question, I believe that it'll probably floor out. You know, you won't, they won't increase significantly, the plan is that the revenue will increase significantly, that's the focus.
Perfect. Then there's a question from a curious investor here: I'm curious if you work with real estate brokers or see a possibility of offering them your service in the current market where the housing market is a bit more difficult. In the case of people selling their house but have not found a new home yet, they may need a relocation service with furnished apartment. Do you not have to move their own furniture to a temporary place and move two times in the short period? Is this a use case, or does it fall out of your scope?
The person who have asked that question, he can get a job if he wants with us. No, it's joking aside, great question, you know, great insight. It is, we do that already. It's, it's a balance because we do that already. I think in 2022, maybe let's say 10% of the overall kind of demand was people who had sold and not found a new place and therefore needing a good kind of plug-and-play interim solution. We've gotten good, great feedback on it, and it is something that we need to do to keep pushing that kind of segment.
However, you know, we don't want to do it in Copenhagen because in Copenhagen we just need to be able to deliver to the key accounts. Again, they're kind of grooming us right now for a huge influx. My fear in Copenhagen is that we won't have enough available in the coming time. No offense to, like, private persons who wants to use us. We welcome everybody with equal amounts of love. I would much rather be able to say to a C25 company, "Sure thing. Bring in your people.
We'll be ready, than having all of it being rented out to, you know, private couples or whatever, families in need of a relationship that will only last three months or whatever. The other relationships is more important to us, so it is a balance. That being said, of course, you know, the market like Odense is we're looking to kind of cultivate that segment again. We have this full kind of action plan in place, you know? We need to. Yeah, going back to Odense, the problem has been, you know, we've had so much demand that just came in on its own that we haven't really felt the need to do too much work really and Sounds horrible to say out loud, but that's just the reality of it.
In a market like that, it would be as the question is, it would be a fantastic supplement to like call the call segment.
Perfect. Do you have any larger deals in your pipeline in Sweden as part of the new sourcing strategy?
We are looking at one project in the Stockholm region. It's a super interesting project. The weakness in this thing is that it's there's so many factors that are outside our control, you know. It is. Until, you know, I get all megalomaniac about it and, you know, create a big property fund or something like that that can buy these assets up for us, we remain a bit, you know, depending on developers and real estate investors and things like that trying to get these products live or these projects live, you know. We are looking at an interesting one, but there are still so many factors outside our control.
You know, I've been in the business a long time now, and in the early days, I would get all excited and already count my chickens, you know, and already feel like, okay, this is a done deal. I've been here for so long that I know it's not a done deal until the ink is dry. We're not, yeah, counting our eggs or our chickens or what you call it. We have a good one, potential one in the Stockholm region, which we still are working on. I hope that answers the question.
Yeah, I think it does. Can you provide some more insights into the quiet launch of Collective Yoyo? Where is the revenue coming from? How many clients? How many projects? What kind of clients/projects? Do you have any KPIs for this product category?
It is, yeah, I can. It's, the, we've called it a quiet launch because basically all the fancy software infrastructure that we wanted to have in place is not in place, a 100%. That's why, you know, we are not, you're not seeing commercials, in your, inboxes or in your Facebook profile. That's why you're not seeing a big push on the, on the product. Because we basically still need to make sure that we can deliver the quality. While we are working on, you know, staying a great service provider in the core product, you know, we are launching the new product segments.
Me sitting here and talking about synergy effects and all that stuff makes little sense if I'm killing all my service guys because they're running around from A - B. That's why it's been a, it's been a more quiet thing. The actual project, I think I touched on it. It's in the Fehmarn region. It's in Lolland or Falster. This is horrible that I don't know where it is. You know, in the south, working on the bridge connection to Germany. There's a massive pressure on that market. The hotels are fully booked the next two years, and everybody's happy.
For me, as a strategic, as responsible for the strategic stuff and the risk management stuff, I'm not that keen on these, you know, markets where I know that there'll be an, you know, an end date. When that bridge is done, I know it's a long project, but still, how do you time that? You can compare it to being in the stock market, you can never, you're never gonna time it correctly anyway. You're never gonna take the perfect decision on, okay, now we are gonna close that market down again. What do we do instead? We have a couple of contractors working on that bridge that has reached out to us. They knew us already from Odense actually.
They found some houses and some stuff on their own. They've kind of taken the risk on that. We're not paying any rent or anything like that. We don't have to, you know, paint it and whatever if we someday into the future have to give it back to the owner. We just deliver the rest, so to say. It's an interesting market because when the furniture is up and delivered, it's on a 10-month contract, I think. We get money for putting it up, so we're charging them an hourly rate for putting it up.
It's just a monthly rent coming in each month without us having to be there, without any complaints on the Wi-Fi not working or the cleaning is, has to be done better or these sorts of things. It is out and working and some of the items we need, we needed to invest in and some of the items we had in stock. It's also a way of playing a bit on our inventory and activating our inventory while it can, before it can go into a core apartment. You know, I'm almost embarrassed to say this, and I hope, but, you know, it's, the payback time, the investment in the furniture will be paid in full after the 10-month rental.
You know, the furniture, the lifespan of the furniture is expected to be at least five or eight years maybe, depending on the different items. Some of the softer items has a lower, shorter lifespan, and some of the other items has a longer lifespan, of course. If you look at it is a financing exercise. It is like, you know, leasing, doing, leasing out electronics to people and then, you know, bulking it up. It is, it is more or less more a financing company than it is a service company. It is, there's a lot of interesting stuff, but the reason we're not just throwing it out there, all over the country is that we need to control it.
We need to still be able to, you know, gain some insights. Before we didn't just throw it up in the air. Basically, it's a financing exercise. The payback time is extremely interesting. You know, if you just look at it from a, we have this fancy little cash sheet in place where we'll do, you know, net present values, and we do discounted cash flows and stuff like that. It's a very interesting business, but you have to get it right, and you shouldn't rush it, in my opinion.
Okay, perfect. Just a follow-up question on my end on that. Is that one of the plans with Collective Yoyo to kind of be able to take advantage of these areas where there is a time-limited project instead of having apartments and focus on only the furnitures in all of these areas around?
Yes, it is, for sure. It is a way to follow your clients around without having to set up a lot of, you know, small, insignificant portfolios here and there. I'm not saying it's not that we don't wanna do that, and we might do that. There is a couple of places in the country where we have some big structured clients. They're like, "You need to come here. You know, we'll figure out a deal that will make you happy, but you need to do that." I'm not saying that we're not gonna do it, but I'm not gonna, you know, have scattered units all over Denmark, you know, in all places where there is some sort of infrastructure going on. I think that the risk is too great. I think that the long-term potential is non-existent.
Instead of that, we can deliver the, the furniture rental product, which is, you know, way cheaper than what these sorts of clients can get anywhere else, and we are still extremely happy with the returns that we're getting, and the clients is happy what they're getting, so it is like a match made in heaven. It totally eliminates the risk of, you know, having the refurbishment liabilities, having the rent payment liabilities. Who knows if there's some unforeseen stuff happening that will, you know, cancel some of the demand in these little remote markets. What do you do then?
You know, you'll sit around, you'll look and you'll be in a province somewhere that you don't have any other industries you can rely on. Instead of taking that risk, we believe that it is a very good kind of Frankenstein supplement product to offer.
Perfect. Then, the last question. One of the objectives towards 2025 is launching new products and in this do a full-scale launch of Collective Yoyo. When do you expect this is possible, and what do you need to change on the software side or product side for this to be a successful and scalable launch?
I was kinda, I've been really pushing our IT guys to get it done this quarter, everything done this quarter. you know, realizing that I needed to shift my focus a bit towards just, you know, not pushing everybody and not whipping everybody around. The downside to IT is that I can help out in every other corner of our business. I can contribute in either with my work force or with my brain, but I cannot help out in the IT department. You know, looking at the screens, it's semicolons and stuff like that. I have zero idea what they're doing. Instead of just keep pushing them, we've shifted the short-term focus towards improving what's already around.
That being said, the potential, I've said, I think I've said it before, I think, I think that this will be a, a way of consuming. You know, I think this will, I think this will be a part of the future mode of consumption for consuming furniture. I think that the younger generations, I don't think they wanna own, you know, Poul Henningsen lamps or Arne Jacobsen chairs. I think they wanna rent it. If they want a new color six months down the road, they can change it up. If they wanna move to China to, you know, work for six months, they wanna have that degree of freedom. I think that I think that, you know, on a macro scale, I think furniture rentals is on the big up.
If you don't have the software infrastructure in place, it's gonna kill you. You cannot run around with like Post-its in this shop, you know, and it has to work extremely streamlined. The short-term focus in our software roadmap is improving what's around, making that better and still pushing towards doing a commercialization of the IT. In parallel, we will be hopefully, I don't know, within a couple of quarters, we will be more ready to software-wise to do something that's very interesting on the Yoyo. Answering the first part of the question, new products.
If you open up, you know, I'm trying to be strategic about everything and new products, if you can figure out a way to explore your existing synergies, new product is a great, you know, way to do that. Take our revenue, or sorry, our sourcing strategy on units. Let's say that a project is 12 months into the future. It's not that we're gonna sit on our hands for the next 12 months. We have to figure out, okay, what can we do in the meantime? Because we have the manpower on staff. We have, you know, we have the ideas. We have the vision.
When we know that, okay, now we've tied down a product, a big project on the core business, it'll come in 12 months, then of course we will be shifting focus to, you know, launching some sub-products in the meantime to kind of diversify and utilizing synergies and creating revenue. New products is the next one I have in mind is the IT. It's if we can transitioning it into being a tech company, we're never gonna be a pure tech company, but I wanna move in that direction. I think, you know, increasing our reach on the core business will then make us more interesting as a partner on the IT. It kind of goes hand in hand.
The general strategy is intact, but the new product hopefully will be, we have the furniture stuff that's still on the way, has done a launch. We want to do more. Then we have the IT as the next big one.
Perfect. That was it for the questions. You have answered all the questions. Now I will hand over the mic for you if you have any final remarks before we end this presentation and Q&A.
Yeah. Again, happy with the questions. Good, very good ones. Good insights. We will be, we'll keep at it. You know, we will. You know, I'm not happy with what we've done in Q1, and people around me know when I'm not happy. We remain committed and on improving everything and sticking to the plan. Thank you for listening. Thank you for your questions. We will, you know, keep at it.