Comment on Movinn’s Annual Report

Movinn published on March 22nd the company’s Annual Report for 2023. The following are some key points that we have chosen to highlight in connection with the report:

  • 6% revenue growth in Q4-23 – slightly above our expectations
  • Continued high-cost base resulted in lower result than estimated – lower cost base expected in 2024
  • Improved profitability important for the cash position

Continued Robust Revenue per Unit – Paves the way for Revenue Growth in 2024

Movinn’s revenue in the fourth quarter amounted to DKK 21.1m (19.9), corresponding to a growth of 6%, 5% above our estimate of DKK 20.1m. The company has faced challenges throughout 2023 regarding demand, primarily in Odense and Aarhus, which has affected the vacancy rates amounting to 15% for the full year compared to 13.5% in 2022. It should be noted that Movinn added 142 new units in 2022, affecting the vacancy rates negatively. Regarding the Danish units, the vacancy rate was 14.5% in 2023 compared to 10.3% 2022. Despite the higher vacancy rates, the revenue per unit has remained robust throughout the year, which continued in the fourth quarter as the revenue per unit amounted to DKK ~197k. As we have stated in previous updates, we see revenue per unit at these levels as strong given the high vacancy rates, paving the way for higher revenue per unit, hence revenue growth, as vacancy rates is expected to decrease. We expect Movinn to focus on lowering the vacancy rates in 2024 where the company has removed 13 units in Aarhus that was underperforming. Moreover, we expect the overall demand for Movinn’s units to accelerate throughout 2024 as a result of an improved macroeconomic environment, which is expected to drive revenue growth.

EBITDA Result Slightly Below our Estimates

The EBITDA result amounted to DKK -0.9m in Q4-23, compared to our estimate of DKK -0.3 and Q4-22’s result of DKK -1.3m. A contributing factor to the lower-than-expected EBITDA result, despite better revenue than estimated, was higher than expected staff costs. Going into 2024, Movinn has downsized the organization, which is expected to decrease the staff cost in the coming years. The company has continued to invest in technology development and in January 2024 Movinn launched direct booking on the website including real-time availability, dynamic pricing based on the length of the desired stay, secure verification of clients and digital sign agreements as well as instant payment. This means customers can make direct bookings and payments on the website from anywhere in the world at any time without involvement from Movinn’s staff. The new technology is expected to decrease the costs regarding sales staff. In total, the staff costs are expected to decrease by DKK 1.6-1.8m in 2024, which, in combination with DKK 1.6-1.8m in savings from downsizing the portfolio in Aarhus, is estimated to improve the EBITDA result for Movinn in 2024.

Improved Cash Flow Important for the Liquidity

The cash position at the end of 2023 amounted to DKK 7m, compared to DKK 9.1m at the end of Q3-23. With interest-bearing liabilities amounting to DKK 22.2m, the net debt amounts to DKK 15.2m. With a dwindling cash position, as depicted in the graph below, we see it as crucial for Movinn to strengthen profitability in 2024, thereby generating positive cash flow to avoid potential external capital injections.

To summarize, Movinn’s 2023 showed quite high vacancy rates amounting to 15%, as a result of a decrease in demand due to an overall challenging macroeconomic environment, which was also accelerated by an oversupply of units in Aarhus and several large projects from customers cancelled or completed at the same time in Odense. In 2024, we expect vacancy rates to come down through an overall increase in demand, the downsizing of underperforming units in Aarhus and the new sourcing strategy regarding adding new units through larger projects. The lower vacancy rates are expected to drive the revenue growth in 2024 through a higher revenue per unit, and in combination with a lower cost base, this is expected to improve Movinn’s profitability in 2024.

We will return with an updated equity research report of Movinn.