Yahoo Finance When Will Serko Limited (NZSE:SKO) Become Profitable?
Serko Limited (NZSE:SKO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Serko Limited, a Software-as-a-Service technology business, provides online travel booking software solutions and expense management services in New Zealand, Australia, North America, Europe, and internationally. With the latest financial year loss of NZ$31m and a trailing-twelve-month loss of NZ$18m, the NZ$380m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Serko's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Serko
Serko is bordering on breakeven, according to the 7 New Zealander Software analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of NZ$2.5m in 2025. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 109% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Serko's upcoming projects, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. Serko currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Serko, so if you are interested in understanding the company at a deeper level, take a look at Serko's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Serko worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Serko is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Serko’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
