Trustpilot Group plc's (LON:TRST) Path To Profitability

We feel now is a pretty good time to analyse Trustpilot Group plc's (LON:TRST) business as it appears the company may be on the cusp of a considerable accomplishment. Trustpilot Group plc operates a review platform for businesses and consumers in the United Kingdom, North America, and internationally. With the latest financial year loss of US$12m and a trailing-twelve-month loss of US$24m, the UK£1.5b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Trustpilot Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Trustpilot Group

Consensus from 6 of the British Interactive Media and Services analysts is that Trustpilot Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$743k in 2023. The company is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 84% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Underlying developments driving Trustpilot Group's growth isn’t the focus of this broad overview, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Trustpilot Group has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Trustpilot Group, so if you are interested in understanding the company at a deeper level, take a look at Trustpilot Group's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

1. Valuation: What is Trustpilot Group 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 Trustpilot Group is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Trustpilot Group’s board and the CEO’s background.

3. 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.