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Serko Limited (NZSE:SKO): Is Breakeven Near?

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. The NZ$512m market-cap company posted a loss in its most recent financial year of NZ$31m and a latest trailing-twelve-month loss of NZ$18m shrinking the gap between loss and breakeven. The most pressing concern for investors is Serko's path to profitability – when will it breakeven? 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

Consensus from 7 of the New Zealander Software analysts is that Serko is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of NZ$3.5m in 2025. So, the company is predicted to breakeven approximately 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 110% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Serko given that this is a high-level summary, though, take into account 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 typically has high 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 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 put together a list of pertinent aspects you should look at:

  1. 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.

  2. 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.

  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.

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

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.

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