With the business potentially at an important milestone, we thought we'd take a closer look at Skyfii Limited's (ASX:SKF) future prospects. Skyfii Limited, a software technology company, provides data analytics services in Australia, North America, the United Kingdom, rest of Europe, and internationally. On 30 June 2020, the AU$72m market-cap company posted a loss of AU$3.4m for its most recent financial year. Many investors are wondering about the rate at which Skyfii will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to some industry analysts covering Skyfii, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of AU$500k in 2022. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 108% 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.
We're not going to go through company-specific developments for Skyfii given that this is a high-level summary, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 1.2% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Skyfii, so if you are interested in understanding the company at a deeper level, take a look at Skyfii's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
- Valuation: What is Skyfii 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 Skyfii 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 Skyfii’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.
This article by Simply Wall St is general in nature. 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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