Loss-Making Echo IQ Limited (ASX:EIQ) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Echo IQ Limited's (ASX:EIQ) future prospects. Echo IQ Limited provides artificial intelligence (AI) diagnostics tool that enhance the diagnosis of structural heart disease in Australia and the United Kingdom. The AU$194m market-cap company posted a loss in its most recent financial year of AU$5.4m and a latest trailing-twelve-month loss of AU$8.9m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Echo IQ will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Echo IQ is bordering on breakeven, according to some Australian Software analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$1.1m in 2026. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 87%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Echo IQ given that this is a high-level summary, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Check out our latest analysis for Echo IQ

One thing we’d like to point out is that Echo IQ 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. 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 Echo IQ, so if you are interested in understanding the company at a deeper level, take a look at Echo IQ's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

1. Historical Track Record: What has Echo IQ's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Echo IQ'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.

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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.