When Will Family Zone Cyber Safety Limited (ASX:FZO) Breakeven?

By
Simply Wall St
Published
February 26, 2021
ASX:FZO

Family Zone Cyber Safety Limited (ASX:FZO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Family Zone Cyber Safety Limited develops, markets, distributes, and sells cyber safety products and services in Australia, the United States, and New Zealand. The AU$202m market-cap company posted a loss in its most recent financial year of AU$18m and a latest trailing-twelve-month loss of AU$19m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Family Zone Cyber Safety 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.

Check out our latest analysis for Family Zone Cyber Safety

Expectations from some of the Australian Software analysts is that Family Zone Cyber Safety is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$6.4m in 2023. So, the company is predicted to breakeven approximately 2 years from now. 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 71%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:FZO Earnings Per Share Growth February 26th 2021

We're not going to go through company-specific developments for Family Zone Cyber Safety given that this is a high-level summary, but, take into account 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 Family Zone Cyber Safety has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high 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:

There are key fundamentals of Family Zone Cyber Safety which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Family Zone Cyber Safety, take a look at Family Zone Cyber Safety's company page on Simply Wall St. We've also compiled a list of key factors you should further research:

  1. Historical Track Record: What has Family Zone Cyber Safety'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 Family Zone Cyber Safety'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. 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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