When Will Gratifii Limited (ASX:GTI) Become Profitable?

Gratifii Limited (ASX:GTI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Gratifii Limited, a technology company, together with its subsidiaries, designs and develops loyalty and rewards programs in Australia, New Zealand, South Africa, and Singapore. The AU$11m market-cap company announced a latest loss of AU$11m on 30 June 2024 for its most recent financial year result. As path to profitability is the topic on Gratifii's investors mind, we've decided to gauge market sentiment. 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 Gratifii

Expectations from some of the Australian Software analysts is that Gratifii is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of AU$1.8m in 2026. 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 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 150% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Gratifii's growth isn’t the focus of this broad overview, however, take into account that generally 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 issue worth mentioning. Gratifii currently has a debt-to-equity ratio of 127%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Gratifii, so if you are interested in understanding the company at a deeper level, take a look at Gratifii'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 Gratifii 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 Gratifii 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 Gratifii’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.