When Will Novatti Group Limited (ASX:NOV) Breakeven?

Novatti Group Limited (ASX:NOV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Novatti Group Limited operates as a fintech company worldwide. The AU$23m market-cap company announced a latest loss of AU$26m on 30 June 2023 for its most recent financial year result. The most pressing concern for investors is Novatti Group's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Novatti Group

Expectations from some of the Australian Software analysts is that Novatti Group is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$1.2m in 2025. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 100% 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 Novatti Group given that this is a high-level summary, however, keep in mind 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 issue worth mentioning. Novatti Group currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Novatti Group's case is 68%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Novatti Group, so if you are interested in understanding the company at a deeper level, take a look at Novatti Group's company page on Simply Wall St. We've also put together a list of important aspects you should further research:

1. Valuation: What is Novatti Group 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 Novatti Group 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 Novatti Group’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.