Loss-Making ReadCloud Limited (ASX:RCL) Expected To Breakeven In The Medium-Term

ReadCloud Limited (ASX:RCL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ReadCloud Limited provides eLearning software and industry-based training solutions to schools and educational institutions in Australia. With the latest financial year loss of AU$1.0m and a trailing-twelve-month loss of AU$119k, the AU$13m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is ReadCloud's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

According to some industry analysts covering ReadCloud, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$800k in 2026. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 106% is expected, 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 ReadCloud 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.

See our latest analysis for ReadCloud

One thing we’d like to point out is that ReadCloud has no debt on its balance sheet, which is rare for a loss-making 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 ReadCloud 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 ReadCloud, take a look at ReadCloud's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Valuation: What is ReadCloud 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 ReadCloud 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 ReadCloud’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.