Here's Why We're Not Too Worried About Phase Holographic Imaging PHI's (FRA:L5W) Cash Burn Situation

Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse.

So should Phase Holographic Imaging PHI (FRA:L5W) shareholders be worried about its cash burn? For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'.

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When Might Phase Holographic Imaging PHI Run Out Of Money?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. In April 2025, Phase Holographic Imaging PHI had kr14m in cash, and was debt-free. Looking at the last year, the company burnt through kr27m. That means it had a cash runway of around 7 months as of April 2025. To be frank, this kind of short runway puts us on edge, as it indicates the company must reduce its cash burn significantly, or else raise cash imminently. The image below shows how its cash balance has been changing over the last few years.

View our latest analysis for Phase Holographic Imaging PHI

How Well Is Phase Holographic Imaging PHI Growing?

Over the last year, Phase Holographic Imaging PHI maintained its cash burn at a fairly steady level. But its operating revenue was anything but flat over the year, gaining a full 58%. It seems to be growing nicely. In reality, this article only makes a short study of the company's growth data. You can take a look at how Phase Holographic Imaging PHI is growing revenue over time by checking this visualization of past revenue growth.

How Hard Would It Be For Phase Holographic Imaging PHI To Raise More Cash For Growth?

Since Phase Holographic Imaging PHI has been boosting its cash burn, the market will likely be considering how it can raise more cash if need be. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.

Phase Holographic Imaging PHI has a market capitalisation of kr4.5b and burnt through kr27m last year, which is 0.6% of the company's market value. So it could almost certainly just borrow a little to fund another year's growth, or else easily raise the cash by issuing a few shares.

So, Should We Worry About Phase Holographic Imaging PHI's Cash Burn?

Even though its cash runway makes us a little nervous, we are compelled to mention that we thought Phase Holographic Imaging PHI's revenue growth was relatively promising. While we're the kind of investors who are always a bit concerned about the risks involved with cash burning companies, the metrics we have discussed in this article leave us relatively comfortable about Phase Holographic Imaging PHI's situation. Taking a deeper dive, we've spotted 4 warning signs for Phase Holographic Imaging PHI you should be aware of, and 2 of them are a bit unpleasant.

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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.