NFON AG (ETR:NFN) About To Shift From Loss To Profit

NFON AG (ETR:NFN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. NFON AG provides cloud-based telecommunication services to business customers in Germany, Austria, Italy, the United Kingdom, Spain, Italy, France, and other countries. The €102m market-cap company posted a loss in its most recent financial year of €16m and a latest trailing-twelve-month loss of €3.9m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which NFON will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for NFON

NFON is bordering on breakeven, according to the 3 German Telecom analysts. They expect the company to post a final loss in 2023, before turning a profit of €2.2m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 108%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of NFON's upcoming projects, but, keep in mind that by and large 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 NFON 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of NFON 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 NFON, take a look at NFON's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

1. Valuation: What is NFON 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 NFON 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 NFON’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.