Basware Oyj (HEL:BAS1V): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Basware Oyj's (HEL:BAS1V) future prospects. Basware Oyj provides networked purchase-to-pay solutions, and e-invoicing and financing services in Finland and internationally. The €559m market-cap company announced a latest loss of €7.3m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Basware Oyj'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 Basware Oyj

Consensus from 4 of the Finnish Software analysts is that Basware Oyj is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of €4.4m in 2022. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 72%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Basware Oyj's growth isn’t the focus of this broad overview, though, take into account 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. Basware Oyj currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Basware Oyj's case is 83%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Basware Oyj 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 Basware Oyj 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 Basware Oyj’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. 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.
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