When Will Basware Oyj (HEL:BAS1V) Turn A Profit?

We feel now is a pretty good time to analyse Basware Oyj's (HEL:BAS1V) business as it appears the company may be on the cusp of a considerable accomplishment. Basware Oyj provides networked purchase-to-pay solutions, and e-invoicing and financing services in Finland and internationally. With the latest financial year loss of €23m and a trailing-twelve-month loss of €9.5m, the €584m market-cap company alleviated its loss by moving closer towards its target of breakeven. 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

Basware Oyj is bordering on breakeven, according to the 4 Finnish Software analysts. They expect the company to post a final loss in 2021, before turning a profit of €4.9m in 2022. Therefore, the company is expected to breakeven roughly 2 years 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 88%, which is extremely buoyant. 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 Basware Oyj given that this is a high-level summary, though, bear in mind that typically 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 78%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Basware Oyj to cover in one brief article, but the key fundamentals for the company can all be found in one place – Basware Oyj's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

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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