XP Factory Plc (LON:XPF) Could Be Less Than A Year Away From Profitability

XP Factory Plc (LON:XPF) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. XP Factory Plc engages in the leisure businesses in the United Kingdom, Europe, and internationally. The UK£18m market-cap company’s loss lessened since it announced a UK£1.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£890k, as it approaches breakeven. The most pressing concern for investors is XP Factory's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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XP Factory is bordering on breakeven, according to the 2 British Hospitality analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of UK£400k in 2026. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 107% 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.

Given this is a high-level overview, we won’t go into details of XP Factory's upcoming projects, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Check out our latest analysis for XP Factory

Before we wrap up, there’s one issue worth mentioning. XP Factory currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in XP Factory's case is 45%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has XP Factory's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on XP Factory'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.