When Will Trustpilot Group plc (LON:TRST) Turn A Profit?

By
Simply Wall St
Published
January 16, 2022
LSE:TRST
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Trustpilot Group plc's (LON:TRST) future prospects. Trustpilot Group plc operates a review platform for businesses and consumers in the United Kingdom, North America, and internationally. The company’s loss has recently broadened since it announced a US$12m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$24m, moving it further away from breakeven. The most pressing concern for investors is Trustpilot Group's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Trustpilot Group

Consensus from 6 of the British Interactive Media and Services analysts is that Trustpilot Group is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$1.7m in 2023. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 83% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
LSE:TRST Earnings Per Share Growth January 16th 2022

We're not going to go through company-specific developments for Trustpilot Group given that this is a high-level summary, but, bear in mind that typically 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 Trustpilot Group has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Trustpilot Group, so if you are interested in understanding the company at a deeper level, take a look at Trustpilot Group's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:

  1. Valuation: What is Trustpilot Group 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 Trustpilot Group 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 Trustpilot Group’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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