Loss-Making Expert.ai S.p.A. (BIT:EXAI) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse Expert.ai S.p.A.'s (BIT:EXAI) business as it appears the company may be on the cusp of a considerable accomplishment. Expert.ai S.p.A., an artificial intelligence (AI) platform company, develops and sells cognitive computing software products based on AI algorithms to read and understand written language worldwide. On 31 December 2023, the €91m market-cap company posted a loss of €9.9m for its most recent financial year. Many investors are wondering about the rate at which Expert.ai will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Expert.ai

Expectations from some of the Italian Software analysts is that Expert.ai is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of €2.2m in 2025. So, the company is predicted to breakeven just over a year from now. 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 105%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Expert.ai given that this is a high-level summary, though, bear in mind 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. Expert.ai currently has a debt-to-equity ratio of 179%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Expert.ai, so if you are interested in understanding the company at a deeper level, take a look at Expert.ai's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

1. Valuation: What is Expert.ai 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 Expert.ai 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 Expert.ai’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com