Money Forward, Inc. (TSE:3994): Is Breakeven Near?

Money Forward, Inc. (TSE:3994) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Money Forward, Inc. provides financial solutions for individuals, financial institutions, and corporations primarily in Japan. On 30 November 2024, the JP¥244b market-cap company posted a loss of JP¥6.3b for its most recent financial year. Many investors are wondering about the rate at which Money Forward 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.

See our latest analysis for Money Forward

Consensus from 8 of the Japanese Software analysts is that Money Forward is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of JP¥4.7b in 2026. Therefore, the company is expected 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 59%, 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 Money Forward given that this is a high-level summary, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Money Forward currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Money Forward's case is 79%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Money Forward 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 Money Forward 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 Money Forward’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.