freee K.K. Just Reported A Surprise Profit And Analysts Updated Their Estimates

It's been a good week for freee K.K. (TSE:4478) shareholders, because the company has just released its latest half-year results, and the shares gained 8.2% to JP¥3,895. It looks like a credible result overall - although revenues of JP¥7.9b were what the analysts expected, freee K.K surprised by delivering a statutory profit of JP¥10.69 per share, instead of the previously forecast loss. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on freee K.K after the latest results.

View our latest analysis for freee K.K

Taking into account the latest results, the consensus forecast from freee K.K's nine analysts is for revenues of JP¥32.8b in 2025. This reflects a meaningful 13% improvement in revenue compared to the last 12 months. freee K.K is also expected to turn profitable, with statutory earnings of JP¥5.72 per share. Before this earnings announcement, the analysts had been modelling revenues of JP¥32.8b and losses of JP¥0.019 per share in 2025. Although we saw no serious change to the revenue outlook, the analysts have definitely increased their earnings estimates, estimating a profit next year, compared to previous forecasts of a loss. So it seems like the consensus has become substantially more bullish on freee K.K.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.5% to JP¥3,180. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on freee K.K, with the most bullish analyst valuing it at JP¥4,700 and the most bearish at JP¥2,000 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of freee K.K'shistorical trends, as the 29% annualised revenue growth to the end of 2025 is roughly in line with the 28% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.9% per year. So although freee K.K is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting freee K.K to become profitable next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for freee K.K going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with freee K.K , and understanding this should be part of your investment process.

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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.