freee K.K. (TSE:4478): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at freee K.K.'s (TSE:4478) future prospects. freee K.K. engages in the provision of cloud-based accounting and HR software solutions in Japan. The JP¥176b market-cap company announced a latest loss of JP¥10b on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which freee K.K 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 freee K.K

freee K.K is bordering on breakeven, according to the 9 Japanese Software analysts. They expect the company to post a final loss in 2025, before turning a profit of JP¥2.1b in 2026. Therefore, the company is expected to breakeven roughly 2 years 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 75% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of freee K.K's upcoming projects, but, keep in mind that generally 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 28% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is freee K.K 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 freee K.K 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 freee K.K’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.

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

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.