We Might See A Profit From freee K.K. (TSE:4478) Soon

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¥216b market-cap company’s loss lessened since it announced a JP¥10b loss in the full financial year, compared to the latest trailing-twelve-month loss of JP¥3.1b, as it approaches breakeven. 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

According to the 9 industry analysts covering freee K.K, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of JP¥794m in 2025. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which signals high confidence from analysts. 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, however, 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 35% 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:

There are too many aspects of freee K.K to cover in one brief article, but the key fundamentals for the company can all be found in one place – freee K.K's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

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.

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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.