Will K3I.Co.Ltd (KOSDAQ:431190) Spend Its Cash Wisely?

We can readily understand why investors are attracted to unprofitable companies. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

So, the natural question for K3I.Co.Ltd (KOSDAQ:431190) shareholders is whether they should be concerned by its rate of cash burn. In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. The first step is to compare its cash burn with its cash reserves, to give us its 'cash runway'.

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Does K3I.Co.Ltd Have A Long Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. K3I.Co.Ltd has such a small amount of debt that we'll set it aside, and focus on the ₩19b in cash it held at June 2025. Looking at the last year, the company burnt through ₩7.3b. So it had a cash runway of about 2.6 years from June 2025. That's decent, giving the company a couple years to develop its business. We should note, however, that if we extrapolate recent trends in its cash burn, then its cash runway would get a lot longer. The image below shows how its cash balance has been changing over the last few years.

See our latest analysis for K3I.Co.Ltd

How Well Is K3I.Co.Ltd Growing?

Notably, K3I.Co.Ltd actually ramped up its cash burn very hard and fast in the last year, by 192%, signifying heavy investment in the business. That does give us pause, and we can't take much solace in the operating revenue growth of 5.5% in the same time frame. Considering these two factors together makes us nervous about the direction the company seems to be heading. Of course, we've only taken a quick look at the stock's growth metrics, here. This graph of historic earnings and revenue shows how K3I.Co.Ltd is building its business over time.

How Hard Would It Be For K3I.Co.Ltd To Raise More Cash For Growth?

K3I.Co.Ltd seems to be in a fairly good position, in terms of cash burn, but we still think it's worthwhile considering how easily it could raise more money if it wanted to. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By looking at a company's cash burn relative to its market capitalisation, we gain insight on how much shareholders would be diluted if the company needed to raise enough cash to cover another year's cash burn.

K3I.Co.Ltd has a market capitalisation of ₩38b and burnt through ₩7.3b last year, which is 19% of the company's market value. Given that situation, it's fair to say the company wouldn't have much trouble raising more cash for growth, but shareholders would be somewhat diluted.

So, Should We Worry About K3I.Co.Ltd's Cash Burn?

On this analysis of K3I.Co.Ltd's cash burn, we think its cash runway was reassuring, while its increasing cash burn has us a bit worried. Even though we don't think it has a problem with its cash burn, the analysis we've done in this article does suggest that shareholders should give some careful thought to the potential cost of raising more money in the future. Its important for readers to be cognizant of the risks that can affect the company's operations, and we've picked out 2 warning signs for K3I.Co.Ltd that investors should know when investing in the stock.

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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.