Companies Like STCube (KOSDAQ:052020) Are In A Position To Invest In Growth

Just because a business does not make any money, does not mean that the stock will go down. 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. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

So should STCube (KOSDAQ:052020) shareholders be worried about its 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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How Long Is STCube's Cash Runway?

A company's cash runway is the amount of time it would take to burn through its cash reserves at its current cash burn rate. As at June 2025, STCube had cash of ₩81b and no debt. Importantly, its cash burn was ₩21b over the trailing twelve months. So it had a cash runway of about 3.9 years from June 2025. There's no doubt that this is a reassuringly long runway. Depicted below, you can see how its cash holdings have changed over time.

See our latest analysis for STCube

How Well Is STCube Growing?

It was fairly positive to see that STCube reduced its cash burn by 20% during the last year. Revenue also improved during the period, increasing by 11%. On balance, we'd say the company is improving over time. In reality, this article only makes a short study of the company's growth data. You can take a look at how STCube has developed its business over time by checking this visualization of its revenue and earnings history.

How Easily Can STCube Raise Cash?

We are certainly impressed with the progress STCube has made over the last year, but it is also worth considering how costly it would be if it wanted to raise more cash to fund faster growth. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Many companies end up issuing new shares to fund future growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

STCube's cash burn of ₩21b is about 4.1% of its ₩503b market capitalisation. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money.

Is STCube's Cash Burn A Worry?

As you can probably tell by now, we're not too worried about STCube's cash burn. For example, we think its cash runway suggests that the company is on a good path. Its weak point is its revenue growth, but even that wasn't too bad! Looking at all the measures in this article, together, we're not worried about its rate of cash burn; the company seems well on top of its medium-term spending needs. Taking a deeper dive, we've spotted 3 warning signs for STCube you should be aware of, and 2 of them don't sit too well with us.

Of course STCube may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.