Kahoot! AS' (OB:KAHOT) Has Found A Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Kahoot! AS' (OB:KAHOT) future prospects. Kahoot! AS operates a game-based learning platform in the United States, Canada, Europe, the Asia Pacific, the Latin America and the Caribbean, Africa, the Middle East, and India. The kr40b market-cap company announced a latest loss of US$34m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Kahoot!'s investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Kahoot!

Consensus from 2 of the Norwegian Entertainment analysts is that Kahoot! is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$20m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, 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 Kahoot!'s upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. Kahoot! currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Kahoot! 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 Kahoot! 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 Kahoot!’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. 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.
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