Loss-Making Kahoot! ASA (OB:KAHOT) Set To Breakeven

Kahoot! ASA (OB:KAHOT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kahoot! ASA 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 kr18b market-cap company posted a loss in its most recent financial year of US$34m and a latest trailing-twelve-month loss of US$37m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Kahoot! will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Kahoot!

Kahoot! is bordering on breakeven, according to the 3 Norwegian Entertainment analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$14m in 2021. The company is therefore projected to breakeven around 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 53% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Kahoot! given that this is a high-level summary, however, take into account 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. Kahoot! currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high 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:

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

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. 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.
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