Serko Limited (NZSE:SKO): Are Analysts Optimistic?

Serko Limited (NZSE:SKO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Serko Limited, a Software-as-a-Service technology business, provides online travel booking software solutions and expense management services in New Zealand, Australia, North America, Europe, and internationally. With the latest financial year loss of NZ$16m and a trailing-twelve-month loss of NZ$14m, the NZ$381m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Serko's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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According to the 6 industry analysts covering Serko, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of NZ$11m in 2027. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 54%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Serko's upcoming projects, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Check out our latest analysis for Serko

Before we wrap up, there’s one aspect worth mentioning. Serko 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:

There are key fundamentals of Serko which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Serko, take a look at Serko's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is Serko 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 Serko 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 Serko’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.