Loss-Making Diginex Limited (NASDAQ:EQOS) Expected To Breakeven In The Medium-Term

Diginex Limited (NASDAQ:EQOS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Diginex Limited, a digital asset financial services and advisory company, provides products, architecture, and infrastructure for the financial markets in the areas of digital asset ecosystem in Singapore and internationally. The company’s loss has recently broadened since it announced a US$57m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$145m, moving it further away from breakeven. Many investors are wondering about the rate at which Diginex 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 Diginex

Consensus from 2 of the American Capital Markets analysts is that Diginex is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$7.6m in 2023. The company is therefore projected to breakeven around 2 years from now. 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 61%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Diginex's growth isn’t the focus of this broad overview, though, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Diginex has no debt on its balance sheet, which is quite unusual for a cash-burning 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 key fundamentals of Diginex 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 Diginex, take a look at Diginex's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

1. Historical Track Record: What has Diginex's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Diginex'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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