We feel now is a pretty good time to analyse ReadCloud Limited's (ASX:RCL) business as it appears the company may be on the cusp of a considerable accomplishment. ReadCloud Limited provides eLearning software and industry-based training solutions to schools and educational institutions in Australia. On 30 September 2024, the AU$15m market-cap company posted a loss of AU$1.0m for its most recent financial year. The most pressing concern for investors is ReadCloud'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.

ReadCloud is bordering on breakeven, according to some Australian Software analysts. They expect the company to post a final loss in 2025, before turning a profit of AU$700k in 2026. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% 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 ReadCloud's upcoming projects, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

View our latest analysis for ReadCloud

One thing we’d like to point out is that ReadCloud has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Valuation: What is ReadCloud 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 ReadCloud 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 ReadCloud’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.