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Dropsuite Limited (ASX:DSE) Has Found A Path To Profitability

·3-min read

With the business potentially at an important milestone, we thought we'd take a closer look at Dropsuite Limited's (ASX:DSE) future prospects. Dropsuite Limited operates a cloud-based software platform worldwide. The AU$143m market-cap company announced a latest loss of AU$31k on 31 December 2021 for its most recent financial year result. Many investors are wondering about the rate at which Dropsuite 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.

See our latest analysis for Dropsuite

According to some industry analysts covering Dropsuite, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of AU$1.3m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 52% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Dropsuite's growth isn’t the focus of this broad overview, 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.

Before we wrap up, there’s one aspect worth mentioning. Dropsuite currently 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. 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 Dropsuite to cover in one brief article, but the key fundamentals for the company can all be found in one place – Dropsuite's company page on Simply Wall St. We've also put together a list of key factors you should further research:

  1. Valuation: What is Dropsuite 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 Dropsuite 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 Dropsuite’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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