With the business potentially at an important milestone, we thought we'd take a closer look at ReadCloud Limited's (ASX:RCL) future prospects. ReadCloud Limited provides eBook solutions to secondary schools in Australia. With the latest financial year loss of AU$982k and a trailing-twelve-month loss of AU$936k, the AU$41m market-cap company alleviated its loss by moving closer towards its target of breakeven. 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.

Check out our latest analysis for ReadCloud

Expectations from some of the Australian Software analysts is that ReadCloud is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$900k in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 104% year-on-year, on average, which signals high confidence from analysts. 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 ReadCloud's upcoming projects, though, 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. ReadCloud currently 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. 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 factors 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.

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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