NFON AG (ETR:NFN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. NFON AG provides cloud-based telecommunication services to business customers in Germany, Austria, Italy, the United Kingdom, Spain, Italy, France, and other countries. With the latest financial year loss of €16m and a trailing-twelve-month loss of €14m, the €121m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which NFON 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 NFON

Consensus from 3 of the German Telecom analysts is that NFON is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of €850k in 2024. The company is therefore projected to breakeven just over a year 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 114%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for NFON given that this is a high-level summary, though, keep in mind that by and large 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 NFON 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:

This article is not intended to be a comprehensive analysis on NFON, so if you are interested in understanding the company at a deeper level, take a look at NFON's company page on Simply Wall St. We've also put together a list of important factors you should further examine:

1. Valuation: What is NFON 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 NFON 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 NFON’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.