Money Forward, Inc.'s (TSE:3994) Path To Profitability

We feel now is a pretty good time to analyse Money Forward, Inc.'s (TSE:3994) business as it appears the company may be on the cusp of a considerable accomplishment. Money Forward, Inc. provides financial solutions for individuals, financial institutions, and corporations primarily in Japan. With the latest financial year loss of JP¥6.3b and a trailing-twelve-month loss of JP¥6.0b, the JP¥217b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Money Forward's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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Consensus from 9 of the Japanese Software analysts is that Money Forward is on the verge of breakeven. They expect the company to post a final loss in 2026, before turning a profit of JP¥4.8b in 2027. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 68% is expected, 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 Money Forward given that this is a high-level summary, 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 Money Forward

One thing we would like to bring into light with Money Forward is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Money Forward's case is 67%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Money Forward 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 Money Forward, take a look at Money Forward's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Historical Track Record: What has Money Forward'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 Money Forward'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.