With the business potentially at an important milestone, we thought we'd take a closer look at PowerSchool Holdings, Inc.'s (NYSE:PWSC) future prospects. PowerSchool Holdings, Inc., together with its subsidiaries, offers cloud-based software to the K-12 education market. The US$4.7b market-cap company's loss lessened since it announced a US$21m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$17m, as it approaches breakeven. The most pressing concern for investors is PowerSchool Holdings' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts' expectations for the company.

See our latest analysis for PowerSchool Holdings

Consensus from 13 of the American Software analysts is that PowerSchool Holdings is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$32m in 2025. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 86% 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.

Underlying developments driving PowerSchool Holdings' growth isn't the focus of this broad overview, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there's one issue worth mentioning. PowerSchool Holdings currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn't exceed 40% of your equity, which in PowerSchool Holdings' case is 48%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is PowerSchool Holdings 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 PowerSchool Holdings 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 PowerSchool Holdings'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.