Riskified (NYSE:RSKD) has significantly reduced its cash burn by 74% over the past year, while reporting an 18% increase in revenue, according to data up to June 2023. The company's annual expenditure to fund growth, also known as "cash burn," was at US$16m last year, a significant decrease that extends its cash runway.
The company currently sits on a substantial cash reserve of US$474m with no debt, indicating a long cash runway before exhausting money at the current spending rate. This financial position provides assurance to shareholders who are often concerned about the potential for companies to run out of cash and collapse.
Analysts predict that Riskified will reach cashflow breakeven, a point where it is neither losing nor gaining money, before exhausting its reserves. This prediction is backed by the company's successful reduction of cash burn and increased revenue.
To maintain its growth trajectory, Riskified could potentially issue new shares or take on debt. Considering that its cash burn of US$16m represents only 2.2% of its market value, which stands at US$706m, the company could easily secure another year's growth by borrowing minimally or issuing shares.
This situation reflects a trend observed in companies like Salesforce.com (NYSE:CRM), which despite years of losses, have demonstrated that unprofitability does not necessarily lead to poor stock performance. The success of Riskified's stock performance amidst reducing its cash burn further exemplifies this trend.
InvestingPro Insights
Taking into account the real-time data from InvestingPro, Riskified (NYSE:RSKD) has been showing promising signs. The company's revenue growth has been accelerating, up by 17.83% over the last twelve months as of Q2 2023. This aligns with the InvestingPro Tip that Riskified's revenue growth has been accelerating.
The company's market capitalization is currently at 706.17M USD, and it holds more cash than debt on its balance sheet, which is a positive sign for the financial health of the company. This is in line with the InvestingPro Tip that Riskified holds more cash than debt on its balance sheet.
Moreover, the company's 1-week price total return as of the end of 2023 was 10.16%, indicating a significant return over the last week, which is another InvestingPro Tip.
In conclusion, Riskified seems to be on a promising path. For more detailed insights and a multitude of other InvestingPro Tips, consider exploring InvestingPro's comprehensive suite of tools and resources.
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