CloudTalk grew sales 22.1%, yet its interest bill was paid by the balance sheet, not the business

Growing sales, an operating loss and an interest bill on top

CloudTalk s.r.o. is a Bratislava company behind a cloud phone system for sales and customer support teams. (An s.r.o. is the Slovak limited liability company.) In 2025 it took EUR 16.2m in revenue, up 22.1% from EUR 13.3m in 2024. The figures are for the company on its own, under Slovak accounting rules, in euros, for the calendar year. Revenue growth of that kind is the part of the story most people would stop at.

The rest of the income statement does not fit with it. The company made an operating loss of EUR 3.3m in 2025, and on top of that it carried interest costs of EUR 428k. Interest cover, the number of times operating profit pays the interest bill, is a simple ratio. Here it has no meaningful value, because there is no operating profit to divide. Every euro of interest was paid from something other than earnings: cash on hand, new borrowing or money from the owners.

The net loss shows the effect. In 2024 the operating loss of EUR 2.9m and the net loss of EUR 2.9m ended up at about the same level. In 2025 the net loss of EUR 3.8m was clearly deeper than the operating loss of EUR 3.3m. Financing has become a visible cost layer below the operating line.

The operating business improved, the bottom line did not

The tension sharpens when the margins are put side by side. The operating margin, operating profit as a share of revenue, improved by 1.4 pp to -20.2%. The EBITDA margin improved by 3.0 pp to -10.2%. EBITDA here means operating profit with depreciation and amortisation added back, a rough view of what the operations generate before the cost of past investment. The net margin moved the other way: it worsened by 1.9 pp to -23.7%.

So the company got slightly better at running itself and slightly worse at being owned. The operating loss widened by EUR 402k in euros, but most of that is depreciation and amortisation, which rose to EUR 1.6m from EUR 1.1m. EBITDA, at EUR -1.6m, was roughly where it was a year earlier at EUR -1.7m, a small improvement of EUR 92.4k. The net loss, meanwhile, widened by EUR 950k. Between the operating line and the bottom line sit the interest and other financial items, and in 2025 they did real damage.

Why a growing company ends up paying interest from reserves

For a software business selling subscriptions, this pattern is common. Building the product, the sales team and the support team costs money years before the customer base is large enough to pay for it. Owners usually fund that gap with equity. When equity runs low, or when the company wants to keep its owners' stake intact, the gap is funded with loans. Loans have one property equity does not: they charge interest whether the business is profitable or not.

Interest cover typically falls for one of three reasons. Borrowing grows faster than earnings. Rates on floating loans reset higher. Or operating profit falls while the debt stays where it is. At CloudTalk the operating result was negative in both years, so the first two are the likelier candidates: the interest burden grew while the operations stayed loss-making. Which of the two applies would show in the loan note of the accounts, in the balance of borrowing at both year ends and the rate it carries.

The balance sheet shows where the money for that interest, and for the loss, came from. Cash fell by EUR 3.9m, or 60.0%, to EUR 2.6m at the end of 2025 from EUR 6.4m a year earlier. Equity fell by EUR 3.7m to EUR 2.4m, close to the size of the year's net loss of EUR 3.8m: the loss went more or less straight through the buffer. The equity ratio, equity as a share of total assets, dropped by 25.5 pp to 25.2%. A year earlier it stood at 50.7%.

That is the real cost of uncovered interest. It is not the interest line itself, which is modest next to revenue of EUR 16.2m. It is that every period of it is paid from a reserve that is not being refilled by the business. Cash at the end of 2025 was already smaller than the year's operating loss, although part of that loss is depreciation and amortisation, which use no cash. But with cash and equity both down by more than half in a single year, the room is noticeably smaller than it was.

One event belongs in the background. A change in the shareholding of CloudTalk s.r.o. was registered in October 2026. The accounts for 2025 do not say what it means for the company's funding, and I would not read anything into it on the strength of the date alone.

What to check in your own company

Interest cover is one of the oldest ratios in finance and one of the most ignored, because in a profitable year it looks comfortable without anyone calculating it. It is worth calculating precisely then.

Take your operating profit for the last full year and divide it by your interest cost for the same year. The result is how many times your business earns its interest. Then run the uncomfortable version. Raise the rate on every floating loan by a few percentage points, recalculate the interest cost, and cut operating profit by a fifth. Divide again. If the second result is close to one, a single weak year turns your lenders into a call on your cash rather than on your profit.

If you are already loss-making at the operating level, as many growing software companies are, the ratio tells you nothing and a different sum takes its place. Add your operating loss after adding back depreciation, your interest and your loan repayments for the next twelve months. Compare the total with your cash at the end of the last month. That gives the number of months the business can fund itself before it needs a decision from owners or lenders. Ask your finance team for that figure in months, not in euros, and ask how it changed over the last year. A runway that shortens while revenue grows is a pattern worth discussing before the bank raises it.

CloudTalk did the harder part of 2025 well: it sold more and ran its operations a little more efficiently. Its interest, though, was paid by the balance sheet rather than by the business, and the balance sheet ended the year with much less in it. For a company in this position the line I would watch is not revenue but the gap between the operating loss and the net loss, because that gap is the price of time, and it is charged whether the growth arrives or not.