We can readily understand why investors are attracted to unprofitable companies. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you’d have done very well indeed. But while the successes are well known, investors should not ignore the very many unprofitable companies that simply burn through all their cash and collapse.
Given this risk, we thought we’d take a look at whether 17 Education & Technology Group (NASDAQ:YQ) shareholders should be worried about its cash burn. For the purpose of this article, we’ll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). First, we’ll determine its cash runway by comparing its cash burn with its cash reserves.
A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. When 17 Education & Technology Group last reported its June 2025 balance sheet in September 2025, it had zero debt and cash worth CN¥351m. Importantly, its cash burn was CN¥149m over the trailing twelve months. So it had a cash runway of about 2.4 years from June 2025. Arguably, that’s a prudent and sensible length of runway to have. The image below shows how its cash balance has been changing over the last few years.
NasdaqGS:YQ Debt to Equity History September 6th 2025
See our latest analysis for 17 Education & Technology Group
It was fairly positive to see that 17 Education & Technology Group reduced its cash burn by 23% during the last year. But the revenue dip of 23% in the same period was a bit concerning. Considering both these factors, we’re not particularly excited by its growth profile. In reality, this article only makes a short study of the company’s growth data. You can take a look at how 17 Education & Technology Group has developed its business over time by checking this visualization of its revenue and earnings history.
17 Education & Technology Group seems to be in a fairly good position, in terms of cash burn, but we still think it’s worthwhile considering how easily it could raise more money if it wanted to. Companies can raise capital through either debt or equity. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund growth. By comparing a company’s annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).
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