Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.

Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. That said, here are three unprofitable companiesto steer clear of and a few better alternatives.

BILL (BILL)

Trailing 12-Month GAAP Operating Margin: -5.8%

Transforming the messy back-office financial operations that plague small business owners, BILL (NYSE: BILL) provides a cloud-based platform that automates accounts payable, accounts receivable, and expense management for small and midsize businesses.

Why Do We Think BILL Will Underperform?

1. Average billings growth of 11.7% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
3. Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs

BILL is trading at $46.52 per share, or 2.7x forward price-to-sales. Read our free research report to see why you should think twice about including BILL in your portfolio.

PagerDuty (PD)

Trailing 12-Month GAAP Operating Margin: -2.1%

Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE: PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.

Why Are We Cautious About PD?

1. Offerings struggled to generate meaningful interest as its average billings growth of 3.8% over the last year did not impress
2. Estimated sales growth of 2.7% for the next 12 months implies demand will slow from its two-year trend
3. Poor expense management has led to operating margin losses

PagerDuty’s stock price of $6.98 implies a valuation ratio of 1.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PD.

Upland Software (UPLD)

Trailing 12-Month GAAP Operating Margin: -2%

Operating under the mantra "land and expand," Upland Software (NASDAQ: UPLD) provides cloud-based applications that help organizations manage projects, workflows, and digital transformation across various business functions.

Why Does UPLD Fall Short?

1. Sales tumbled by 3.4% annually over the last five years, showing industry trends like AI are working against its favor
2. Projected sales decline of 14% over the next 12 months indicates demand will continue deteriorating
3. Poor free cash flow margin of 11.1% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

At $0.98 per share, Upland Software trades at 0.1x forward price-to-sales. To fully understand why you should be careful with UPLD, check out our full research report (it’s free).

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.