Online Shopping Growth Will Expand Australia's E-commerce Advantage

Key Takeaways

• Diversified marketplace expansion and exclusive private labels are boosting margins, recurring revenue, and competitive positioning in Australia's e-commerce market.
  
• Enhanced data and AI-driven operations are improving efficiency, customer conversion, and earnings scalability amid reduced competition and rising demand for value.
  
• High marketing spend, operational challenges, and inventory risks amid intensifying competition threaten profitability and expose the business to sustained margin and earnings pressure.

Catalysts

Operates as an online retailer in Australia.

• The ongoing acceleration of consumer adoption of online shopping-supported by Kogan.com's significant year-on-year growth in active customers (+48%)-positions the company to capture a growing share of e-commerce spend in Australia, especially as internet and smartphone penetration increases; this is likely to drive robust revenue and customer lifetime value over the coming years.
  
• Kogan.com's expansion and optimization of its marketplace platform and introduction of new verticals (e.g., Mighty Ape marketplace, Kogan FIRST MAX, Kogan Energy) are catalyzing growth in high-margin, asset-light, recurring revenue streams; as these segments scale, they are set to improve group margins and long-term earnings visibility.
  
• The closure of key domestic competitors in the value online retail segment (e.g., Catch, MyDeal) has reduced market fragmentation, enabling Kogan.com to strengthen relationships with marketplace sellers and capture incremental market share, which is expected to accelerate revenue and GMV growth in the near to medium term.
  
• Increasing demand for value and price transparency-amplified by inflation and cost-of-living pressures-plays directly into Kogan.com's core proposition of offering competitive pricing and exclusive private label products, supporting higher sales volumes and gross profit, particularly as 72% of product revenue now comes from exclusive brands (with higher gross margin).
  
• Ongoing investment in data analytics, customer personalization, digital marketing, and embedded AI tools is expected to drive greater operational efficiency, improved customer acquisition conversion, and lower costs, contributing to higher EBITDA margins and scalable earnings growth.

Kogan.com Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Kogan.com's revenue will grow by 7.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from -8.1% today to 4.9% in 3 years time.
• Analysts expect earnings to reach A$29.6 million (and earnings per share of A$0.3) by about August 2028, up from A$-39.5 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting A$35.6 million in earnings, and the most bearish expecting A$24.4 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.6x on those 2028 earnings, up from -10.2x today. This future PE is lower than the current PE for the AU Multiline Retail industry at 39.9x.
• Analysts expect the number of shares outstanding to decline by 0.55% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.89%, as per the Simply Wall St company report.

Kogan.com Future Earnings Per Share Growth

Risks

• The group's growth is currently highly dependent on continued heavy investment in marketing spend to acquire new customers, which may pressure net margins if customer acquisition costs rise or ROI on marketing declines in the long term.
  
• The products division is structurally loss-making (reported ~ -4% adjusted margin in FY '25 and aims merely for breakeven in the medium term), so any failure to expand high-margin platform sales or inability to raise product margins will weigh on overall group profitability and earnings growth.
  
• The significant underperformance of Mighty Ape-including gross sales decline, negative EBITDA, and a $46.3 million goodwill impairment-shows operational execution and integration risks; prolonged weakness or further operational disruptions could drag on group-level revenues and margins.
  
• Heavy reliance on proprietary/exclusive brands (72% of product revenue) concentrates risk in inventory management and consumer preference shifts; inventory obsolescence or misjudging trends could lead to further margin pressures through forced discounting and write-downs.
  
• Growing competition from both global (e.g., Amazon) and local e-commerce/marketplace players-despite recent exits (Catch, MyDeal)-will likely intensify as retail shifts further online, driving up customer acquisition costs and compressing take rates and net margin long-term.

Valuation

• The analysts have a consensus price target of A$5.721 for Kogan.com based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$9.0, and the most bearish reporting a price target of just A$4.25.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$605.0 million, earnings will come to A$29.6 million, and it would be trading on a PE ratio of 23.6x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of A$4.05, the analyst price target of A$5.72 is 29.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.