Kogan has reported an set of excellent results for FY18. It continues to be a fast growing business intent on selling good value products to consumers. Revenue is up 42.4%, customers are up 45.3%, NPAT is up 110.4%, margin has improved slightly, and 6 new verticals were launched throughout the year.

While no specific guidence was provided for FY19+ it seems unlikely that kogan is going to slow down any time soon with additional verticals to be launched which should increase addressable markets and brand awareness. I am also interested in their november update to hear how their new white goods have been recieved by the market. It also mentions "Selective & Opportunistic M&A" which is one to watch, although I can only assume they mean they might gobble up another dick smith type brand given the chance and are not actively looking for growth this way.

Kogan continues to be expensive relative to current earnings, and with management trust up in the air for some people it is a big ask to believe that future earnings can justify this premium. If current growth continues on its path however today could look cheap in the future.

A strong update from Kogan, although perhaps not as strong at the market was expecting?

Key Points FY18 vs FY17

1. Revenue growth greater than 40%
2. EBITDA Growth greater than 90%
3. Active customers of 1,388,000 compared with 955,000

While I know price and metrics are important, I want to ignore traditional metrics and take a more philosophical approach to the growth and bull argument in Kogans favor. While the business is doing very well at what it does, and is clearly priced for it, it also has huge potential in optionality - that is " The value of additional optional investment opportunities available only after having made an initial investment (https://en.wiktionary.org/wiki/optionality)". Just as Amazon started out as a book store and branched out, Kogan started out in selling consumer products that were branded with Kogan at a heavily reduced price to their branded counterparts.

This optionality is Kogans future strength and is clear from the rollout of Kogan insurances (health, pet etc), mobile plans, NBN plans, travel deals and most recently announced white goods. The intent is to target any products where Kogan can target margin of competitors. Given that Kogan already has and continues to gather the information on consumers who enjoy good value, and are reasonably tech savvy (enough to use a computer to order online and thus use most of the products that they have to offer) they already have a good database of people on which to target their high value offers. Not to mention their experience in logistics of products.

I personally couldn't guess what future offers Kogan might make however given their track record I wouldn't rule out growth and profits from currently unknown income streams in the next 5 or 10 years. This company is still founder led with significant skin still in the game. The threat from Amazon is something to consider however I believe there is room enough for 2 in the online space, not to mention that Kogan actually sells their products on Amazon.

Of course this is speculative, and I haven't touched on any of the risks. This is a Bull case after all :) If you were to buy at these prices, and the company increases profits and offerings as it has been doing, I believe in 5 years the price might look good value today.