There are 2 top ASX tech shares that are growing rapidly which could be a buy, including Kogan.com Ltd (ASX:KGN) and Redbubble Ltd (ASX:RBL).
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There are some top ASX tech shares that are growing rapidly and could be worth looking into.
Here they are:
Redbubble Ltd (ASX: RBL)
Redbubble is an e-commerce business focused on selling artist-produced products like masks, stationery, wall art, phone cases and masks. It operates two websites: Redbubble.com and TeePublic.com
The Redbubble share price has fallen 7.5% since 13 January 2021, but it is still reporting high levels of growth.
The high-growth ASX tech share said in its FY21 trading update for the first quarter showed normalised marketplace revenue growth of 98% to $139.3 million, gross profit rose by 118% to $59.6 million and the earnings before interest and tax (EBIT) generation amounted to $17.2 million.
Joseph Kim from Montgomery Investment Management said: “While Redbubble has clearly been a “stay-at-home” trade, we believe the business has the opportunity to emerge a longer-term structural winner from COVID-19 should it capitalise in the recent spike in user and customer interest as a result of recent lockdown measures.”
Redbubble CEO Martin Hosking is very optimistic about the long-term future of the company. He said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and margin structure to ensure it can do so while remaining profitable.”
Redbubble is focused on four key initiatives. The first is artist acquisition, activation and retention. Second, Redbubble is focused on user acquisition and transaction optimisation. The third focus is customer understanding, loyalty and brand building. Finally, further physical product and fulfilment network expansion is the last focus.
Kogan.com Ltd (ASX: KGN)
Kogan.com is another e-commerce ASX tech share. It sells a large selection of products on its website including TVs, phones, computers, cameras, furniture, clothing, cars, insurance, travel, energy, internet and mobile services.
The company has been reporting continued growth in FY21, following on from FY20’s growth. FY20 saw gross sales go up 39.3% to $768.9 million, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew 57.6% to $49.7 million and earnings per share (EPS) went up 61.1%.
In the first four months of FY21, to the end of October, Kogan.com saw 99.8% growth of gross sales, 131.7% growth of gross profit and 268.8% growth of adjusted EBITDA. It saw strong performance from its product divisions and Kogan Marketplace. Active customers grew 61.4% year on year to 2.68 million.
Over the past four years the ASX tech share boasts of rising margins whilst investing into its platform, products and services. The EBITDA margin was 4.3% in FY17, but it had grown to 9.3% in FY20.
Mr Kogan, the founder of the company, has spoken about the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”
The ASX tech share also recently announced the acquisition of New Zealand online retailer Mighty Ape, which is a leader in gaming, toys and other entertainment categories.
In FY20, Mighty Ape is expecting to make $137.7 million of revenue, gross profit of $45.7 million and EBITDA of $14.3 million, representing year on year growth of 43.7%, 58.1% and 254.1% respectively.
At the current Kogan.com share price it’s valued at 28x FY23’s estimated earnings.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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