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- Online retailer Kogan.com (KGN) has had a boom year as shoppers turn to online solutions amid shopfront closures during the COVID-19 pandemic
- The company is projecting big yearly increases in earnings, profits and revenues as consumers flock to the platform
- Gross sales and profits grew around 40 per cent, while the company’s net profit after tax of $26.8 million was a 55.9 per cent improvement
- Kogan.com now has almost 2.2 million active users — a yearly increase of 35.7 per cent
- Nevertheless, company shares are down 4.99 per cent to $20.75
Kogan.com (KGN) has had a boom year as shoppers turn to online solutions amid shopfront closures during the COVID-19 pandemic.
The company is projecting big increases in earnings, profits and revenues — mostly in the second half of the financial year — as consumers flock to the platform.
Online sales boom
Kogan posted $768.9 million in gross sales, up 39.3 per cent on the prior year, while revenues jumped 13.5 per cent to $497.9 million.
Gross profits grew almost 40 per cent, while the company’s net profit after tax of $26.8 million was a 55.9 per cent improvement year-on-year.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) also grew 57.6 per cent to $49.7 million.
The growth was most remarkable in the second half of the year — when COVID-19 hit — with gross sales, gross profit and adjusted EBITDA rising by 62.5 per cent, 68.3 per cent and 74.1 per cent respectively.
The company closed the financial year with $146.7 million cash on hand, and an undrawn bank debt facility of $30 million. These figures also exclude the $20 million raised in the July share purchase plan, further firming up the balance sheet.
Key drivers
Ruslan Kogan, Founder and CEO of Kogan.com, attributes the growth to both the company’s overall strategy and its responsiveness to the demands brought on by the COVID-19 pandemic.
“The second half of FY2020 was an extremely turbulent and challenging period for the world, the country, and the company,” Ruslan said.
“We have built a diversified, resilient business over many years, which enabled us to help Australians in their time of need,” he continued.
“In the midst of the crisis, our teams mobilised all our resources to ensure our supply chains remained open, our logistics operations continued functioning, and in-demand products remained available for speedy delivery,” he concluded.
Kogan.com now has almost 2.2 million active users — a yearly increase of 35.7 per cent.
The company also credits the onboarding of new sellers on the Kogan Marketplace platform with the enhanced consumer uptake and increased sales.
Kogan also had success across a number of verticals which continue to provide more avenues to growth.
Kogan Mobile performed relatively in line with the prior year, contributing over 10 per cent of total gross profit and providing a solid foundation for growth of Kogan Mobile New Zealand.
Kogan Internet customers also grew over 90 per cent year-on-year, resulting in a commission-based revenue increase of almost 145 per cent.
Kogan Insurance grew 36 per cent for the year, while new company verticals Kogan Cars, Kogan Credit Cards, Kogan Superannuation and Kogan Energy have also gained footholds in the market.
Outlook
While it’s somewhat unlikely the exceptional circumstances of the past six months will be repeated, the expansion of Kogan’s footprint through the pandemic is a boon for the retailer.
The stellar results have seen Kogan’s board announce a fully franked final dividend of 13.5 cents per share.
While the company says it won’t release financial guidance for the coming year, this is consistent with prior years and is perhaps prudent given the volatility of the global economic situation.
The Kogan CEO believes the eCommerce revolution is gathering speed as more consumers move online.
“We’re seeing record numbers of first-time customers, who then go on to make repeat purchases at a 40 per cent faster pace than previously,” Ruslan said.
“For us, this is a very exciting trend that shows once customers learn about shopping online, they change their ongoing behaviour,” he continued.
“After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com,” he concluded.
Kogan.com shares are down 4.99 per cent to $20.75 as at 2:41 pm AEST.
