Kogan has continued its policy of underpromising and overdelivering in the 2016-17 financial year, proudly boasting of significantly outperforming the prospectus forecasts on “all key metrics” with all figures up.
Kogan.com Limited has announced (PDF link) its financial results for the full year ended 30 June 2017 (FY17), the company’s first as a publicly listed company. A YouTube video of its results presentation is embedded at the end of this article.
Here are the key highlights:
- Significantly outperformed prospectus forecast on all key metrics.
- Revenue of $289.5 million, up 37.1% on prior year (FY16: $211.2 million) and up.20.0% on prospectus forecasts
- Pro forma EBITDA of $13.2 million, up 230.0% on prior year (FY16: $4.0 million) and up 91.3% on prospectus forecasts, reflecting revenue growth and margin expansion.
- Pro forma NPAT of $7.2 million, up 800.0% on prior year (FY16: $0.8 million) and up 188.0% on prospectus forecasts.
- Statutory revenue and NPAT of $289.5 million and $3.7 million, respectively.
- Growth in active customer base to 955,000, up 36.0% from 30 June 2016, driven by growth in the Kogan Portfolio and strategic marketing initiatives.
- Gross margin of 17.9% (FY16:15.5%) due to product sales mix and new verticals.
- Strong balance sheet with net cash of $32.0 million, Pro forma operating cash flow before capital expenditure of $10.8 million and operating cash conversion of 81.8%.
- Fully franked final dividend of 3.80 cents per share, bringing total dividends in respect of FY17 to 7.70 cents per share, reflecting the outperformance of the business and the directors’ confidence in Kogan.com’s long-term strategy.
For FY18, Kogan advises strategic expansion of its private label range, more brand building, more partnerships for the Kogan Marketplace for third party brands to market to the Kogan community, more promotion of Kogan Mobile, a ramp up of Kogan Insurance, the launch of fixed-line NBN services in partnership with Vodafone (extending its existing mobile partnership), opportunistic M&A where applicable, and more growth for Kogan Retail.
{loadposition alex08}Kogan.com founder and chief executive Ruslan Kogan said: “Kogan.com has delivered a strong result for the full year. This result reflects the skill and dedication of our team, the growth in Kogan.com’s portfolio of products and services businesses and our ability to make well- considered investments in inventory and marketing in line with our long-term strategy.
“The company has a strong balance sheet which will allow us to continue to fund growth in our core Kogan Retail businesses, while the continued diversification of our Kogan Portfolio is providing strong cash flows. Our team is very proud of the fact that we’ve managed to build and engineer a business model that is both a high-growth and dividend-paying company.
“We will continue to look for opportunities to serve our loyal community of customers with new value-focused offers. In a noisy marketplace, the Kogan brand is recognised for price leadership through digital efficiency. Recent industry awards — in particular, winning the People’s Choice Award at Startrack’s ORIAS — are a testament to this. In FY17 our offer spanned retail, marketplace, mobile and travel and in FY18 we add Kogan NBN and Kogan Insurance. We are all very excited for the year ahead.”
The company says the following factors positively impacted its FY17 result:
- Growing brand
- Kogan.com had 955,000 active customers as at 30 June 2017, up 36.0% on the prior year. Marketing initiatives outlined in the prospectus were successfully executed and continue to be a disciplined focus for Kogan.com, with annual revenue per customer and gross profit per customer increasing. Kogan.com has recently been recognised: with the People’s Choice Award at Startrack’s Online Retail Industry Awards (ORIAS); as the #1 Most Mobile Ready Brand by Ansible; and as having the Best Value for Money TV on the market by Canstar.
- Growth in third party domestic sales including via Kogan Marketplace
- Additional brands and an expanded range of products boosted this channel, reflecting increased interest from brands and distributors in the Kogan.com Active Customer base. Revenue from this channel grew 51.3% year on year.
- Precision private label execution
- In FY17, Kogan.com deployed proceeds from the IPO to respond to pent up demand for its private label products. Utilising an analytical approach to sourcing decisions enabled Kogan.com to service the existing demand while maintaining healthy inventory levels. Private label revenue was up 20.8% on prior year and represented 52.2% of the group’s gross profit in FY17.
- Strong growth in Kogan Mobile
- Kogan Mobile is continuing to scale, with annual revenue reaching $3.6 million in FY17 as a result of both new customer acquisitions and repeat customers.
- Gross margin expansion
- Gross margin was 17.9%, exceeding the prospectus forecast by 2.7pp. Margin expansion was driven by precision demand planning to build private label inventory, automation initiatives and the accelerated growth of Kogan Mobile.
- Proprietary eCommerce platform and ERP
- Kogan.com’s multi-channel proprietary world class platform allows personalisation in marketing and scalability of the consumer offering.
Here’s what Kogan says it will focus on for FY18:
- Continued investment in expanding the Kogan Retail private label range, where pre- existing online demand is established and where Kogan.com can be a price leader with a strong competitive advantage;
- Continued investment in brand-building to drive revenue per customer and conversion rates across the portfolio;
- Continued partnerships with select brands and distributors via Kogan Marketplace, giving those brands an effective channel to market via a direct voice with the Kogan Community;
- Continued promotion and marketing support for Kogan Mobile, which continues to grow strongly with a win-win-win proposition for the Kogan Community, our partner Vodafone, and Kogan.com;
- Ramp up of Kogan Insurance — which launched in early 1H18 in partnership with Hollard Insurance Company — with the objective of delivering value for money in home, contents, landlord, car and travel insurance;
- Launch of Kogan Broadband in 2H18, also in partnership with Vodafone, offering competitively priced fixed-line NBN services;
- Continued assessment of opportunities to grow Kogan Retail via opportunistic M&A; and
- Continued assessment of opportunities to expand the Kogan Portfolio of products and services in ways that serve the Kogan Community and continue to build goodwill.
The company’s board says it, “believes that the business will continue its trajectory of strong revenue growth on the back of the growing Kogan brand and our ongoing investments in marketing and inventory".
"The board also believes that the business-wide EBITDA margin will grow on the back of rapid growth in Kogan Mobile and continued expansion of the Kogan Portfolio of businesses into new verticals."
Here is the "Kogan.com (ASX:KGN) FY17 Results Presentation"