​Kogan.com produces AU$1.5m profit as focus turns to brand building

The online retailer has posted AU$1.5 million in statutory after-tax profit for its first full half since going public last year.
Written by Asha Barbaschow, Contributor

Online retailer Kogan.com has reported its results for the six months ended December 31, 2016, announcing statutory after-tax profit of AU$1.5 million.

For the first half of the 2017 financial year, Kogan.com reported pro forma trading earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$7.3 million, up from the AU$2.6 million figure reported for the corresponding period a year prior.

Revenue for the period came in at AU$143.9 million, up from the AU$104.7 million reported during the previous financial year.

Private Label, Kogan.com's own branded technology and appliance range, contributed AU$44.8 million to the company's total revenue during the six-month period.

In its market update provided to the Australian Securities Exchange (ASX) on Thursday, Kogan.com said it was delivering its results with pro forma adjustments to its statutory results to account for initial public offering (IPO) transaction costs, listed company costs, and historical governance costs.

Thursday's results are the first full six-month figures to be published since the organisation went public in July last year.

At time of IPO, Kogan offered shares at AU$1.80 each to raise AU$50 million, giving the company a market capitalisation of AU$168 million.

The company said on Thursday that significant funds raised from the IPO have since been invested in accelerating Kogan.com's growth strategy, including investment in automation to leverage data, analytics, and customer insights from its online platform.

Funds were also used to "capitalise on growth opportunities" in Private Label, Kogan.com founder and CEO Ruslan Kogan said.

"We are pleased to deliver results for our shareholders that exceed full-year Prospectus earnings forecasts and demonstrate that we are on track to continue to build the Kogan.com business in line with our long-term business strategy," the CEO said.

"Our trading results reflect the culmination of years of work from our world-class team in building the systems, processes, and platforms that allow us to scale our diversified portfolio of product divisions and new verticals."

During the first half, Kogan.com experienced growth in its active customer base to 830,000, up 18.2 percent from June 30, 2016. The current customer base includes the addition of 128,000 customers during the six-month period, which was contributed to by the launch of Dick Smith online.

Kogan.com acquired Dick Smith's online retail business in March, following the electronic retailer entering into voluntary administration in early January.

Kogan Mobile reported AU$1.1 million in gross sales during the six-month period, almost reaching its 12-month goal of AU$1.4 million. Kogan attributed its million-dollar sales to its commercial relationship with Vodafone, saying the company has been able to bring a "compelling" offering to the market as a result.

Kogan Mobile was relaunched on Vodafone's 3G network in October 2015 following a short-lived tenure in the mobile industry in 2013, which was marked by an unfortunate deal with ISPOne to resell Telstra 3G services.

In April last year, the company announced Kogan Mobile customers would be able to use Vodafone Australia's 4G network, with all new and existing customers transitioned over to the higher-speed network in June without any increase in pricing.

Under the arrangement with the telecommunications provider, Vodafone is responsible for operations, while Kogan is responsible for branding, marketing, and customer acquisition, the company explained.

"Kogan Mobile is continuing to deliver new plans and promotions into market, demonstrating the strength of the Kogan brand in launching and growing new verticals," the CEO said.

Kogan Travel also contributed AU$2.8 million to the company's total revenue during the first half of the 2017 financial year.

For the 2016 financial year, Kogan.com reported AU$809,149 in after tax profit on revenue of AU$211.2 million. EBITDA came in at AU$3.9 million for the 12-month period and gross profit for period was AU$32 million, a slight increase on AU$28 million recorded in calendar year 2015.

At the time, Kogan.com attributed the positive performance of FY16 to a number of factors including the growth of its customer base to 3.7 million active subscribers as of June 30, 2016, up 60.8 percent from 2015, as well as the launch of Dick Smith which delivered the company AU$6.5 million in revenue.

Looking forward, Kogan.com is forecasting pro forma trading EBITDA of between AU$10.5 million and AU$11.5 million for the 2017 financial year.

The company said it will be focusing on further growth of its active customer base; increased value from investment in proprietary systems, ERP, and automation; Private Label growth; and further growth in Kogan Mobile.

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