Kogan revenue up but profit takes 87% nosedive to AU$3.5 million

Kogan's dip in profit was attributed to the company's expenses more than doubling across the board.
Written by Campbell Kwan, Contributor

Kogan's net profit after tax (NPAT) for the 2021 financial year whittled down to AU$3.5 million, marking an 86% decline compared to its AU$26.8 million performance last year.

The nosedive in profit was due to higher freight and inventory costs, with both amounting to almost AU$69 million and AU$35 million, respectively. By comparison, these expenses were more than double those incurred during FY20.

The company also had AU$86 million in administrative expenses, which was almost AU$51 million more than last year.

Within those expenses were logistics demurrage charges of AU$7.7 million as a result of COVID-related warehousing and supply chain interruptions, AU$15.6 million in equity-based compensation expenses to cover the cost of options awarded to Kogan co-founders Ruslan Kogan and David Shafer, and AU$12 million in provisions for the final payments to acquire New Zealand online retailer Mighty Ape.

Revenue-wise, Kogan continued to see increases during FY21 by earning just over AU$780 million in total revenue. In FY20, Kogan had AU$498 million in total revenue.

Apportioning total revenue into Kogan's various segments, Kogan's exclusive brands provided the lion's share with AU$378 million, which was a 62.5% year-on-year increase. This was followed by third-party brands chipping in AU$271.7 million and Kogan Marketplace with AU$23.4 million, marking 19% and 79% jumps, respectively.  Kogan First also saw its revenue grow during FY21, which grew 280% to AU$8.9 million. 

Kogan Mobile did not share the same fate as it saw its revenue dip by 11.5% year-on-year to AU$11.3 million. Mighty Ape, meanwhile, contributed AU$80.2 million during its first year being owned by Kogan and rounding out the online retailer's earnings was AU$4 million earned from ad income.

The full-year performance is in stark contrast to the company's first-half results posted just six months ago, when it posted a half-year NPAT increase of 164% to AU$23.6 million.  

In light of the 87% profit plunge, Kogan said it has withheld its final dividend.

"To support the company with its growth plans, the board has decided to conserve cash for business investment and growth purposes and has paused dividends," the company said.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was also cut in half, going from AU$46.5 million to AU$22.5 million.

Adjusted EBITDA, which removes equity-based compensation and one-off costs, painted a better picture as it jumped 40% year-on-year to AU$61.8 million.

As of June 2021, Kogan has 3.2 million active customers, Mighty Ape has 764,000 customers, while 120,000 customers have signed onto the Kogan First service, the company said. It added that Kogan's market share within the Australian online retail market rose by 14 percentage points to 35.3%.

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