The Kogan.Com Ltd (ASX: KGN) share price has risen around 15% in reaction to the latest business update.
Kogan.Com is an online business that was set up by Ruslan Kogan in 2006 in his parent’s garage. Kogan.Com offers a variety of products and services including Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance and Kogan Travel. The company plans to launch Kogan Super in the near future. Kogan.Com aims to offer consumers price leadership through digital efficiencies.
Kogan.Com’s March 2019 Quarter Update
Kogan.Com announced that its business has generated strong earnings growth in the March quarter, whilst focusing on future growth.
The online company achieved revenue growth of 9.5% and gross profit growth of 28.4%. Operating costs only grew by 4.4%, translating into EBITDA growth of 96.4% (click here to learn what EBITDA means).
Kogan.Com outlined that for the nine months to 31 March 2019, EBITDA is 15% higher compared to nine months to March 2018.
This result was delivered by gross transaction value growth, the growth in value of all sales processed through Kogan.Com, of 17.5%.
The online business said it achieved 23.4% year on year growth of active customers, 40.6% growth of Kogan Mobile active customers, 78.7% quarter-on-quarter growth of Kogan Internet customers and 78.7% year-on-year revenue growth of Kogan Insurance.
Kogan.Com also announced that it and Eclipx Group Ltd (ASX: ECX) have entered into a partnership to launch Kogan Cars to secure new cars at cheap prices from dealers and enable people to trade-in cars. Kogan.Com will receive fees from Eclipx under this agreement.
The company has also launched Kogan First, allowing the customer to subscribe for unlimited free shipping and other benefits.
Kogan.Com Founder and CEO Ruslan Kogan said: “Our team has delivered a solid quarter of earnings growth, and continued to make in-demand products and services more affordable and accessible, all while launching Kogan Marketplace, and undertaking the preparatory work to launch key upcoming new verticals.”
Is Kogan.Com A Buy?
Kogan.Com is a very interesting business. On the one hand it is building the ‘network effect’ of online businesses that are very scalable, and its partners seem to be taking most of the operational risk (such as in Kogan insurance, Kogan Cars and so on).
However, the question is, can it actually achieve a sustainable market position with all of its services? Are there going to be too many different operations to keep track of? Will it actually be able to achieve a good profit with its segments, or will it be out-competed by specialists in each industry? Only time will tell.
For now, I’d rather go for the easier-to-judge ASX growth businesses in the free report below.
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