The Kogan.Com Ltd (ASX: KGN) share price climbed around 4.5% today after giving a business update to the market.
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.
What Kogan.Com Announced
Kogan.com said that in the final quarter of FY19 it saw a good first full quarter contribution from Kogan Marketplace with continued growth in ‘Exclusive Brands’ and plenty of work done for the launch of other services like Kogan Mobile NZ, Kogan Credit Cards, Kogan Super, Kogan Energy and Kogan Cars.
The online business achieved 15.9% growth of active customers, ending the year with just over 1.6 million. Kogan Mobile customer s grew by 24.4% and Kogan Internet customers increased by 273%.
Kogan Insurance commission-based revenue in the second half of FY19 increased by more than double compared to the second half of FY18. Meanwhile, ‘Exclusive Brands’ revenue in the second half of FY19 increased by over 30% compared to the same period a year previously.
Kogan Marketplace was launched in the March 2019 quarter, and achieved gross transaction value of $3 million in April 2019, $4 million in May 2019 and $5 million in June 2019. This is clearly good progress on a month by month basis.
It has also formed a US business to supply ‘Exclusive Brand’ products to US retailers, with the first orders already having been received from “large US-based retailers”.
Looking at the unaudited management accounts for the second half of FY19 compared to the second half of FY18, gross transaction value growth was over 9%, gross profit growth was over 12% and operating costs reduced by more than 2%. This combination led to EBITDA (click here to learn what EBITDA means) growth of 25%.
The final disclosure was about the balance sheet – at 30 June 2019 cash was $27.5 million, inventory was $75.7 million and there is no bank debt.
This was a solid update by Kogan and it shows it can do well despite the increasing online competition from places like Amazon.
Even so, retail just isn’t the sector for me. I prefer the idea of investing in growth businesses in consistent industries like the ones in the free report below.
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