Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kogan.com Ltd (ASX:KGN, Financial) achieved strong profitability with an adjusted EBITDA of $40 million for FY24.
- The company declared a final year dividend of $0.075 per ordinary share, totaling $0.15 per share for the financial year.
- Kogan FIRST loyalty program grew to over 0.5 million subscribers, while Mighty Ape PRIMATE grew by more than 35% during the year.
- The launch of the Kogan advertising platform generated $2.9 million in advertising revenue, indicating strong potential.
- The company maintained a solid balance sheet with $41.2 million in cash and zero debt.
Negative Points
- Top-line sales dipped due to a strategic focus on platform-based sales, impacting overall revenue.
- The retail environment in New Zealand remains challenging due to economic pressures and reduced consumer spending.
- Operational costs increased temporarily due to the setup of a new warehouse in Christchurch.
- Revenue from the products division was impacted by cycling a prior year of increased promotional activity.
- Kogan FIRST revenue showed a decline in the second half compared to the first half, indicating potential challenges in maintaining consistent growth.
Q & A Highlights
Q: Looking back at the January update, adjusted EBITDA was $4.9 million. That represented about a quarter of the second half '24 EBITDA. At the July update, the $3.5 million represented about a sixth of the first half '24 adjusted EBITDA. Are the seasonal factors closer to the January update of the half or is it closer to the pcp?
A: We don't give forward guidance, but there's nothing out of the ordinary in July. It's a standard month, and we're pleased with the performance. We'll see how the rest of the year pans out. — Ruslan Kogan, CEO
Q: How should we think about margin profile going forward?
A: We don't provide forward guidance, but you can see the results of what we do with Kogan FIRST and how it performs based on the numbers we disclose. — Ruslan Kogan, CEO
Q: Between Kogan FIRST verticals and products, what was the main driver of the 15.6% revenue growth for July?
A: We don't break out that level of detail. We provided the July performance number, but we won't be providing month-by-month analysis on the various lines of product performance. — Ruslan Kogan, CEO
Q: Kogan FIRST revenue was down half on half, second half versus first half, despite price and subscriber growth year on year and half on half. Can you explain the dynamics on how subscriber growth translates to revenue and earnings?
A: Subscriber growth in Kogan FIRST is related to promotional activities and transactional volumes. The best way to monitor that is to look at the revenue and sales over time for Kogan FIRST. — Ruslan Kogan, CEO
Q: What are the earnings tailwinds in FY25 and operating synergies from opening the Christchurch warehouse?
A: The Christchurch warehouse setup costs were expensed rather than capitalized. We believe there will be a material saving in the Mighty Ape business into FY25 in terms of costs that were incurred in FY24 that will not be continuing or will reduce progressively over the course of the year. — David Shafer, CFO
Q: To what extent can we extrapolate July '24 EBITDA update of $5 million for FY25?
A: We're hesitant to give any forward commentary. There's nothing one-off in nature in the July result. Aryan's guess is as good as ours in terms of whether you can replicate that number for the remainder of the calendar year. — David Shafer, CFO
Q: What have you noticed around churn post the price increase for Kogan FIRST?
A: The price increase came into effect in April. We had over 500,000 Kogan FIRST subscribers. The price increase is not something that will impact customers too much. The program delivers immense value, and we believe customers can't afford not to be a Kogan FIRST subscriber. — Ruslan Kogan, CEO
Q: What percentage of the Kogan FIRST back book is now on the revised pricing?
A: We don't go into that level of detail on our various cohorts. — Ruslan Kogan, CEO
Q: Are there any categories in particular underperforming or outperforming in exclusive brands?
A: TVs and home appliances are performing very strongly and driving a lot of the performance in our business. These are the things that our business has been known for the longest. — Ruslan Kogan, CEO
Q: Has there been any change in the way Kogan FIRST revenues are recognized?
A: There's no change in the way Kogan FIRST revenues are recognized. Revenue is recognized over the course of the year based on the usage pattern of customers. — David Shafer, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
