The Kogan.com Ltd (ASX: KGN) share price is up around 14% after the ASX share announced its FY24 result.
Kogan is an online retailer of various goods and services including electronics, furniture, telecommunications, insurance and a subscription service (Kogan First).
FY24 result
Here are the highlights from the FY24 report:
- Gross sales down 4.8% to $809 million
- Gross profit increased 23.3% to $168.4 million
- Kogan First subscribers increased 25.2% to 502,000
- EBITDA improved $56.8 million to $36 million
- EBIT soared $58.3 million to $20.9 million
- Underlying net profit after tax (NPAT) increased $25.3 million to $21 million
- Statutory NPAT increased $26 million to $0.1 million
- Final dividend of $0.075 per share
- Full-year dividend of $0.15 per share
Kogan revealed that platform-based sales increased to 62% of Kogan.com’s gross sales (which includes Mighty Ape), delivering “higher quality earnings and improved margin”.
The products division returned to year on year revenue growth in the fourth quarter, while FY24 gross profit increased 39.6% to $39.3 million. ‘Verticals’ grew revenue by 20.5% to $20 million. Kogan.com’s advertising platform has grown to $2.9 million of advertising revenue and is expected to become more meaningful as it continues scaling.
Kogan said the growth of its loyalty programs – Kogan First and Mighty Ape Primate – have built a meaningful loyalty customer base for the ASX share, supporting the realisation of marketing efficiencies. Marketing costs reduced by 1%.
The company’s balance sheet is in a good position, with a cash balance of $41.2 million and no debt.
Outlook for the Kogan share price
The business revealed how it performed in July 2024. Gross sales increased 2.1% to $63.9 million, revenue increased 15.6% to $40.3 million, gross profit rose 23% to $15.6 million, adjusted EBITDA climbed 53.4% to $5.3 million and adjusted EBIT soared 88.9% to $4 million.
Kogan is seeing the numbers move in the right direction and it’s demonstrating operating leverage again. Will it last? Who knows. The company seems to keep facing speed bumps every so often, so I’m not sure if this is the right time to buy, but it could be undervalued if sales and profit keep rising.
The current financial environment, where household budgets are tight, should be where Kogan can excel by providing cheap products.
Brave investors may want to invest for a recovery of profit, but this is certainly a higher-risk business, as we’ve seen over the past three years. There are other ASX growth shares I’d buy first.
