Kogan.com shares jump as half-year results turn from red to black, despite ongoing sales and revenue falls

Online retailer Kogan.com is back in the black and will pay its first dividend in three years after posting a net profit of $8.7 million for the half-year (1h24) to December 31.

It’s a turnaround of more than $30 million on the $23.8 million half-yearly loss 12 months ago and comes despite a 9.9% fall in revenue to $248.2 million for the half, alongside a 5.6% drop in gross sales to $446.6 million.

The company (ASX: KGN), now nearly 18 years old, has reinstated an interim dividend for the first time since May 2021, paying 7.5¢ per share.

Kogan.com shares jumped more than 20% in morning trade to a 25-month high above $7.40 on the half-year results and have now risen more than 70% in a 4 weeks from January 23’s close of $4.37.

Gross margin jumped 13.2% to 36.1%. The company said that was due to Kogan.com product division profitability recovering following the optimisation of inventory and focusing on platform and software-based subscription revenue.

The stock levels that the company previously blamed on its losses continued to drop, with inventory down 30.6% as Kogan looks to transform to a marketplace business via Kogan Marketplace, Kogan Verticals, advertising and other income. Platform-based sales increase to 63% of gross sales.

Adjusted EBITDA was $21.5 million, a turnaround from a $4.4 million loss 12 months ago. Adjusted net profit after tax was $10.2m (1H23: $9.6m loss)

Founder and CEO Ruslan Kogan said he’s “never been more confident” about the outlook for our business

“While our business transformation to a more efficient, platform and software based model is in its early days, it’s promising to see that it’s starting to pay dividends,” he said.

“We’ve recently launched Mighty Ape’s first Vertical, Might Mobile, as well as our Advertising Platform which is supporting sellers on our Marketplace. In addition, we’ve delivered more savings and benefits to our customers, in particular our fast-growing Kogan FIRST Subscribers.”

Ruslan Kogan remains one Australia’s highest paid CEOs, taking home $15.2 million in FY22 – a 60% increase on FY21’s $9 million when the business was last profitable.

Last financial year, as the losses continued, he received a 13% pay rise to $17m.

One explanation for the rapid rise in Kogan First subscribers may be why consumer advocacy organisation CHOICE gave Kogan.com a ‘Shonky’ award for the $99 subscription

CHOICE accused Kogan of “tricking customers” into signing up for the trial after it conducted a mystery shop of Kogan with 19 shoppers, and nearly a third – six – accidentally signed up for Kogan First. None of them knew how much they had agreed to pay after the trial ended.

It’s been a tough 12 months for the business as it sought to turn around ongoing losses and a plummeting share price that saw Kogan.com dropped from the All Tech Index last March.

A year ago, the online retailer revealed its half-yearly loss had doubled on 2022’s to a statuary loss of $23.8 million as gross sales fall 32.5% to $471.1 million and revenue fall 34.3% to $275.6m on a year ago.

A year on, that red ink has finally been washed away, but there two trends that continue: falling gross sales and revenues since pandemic peaks in 2021 and 2022, mow sliding towards FY2020 levels when the Kogan.com posted $772.3m in annual gross sales and $497.9m in annual revenue.

The business has now lost nearly a third of its customer since FY22, reporting 2,744 million group active customers – 2,026,000 within Kogan.com and 718,000 within Mighty Ape in 1H24. That compares with 3.972 million in the 2022 financial year.

The company says that “consistent with prior years” it will still not offer earnings guidance.