Slide 1: 1HFY19 Results
1HFY19 RESULTS 22 February 2019
Slide 2: Important Notice
IMPORTANT NOTICE This disclaimer applies to this presentation and the information contained in it (the “Presentation”). By reading this disclaimer you agree to be bound by it. Important notice and disclaimer: This presentation contains a general summary of the activities of Kogan.com Ltd (Kogan.com)
Slide 3: Contents
CONTENTS CEO Update Page 4 - 12 Financial Update Page 13 - 23 Outlook Page 24 - 28 3
Slide 4: CEO Update
CEO Update Ruslan Kogan Founder & CEO 4
Slide 5: 1HFY19 Highlights
1HFY19 HIGHLIGHTS FINANCIAL PERFORMANCE • GTV of $277.3 million and Revenue of $231.8 million out-performed the prior year by 12.9% and 10.6%1, respectively. 1HFY19 EBITDA was $13.3 million GROWING BRAND • 1,542,000 Active Customers at 31 December 2018 – an increase of 32.2% year-on-year STRONG GROW
Slide 6: 1HFY19 Results
1HFY19 RESULTS Gross Profit growth of 10.8% reflects strong performance from core Product Divisions and New Verticals 1HFY18 vs 1HFY19 1HFY181 1HFY19 Variance GTV 245.6 277.3 12.9% Revenue1 $m 209.6 231.8 10.6% Gross Profit 40.7 45.1 10.8% Gross Margin1 19.4% 19.5% 0.1pp/0.1% EBITDA1 $m 14.1 13.3 -5
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS IXzz!XnRXJRnXJRÁ³ Revenue and Gross Profit continue to grow by double digits, while EBITDA was impacted by investments in logistics 5HYHQXHDQG*URVV3URILWFRQWLQXHWRJURZZKLOH(%,7'$ZDVLPSDFWHGE\LQYHVWPHQWVLQORJLVWLFVDQGPDUNHWLQJ and marketing. REVENUE1 GROSS PROFIT 1 EBITDA1 5(9(18
Slide 8: Who We Are
WHO WE ARE We have built a company that allows us to be agile, bold and innovative. Our growing portfolio of businesses provides diversification of income, making us a more resilient business. 1,542,000 Active Customers1 Additional Channels Notes: 8 1. Active Customers includes customers that transa
Slide 9: Kogan Kinetics: Our Virtuous Cycle
KOGAN KINETICS OUR VIRTUOUS CYCLE CUSTOMER & BRAND GROWTH • Scale efficiencies • Customer acquisition & retention ENHANCED CONSUMER MORE PARTNERS OFFERING & PRODUCTS • Broader selection • More brands • Improved pricing • Additional verticals • Top tier manufacturing partners 9
Slide 10: Building the Kogan Brand
BUILDING THE KOGAN BRAND IXzz!XnRXJRnXJRÁ³ %8,/',1*7+(.2*$1%5$1' In the twelve months to December 2018, the business achieved 32.2% growth in Active Customers 5HYHQXHDQG*URVV3URILWFRQWLQXHWRJURZZKLOH(%,7'$ZDVLPSDFWHGE\LQYHVWPHQWVLQORJLVWLFVDQGPDUNHWLQJ ,QWKHWZHOYHPRQWKVWR'HFHPEHUWKHEXVLQHVVDFKLHYHGJ
Slide 11: Building the Kogan Brand
BUILDING THE KOGAN BRAND %8,/',1*7+(.2*$1%5$1' %8,/',1*7+(.2*$1%5$1' A large percentage of traffic continues to come from free sources. Gross sales per customer was impacted by a reduction in high value Apple sales and the introduction of a long-tail of lower value items on our websites, while the $
Slide 12: Exclusive Brands Strategy
(;&/86,9(%5$1'6675$7(*< EXCLUSIVE BRANDS STRATEGY %8,/',1*7+(.2*$1%5$1' ([FOXVLYH%UDQGVFRQWLQXHWRGHPRQVWUDWHVWURQJJURZWKDVZHFRQWLQXHWRPHHWVWURQJFRQVXPHUGHPDQGDFURVVD Exclusive Brands continue to demonstrate strong growth, as we continue to meet strong consumer demand across $ODUJHSHUFHQWDJHRIWUDIILF
Slide 13: Financial Update
Financial Update David Shafer CFO/COO 13
Slide 14: 1HFY19 Results Compared to 1HFY18
1HFY19 RESULTS COMPARED TO 1HFY18 Our diversified portfolio of businesses continued to deliver top- line growth and growth in gross profit, as we managed our costs OVERVIEW and investments in marketing and warehousing. GTV reflects the gross sales of Kogan Retail and the gross transaction value of N
Slide 15: Key Drivers of 1HFY19 Financial Performance
KEY DRIVERS OF KOGAN.COM 1HFY19 FINANCIAL PERFORMANCE The business achieved strong Active Customer growth and revenue growth across core Product Divisions, while actively managing operating costs and investments to reflect the trading environment. Our portfolio of businesses gave diversification of
Slide 16: Key Drivers of 1HFY19 Financial Performance
KEY DRIVERS OF KOGAN.COM 1HFY19 FINANCIAL PERFORMANCE Kogan Mobile continued to achieve strong growth in Active Customers over the period. We provided NEW VERTICALS compelling promotional introductory offers, which impacted ARPU over the period. As promotional offers apply for a limited period, we e
Slide 17: 1HFY19 Gross Profit Product & Business Mix
1HFY19 GROSS PROFIT PRODUCT & BUSINESS MIX Exclusive Brands and Partner Brands represented 50.9% and 27.2% of gross profit in 1HFY19, respectively. When combined with Kogan Mobile, these three core divisions accounted for 90.1% of gross profit. 1HFY19 GROSS PROFIT MIX 0.8% 0.1% Growth in Exclusive B
Slide 18: Kogan Mobile & Internet
(;&/86,9(%5$1'6675$7(*< (;&/86,9(%5$1'6675$7(*< %8,/',1*7+(.2*$1%5$1' %8,/',1*7+(.2*$1%5$1' .2*$102%,/( .2*$1,17(51(7 ([FOXVLYH%UDQGVFRQWLQXHWRGHPRQVWUDWHVWURQJJURZWKDVZHFRQWLQXHWRPHHWVWURQJFRQVXPHUGHPDQGDFUR .2*$102%,/( KOGAN MOBILE &.2*$1,17(51(7 $ODUJHSHUFHQWDJHRIWUDIILFFRQWLQXHVWRFRPHIURPIUHHVRX
Slide 19: Kogan Insurance
(;&/86,9(%5$1'6675$7(*< %8,/',1*7+(.2*$1%5$1' .2*$1,1685$1&( .2*$102%,/( KOGAN INSURANCE .2*$1,17(51(7 ([FOXVLYH%UDQGVFRQWLQXHWRGHPRQVWUDWHVWURQJJURZWKDVZHFRQWLQXHWRPHHWVWURQJFRQVXPHUGHPDQGDFURVV $ODUJHSHUFHQWDJHRIWUDIILFFRQWLQXHVWRFRPHIURPIUHHVRXUFHV*URVVVDOHVSHUFXVWRPHUZDVLPSDFWHGE\DUHGXFWLRQLQKLJ
Slide 20: Operating Costs
OPERATING COSTS During 1HFY19, the business made investments in the future, specifically through expanding our warehouse footprint and investing in marketing. Operating costs in 2QFY19 represented 12.9% of revenue, compared to 13.7% for the first half of FY19 (1HFY18: 12.7%) demonstrating that some
Slide 21: Net Assets
NET ASSETS Cash of $15.5 million reflects the investments in inventory in order to respond to customer demand in Exclusive Brands and Partner Brands. $m Dec-18 CURRENT ASSETS Cash and cash equivalents 15.5 Trade and other receivables 3.5 Inventories 92.9 Inventories of $92.9 million comprised : Fina
Slide 22: Inventory Turn
(;&/86,9(%5$1'6675$7(*< ,19(1725<7851 INVENTORY TURN %8,/',1*7+(.2*$1%5$1' .2*$1,1685$1&( .2*$102%,/( order to respond to consumer demand.2*$1,17(51(7 ([FOXVLYH%UDQGVFRQWLQXHWRGHPRQVWUDWHVWURQJJURZWKDVZHFRQWLQXHWRPHHWVWURQJFRQVXPHUGHPDQGDFURVVD In from the growing base of active customers, the busin
Slide 23: 1HFY19 Statutory Cash Flow
1HFY19 STATUTORY CASH FLOW The business invested in inventory during the half to respond to consumer demand, and drive the revenue growth of 26.1% in Exclusive Brands and 96.5% in Partner Brands $m Statutory 1HF19 OVERVIEW Statutory EBITDA 13.3 Non-cash items in EBITDA1 (1.2) The operating cash flow
Slide 24: Outlook
Outlook kogan.com Ea
Slide 25: 2HFY19 & Beyond
2HFY19 & BEYOND In 2HFY19, we expect continued brand growth, deeper market penetration in existing portfolio businesses and to launch new portfolio businesses. SELECTIVE & OPPORTUNISTIC M&A LAUNCH ADDITIONAL BUSINESS VERTICALS 25
Slide 26: Portfolio Business - Market Size
PORTFOLIO BUSINESS - MARKET SIZE Achieved greater than 1% Portfolio Business Partner Launch date Market size market share? Kogan Retail n/a FY06 $21.3 billion1 ✓ Kogan Internet Vodafone Launched 4QFY18 10.9m premises2 - Kogan Insurance Hollard Launched 1QFY18 $43.0 billion3 - Kogan Health Medibank L
Slide 27: Outlook
OUTLOOK In 2019, we expect to see the scaling up and launch of New Verticals, and further growth in the Active Customer base 2HFY19 has started well with January unaudited management accounts showing YoY: • Revenue growth of 13.1%; • Gross profit growth of 19.9%; and • Operating costs (Variable Cost
Slide 28: Dividend
DIVIDEND The board has declared a fully franked dividend of 6.1 cents per share DPS (cents) Franking (%) Record date Payment date Dividend per share (cents) 6.1 100.0 23 April 2019 8 May 2019 28
Slide 29: Glossary
GLOSSARY 1HFYxx: the six months ended 31 December 20xx. 2HFYxx: the six months ended 30 June 20xx. 1QFYxx: the three months ended 30 September 20xx. 2QFYxx: the three months ended 31 December 20xx. Active Customers: unique customers who have purchased in the last twelve months from X date, rounded t
Slide 30: Glossary
GLOSSARY Kogan Mobile: New Vertical offering pre-paid mobile phone plans available online using Vodafone’s mobile network in Australia. Kogan Mobile New Zealand: New Vertical due to launch in FY19 offering pre-paid mobile phone plans available online using Vodafone’s mobile network in New Zealand. K
Slide 31: Annexure 1: 1HFY19 Gross Sales & Revenue by Portfolio Business
ANNEXURE 1 1HFY19 GROSS SALES & REVENUE BY PORTFOLIO BUSINESS Partner Brands achieved revenue growth of 96.5% year-on-year. 1HFY18 1HFY19 YoY revenue $m Gross Sales Revenue Gross Sales 1 Revenue growth % Exclusive Brands 71.8 65.9 87.9 83.1 26.1% Global Brands 90.9 86.2 46.6 46.9 -45.6% Partner Bran
Slide 32: Annexure 2: 1HFY19 Impacts of AASB 15
ANNEXURE 2 1HFY19 IMPACTS OF AASB 15 1HFY19 without adoption of $m 1HFY19 reported 1 2 AASB 15 Revenue 231.8 3.2 0.3 235.3 Cost of Sales (186.7) (3.2) - (189.9) Gross Profit 45.1 - 0.3 45.4 Gross Margin % 19.5% - - 19.3% EBITDA 13.3 - 0.3 13.6 In line with changes to accounting standards for the fin
Slide 33: Annexure 3: 1HFY18 Statutory Reconciliation to Trading Results
ANNEXURE 3 1HFY18 STATUTORY RECONCILIATION TO TRADING RESULTS Statutory Unrealised FX Trading $m 1HFY18 gain or loss1 actual 1HFY18 Revenue 209.6 209.6 Cost of Sales (168.9) (168.9) Gross Profit 40.7 40.7 Gross Margin % 19.4% 19.4% Variable Costs (6.9) (6.9) Marketing Costs (9.5) (9.5) People Costs