Slide 1: 1H17 Investor Presentation
For personal use only 1H17 INVESTOR PRESENTATION 23 FEBRUARY 2017
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. For personal use only Important notice and disclaimer: This presentation contains a general summary of the activities of Kog
Slide 3: Contents
CONTENTS For personal use only CEO Update Page 4 - 11 Financial Update Page 12 - 22 Outlook Page 23 - 25 Q&A 3
Slide 4: CEO Update
For personal use only CEO Update Ruslan Kogan Founder & CEO 4
Slide 5: 1H17 Results
1H17 RESULTS Kogan.com exceeded the full year FY17 Prospectus forecast Pro Forma EBITDA of $6.9 million within the first half. For personal use only Prospectus Prospectus forecast to Actual 1H17 Actual 1H16 1H172 Actual 1H17 Variance % Revenue $m 104.7 123.3 143.9 16.7% Gross Margin % 15.1% 15.2% 18
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue, Gross Margin and Pro Forma Trading EBITDA exceeded 1H17 Prospectus forecast2. 1H17 Pro Forma Trading EBITDA exceeded the full year FY17 Prospectus forecast. For personal use only REVENUE GROSS MARGIN Pro Forma Trading EBITDA1 155.0 18.5% 8.0 18.0% 145.0 7.0 17.5% 135.0
Slide 7: First Half in Review
FIRST HALF IN REVIEW How we delivered value in 1H17: For personal use only BEST-IN-CLASS DATA DRIVEN CULTURE COMPELLING OFFERING SERVICE & TECHNOLOGY Leveraging data, analytics and We believe ‘There is always a Strong Private Label offering, customer insights to effectively better way’ and as such c
Slide 8: Building the Kogan Brand
BUILDING THE KOGAN BRAND In the six months to December 2016, the business achieved 18.2% growth in active customers. For personal use only Dec-16 vs Jun-16 Dec-15 Jun-16 Dec-16 growth % Active Customers1 621,000 702,000 830,000 18.2% LTM UNIQUE ACTIVE CUSTOMERS1 850 800 750 ‘000 700 650 600 MAR-16 J
Slide 9: Industry Leading Proprietary IT Platform
INDUSTRY LEADING PROPRIETARY IT PLATFORM Scalable web infrastructure that drives increased engagement and conversion optimisation For personal use only Leveraging data, analytics and long-term investments in systems to continually better understand PROPRIETARY our customers and what interests them.
Slide 10: Private Label Strategy
PRIVATE LABEL STRATEGY Private Label is a pillar of the business and remains a focus area for the business to generate further growth and build the customer base. Investment of IPO proceeds in our exclusive Private Label brands is expected to be a key For personal use only driver in 2H17 performance
Slide 11: Continued Growth in Third Party Domestic Offering in 1H17
CONTINUED GROWTH IN THIRD PARTY DOMESTIC OFFERING IN 1H17 For personal use only Third Party Domestic continues to expand as brands are increasingly attracted to our customer base and distribution capability. NUMBER OF THIRD PARTY DOMESTIC BRAND PARTNERS 402 352 302 252 202 152 102 52 2 Mar-15 Apr-15
Slide 12: Financial Update
For personal use only Financial Update David Shafer CFO/COO 12
Slide 13: Pro Forma Trading Actual & Forecast Results
PRO FORMA TRADING ACTUAL & FORECAST RESULTS Higher than forecast revenue and gross margin drove an out performance against 1H17 Prospectus forecast Pro Forma EBITDA of 92.1%. For personal use only Pro Forma Prospectus Trading $m forecast 1H17 actual 1H17 % Variance Gross sales 130.2 154.4 18.6% OVER
Slide 14: Pro Forma Trading 1H17 Results Compared to 1H16
PRO FORMA TRADING 1H17 RESULTS COMPARED TO 1H16 Pro Forma Trading EBITDA increased by 180.8% year on year. For personal use only Pro Forma Pro Forma Trading actual Trading $m 1H16 actual 1H17 % Variance Gross sales 107.1 154.4 44.2% OVERVIEW Revenue 104.7 143.9 37.3% Revenue growth of $39.2 million
Slide 15: Key Drivers of Kogan.com 1H17 Financial Performance
KEY DRIVERS OF KOGAN.COM 1H17 FINANCIAL PERFORMANCE For personal use only The business is utilising IPO proceeds to deliver on growth strategies, with the benefits starting to be realised in 1H17. Following the IPO, cash constraints were released and the business was able to implement RELEASE OF CAS
Slide 16: Key Drivers of Kogan.com 1H17 Financial Performance
KEY DRIVERS OF KOGAN.COM 1H17 FINANCIAL PERFORMANCE For personal use only Focus on efficiencies, automation initiatives and Private Label resulting in improved gross margins. Improvements in efficiency, automation initiatives, continual improvements to our ERP and expansion in the product offering a
Slide 17: 1H17 Gross Profit Product & Business Mix
1H17 GROSS PROFIT PRODUCT & BUSINESS MIX Following investment of IPO proceeds in 1H17, Private Label is poised for strong growth in 2H17. For personal use only GROSS PROFIT MIX IN 1H17 Mobile 4.2% Other Income 0.9% Travel 1.3% OVERVIEW Private Label began to reap the benefits Private Label Third Par
Slide 18: 1H17 Investment in Inventory
1H17 INVESTMENT IN INVENTORY Optimal inventory holding achieved through targeted investment of IPO proceeds. For personal use only HALF YEARLY INVENTORY IN WAREHOUSE OVERVIEW VERSUS INVENTORY TURNOVER 35 6.0 Inventory in warehouse at 31 December 2016 was $32.8 million. In line with our Private Label
Slide 19: New Verticals
NEW VERTICALS Kogan Travel and Kogan Mobile exceeded Prospectus Forecast Gross Sales by 24.0% and 83.3%, respectively. For personal use only Prospectus $m forecast 1H17 Actual 1H17 % Variance Gross sales1 Kogan Travel 2.5 3.1 24.0% Kogan Mobile 0.6 1.1 83.3% Total 3.1 4.2 35.5% KOGAN MOBILE QUARTERL
Slide 20: Pro Forma Trading Operating Costs
PRO FORMA TRADING OPERATING COSTS Trading operating costs as a % of revenue were 0.8ppts higher than Prospectus Forecast, primarily driven by Marketing costs. Investment in marketing has helped to drive the outperformance in revenue versus Prospectus Forecast of 16.7%. For personal use only PRO FORM
Slide 21: Net Asset Summary
NET ASSET SUMMARY At 31 December 2016, cash was $26.5 million following the IPO and repayment of debt in July 2016. For personal use only $m 31 Dec 16 CURRENT ASSETS Cash & Cash Equivalents 26.5 Trade & Other Receivables 4.7 Inventories 42.4 Total Current Assets 73.6 NON-CURRENT ASSETS Property, Pla
Slide 22: 1H17 Statutory Cash Flow
1H17 STATUTORY CASH FLOW Following the IPO, the business deployed funds into inventory to drive growth in Private Label and Third Party Domestic, in line with strategy. This resulted in an increase in net working capital of $6.8 million. For personal use only Statutory $m OVERVIEW 1H17 Statutory EBI
Slide 23: Outlook
For personal use only Outlook 23
Slide 24: 2H17 Outlook
2H17 OUTLOOK Positive outlook for 2H17 due to growth in gross margins, strong growth in revenue and Kogan Mobile. For personal use only Following stronger than expected results in 1H17 and trading results for January that are ahead of the FY17 Prospectus forecast monthly projection and the updated g
Slide 25: Dividend
DIVIDEND For personal use only As a result of the significant outperformance in 1H17, the Board has declared a fully franked interim dividend of 3.9 cents per share, with a record date of 9 March 2017 and a payment date of 24 March 2017. The Board’s current intention is to pay a final dividend at th
Slide 26: Q&A
For personal use only Q&A 26
Slide 27: Glossary
GLOSSARY Third Party Branded Domestic: brands owned by third parties, for which products are sourced domestically Third Party Branded International: brands owned by third parties, for which products are sourced internationally For personal use only Private Label: products sold under brands owned by
Slide 28: 1H17 Reconciliation of Gross Sales to Revenue
ANNEXURE 1 1H17 RECONCILIATION OF GROSS SALES TO REVENUE For personal use only At 31 December 2016 presales were $5.2 million, representing Gross Sales yet to be dispatched. $m 1H16 1H17 Gross sales 107.1 154.4 Change in presales1 3.6 (1.9) Refunds and cancellations2 (6.0) (8.6) Revenue 104.7 143.9
Slide 29: 1H17 Product Divisions Gross Sales & Revenue
ANNEXURE 2 1H17 PRODUCT DIVISIONS GROSS SALES & REVENUE For personal use only 1H16 1H17 YoY revenue $m Gross Sales Revenue 1 Gross Sales Revenue 1 growth Private Label2 44.5 43.5 47.3 44.8 3.0% Third Party International 41.7 40.8 68.7 64.0 56.9% Third Party Domestic 18.3 17.8 33.9 30.9 73.6% Product
Slide 30: Seasonality of Gross Sales
ANNEXURE 3 SEASONALITY OF GROSS SALES For personal use only The business expects 2H17 to be a material contributor to FY17 results. We are seeing the benefits of the investment of IPO proceeds into Private Label. HALF YEARLY TOTAL GROSS SALES HISTORICALLY (% of financial year gross sales) 160 154.4
Slide 31: Statutory Reconciliation to Trading Results
ANNEXURE 4 STATUTORY RECONCILIATION TO TRADING RESULTS For personal use only Pro Forma Trading EBITDA of $7.3 million represents 105.8% of the full year Prospectus Forecast Pro Forma EBITDA of $6.9 million. Statutory Transaction Pro Forma Non-Trading Pro Forma Trading $m 1H17 costs1 actual 1H17 item