Slide 1: 1HFY18 Results Presentation
For personal use only 1HFY18 RESULTS PRESENTATION 22 FEBRUARY 2018
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 CEO Update For personal use only Page 4 - 12 Financial Update Page 13 - 22 Outlook Page 23 - 27 3
Slide 4: CEO Update
For personal use only CEO Update Ruslan Kogan Founder & CEO 4
Slide 5: 1HFY18 Highlights
1HFY18 HIGHLIGHTS 1HFY18 saw the start of a watershed period for Kogan.com, as the Company accelerated growth in its existing Product Divisions and laid the foundation for future growth via continued expansion in New Verticals. For personal use only FINANCIAL OUTPERFORMANCE • Outperformed full year
Slide 6: 1HFY18 Results
1HFY18 RESULTS Trading EBITDA of $14.1 million exceeded 1HFY17 Pro Forma EBITDA by 93.2%. The Company exceeded full year FY17 Pro Forma EBITDA in the first half of FY18. For personal use only Trading Pro Forma 1 1 actual 1HFY18 vs 1HFY17 actual 1HFY17 1HFY18 Growth Revenue $m 143.9 209.6 45.7% Gross
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS Kogan.com outperformed on all key financial metrics in comparison to the prior year. For personal use only REVENUE GROSS PROFIT EBITDA1 45.0 300.0 16.0 $40.7m $14.1m 40.0 14.0 250.0 35.0 $209.6m 12.0 30.0 200.0 10.0 $25.9m 25.0 $m $m $m 8.0 $7.3m 150.0 $143.9m 20.0 6.0 15.0 100.
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 enables us to scale with minimal capital requirements. For personal use only 1,166,000 Active Customers 8.5 million Active Subscribers 8
Slide 9: Kogan Kinetics: Our Virtuous Cycle
KOGAN KINETICS OUR VIRTUOUS CYCLE For personal use only 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 In the twelve months to December 2017, the business achieved 40.5% growth in Active Customers2. For personal use only Dec-16 vs Dec-17 Dec-16 Jun-17 Dec-17 Growth Active Customers 830,000 955,000 1,166,000 40.5% ACTIVE CUSTOMERS NET PROMOTER SCORE (NPS)1 1,250 Average 59.83
Slide 11: Building the Kogan Brand
BUILDING THE KOGAN BRAND Annual revenue per customer and gross profit per active customer are increasing. For personal use only ANNUAL REVENUE PER CUSTOMER1 CONVERSION RATE3 ANNUAL RETURN ON INVESTMENT IN MARKETING2 TRAFFIC - FREE (BRAND DRIVEN) VS PAID MARKETING 57 28% FREE SOURCES • Direct website
Slide 12: Exclusive Brands Strategy
EXCLUSIVE BRANDS STRATEGY Exclusive Brands strive to demonstrate strong growth, as we continue to meet strong consumer demand across a wide-array of categories. For personal use only STRONG YOY GROWTH IN EXCLUSIVE BRANDS REVENUE 70.0 Our Exclusive Brands private label business 65.0 benefits from: 60
Slide 13: Financial Update
For personal use only Financial Update David Shafer CFO/COO 13
Slide 14: 1HFY18 Results Compared to 1HFY17
1HFY18 RESULTS COMPARED TO 1HFY17 First half FY18 Trading EBITDA increased by 93.2% on the prior year OVERVIEW and exceeded the full year FY17 Pro Forma EBITDA. For personal use only GTV growth of 51.1% versus Revenue growth of Pro Forma1 Trading1 45.7% is driven by Kogan Mobile transaction $m actua
Slide 15: Key Drivers of 1HFY18 Financial Performance
KEY DRIVERS OF KOGAN.COM 1HFY18 FINANCIAL PERFORMANCE For personal use only Successful implementation of strategy to grow the brand and invest in inventory in order to accelerate growth. BRAND GROWTH The business achieved solid growth in Active Customers in 1HFY18 of 211,000 (22.1%) and 336,000 (40.
Slide 16: Key Drivers of 1HFY18 Financial Performance
KEY DRIVERS OF KOGAN.COM 1HFY18 FINANCIAL PERFORMANCE For personal use only High performing team aligned with the interests of shareholders. GROSS MARGIN IMPROVEMENT Rapid growth in New Verticals and acceleration of the Partner Brands Product Division drove gross margin improvement YoY. Kogan Mobile
Slide 17: 1HFY18 Gross Profit: Product & Business Mix
1HFY18 GROSS PROFIT PRODUCT & BUSINESS MIX For personal use only Kogan Mobile increased as a % of gross profit by 4.9pp compared to FY17 to 11.9% in 1HFY18. 1HFY18 GROSS PROFIT MIX OVERVIEW Other Income 0.7% Gross margin improvement was driven by Insurance 0.3% mix shift. Kogan Mobile achieved signi
Slide 18: Kogan Mobile
KOGAN MOBILE Kogan Mobile achieved YoY growth in commission of 340.9% to $4.8 million in 1HFY18. For personal use only KOGAN MOBILE ACTIVE CUSTOMERS The strong commercial relationship with Vodafone, combined with the strength of the Kogan branding and marketing engine, continues to translate into gr
Slide 19: Pro Forma/Trading Operating Costs
PRO FORMA/TRADING OPERATING COSTS Operating costs as a % of revenue were down by 0.2pp year on year to 12.7%. For personal use only PRO FORMA/TRADING1 OPERATING COSTS OPERATING LEVERAGE BREAKDOWN 1HFY17 - 1HFY18 YoY % increase in Revenue and EBITDA (as a % of revenue) 14% 100% 93.2% 90% 12% 1.7% 1.6
Slide 20: Net Asset Summary
NET ASSET SUMMARY Strong balance sheet with $28.2 million of cash at 31 December 2017. For personal use only $m Dec-17 CURRENT ASSETS Cash & Cash Equivalents 28.2 Trade & Other Receivables 4.8 Inventories 69.8 The balance sheet reflects the investments made in inventory since the IPO in July 2016. T
Slide 21: Inventory Turn
INVENTORY TURN Notwithstanding a significant increase in inventory in warehouse, inventory turn has also experienced a slight increase in comparison to 2HFY17. For personal use only INVENTORY TURN Inventory in warehouse has increased (inventory in warehouse) significantly following investment to mee
Slide 22: 1HFY18 Statutory Operating Cash Flow
1HFY18 STATUTORY OPERATING CASH FLOW The business achieved operating cash conversion of 32.6% in 1HFY18. For personal use only Statutory $m 1HFY18 Statutory EBITDA 14.4 OVERVIEW Unrealised gain on foreign exchange contracts (0.3) The business generated operating cash flow before capital Trading EBIT
Slide 23: Outlook
For personal use only Outlook 23
Slide 24: Delivering Growth in 2HFY18 & Beyond
DELIVERING GROWTH IN 2HFY18 & BEYOND We expect continued brand growth and to continue to outperform underlying market growth in every portfolio business. For personal use only SELECTIVE & OPPORTUNISTIC M&A LAUNCH ADDITIONAL BUSINESS VERTICALS 24
Slide 25: New Verticals - Market Size
NEW VERTICALS - MARKET SIZE For personal use only New vertical Partner Launch date Market size Kogan Internet Vodafone 4QFY18 10.9m premises1 Kogan Insurance Hollard Launched 1QFY18 $43.0 billion2 Kogan Health Medibank Launched 3QFY18 $26.0 billion3 Kogan Life Greenstone 4QFY18 $66.0 billion4 Kogan
Slide 26: 2HFY18 Outlook
2HFY18 OUTLOOK Positive outlook for 2HFY18 due to trajectory in revenue, gross profit and strong growth in Kogan Mobile. For personal use only As advised at the end of FY17, the Board will not be providing formal EBITDA guidance for FY18. However, the Board will provide updates on the trading perfor
Slide 27: Dividend
DIVIDEND In line with the company’s dividend policy, the Board has declared a fully franked interim dividend of 6.9 cents per share, with a record date of 1 March 2018 and a payment date of 13 March 2018. For personal use only DPS (cents) Franking (%) Record date Payment date Interim dividend 6.90 1
Slide 28: Glossary
GLOSSARY 1HFYxx: the six months ended 31 December 20xx. 2HFYxx: the six months ended 30 June 20xx. For personal use only 3QFYxx: the three months ended 31 March 20xx. 4QFYxx: the three months ended 30 June 20xx. Active Customers: unique customers who have purchased in the last twelve months from X d
Slide 29: Glossary
GLOSSARY Kogan Life: Product Division due to launch in 2HFY18 offering life insurance online. Kogan Mobile: Product Division offering pre-paid mobile phone plans available online using Vodafone’s mobile network. For personal use only Kogan Pet: Product Division due to launch in 2HFY18 offering pet i
Slide 30: 1HFY18 Reconciliation of Gross Sales to Revenue
ANNEXURE 1 1HFY18 RECONCILIATION OF GROSS SALES TO REVENUE For personal use only At 31 December 2017, presales were $6.1 million, representing Gross Sales yet to be dispatched. $m 1HFY18 Gross sales 221.7 Change in presales1 (1.3) Refunds and cancellations (10.9) Statutory revenue 209.6 Notes: 1. Ch
Slide 31: 1HFY18 Gross Sales & Revenue by Portfolio Business
ANNEXURE 2 1HFY18 GROSS SALES & REVENUE BY PORTFOLIO BUSINESS For personal use only 95.7% of total revenue was generated by the product divisions. 1HFY17 1HFY18 YoY revenue $m Gross Sales Revenue Gross Sales 1 Revenue growth % Exclusive Brands 47.3 44.8 71.8 65.9 47.3% Global Brands 68.7 64.0 90.9 8
Slide 32: Statutory Reconciliation to Trading Results
ANNEXURE 3 STATUTORY RECONCILIATION TO TRADING RESULTS For personal use only 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