Australian e-commerce company Kogan.com has credited new verticals and an expanding portfolio of private label products for the strong FY19 results it reported on Tuesday.
The online retailer posted A$17.2 million ($18.2 million) in net profit after tax in the year ended June 30, 2019, a 22 per cent increase on FY18.
This was primarily driven by the increase in revenue from Kogan’s expanding portfolio of private label products, which represented almost half of the company’s A$90.7 million ($95.8 million) overall gross profit in the year.
Gross profit was up 12.5 per cent year on year, reflecting a 1.2 percentage point increase in gross margin to 20.7 per cent.
Kogan posted an EBITDA of A$30.1 million ($31.8 million) on A$551.8 million ($582.6 million) in gross sales, which includes the value of transactions from Kogan Marketplace, Kogan Mobile and other new verticals. Kogan’s revenue was A$438.7 million ($463.2 million).
Ruslan Kogan, founder and CEO of Kogan.com, said in a statement that the company now has a “very compelling offer in each segment” it operates in, and is continuing to invest in its brand and customer experience.
“In the 2019 financial year, we have continued our significant investments in our improved customer offering. We now have 13 distribution centres, enabling us to delight customers all over Australia and New Zealand with faster and more cost efficient delivery options,” he said.
“We have also significantly expanded our product range, giving our customers more choice and driving more competition on our platform.”
The expanded product range is thanks to the launch of Kogan Marketplace in FY19, which achieved A$1.5 million ($1.6 million) in commission-based revenues, reflected as gross profit.
Kogan has referred to its marketplace as a “transformational step” for the company, and said it expects the platform to help reduce its reliance on third-party brand inventory and become more capital light.
Revenue from third-party brands, which are a combination of what Kogan used to refer to as global brands or partner brands, fell in FY19, due to the change in GST laws and subdued demand for Apple products.
Meanwhile, revenue from Kogan’s exclusive brands was up 42 per cent year on year, thanks to the expansion of its private label range, including into whitegoods.
The retailer also saw strong growth in new verticals, including a 24 per cent increase year on year in active customers and a 9.8 per cent increase year on year in commission based revenues for Kogan Mobile.
Kogan Internet, which launched in April 2018, saw a 273 per cent year on year increase in active customers, and Kogan Insurance, which now includes policies for car, home, travel and more, grew commission-based revenues by 144 per cent year on year.
Overall, the company grew active customers by 16 per cent in FY19 to 1.61 million, despite spending less on marketing. The retailer attributed this to a new proprietary marketing bidding system, which is delivering better ROI on marketing spend.
Consistent with prior years, Kogan has not provided guidance for FY20, but said unaudited gross sales in July were up 18.3 per cent year on year, and gross profit was up 32 per cent. Kogan Marketplace gross sales reached $7.1 million in the month.
The company said it is “relentless” in the pursuit of growth and expansion, and said it expects to launch Kogan Mobile in New Zealand, Kogan Money Super, Kogan Money Credit Cards and Kogan Energy this calendar year.
This story first appeared on sister site, Inside Retail Australia.