Kogan.com Ltd

Good morning. We're just waiting for the participants to be joined to the Zoom webinar. Give us a few more seconds. Okay, ladies and gentlemen, welcome to the Kogan first half results for FY26. This morning we are joined by Ruslan and David and we will begin with a short presentation and this will be followed by Q&A. Just a reminder that the Q&A will be via the Q&A function in the Zoom webinar. If you could please submit your questions. Handing over now to Ruslan and David.

Good morning everyone and thank you for joining us for the Kogan Group's first half FY26 results presentation. It's a pleasure to be here with David Shafer, our CFO, COO and Executive Director. This morning we'll take you through the company's results for the first half of FY26 which demonstrated the strength of the Kogan.com platform. We delivered growth, strong cash generation and improved operating leverage, with Kogan.com once again leading the group's performance. At the same time, meaningful progress was made in optimising MightyApe, with the foundations now firmly in place to support a return to sustainable profitability under our one-group strategy. To begin, let's dive straight into the highlights for the half. The Kogan Group results are split into two reporting segments, Kogan.com and Mighty Ape. Kogan.com is firing on all cylinders. We drove gross sales past half a billion, growing 21% on the prior corresponding period, while revenue grew by 17%. And we didn't just grow sales, we also expanded our profitability. The top line growth translated into $27.6 million in adjusted earnings, an 18% increase on the prior corresponding period. You can see the benefit of our operating leverage, with adjusted earnings margins expanding to 11.9%. Regarding Mighty Ape, we are seeing good progress. The performance is improving, the inventory reset is largely complete and the team is now fully integrated into the group structure. This is part of our one group strategy under which we expect Mighty 8 Performance to progressively recover. Importantly, the Kogan.com earnings result delivered strong cash generation, with the Kogan Group producing $45.1 million of free cash flow this half, up 2% on the prior corresponding period. Overall, we delivered double-digit sales growth, margin discipline and strong cash generation. Let's now delve deeper into the results. I'll hand over to David to present the financial update.

Thanks and good morning everyone. It's great to have you with us today. Here we have broken out the results of our two reporting segments to highlight the drivers of performance. The story of this half is clear. Kogan.com is doing the heavy lifting. Let's look at the top row first. Kogan.com, which also includes our core retail brands like Dick Smith, Matt Blatt and Brosa, delivered an outstanding performance. We saw revenue increase 17%. Importantly, we also delivered at the bottom line too. Gross profit climbed 16% to nearly $100 million and adjusted EBITDA grew 18% to $27.6 million. This is the operating leverage Ruslan mentioned. As we scale, our platform model ensures that incremental sales translate into meaningful earnings growth. Now looking at the middle row, Mighty Ape. As expected this was a transition half. We are deep in the execution of a strategic reset towards our one group strategy, which aims to align our procurement, verticals, marketplace and loyalty strategies across the group. Revenue was down 25%, which reflected our deliberate move to reset inventory levels and tighten procurement as we commenced the rebuild of inventory with greater focus on exclusive products. While this resulted in an adjusted EBITDA loss of $3.2 million for the half, we believe this is temporary and was necessary. We have stripped back the cost base and are streamlining operations to ensure Mighty Ape returns to sustainable profitability in the second half through the one group strategy I mentioned earlier, bringing it together at the group level on the bottom row. Despite the drag from the Mighty Ape reset, the sheer strength of the Kogan.com business drove total group revenue up 5% to $287.6 million. While Group Adjusted EBITDA dipped slightly by 3%, the underlying health of our primary business remains exceptionally strong. Moving to slide 6, this is where you see the quality of our earnings. We aren't just generating profit, we are building a defensive moat around it. The headline figure here is 72%. That is the percentage of our gross profit that came from our exclusive products and services, areas where we own the IP, control the supply chain and dictate the margin. These are products and services customers can only purchase through us. Looking at the breakdown of that moat, Kogan.com products contributed 30.8% of total gross profit. This is our exclusive brand strategy. Unbeatable value for customers, but with end to end control for us. The loyalty programs also delivered 28.3% of total gross profit. This is recurring subscription revenue that has compounded over time. Then you have the marketplaces division contributing 18.7%. This is a scalable capital light revenue stream offering huge customer choice with minimal working capital requirements. The takeaway is diversification of revenue streams all connected through the One Brand and Loyalty Program. We are not reliant on a single product category or a single revenue stream. We have a balanced mix of recurring subscriptions, high margin exclusive products and asset-light marketplace revenue. That is what we call a durable earnings base. This mix of revenue streams is unified for consumers through the Kogan.com channel and loyalty program, seamlessly bringing together many different offerings under the one umbrella. Turning to slide 7, this is the financial highlight of the half. This is the definition of operating leverage. Look at the table on the left. It tells the story of a scalable platform. Double digit revenue growth of 16.9%, gross margin held steady at 42.9%, and delivered margin improving to 38.9%, showing we are becoming more efficient at getting products to customers. We also invested for the future by increasing our marketing to drive our top line and community of shoppers. Further, our fixed costs as a percentage to sales dropped to 11.3%. This is the discipline we promised. We are growing the top line without adding weight to the cost base. Now look at the charts on the right. That efficiency flows straight through to the margins. Adjusted EBITDA margin increased to 11.9% and adjusted EBIT margin climbed to 9.7%. This is the model working as designed. We drive top line growth, control the fixed costs and deliver the difference as expanded margin. Turning now to Mighty Ape. The theme is reset and rebuild under one team and one global strategy. This half was about making the hard decisions to fix the foundations and set the business up for success over the long term. First, the inventory reset. We started this work last year and this half we largely completed it. We executed a comprehensive optimisation program, reducing our stock holdings by 32%. This addressed the legacy inventory and released working capital, meaning our range is now strictly focused on what our customers want. As we rebuild inventory under our one group strategy, we will deliver a greater focus on exclusive products. At the same time, we overhauled our operating model. We stripped out complexity and tightened our cost controls. As a result, we have seen a material reduction in operating costs as a percentage of revenue. The business is simply leaner and faster than it was six months ago. Most importantly, you can see this in the trajectory. We started the half with adjusted EBITDA margins in double digit negative territory in July. But as these changes took hold, we climbed month on month, crossing into positive territory by December. But we're not calling victory yet. The New Zealand retail environment remains challenging, and the major reset is a work in progress. Inventory has been optimised, the cost base has been structurally reduced, and the business is now positioned for a sustainable recovery. Turning now to the group's capital position. If you look at the cash flow column to the right, you'll see our earnings converted efficiently into $46.9 million in operating cash flow. That flowed almost entirely through to free cash flow, which was $45.1 million for the half. This was bolstered by our discipline on inventory, where we released $7.1 million year on year, largely due to the mighty ape reset. This performance has left our balance sheet in good condition. We ended the half with $71.8 million in total cash. That is an increase of over $4 million year-on-year and we remain completely debt-free. This financial strength allowed us to return capital to shareholders. In this half alone, we returned $5.8 million net of the DRP in dividends and another $4.8 million through our on-market share buyback. We are liquid, we are flexible and we have the capital to invest aggressively in growth while continuing to return value to you. For those who want the line by line statutory details, you can find them in the annexures. Turning to slide 10, let's talk about returns. Because of the strong cash generation and capital position I just walked through, we are in a position to step up the dividend. The Board has declared an interim dividend of 8.0 cents per share, fully franked. The increased dividend is a direct reflection of our confidence in the Group's balance sheet and our ability to generate consistent free cash flow. For those looking to reinvest, our Dividend Reinvestment Plan remains active, offering shares at a 2.5% discount to the market price. Key dates are on the right. We will be paying this out on the 30th of April. That wraps up the financials. I'll now hand back to Ruslan to take us through the business update and outlook.