Kogan.com Ltd

Good morning everyone and welcome to Kogan.com's FY26 full year results presentation. As people are coming in, we will start the video very shortly. My name for you, for those who don't know me, my name is Ron Bettschler. I'm the non-exec director on the Kogan.com Ltd board. Today with us are Ruslan Kogan, founder, CEO and exec director and David Shafer, CFO, COO and exec director. We will commence today with a short presentation followed by Q&A. If you have any questions, please put them in the Q&A box and I will moderate the Q&A with Ruslan and David after the presentation. We'll throw to the presentation now and we'll do the Q&A straight after. Thank you.

Good morning everyone and thank you for joining us for the Kogan Group's FY26 results presentation. It's a pleasure to be here with David Shafer, our CFO, COO and Executive Director. FY26 was a strong year for the Kogan Group. Kogan.com continued to perform well while we made significant progress through the operating reset at Mighty Ape. We also continue to invest in the capabilities and operating model that we believe will support the group's growth over the years ahead. David and I will take you through the financial results, the key developments across the business and our priorities for FY27. Let's start with the highlights. The group exceeded $1 billion in gross sales, representing an increase of 12%. Group adjusted earnings increased 14% to $41.8 million, at an 8.2% margin. The key driver was Kogan.com, where revenue increased 16%, gross profit increased 18%, and adjusted earnings increased 22%. At MightyApe, the operating reset started to show encouraging results. Platform-based sales more than doubled, fixed costs reduced 13%, and the business returned to positive adjusted earnings in the fourth quarter. Alongside this, we maintained a strong capital position, ending the year with $36.4 million of cash and no external debt, after returning $34.9 million of capital to shareholders. So, a strong year for Kogan.com with encouraging progress at Mighty Ape. I'll now hand over to David to take you through the financial results.

Thanks, and good morning everyone. Let me now take you through the financial details behind those results. The group result was driven by strong growth and operating leverage at Kogan.com. Kogan.com revenue increased 16% to $425.2 million dollars Gross profit increased 18% to $184.8 million and adjusted earnings increased 22% to $45.1 million. At MightyApe, we undertook a significant operating reset during fiscal year 26, including the accelerated inventory reduction and restructuring of the cost base. Against that backdrop, revenue within Mighty Ape reduced 30% to $85.6 million and the business recorded a $3.3 million adjusted earnings loss for the full year. What is more important, however, is the progress we saw through the year. Mighty Ape's fourth quarter returned positive adjusted earnings, reflecting the culmination of our one-group strategy run by one global team. Our focus now is on building on that progress sustainably through FY27. At group level, revenue increased 5% to $510.7 million, gross profit increased 11% to $210.9 million, and adjusted earnings increased 14% to $41.8 million. This slide highlights both the quality of our earnings and the strength of the Kogan Group ecosystem. 73% of group gross profit was generated from exclusive products and services. Products and services that only the Kogan Group can offer. That includes our exclusive brands, loyalty subscriptions, verticals and advertising. This creates an important mode around our business. Our customers are increasingly engaging with products and services that are unique to our ecosystem Strengthening loyalty and differentiating our offering from our competitors. At the same time, 61% of group gross profit was generated from Capital Light platform-based sales, up from 59% in FY25. These are highly attractive revenue streams with recurring revenues, minimal working capital requirements and strong margins. Together with Kogan.com products, this gives us a diversified, increasingly capital-light earnings base, underpinned by products and services that are unique to the Kogan Group. Kogan.com delivered a strong result across all the divisions in the business. Growth was broad-based with every division contributing, product, marketplace, Kogan First, verticals and advertising. That growth was complemented by improved sourcing, A greater contribution from higher margin platform-based sales and continued discipline across the cost base. The result is a business growing strongly at the top line with expanding margins and generating increasing operating leverage. Adjusted earnings in Kogan.com increased 22% to $45.1 million, ahead of revenue growth of 16%. This demonstrates the strength of the Kogan.com operating model, multiple growth drivers, improving margins and a cost base that is scaling efficiently. Turning to MightyApe, the operating indicators improved materially through the year, although the recovery is still at an early stage. Adjusted earnings moved from losses in the first three quarters to a positive fourth quarter, growth margin increased from 23.4% in the first quarter Ltd Ltd Ltd Ltd Ltd and provide a much better operating base. Our focus in fiscal year 27 is on sustaining profitability while rebuilding the sales base in a disciplined way. Turning now to the group's capital position, which remains strong, we ended FY26 with $36.4 million of cash and no external debt. Free cash flow increased 18.2% to $38.3 million. while inventory increased by $5.7 million to support growth in the Kogan.com products division, noting the significant reduction of inventory at MightyApe. During the year, we returned $34.9 million to shareholders, comprising $14.7 million in gross dividends and $20.2 million through the on-market share buyback. That strong cash generation gives us flexibility to invest in growth while continuing to return capital to shareholders. 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. The strong cash generation and capital position I just walked through supports the Board's decision to declare a final dividend of 8.0 cents per share, fully franked. This reflects the strength of our balance sheet and our confidence in the group's ongoing ability to generate strong 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. That wraps up the financials. I'll now hand you back to take a look at our strategy and outlook.