The Kogan.com Ltd (ASX: KGN) share price will be one to watch on Tuesday after the release of a business update after the market close.
How is Kogan performing?
This afternoon Kogan revealed that it successfully navigated through the significant disruptions of the COVID-19 pandemic and has generated strong gross sales and gross profit growth during the March quarter.
According to the release, third quarter gross sales grew by more than 30% over the prior corresponding period. Pleasingly, gross sales growth was particularly strong at the end of the quarter. During the month of March sales increased more than 50% on the prior corresponding period.
It was a similar story for its gross profit. Gross profit grew 23% during the third quarter and more than 50% during March.
Also growing at a solid rate during the third quarter was its active customers following a strategic increase in marketing. At the end of the period its active customers stood at 1,809,000, up 13.8% from 1,589,000 at the end of March in 2019.
Once again, the month of March was a standout here. Kogan added 62,000 active customers in March, reflecting the largest monthly increase in active customers since its IPO.
However, the increased investment in marketing has led to a 37% lift in operating expenses during the quarter. This led to Kogan's adjusted EBITDA only growing by over 4% during the March quarter.
Management believes this investment will be worth it, though. It said: "The significant strategic investment to grow our brand and Active Customers is expected to have ongoing long term benefit to our business. The Company expects marketing efficiency to improve rapidly as the Company collects, and acts on, more data from its broader marketing strategy."
Marketplace update.
The company also provided the market with an update on the Kogan Marketplace.
Management advised: "The pipeline for new sellers on the Kogan Marketplace remains strong and continues to grow even as we onboard sellers at the fastest pace yet. The number of new sellers currently in the integration phase, which are yet to go live, is more than 50% of the number of current active sellers."
In addition to this, the company revealed that the number of current active enquiries from potential new sellers is more than three times the number of sellers that are currently active.
In light of this increasing demand, the company continues to invest in building its proprietary marketplace platform to enable more automation and self-service for sellers. This is in order to automate and expedite onboarding and integration.
