The Kogan.com Ltd (ASX: KGN) share price is under pressure on Tuesday.
In morning trade, the e-commerce company's shares are down 15% to $4.82.
This follows the release of the company's full-year results for FY 2023.
Kogan share price sinks on FY 2023 results
- Gross sales down 28.4% to $844.8 million
- Revenue down 31.9% to $489.5 million
- Gross profit down 26% to $136.6 million
- Adjusted net loss after tax of $7.7 million
- Reported loss after tax of $25.9 million
- Dividend remains suspended
What happened during FY 2023?
For the 12 months ended 30 June, Kogan reported a sizeable 28.4% decline in gross sales to $844.8 million. Management advised that this reflects general market trading conditions and the realignment of inventory levels.
Speaking of which, the company's inventories were reduced to $68.2 million at the end of the financial year, representing a reduction of over 57%. Management believes it is entering FY 2024 with inventory levels aligned to current levels of demand.
One metric that is heading in the wrong direction is its active customers. They came in at 2,945,000, comprising 2,190,000 for Kogan and 755,000 for Mighty Ape. This means that the company lost over 1 million active customers over the 12 months. One small positive was that Kogan First subscribers grew by 7.8% to over 401,000.
On the bottom line, Kogan posted an adjusted net loss of $7.7 million and a reported loss of $25.9 million. The latter includes non-cash items such as unrealised gains/(losses), equity-based compensation, and one-off non-recurring items.
Management commentary
Despite the sizeable profit decline, Kogan's founder and CEO, Ruslan Kogan, was happy with the company's performance. He also highlights that a milestone moment happened during the year, with platform-based sales becoming the biggest contributor to sales and profits.
These are sales made through Kogan Marketplace, Kogan Verticals, and Advertising & Other Income. Basically, anything that the company doesn't hold inventory for. Which, given its terrible inventory management track record, is likely to be seen as a positive. Kogan said:
FY23 marked a significant milestone in the history of our Business. For the first time ever, Kogan.com's platform-based sales contributed the majority of our Gross Sales and Gross Profit. Importantly this has enabled us to deliver better quality earnings as we successfully transitioned into a higher margin, lower risk, platform and software based business while offering our customers increased competition and improved value.
We have set ourselves up for success in FY24 and beyond, and in doing so, we have ensured we're in the best position possible to deliver exceptional value products and services to millions of customers.
Outlook
The company hasn't provided any real guidance for FY 2024. Though, Ruslan Kogan revealed that he is positive on the year ahead. He said:
Having returned Kogan.com to sustained and increasing underlying profitability in the second half of FY23, we look to FY24 with confidence. We expect the number of Kogan First Subscribers to accelerate following the expansion of the program, continued growth in our Verticals, a return to growth in Kogan Marketplace as well as our recently introduced Advertising Platform, the launch of a new Vertical in New Zealand and continued improvement in our Product Division's profitability. These initiatives are expected to underpin continued growth in the business and support ongoing growth in shareholder value.
Kogan also revealed that in July 2023 unaudited management accounts showed an adjusted EBITDA of $3.5 million.
