Online retail has been a brutal place to operate over the past two years.
Cost of living pressures, subdued consumer confidence, and fierce competition have weighed on virtually every player in the sector.
Yet ASX retailer Kogan.com Ltd (ASX: KGN) just delivered a May business update that sent its shares surging 19% in a single session, and the numbers behind the jump deserve a closer look.
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What the update showed
The May 2026 Business Update, covering the ten months ended 30 April 2026, was the strongest trading update the company has delivered in years.
Group Gross Sales rose 13.2% to $875.6 million, while Group Revenue grew 6.0% to $433.7 million.
Gross Profit climbed 11.1% to $177.9 million, and Group Adjusted EBITDA jumped 17.4% to $37.5 million.
Group Adjusted EBIT grew even more strongly, surging 25.4% to $26.9 million.
The Group Adjusted EBITDA margin reached 8.6%, placing Kogan towards the upper end of its FY2026 guidance range of 6% to 9%.
Active customers across the group grew 4% to 3.5 million.
The Mighty Ape turnaround is gaining traction
The most encouraging element of the update was not the Kogan.com core business, which has been performing well for several quarters, but the early signs of a recovery at Mighty Ape, the New Zealand subsidiary that had been a persistent drag on group earnings.
In the four months to 30 April 2026, Mighty Ape's Gross Margin improved by 8.4 percentage points to 37.8%, a remarkable turnaround from the inventory-driven losses of the prior year.
Adjusted EBITDA losses at Mighty Ape fell 52.8% compared to the prior corresponding period, reflecting the success of the pivot toward a capital-light, higher-margin operating model.
CEO Ruslan Kogan said in the update:
Kogan.com continues to go from strength to strength, with strong growth across all key metrics. The early signs of the Mighty Ape turnaround are encouraging and we are focused on continuing to drive profitable growth across the group.
What Bell Potter thinks
Bell Potter rates Kogan shares as a buy with a price target of $5.50, describing the company as well-positioned to capture a growing share of Australia's online retail market as digital penetration continues to rise.
The broker has noted that Kogan's platform-based revenue streams, including Kogan FIRST memberships, Kogan Mobile, and the Kogan Marketplace, provide a more resilient and higher-margin earnings base than pure product sales.
Bell Potter also noted that these divisions are growing at a materially faster rate than the broader retail business.
The risks worth knowing
ASX retailer Kogan is not without its challenges.
The company remains loss-making on a reported basis due to non-cash items and the ongoing Mighty Ape integration costs.
Competition from global online retailers including Amazon Australia and Temu remains intense, and any deterioration in consumer spending would likely weigh on volumes quickly.
Foolish takeaway
Kogan.com's May update confirmed that the business is firing on almost all cylinders, with core growth accelerating and the troubled Mighty Ape subsidiary showing its first real signs of recovery.
For investors who have been watching from the sidelines, today's result makes the investment case harder to ignore than it has been in some time.
