The Kogan.com Ltd (ASX: KGN) share price is surging higher this morning following another strong business update.
Kogan has provided the market with an update of how it has performed during the fourth quarter to date, in light of the coronavirus crisis.
The Kogan share price has been experiencing a very strong rally in recent months. Kogan shares dropped to a low of $3.45 in mid-March but closed yesterday at $11.40. That’s a massive 230% increase. The rally has been particularly strong since mid-May and appears set to continue based on morning trade today. At the time of writing, Kogan’s share price has already climbed nearly 9% since the market opened.
The S&P/ASX 200 Index (ASX: XJO) in comparison, has seen a much more modest recovery since the March crash.
Customer base and sales continue their upward trajectory
Kogan revealed today that its active customer base has continued on a strong growth trajectory. There were an additional 126,000 active customers added during May to now total 2,074,000. That’s an increase of 6.5%.
Gross sales for Kogan soared higher by more than 100% in the fourth quarter to date (April and May), compared to the equivalent period in 2019.
Kogan previously revealed to the market that the pipeline for new sellers in its Kogan Marketplace remains very strong. This is helping to boost the company’s strong sales momentum and, as such, the Kogan share price.
Profitability continues to climb
Kogan’s profitability also continues to improve. The company’s gross profit increased by more than 130% during April and May.
EBITDA growth was even more impressive. Adjusted EBITDA climbed by more than 200% in the prior two months, compared to the corresponding period.
When EBITDA is adjusted for the financial year to date, it grew by more than 50%. Also, a very impressive result.
Kogan’s strong growth during the last two month follows on from a very strong March quarter. The Aussie ‘etailer’ revealed back then a strong 30% increase in gross sales and a 23% jump in gross profit during the March quarter.
There has been a sharp increase in spending at online retail sites such as Kogan and Amazon since lockdown restrictions were implemented. With more Australians working from home, Kogan has been cashing in on strong demand for goods such as PCs and laptops. Also, other home office accessories as well as home fitness equipment have proven very popular with Aussies isolating at home. Whilst many companies have suffered significant revenue losses due to the COVID-19 crisis, the pandemic has largely been good news for the Kogan share price.
Where to next for the Kogan share price?
In more good news, Kogan also revealed today that it ended the month of May with $58.6 million of cash on its books. The company also has a debt facility which was drawn to $26.0 million. So, its cash position is fairly solid. As mentioned, Kogan’s share price is up by another massive 9% to be trading at $12.41. However, with such a strong rally since mid-March, I feel that Kogan may see some high share price volatility in the months ahead.
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Motley Fool contributor Phil Harpur owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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