The Kogan.com Ltd (ASX: KGN) share price is surging from the open on Monday after the online retailer reported its FY24 results. Kogan shares are swapping hands 7% higher at $4.66 apiece this morning as investors process the update. Meanwhile, the S&P/ASX 200 index (ASX: XJO) is up 0.33% at the time of writing. Let's see what the company posted.

Melbourne-headquartered online retailer Kogan (ASX: KGN) has finally broken even following accumulated statutory losses of $61.4 million over two years, recording its first profit since FY21 as active customer numbers passed the 2.6 million mark and gross margin rose significantly. 

The group, which was founded in 2006 by its CEO Ruslan Kogan, languished after an initial COVID-induced boom amidst softening conditions and mismatched inventory levels, but has now returned to profitability with a net profit after tax (NPAT) of approximately $80,000 for FY24.

This compares to a loss of $25.9 million in the previous year, but the recent figure would be higher if not for several non-cash items including a deferred tax asset release of $14.7 million, an equity-based compensation expense of $3.9 million, and a further $3.4 million depreciation and amortisation on assets acquired in the December 2020 acquisition of New Zealand-based Mighty Ape.

Kogan does not consider these non-cash items as representative of underlying performance, and emphasises that adjusted NPAT went from a loss of $4.3 million to a profit of $21 million in FY24.

Kogan's FY24 Highlights

The increase in underlying results was boosted by gross margin going up by 8.7 percentage points to 36.6 per cent, while Kogan FIRST subscribers rose by more than a quarter to 502,000.

The company also saw growth in its Kogan FIRST and Mighty Ape PRIMATE loyalty programs, with subscriber numbers rising 25% and 35%, respectively.

Kogan.com founder and CEO Ruslan Kogan noted the company's return to growth in FY24: "FY24 was a milestone year for Kogan.com. Our business returned to a position of profitability and strength, having navigated through the previous two and a half years of turbulence."

"We got through this by restructuring and improving our operations, focusing on growing the right areas of our business, rapidly growing platform-based sales, and most importantly, investing in our loyal customer base. This has helped put Kogan.com in its strongest position ever."

Looking ahead, Kogan.com plans to continue its focus on profitability. Its trading update for July 2024 shows a positive start to the new financial year, with revenue up 15% year over year and pre-tax earnings increasing by 53%.

Kogan's Commitment to Affordability

And Kogan's CEO says its business model is looking to increase its advantage via its competitive pricing: "In response to the ongoing cost-of-living crisis that our customers are facing, we are doubling down on our commitment to affordability and value. This was at the core of our brand when we launched 18 years ago, and we understand the economic challenges our customers are facing."

"Everything we do is aimed at enabling our customers to live their best lives without having to strain their budgets. You'll see this play out in all our investments and launches going forward."

"Our team's obsession with delivering remarkable value for our customers has underpinned the growth of Kogan.com into the top performing Australian e-commerce company for nearly two decades. These efforts are more crucial than ever, and we're primed to deliver again for our customers in FY25."

While revenue declined in FY24 by 6.1 per cent to $459.7 million, in July 2024 it flipped in the other direction, rising 15.6 per cent to $40.3 million. For that month alone, adjusted EBITDA was up by more than half at $5.3 million - a result that equates to roughly one eighth of the entire result for FY24.

Kogan's Future Outlook

Kogan's strong performance in FY24 signals a positive outlook for the company. The company's focus on profitability, coupled with its commitment to affordability and value, suggests that Kogan is well-positioned to navigate the challenges of the current economic environment and capitalize on future growth opportunities. With a solid track record in the Australian e-commerce market and a loyal customer base, Kogan is poised to continue its success in the years to come.

Kogan's FY24 performance is a testament to the company's ability to adapt and thrive in a rapidly evolving market. By focusing on key areas such as platform-based sales, customer loyalty, and operational efficiency, Kogan has emerged as a leader in the Australian e-commerce sector. The company's commitment to affordability and value is expected to further drive growth in the future, making Kogan a strong contender in the Australian retail landscape.