This is what www.equitystory.com.au has to say about KGN...

• This is what www.equitystory.com.au has to say about KGN
• Revenues – this time last year the revenues improved by 34% which is very healthy and demonstrates excellent growth in 12 months. On previous quarter revenues rose 14% which is still a very good number and at that pace FY18 = $452M in revenues or growth of 56% over FY17.
• Inventory – We know Kogan is super careful on inventory and costs and he has been running a fairly stringent inventory base. With a greater inventory base and product line, it is only natural that Christmas period in FY18 will need a greater array of inventory so he has spent the dollars to position himself to maximise sales. The costs have gone up by almost 50% from previous corresponding period but the difference is only 15% if you account for the 34% in sales growth. It’s understandable the growth in costs from previous quarter as traditionally Christmas period build will see a heavier spend. It’s only natural, with the growing business to see inventory’s grow as the product lines grow.
• Advertising – No change from previous period which suggests that you only need to spend XX amount on advertising pre-Christmas period to get your message across, excellent result
• Staff Costs – There is no secret that KGN’s staff costs are ridiculously low and probably the lowest amongst all the tech stocks by a fair margin
• Admin Costs – Again ridiculously low
• Net Cash Flows – Purely and simply it’s all about inventory build for the Christmas period. We can’t see anything suspicious or wrong with the numbers, and fully understand the reasons why we saw a negative cashflow number. Best thing to do is wait for another couple of periods to see how the numbers change but we suspect the large inventory will be whittled away during the Christmas period, and we will see a return to cash flow positive numbers in subsequent period (there might be more costs in the Dec Q with the Christmas period). We are of the opinion that KGN needs to spend to grow and we are very confident that the numbers will be good in FY18.