The Temple & Webster Group Ltd (ASX: TPW) share price fell 5% as the online ASX retail share reported an overall decline in FY23, but a stronger second half.
FY23 result
Here are some of the highlights from the company’s report for the 12 months to 30 June 2023:
- Revenue fell 7% to $396 million
- EBITDA (EBITDA explained) of $14.8 million was down 9% to $14.8 million
- Net profit after tax (NPAT) dropped 30.6% to $8.3 million
- Cash balance of $105 million and no debt
The business pointed to a number of positive revenue highlights, which included FY23 fourth quarter revenue growth
thanks to both repeat and first-time customers. Orders from repeat customers were 54% of total orders, while revenue per active customer grew by 6%.
Trade and commercial revenue grew by 9%, and it made home improvement revenue of $23 million in its first full year of operation.
FY23 second half EBITDA grew by 80% to $7.5 million.
Other highlights
Temple & Webster revealed that its marketing return on investment (ROI) is holding at 2x, despite inflationary pressures which provides “headroom to increase” its spending in FY24 and FY25.
It also said that all its pre-sale product enquiry live chats, which are at least 20% of all customer enquiries, are now powered by generative AI solution.
Longer-term outlook
The company said that it’s targeting annual sales of at least $1 billion within three to five years. There are five things that it’s looking to do:
- Become the first brand customers look at in the furniture and homewares category
- Generate the majority of revenue from exclusive products
- Develop market-leading capabilities around technology, AI and data
- Lower its fixed costs percentage of revenue to obtain a price and margin advantage
- Building scale through adjacent growth plays, including the home improvement and trade and commercial segments
Final thoughts on the Temple & Webster share price
Temple & Webster revealed that the positive momentum from the FY23 fourth quarter has “accelerated” into FY24, with revenue growth of 16% year on year with growth of both repeat and first time customers.
It’s going to continue its $30 million share buyback, its inventory level are “well-managed” and the business has “never been in a stronger financial position.”
I think this is a great business and has a very promising future, with revenue growth, expected profit growth, increasing market share, digital adoption and growing revenue diversification. It’s one of the ASX growth shares on my watchlist.
