Temple & Webster Doubles Profit as Revenue Surges 24% in H1 FY25

Strong Financial Momentum

Temple & Webster Group Ltd has reported a compelling set of results for the half-year ended 31 December 2024, showcasing significant growth across key financial metrics. Revenue surged 24% year-on-year to $313.7 million, driven by a record active customer base of approximately 1.2 million and a modest 2% increase in revenue per active customer to $470.

Profitability gains were even more pronounced, with profit before tax nearly doubling to $12.5 million and net profit after tax soaring 118% to $9 million. The company’s EBITDA reached $13.2 million, reflecting a 4.2% margin, signaling improved operational leverage despite ongoing investments in growth.

Strategic Growth Drivers

Temple & Webster’s growth story is anchored in its strategic focus on exclusive product offerings, which now account for 45% of total revenue. This mix shift towards higher-margin private label and exclusive drop-ship products contributed to a 68 basis point increase in gross margin percentage, supported by favourable foreign exchange movements and a disciplined promotional approach aimed at market share expansion.

The company’s innovative drop-shipping model continues to enable a broad product range exceeding 200,000 items, while reducing inventory risk and accelerating delivery times. Complementing this, the home improvement segment grew 41% to $20 million in revenue, reflecting successful diversification and cross-selling strategies.

Technology and Efficiency Gains

Temple & Webster has leveraged artificial intelligence extensively, with AI tools now managing over 60% of customer pre- and post-sales interactions. This has halved customer care costs since H1 FY23 and enhanced shipping price accuracy by 17%, contributing to a 3% uplift in revenue per visit. These technology-driven efficiencies have helped reduce operating expenses as a percentage of revenue, underscoring the company’s commitment to disciplined cost management while scaling.

Balance Sheet and Cash Flow Strength

The Group’s balance sheet remains robust, with a cash balance of $139.3 million at the half-year mark, ensuring ample liquidity to support ongoing growth initiatives. Free cash flow generation was strong at $32.5 million, reflecting the benefits of an asset-light, negative working capital business model. Net tangible assets per share increased to 81.3 cents, up from 64.25 cents a year earlier, signaling enhanced shareholder value.

Outlook and Strategic Priorities

Temple & Webster remains on track to achieve its ambitious mid-term target of $1 billion in annual sales within 3-5 years. The company’s five strategic priorities, brand leadership, exclusive product growth, data and AI capabilities, fixed cost reduction, and adjacent market expansion, are all progressing well. Notably, branded search interest rose 24%, and exclusive products dominate the top-selling items, reinforcing the brand’s market positioning.

While no dividends were declared during the period, the company’s focus on reinvestment and share buy-backs reflects a balanced approach to capital management. Investors will be watching closely how Temple & Webster navigates competitive pressures and sustains its growth trajectory in the evolving online retail landscape.