FY20 result: Temple & Webster (ASX:TPW) reveals 74% growth

Online furniture retailer Temple & Webster (ASX: TPW) has revealed huge growth in a preview of its FY20 numbers.

Temple & Webster’s big FY20 result

The company has released some pre-audited FY20 numbers to the market as well as a July trading update.

Full year revenue was up 74% over the year to $176.3 million. The second half revenue was up 96% and the fourth quarter revenue was up 130%. Clearly these numbers show the company’s growth accelerated at the end of the year due to COVID-19 impacts.

EBITDA (click here to learn what EBITDA means) increased by 467% to $8.5 million, up from $1.5 million a year ago.

The online retailer said that it was cashflow positive during the year and finished with $38.1 million of cash with no debt. This excludes the proceeds from the recent $40 million capital raising.

The number of active customers rose by 77% year on year.

Some other highlights included the first day of $2 million revenue, a customer satisfaction rate (NPS) of more than 65%.

The company also revealed that it has made a small investment into a start-up developing AI interior design tools.

Temple & Webster CEO Mark Coulter said: “Out of all of the great numbers that we are releasing today, the record level of customer satisfaction is the one that I am most proud of. Many customers are trying online shopping for their homes for the first time out necessity and it’s clear the inherent benefits of online, being range, value and convenience, have resonated with those customers…”

The advantages of being the online market leader are apparent as we continue to grow our market share.”

Trading update

The company said that July’s revenue growth rate is inline with what was experienced throughout the fourth quarter of FY20. As a reminder, that growth was 130%.

Temple & Webster said it’s committed to a high growth strategy to take advantage of the structural shift towards online. It’s look at both organic and ‘inorganic’ opportunities (meaning acquisitions).

Summary

The ASX share is definitely one of the small caps to watch. It’s not cheap that. At the pre-open share price of $7.78, Temple & Webster is valued at 65 times the estimated earnings for the 2022 financial year. That’s ‘expensive’. It needs to keep generating strong growth over the next few years to justify this price. However, I’d be happy to make a small purchase today and buy more in the next market dip because it has so much long term growth potential. You may want to find growth shares that are trading cheaper.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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