The Temple & Webster Group Ltd (ASX: TPW) share price is going nuts after releasing a trading update, it’s up 11%. It also released its official FY20 report today.
FY20 result
The online furniture and homewares business has released its FY20 result today, though the highlight was the FY21 trading update.
Management said there have been no change to the FY20 result since the update released a month ago.
As a reminder, the company reported FY20 revenue grew 74% to $176.3 million (with Q4 revenue up 130%). EBITDA grew by 467% to $8.5 million (click here to learn what EBITDA means). It reported a net profit after tax (NPAT) of $13.9 million, which included an income tax benefit of $5.9 million.
During June 2020 it achieved its first $2 million day of checkout revenue. Customer satisfaction reached a record in the FY20 fourth quarter of a NPS of more than 65%. Active customers grew 77% year on year to around 480,000.
Temple & Webster was cashflow positive during the year and it ended with cash of $38.1 million with no debt. This excludes the proceeds from the recent $40 million capital raising to strengthen its balance sheet.
FY21 trading update
The company said that it has started the 2021 financial year strongly with year on year revenue growth of 161% to 27 August 2020.
Temple & Webster said that growth was consistent across July and August with both months trading up more than 160% on the prior corresponding period.
The ‘contribution margin’ was above 15%. This meant that the EBITDA generated over the two months is expected to be around $6 million.
At 27 August 2020 it had $81 million of cash and no debt, so its balance sheet is in a good position.
The company also reported that customer satisfaction remains over 65% and new customers are “performing well” compared to prior cohorts of customers.
Temple & Webster CEO Mark Coulter said: “As you can see from our trading update, Australians are still turning to the online channel to meet their ongoing needs. We continue to focus on customer satisfaction to ensure that customers who are trialling online shopping for the first time have a great experience and therefore will come back.
“In July we crossed the magical milestone of 500,000 active customers…The advantages of being the online market leader are apparent as we continue to grow our market share.”
Summary
Temple & Webster is a very promising business. If it can keep growing strongly then it could still be a good buy today, even though it has a high price/earnings ratio. However, patient investors may be able to buy at a better price over the next few months.
But, there are other ASX growth shares I would rather buy first such as Pushpay Holdings Ltd (ASX: PPH). I prefer the idea of Pushpay’s exposure to consistent annual donations as well as the international earnings diversification.
