The Temple & Webster Group Ltd (ASX: TPW) share price is on watch after delivering its FY21 report and big growth.
Temple & Webster is a large pure play online retailer in the furniture and homewares market.
FY21 result
The e-commerce ASX share said that it delivered a record year for revenue, profit and customers.
Its full year revenue rose by 85% year on year to $326.3 million. That included good growth in the fourth quarter with a 26% increase against the last quarter of FY20 (which saw 130% growth).
Temple & Webster’s commercial division saw revenue growth of 110%, though this is currently only a small part of the pie.
The company’s active customer total increased by 62% year on year to 778,000. Revenue per active customer increased by 12% year on year due to customers repeat buying more often and spending more when they do. This is good news for long-term maintenance and growth of profit.
The business also revealed that its EBITDA (EBITDA explained) went up by 141% year on year to $20.5 million. This was an interesting (and strong) outcome considering Temple & Webster said a while ago it was going to start heavily investing for growth.
Temple & Webster reported it was cashflow positive for the year, with an ending cash balance of $97.5 million.
Temple & Webster trading update and outlook
The company said that it has started FY22 strongly with revenue growth of 39% for the period of 1 July 2021 to 24 July 2021.
It’s planning to continue its investment strategy with the ultimate goal of becoming the largest retailer (online and offline) of furniture and homewares in its home market.
There are a few tailwinds that it points to. There’s the ongoing adoption of online shopping due to structural and demographic shifts, the acceleration of these trends due to COVID-19, an increase in discretionary income due to travel restrictions and strong housing market growth.
Summary thoughts on Temple & Webster and the share price
The company seems like it’s in a very promising position for long-term growth. It’s planning heavy investment in a sector (online retail) that is likely to see growth for years to come. I think it could be a good business to follow if it is able to keep increasing its revenue, market share and lay the foundations for strong margin growth in future years.
It’s one of the ASX growth shares on my watchlist.
