The Temple & Webster Group Ltd (ASX: TPW) share price is up more than 7% after reporting an excellent FY25 and trading update.
Temple & Webster is an online retailer of homewares and furniture, though a majority of products are shipped straight to customers from suppliers.
Temple & Webster FY25 result
Here are the main highlights from the FY25 result compared to FY24:
- Revenue grew 21% to $601 million
- EBITDA (EBITDA explained) increased 43% to $18.8 million
- EBITDA margin increased to 3.1%, up from 2.6%
- Net profit after tax (NPAT) rocketed by 532.8% to $11.3 million
- Free cash flow surged 89.9% to $37.9 million
The company said that its revenue was driven by growth in both new and repeat customers. Active customers grew 16% year on year to around 1.3 million.
It also said that it had a strong June 2025, with sales growth of 28% year on year, resulting in an increased deferred revenue balance, which will flow through in FY26.
Its profitability was stronger than it had guided. The EBITDA margin was expected to be between 1% to 3% and came in at 3.1%.
Pleasingly, its market share of the Australian furniture and homewares market has increased to 2.7%. I’m expecting this to rise in the coming years.
Home improvement saw revenue of $42 million in FY25, up 42.5% year on year. Trade and commercial revenue rose 9% year over year, amid challenging economic headwinds, though forward order activity in trade and commercial improved in the second half of FY25.
Various metrics going in the right direction
The business is reporting positive progress in a number of areas. For example, its percentage of private label and exclusive products to Temple & Webster is increasing.
Thanks to the largely digital operating model of the business, its fixed costs as a percentage of revenue is reducing, providing a boost for overall margins. In FY25, the fixed costs were 10.6% of revenue, down from 11.3% in FY24.
Trading update and outlook for the Temple & Webster share price
In FY26, it’s expecting its contribution margin to increase from 13.7% to between 14% to 16% and reach more than 20% in the long-term.
The EBITDA margin is predicted to be between 3% to 5% in FY26, up from 3.1% in FY25. It’s expected to get to more than 15% in the long-term.
Rising profit margins are a very attractive feature for a business growing revenue quickly. For 1 July to 11 August 2025, revenue had grown by another 28% year over year and home improvement “continues to outperform”.
With rate cuts and government policies aimed at stimulating housing, FY26 could be another good year.
Temple & Webster shares are definitely one to watch, though it’s priced highly for its growth for the foreseeable future. But, international growth or new ventures could send it even higher if it executes well.
I’m a happy shareholder, but I’m not looking to invest any more at the current elevated valuation.
