Thank you for standing by, and welcome to the Temple & Webster half year 2021 results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Mark Coulter, CEO and Managing Director. Please go ahead. Thank you, Amanda. Good morning, everyone, and thank you for your time today. It gives Mark Tayler and myself great pleasure to be presenting the results for the first half of FY21 this morning. We've uploaded an investor deck on the ASX, which we will be running through. The key messages for you to take away today are, firstly, we have delivered record results, with revenue up 118%, EBITDA up 556% year-on-year. Secondly, we operate in a large market, and we're still very early in the adoption curve of online shopping in our category, even after any acceleration by COVID. Finally, we continue to make excellent progress on our strategy and have entered the year still growing in excess of 100%. Page three is a summary of a very busy half. I will take you through these points in more detail as we go through the deck. However, I would like to say up front that rapidly scaling any business is not an easy task. The team has done an amazing job on executing our roadmap while dealing with a massive increase in customers and orders. One of the key points on this page is that we have significantly expanded our team, both onshore and offshore, and invested in infrastructure such as new offices and remote working technology to allow us to do that. We've also focused on team's wellbeing, as the risk of burnout in conditions like this is high. The good news is that in our last employee engagement survey, we received a record score. Having an engaged, healthy, and talented team remains our number one priority. The other point to note on this page is that we have experienced strong growth across all of our major product categories, geographies, marketing channels, and customer demographics. This suggests to us that the shift up the adoption curve is going to remain with us even if the world goes back to whatever the new normal looks like. Page four gives new shareholders a quick snapshot of the business. The key takeaway from this page is that we were a high-growth business before COVID and plan to continue to be one for many years to come. We operate in a big market and have scale on our side to continue to accelerate our market share as more and more customers adopt online shopping in our category. One of the business's strategic goals is to grow our private label division. On page five, you can see that as a share of sales, our private label division has grown from 18% to 25%. This area of the business is a priority for a host of reasons, including margin growth, filling product and price gaps, greater control of our supply chain, and as a strategic defense. We've added more resources in our buying and planning teams. We've invested into data and AI technologies to help with forecasting. We've diversified our factories globally to reduce any reliance on a single country. We've expanded our quality and compliance team and moved into product design. We've also leveraged our balance sheet into a higher stock position while ensuring our inventory turns remain high. As an online retailer, our efforts on ensuring people convert once they get to the site and they have a great experience post-order will always be a priority. This half, we were proud to launch our iOS app. Although we're still testing the app, the data is looking pretty positive. I know many of you will have questions on that. The conversion rate, basket size, repeats are all looking pretty positive, and we're actually going to be pushing out our Android app this half. We've also launched our new homepage, which makes better use of our deep reservoir of in-house produced content. In addition to the Android app, watch out for our swatch service, which is a B2C service so people can order swatches of key products that they're looking at. We're going to be rolling out visual search so you can search by photo, and we'll be launching augmented reality using our first batch of 3D models. In terms of customer satisfaction, it actually reached record levels during the half. That was due to a bunch of improvements, both on the catalog side. We also doubled our care team, and we've worked very closely with our freight partners on service levels. Next year, we will be ensuring that we work even more closely with our warehouse providers and logistics partners so we can handle the big peaks in the year. They come around, particularly around the peak around November, Black Friday and Cyber Monday. We'll also be continuing our pilot of our after-hours and weekend delivery service, and we'll be adding more experts into our care team. On page seven, you can see the results of our first major foray into brand marketing since listing. Over the half, we ran a national TVC campaign on the Free-to-Air networks, Foxtel, and YouTube. We've seen a significant increase in our aided brand awareness as a result of this campaign, as you can see on the page. Later this calendar year, we will be testing other channels such as outdoor and radio. Importantly, as page nine details, while our cost per customer increased as a result of this activity, as expected, it was offset by an increase in orders per customer, an increase in average order value, and an increase in our margin. The net effect of this was that our 12-month marketing ROI actually held steady at 2.6, even in the face of the increase in customer acquisition costs. What this allows us to do is continue to increase our investment to become the top-of-mind online brand in our category, which we are planning to do. On page 10, you can see our Trade & Commercial recovered from the weak finish to the last financial year. It actually grew 89% over the half. This is driven by recoveries in sectors such as residential development and regional hospitality. You can see on the chart with first-time repeat orders that the customers are still very loyal, and that's a testament to the great service that we're providing to those customers. I'll now hand over to Mark Tayler to take you through the results in more detail. Thanks, MC. Morning, all. As Mark mentioned, it's always pleasing to present another set of record numbers for the half. I'm going to start on page 13, which summarizes the group's profit and loss results for the first half versus the corresponding half last year. As Mark noted, the half was headlined by the record revenue and record profitability result. Accounting revenue for the half came in at AUD 161.6 million, which was up 118% year-on-year, or 124% on a checkout revenue basis, which excludes accounting adjustments. The reason for the variance in growth was essentially a higher level of deferred revenue as at the end of December relative to last year, which will ultimately benefit the month of January from an accounting perspective. The consistency in revenue growth year-over-year, for me, highlights the plays with scale are the ones that will benefit the most from changing consumer preferences and those structural tailwinds that are in our favor as more of the spend in our category moves online. This is highlighted on page 20 of the deck, which outlines our growth profile relative to the rest of the market. Delivery margins came in above our short- to mid-term target of circa 30%, primarily driven by the growth in private label, which runs at a higher delivery margin level to that of the dropship component of the business. However, we also saw a continuation of favorable terms and a forging of stronger relationships with our dropship partners, not only from a cost perspective, but also in regards to things like exclusivity on ranges, first rights to products, priority shipping. Again, the benefits of scale for me really, I suppose, shone through during this half. The favorable market conditions and strong demand throughout the first half also assisted margin levels to an extent, given we didn't have to discount or promote the product as heavily as anticipated. You will see a step-up in marketing spend, both in dollar terms and also as a percentage of revenue, with marketing coming in at 12.8% of revenue, with the main variance to last year being our investment in TV to continue to build brand awareness in the Australian market. As Mark mentioned, Aided brand awareness is now at 55%. The trajectory is looking very positive. As a result of the increase in delivered margins, our contribution margin levels came in above our short to mid-term target of circa 15%. This is still the level to which we believe is more of an optimum level to deliver above-market growth while still providing leverage to invest into all of those growth areas of our business. The operating leverage in the first half was in part driven by the continued reduction in our fixed costs as a percentage of revenue, which for the first half were down to 7.5% of revenue from 11.7% last year, excluding share-based payments. It is important to note that, as in previous years, the full cost of this reinvestment activity, which is predominantly people investment into areas such as technology, our B2B teams, 3D AR teams, our private label teams, will be realized in the second half of FY 2021, as in previous years. The end result being a record in terms of profitability, with an EBITDA result of AUD 14.8 million, or AUD 15.3 excluding share-based payments, which is an increase, as Mark said, of over 550% on last year. The next page I want to talk to is page 15, which highlights the cash-generative nature of the business, while also highlighting an area we are beginning to allocate some capital. Ending cash for the half came in at AUD 85.7 million, up from AUD 38.1 million as at June 30. Now, I'd love to say the delta was solely driven by operating cash flow, and a good part of it was, but within this did contain the proceeds of a capital raise, which was conducted in July 2020 with net proceeds of between AUD 38 million and AUD 39 million. You will see on the waterfall chart operating cash flow for the first half of circa AUD 23 million, which highlights both the operating results, but also the cash flow nature of the dropship component of the business model, which is still by far the majority of the business. Those positive operating cash flows were offset by investments into private label inventory. The largest we have made to date off the back of a fairly successful last six months, where we've seen our private label products now make up over 25%, or make up 25% of the group's sales. As we start to fill some of those product and pricing gaps across our ranges, we'll continue to invest in this area where we believe it makes sense to do so. All of our inventory metrics, whether it's weeks of cover, GMROI, aging profile, all those metrics are all tracking better than our target ranges, which for me signals that the buying decisions that we're making are quite strong. The investment that we made into our Israeli-based AI interior design company, which completed in July 2020, also forms part of that cash flow waterfall chart under the column labeled 'Other.' As in previous years, a full balance sheet will be presented as part of the audited accounts. However, the strong balance sheet position remains. It's a strong balance sheet. It's a balance sheet with a healthy cash balance, no debt, the flexibility to allow for reinvestment of operating leverage, and the ability to take advantage of both organic and inorganic opportunities in the market. Thanks, all. Now I'll hand you back to Mark. Thank you, Mark. Before taking you through our strategy, I think it's worth retouching on the investment thesis of Temple & Webster. On page 17, you can see the 2019 numbers from Euromonitor. We don't have more recent data. 2019 data will have to do. Even then, you can see it was a big market, AUD 14.6 billion. That importantly excludes categories such as home improvement, appliances. It's really just our core furniture and homeware. Our TAM is actually bigger than this. For current purposes, you can see that it's still a big market. That AUD 14.6 billion, only a fraction of that moves online. Australia lags behind the U.S. and U.K., as you can see on the chart on the right. Even with COVID, we're not talking about a huge acceleration. It could be somewhere in between. Our best guess is somewhere in between where the U.S. and U.K. was, and where Australia was, but we've still got a lot of growth left in terms of penetration. The next page shows you why that shift is happening. One of the main reasons is that people who have grown up buying a lot of things online are now entering a time of life where their homes are more important. This trend has been accelerated, of course, by COVID. Now, while it's impossible to predict the future, we believe online shopping habits have been formed and are being formed right now, which will permanently accelerate the adoption in our category. We have a pretty simple strategy. It hasn't changed much, which a good strategy shouldn't. That's on page 19. We want to have the biggest and best range, having everything you need for the home. Importantly, the best bit of this means we won't list everything. We want to be seen as a place of quality, but at an affordable price. We want to be a source of inspiration and the place you go to when you want to make your home more beautiful, and we want a seamless customer experience, both the support level and the delivery into the home. As page 20 sets out, the bigger we get, the more scale benefits we get. They are things like we can forge closer relationships with our suppliers and get better stock security, better terms, exclusive product ranges. We can make bigger investments into things like technology and data, our brand awareness and our private label products. We can produce more content by having more studios and more creative resources. In effect, essentially what happens is the bigger we get, the better and stronger our customer proposition becomes, which is a virtuous cycle. This, in turn, will lead us to increase our market share, which you can see on the right-hand side of page 20. We think we are increasing our share of growth versus the market stats we have. Page 21 is our one-page initiative strategy. It's pretty simple. We want to increase our range, keep improving our range to ensure it remains the biggest and best. This includes expanding our private label range, as Mark has said. We want to continue driving a digital advantage, including making better use of our massive amount of data through initiatives such as personalization. We'll be adding more resources into our technology team. Our Aided brand awareness post our TV campaign, as I said, was around 55%. We are aiming for national brand status, so we want to get that to above 80%, and we'll do that through digital and non-digital channels. One of our key pillars is inspiration. Now, we've already added over the half editorial, design, 3D artists, video resources in the team, but we also are in the process of building our 3D model library and adding resources to make best use of those assets. We want to continue to improve our customer care, as always, through better training and platforms. We'll be focusing on the delivery experience in the process of piloting an after-hours weekend delivery. If that's successful, we'll roll out that pilot to a national customer base. Of course, Trade & Commercial provides another growth market, and we will be continuing to invest in our team, our range, and service proposition to keep winning market share in this segment. While we don't have a specific M&A strategy, we will consider inorganic investments to accelerate any of the areas on this page where it makes financial, strategic, and operational sense. Our trading update is on page 22. As previously mentioned, the second half has started strongly, with January's revenue growth tracking in excess of 100%. We're continuing to experience strong tailwinds, including the ongoing adoption of online shopping due to the structural and demographic shifts I mentioned before, the acceleration of these trends due to COVID, an increase in discretionary income due to travel restrictions still in place and likely to be in place for a while, and the continued recovery of the housing market and unemployment levels. As Mark said, we will be continuing our reinvestment strategy. We really want to make sure we're investing into growth areas of the business to cement our online market leadership and drive market share. Finally, a big shout-out to the Temple team, many of whom listen to this call. Without them, Mark and I wouldn't be able to deliver such a great set of numbers. We'll now take any questions you have. Thanks, Amanda. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up your handset to ask your question. Your first question comes from Ashish Chandra from Goldman Sachs. Please go ahead. Thanks very much for taking the questions. Just a couple if I could. Could you talk us through a little bit kind of the revenue profile as it went through that first half in terms of first quarter, second quarter, absolute AUD? Is there any sort of color you can give around that to give a sense of kind of how it progressed? The last update you gave was, I think, towards the end of October. Yeah. Hi, Ash. It's Mark T. We probably need to let everyone know who's talking. Yeah, look, the revenue profile throughout the half was in AUD terms, fairly consistent, I would say. Q2 is always a bigger quarter for us than Q1. It doesn't overly reflect in the growth rates. If you look at the prior year, there was certainly a bit of a variance in terms of the comping, Q1 versus Q2. If you look at last year, we actually accelerated our growth throughout the half. We started at low 30% levels in terms of year-on-year growth. That accelerated throughout the half, up to ending the half at around a 50% growth rate. That obviously implies that the Q2, we're always going to be comping a larger Q2 period relative to Q1. In terms of dollars, Q2 was a bigger quarter than Q1, as it always is. It's a seasonally larger quarter for us. Those underlying, I suppose, revenue growth trends, have also then continued into January, with January continuing to grow at over 100%. Would January, May, June be your three of your most important months in this upcoming second half? Yeah. Look, there's a few big months for us throughout the year. We're not a typical, I suppose, gifting retailer or where the bulk of our profitability comes in one or two months of the year. Certainly, Q2 and Q4 are our bigger quarters. Within those quarters, October and November are the bigger months in terms of dollars. Then in Q4. The reason for that is obviously Christmas and people setting up their homes for Christmas. Then May and June are also very big months as well. June in particular, you've got a lot of end of year sales going on. Also from a B2B perspective, it's a big month from a B2B as companies get into ensure that they take advantage of those tax advantages. October, November are big months. December is still a big month for us as well. What you typically tend to see in December is after about the, I suppose, mid-December, it flattens off a little bit as some more of that spend shifts from online back to offline. When Boxing Day comes around, the sales start to come up again. Like I said, in May and June as well, you start to see an uptick in Q4 as well, as end of year sales start to kick in. Got it. The only thing I'd add to that is, yes, Q2, Q4 are our strongest seasonal quarters, but January still is a seasonally strong month. Got it. We are comping a good month. Can I ask, with respect to the commentary you've provided around the ongoing investment in the foundation of the business to support future growth? Is this a reasonable step change that we're going to see through this fiscal 2021 year, off which you are positioning the business to be able to service a considerably larger revenue stream? Or is this something that for the next two to three years, we should be expecting pretty decent year-on-year growth in the cost base? Just trying to get a sense of how this investment is setting you up. I'll- Do you want to take that? Yeah. Maybe Mark, you want to have a go, and then I'll finish. I don't think. We're very much looking at the long-term picture, right? Because we look at what's happening around the world and what's happening to Wayfair. Wayfair's numbers are extraordinary, right? They're doing $13 billion in America alone, in their main market. You translate that back into Australian dollars and population, et cetera, and we should be doing AUD 1.3 billion. It's insane right now. They're still growing at 60%. When we talk about setting the business up for growth and long-term growth, we're not talking about one year, two years, three years even. We're talking about making this business into a multibillion-dollar revenue business. Wayfair's proven it. Now, obviously, we don't want to load the cost base completely straight away because it's going to destroy the economics. Also there's a natural rhythm of an organization. It can only grow so quickly before it collapses, right? You don't want to collapse and go on weight. Yes, we'll be making investments in the cost base this year and next year and the year after and the year after, because we're chasing a much bigger number than the two to three-unit forecast. Yeah. Last question before I jump on. Further to add to that as well. Agree with that. Thank you. I'll just ask the last one before I jump back in the queue. Your ROI on marketing spending is holding steady. How's your thinking on this evolving as you're getting more indications of how repeat usage is rising? Is this something that you could actually take a view on? It's a good question. If you'd asked me before TV, I would've said that ROI was going to come down, actually. Interestingly, the ROI has held, and even though you can see the CAC go up, as I said in my commentary, it's being offset by an increase in the repeat rate, slight increase in AOV and increase in margin. It's quite interesting. Our best guess is that we're actually reactivating repeats with this brand marketing. I think it's going to be an interesting equation as it plays out. As we increase our shift into brand marketing and CAC rises, are we actually increasing the repeat rate? We know that companies like Wayfair have a higher orders per active customer. We know we've got room left with that. We know our orders, sub 50% of our orders come from repeat customers. Wayfair is more like 70% plus. We've got a lot of growth left in repeats, that will set off the increase in CAC. It'll be interesting one to watch. I think the dynamics, as I said, will be interesting. We don't have a fixed view that it has to be 2.6. I think 2.6 is really good. It means we're making money on the customers, on the new customers. We don't think it has to be that. It could be lower, and we could funnel more money into marketing to accelerate growth, and we make sure we are that dominant player. At the moment, what's happening is that the two forces are counterbalancing and the ROI is holding. Okay, terrific. Thanks, gentlemen. I'll jump back in the queue. Thank you. Your next question comes from Callan Sinclair from Macquarie. Please go ahead. Hi, guys. Just a couple from me. Maybe just if you can touch on how suppliers have gone in keeping up with the growth through that first half, and if it's been a constraint through the period, just both in terms of the inventory availability and delivery time frame standards, all that sort of stuff. Yeah. Look, my line in the opening, which is it's not easy to rapidly scale a business. There's a lot in that. Clearly there's all our internal things that go with scaling business, but it's all the external things as well, because like any business, you're reliant on all your suppliers. Whether that be, in our case, our product suppliers or our factories, but also our logistics suppliers. As you probably read from some of the commentary around the market, definitely there have been bottlenecks in different parts of the supply chain. We had delays out of Asia for some of our private label. We had stock shortages in our drop shipping network, as they also experienced the same delays on their end. The good news is that we've washed through that. We've got a lot of stock that's arrived or arriving. Our suppliers have got a lot of stock also. We're in a good stock position actually right now, which is good. That's only going to get better. Logistics network was humming, actually. Our warehousing and our carriers were humming up until the November peak, which is what I called out, the Black Friday, Cyber Monday period. I think the networks do well when there's a steady increase. Even if it's a big steady increase, they can plan for it. The trouble with the consumer e-commerce sector is that that period and that weekend is getting so big and everyone's holding off to buy their Christmas shopping over that weekend, that it puts a massive strain on the network for a short period of time until it filters out. Everything's almost back to normal now. It's okay, and we found additional warehouse space and our carriers are back to normal delivery standards. We definitely need to make sure that for the next peak, the next November, and from now on, we are working out how to make sure we're addressing that sudden increase capacity. Yeah, as I said, most of those issues have been sorted out, but it was a challenging quarter. Yeah, appreciate it. You touched on it briefly, but just in terms of the private label and new categories you can go into, just what are the key remaining gaps you're looking to focus on in the forward period and whether you're preferencing drop ship versus private label? Maybe just adding to that, can you drive higher spend per customer by consistently increasing that range? The second part of your question is easy to answer, which is yes. I definitely think the more bites of the cherry that you give someone, the more they'll spend with you. If you can add in more categories, more subcategories, they don't need to go to your competitors. We know ourselves by what we've done over the last X number of years, that you will get a bigger AOV. Definitely expanding range, both within a category and adding categories is a focus. I think in terms of private label and drop ship, if we have the stock for a drop shipper, we can get a good margin on it. We can rely on the drop shipper's operational metrics. We can rely on the drop shipper's quality, and everything's great. Why would we not use a drop shipper? It saves our balance sheet. We don't have a preference to use private label, but in some areas, it gets tougher. One of the classic examples is entry-level product range. There is quite skinny margins at the entry-level part of a furniture range. When you start adding in wholesalers and retailers, et cetera, you get into quite low margins. We want to be careful we don't just chase the revenue at the expense of maintaining good economics for the business. I think for some areas, it makes more sense to import because the margin may not be there across the chain. In other areas, there may not be. We can see in our data, for example, that our customer wants a particular size or a particular color or material, et c. Our dropshippers, and we'll often go to a dropshipper and say, "Can you source this for us?" They'll go, "We can, but we don't think there's a big enough market nationally for it." We will then have to go, "Okay. Well, we think there's a big enough market on Temple & Webster," and we'll take the inventory risk to bring it in. I think we'll use the private label as an area to fill, as I said, the product and price gaps and where we can't make the margin we want on products. Our preference would always be to work with a dropshipper as well. Okay, great. Maybe just last one from me before I hand it over. You mentioned the recovery in the housing market and the outlook. I guess, hard to answer, how significant is just the general listing volumes and rental turnover to driving the category and your revenue growth historically? As that comes through, do you think that offsets some of the other benefits you've got in the period to date? I think, what we want is turnover. We want people moving, right? So when the market recovers, people start selling, people start moving. That's what we want. There's obviously a bit of a wealth effect, right? People are richer, and they will redecorate the house or do something. Basically, we want people selling, moving, renting, changing, because when they do that's when they Think of your own life stage, right? When was the time where you bought most of your furniture? It's usually when you've moved. So I think that definitely as a trend, if people start moving again, because there's been a housing market. The housing crisis didn't actually really tank that much during COVID, right? For some markets, it went a bit backwards. Because there was a real shortage of supply so there was just nothing on the market. If listings volumes increases and the housing market recovers, then people start moving, and that definitely helps us. Our furniture and housing is correlated to that. Great. Thanks for that. I'll leave it for the other guys. Cheers. Thank you. Your next question comes from Tim Piper from RBC Capital Markets. Please go ahead. Morning, team. Just a question on the deferred revenue, the differential in revenue and checkout-based revenue. In terms of orders unfulfilled, how far is that sort of stretching? It was stretching back at the end of December. Was there still undelivered orders from the Black Friday/Cyber Monday event at the end of November? Has this sort of backlog cleared completely now? I'll take this one. I'd say, look, yes, it's completely Well, completely? The majority, yes, has all been shipped out throughout January. Certainly no backlog going back that far. Essentially what we saw in December was they were still catching up. Some of our logistics providers were still catching up throughout the month of December for that huge spike in that Black Friday/Cyber weekend. That backlog essentially transpired throughout the whole of December. They were sort of catching their tail throughout that whole period. As we came into January, we started to see that backlog start to then dissipate. Obviously by the end of January, things were returning back to normality. I can talk from my own personal experience, having bought something on TPW a few weeks ago, and I got it within a couple of days. Certainly back to where they should be. As Mark said, the difficulty is in those spikes, those sudden spikes in demand. We need to work through that. Our partners need to work through that. Essentially from a deferred revenue perspective, they are orders that aren't delivered essentially. As at the end of December, we had a portion of deliveries that weren't delivered more than what on a relative basis more than last year, they were delivered in January. From an accounting perspective, obviously we can't recognize that in December, they'll be recognized in January. Okay, got it. When you talk about January revenue growth tracking in excess of 100%, is that accounting revenue? Are you taking into account? No. That's on Yeah. Whenever we quote revenue growth, that isn't at the end of a half or isn't at the end of a financial year. That is always just order based on order date, which excludes any accounting. Any accounting benefits in terms of deferred revenue would be over and above that level. Right. The volume in January looks pretty strong, you're going to have an added tailwind of obviously, there's several million dollars worth of deferred revenue kicking in as well. Look, that's correct. I think the other important point, which Mark noted as well, is January is seasonally a very good month for us. January last year was seasonally very strong. Q2 was seasonally very strong last year as well. The fact that we're able to grow in excess of 100% throughout Q2 and into Q3, that gives us some confidence that things are holding up very well and there's still a lot of demand out there for furniture and homewares. Got it. Thanks for taking the questions. Well done on the update. Thank you. Your next question comes from Sam Haddad from Bell Potter. Please go ahead. Good morning, guys. Just a question on TV advertising again. Just in reference to slide eight, there's a chart there on the right. Is the first-time customer line more of a better litmus in terms of the traction you get from the increase in brand awareness? We saw that spike up with people working from home and forced to shop online with the fallout of COVID. It's sort of plateaued there since then. Should we see an uptick on that green line with the increase in brand awareness from TV advertising? I could say it's a really interesting question because, clearly we can see our first-time customers increase. Don't forget, those three months, you're comparing the peak at the end of COVID in FY 2020 versus coming into FY 2021. So the fact that they're holding at those numbers the first time means we're still attracting a lot of first-time customers. It's impossible, though, because you don't have the tracking, like someone having clicked on a link. It's really hard to know is it a first-time customer or a repeat customer? And that's unfortunately the reality with TV. Now we can look at things like baselines, and we look at channels. We take, for example, our long-tail search as a baseline, and we're going to go, well, how does that compare both first time and repeats versus our direct channels? People coming into Temple & Webster either by typing in Temple & Webster in Google, which is called branded search, or entering templewebster.com.au into their browser. We can identify that traffic, which we attribute to TV, and we look at it versus a baseline of people who are searching for a blue couch. What we can see is that TV has had an impact not only on first-time customers but also on repeats. It's driven repeats. That's what I'm saying. I don't think it's just a medium, really interestingly, for first-time acquisition. It's also a medium to remind people who may have bought us before that we are around. It could have been a few years ago, they bought with us, but they may be in market for something. Rather coming into Google and searching for something, which they may not be doing, they're coming straight to us. I think it's an interesting medium because it's not just first time, it's first time and repeat. When we look at even on a first-time basis and we attribute the TV spend to first-time customers, it's still looking okay on a cost of sale. One of the reasons why we think we can get away with TV advertising, the economics are okay, is that we have a pretty high AOV. Our customers spend quite a bit of money with us. I think if you're an online retailer with a little bit low AOV, the economics on TV just wouldn't work. Yes, because when I think of increasing brand awareness, I would have thought that the first thing to tick up would be the green line, and obviously, you get an increased repeat purchase on the back of that. You don't know. Sam, I think a little bit of it is hidden evidence, right? The green line could potentially be falling if we weren't doing TV. It's hard to know. The green line is a factor of everything we're doing, and it's still holding up at quite a lot of new customers in that period. Yeah. Just back on the reinvestment strategy. It was a previous question, just to ask it in a different way. For the amount of investment that you've made in the business today where you stand, what level of sales can the business support? Just to get an idea of how far ahead of the curve you've invested in terms of the growth of the trajectory of the business. That's an interesting question. Look, there's no real constraints of growth in terms of what we've currently got. Our platform is very scalable. If we just froze, let's say we did nothing more from today, just literally froze. No more people, no more nothing. Our platform is very scalable. We know we can do much more revenue because we do our peak days. We announced today that we had an AUD 3 million day. You times that by 365, and you get AUD 1 billion. Our platform can handle AUD 3 million days. Our customer care team is variable, so that comes out. That's not even in the fixed cost base. That'll just scale normally. Our logistics is third party, so that can scale without hitting our balance sheet or P&L. Our category teams, we have hundreds and hundreds of suppliers. We can also always increase the number of orders without adding people. If you ask me, could we be a much, much bigger business with the current cost base? I would say yes. However, I think, like all businesses, you don't want to stop because if you stop, you're letting competitors potentially out-compete. I think there should be a continued investment in fixed cost base because that'll allow us to keep pushing the customer proposition, keep pushing things like technology, keep leveraging data, which will make marketing more efficient, et cetera. The business will keep getting bigger and bigger. However, what we're very careful of is that we want to make sure the operating leverage is still apparent, so you can still see fixed cost as a percentage sale come down. We're not going to go crazy because we want to keep showing the operating leverage. Even with investment each year, and a significant investment in our headcount to do all the things that I'm talking about, you'll still see that operating leverage. You see what happened last quarter with Wayfair. They've got a significantly bigger headcount than us, but their volume increase in volume meant that they got to profitability. Their adjusted EBITDA for the last quarter was 9.5% or something. It was quite high. They got leverage on their ad cost because repeats are such a high part of their business now, and they got leverage on their fixed costs. They've set themselves up to be a $13 billion U.S. business. I think that's the journey we want to make sure we're going on. I understand your question, which is how much additional cost is needed to keep growing. I think how we look at it more is that we have a long-term goal we want to get to, and we want to make sure that we keep innovating the customer offer and keep making the proposition of Temple & Webster better and better. There is no reason why you'd go to any of our competitors. I think that does require investment. You'll still see the operating leverage as we go through our journey. No, I certainly recognize the additional cost needed. I was just wondering, with your cost base today, what revenue can you support, do you think? Is there a number that you can- Well, look, I think, I mean, we can do AUD 3 million in a day. Okay. That's fine. Just on Trade & Commercial, that seems to be rebounding quite strongly. Can you talk about the categories, the underlying markets there within that division, what you're seeing? Yeah. It's a bit of a mixed bag. It's still definitely a mixed bag. Things like offices. Office used to be one of the major categories. That hasn't yet come back, for obvious reasons. It's been picked up. Other categories are picking up the slack. Residential development is going crazy. A lot of developers are accelerating projects. We do work with display suites and furniture packages and even other lines of residential development like assisted living, for example. Hospitality is having a boom. No one's going overseas, so a lot of the regional hospitality, regional hotels, restaurants, et cetera, are all going bananas. They're probably the two ones that picked up. Our designer market. Our Trade & Commercial is also going quite strongly as people are spending money on their homes. You can see that in the overall ABS market. Furnishing homes is having a good run. The interior designers, interior decorators are also having a good run. They're probably the three sectors which are countering the slower growth in some of the other sectors like office. Yeah. Just final question from me. FX with the strong Australian dollar, what are the implications to your business? Yeah, good question, Sam. Look, historically, FX hasn't really had too much of an impact on our business, given the fact we weren't transacting in any other currencies. I mean, obviously, we don't sell into overseas markets at the moment. With the growth in private label, now we'll start to see some more impacts of FX. We've always hedged, and we've always lowered the risk on any transactions from a USD perspective. It's predominantly where we're buying stock from factories that transact in predominantly USD. With the growth in private label, we will start to see a bit more FX starting to come into the business. Still relatively low. If you look at the amount of inventory we're holding relative to the size of the business, it's still small. As that grows, we'll start to see a bit more of an impact. With the appreciation of the AUD. Not only will we see some benefits coming through there, but obviously our drop ship suppliers as well will start to see some benefits from a COGS point of view, which will ultimately will be passed on through pricing through to us. It's up to us whether or not we want to then pass on those savings through to the customer or bank some of that profitability. Given we're in that growth phase at the moment, I would suggest we'd be passing on a lot of those savings back to the customer. Great. Thanks for your time. Thank you. Your next question comes from Scott Hudson from MST. Please go ahead. Yeah, morning, gentlemen. A couple of quick questions from me. Firstly, in terms of, I guess, the behavior of the customers acquired through COVID, is there any change in how that cohort is spending relative to maybe historical cohorts? Well, I think, as I said, the orders per active customer are going up. We can see in our cohorts they're still good customers. Their repeat rates are still higher than our historical cohort. Okay. In terms of the app, are you getting much sales activity through the app itself? Yeah, look, it's still early days. We've launched it. We're promoting it. When you land on our mobile site, you'll see a little banner at the top saying, "Do you want to install the app?" That's all we've done. We have done no other marketing pushing that. It's really just organic installs. Having said that, the numbers are creeping up. Revenue is also creeping up as well. It's not tiny, but it's not huge. What we're mostly interested are things like, are the customers repeating at a higher rate than your non-app customers? Are they converting at a higher rate? Is the AOV higher? Are they spending more? We're looking at kind of those metrics. All the early reads are that it's actually pretty good. Now we will be starting to market the app hard. We are working on the Android app. The question is, before we go big bang download the app, do we make sure we have an Android app? Android customers can be a bit sensitive. They do not like when Apple, iOS companies only have an iOS app, which I totally understand. Given the Android app we are building as we speak, we may wait until we have got the Android app before we do a big market download the app. What is the timing on the Android app? This half. No clarity on earlier in the half or later in the half or? I have been burnt before by promising app launches, so it is a bit tough. Fair enough. I am pretty sure every CRO in the world has. In terms of the, I guess your margins, distribution margins and contribution margins coming ahead of your mid to long or short to midterm expectations. Is that something that is likely to persist over the immediate near term, or is that just a first half outlier? Y eah, I'll take this one. Look, I don't think it's an outlier per se, but we have said that, and we've been saying it for a while now, that we think around that 30% delivered margin level is a more optimal level. Around the 15% level in terms of contribution margin is more of an optimal level in terms of being able to generate pricing points to the customer and be able to provide really good promotional activity to the customer to drive really healthy growth. Also allowing us, from a contribution margin perspective, to not only have enough funds there to invest in continued growth in that marketing line, not just digital, but now as you can see, we're investing into above-the-line campaigns as well. That sort of 30%, 15% contribution as we've been testing over the last few years, seems to be the outcome where it's going to drive very good growth. Very good top-line growth, very good at customer acquisition. Also allow us enough operating leverage to not only drive profitability but also to be allowing for reinvestment back into the business. Look, it's TBC. We don't give guidance, but certainly if we continue to grow private label inventory as a% of the overall revenue base, that will have a positive impact on the overall delivered margin percentage. It's then up to us to look at that and to determine what sort of growth we want to drive. We view delivered margin, we view contribution margin, and everything in between that is essentially levers for us to push and pull to drive as much revenue growth as possible whilst not destroying the margin economics of the business. We've always said those short- to midterm targets are closer to 30%, closer to 15%. Okay. Just in terms of, do you have a sense of where private label should end up as a% of sales going forward? Depends who you ask. It's Mark or me. What's the range? Mark, what's your range? We laugh because it's a debate that we have internally a lot. Obviously, from a CFO perspective, I would much prefer more of the business to be going through our negative working capital business model, being the dropship component of the business. Obviously private label has a lot of inherent benefits, both strategic and there's financial benefits of it as well, but it carries a bit more risk as well. It's currently at around 25%. Look, I've got no doubt that there's a capacity propensity for that to continue to grow. We'll always ensure that we maintain that negative working capital mix in the business. As Mark said, always our first port of call will be our dropship suppliers. If we're seeing product and pricing gaps across the ranges, and it makes sense for us to invest into a certain line, and it ticks all the boxes, then we'll continue to do that. I think from a range perspective, I think 30% could be or even potentially a bit over 30% it could get to over time. That's dependent on a lot of factors. It's dependent on the growth of our dropship component of the business as well. Like I said, we always want to try and maintain that negative working capital balance in our business as well. Lastly, I guess AUD 86 million or AUD 87 million of cash. I guess what are the plans in terms of utilization of that? Well, you can see private label to start off with. We are investing in that area of the business. There's an allocation there of capital going into private label. Look, we are testing that, right? If it continues to work, then we do believe that's definitely a way in which we can allocate some capital towards an organic element of the business. If you look at some of the areas that we're investing, particularly around the 3D augmented reality, we've already made a small investment into our Israeli-based interior design company. There'll potentially be further investment in and around 3D and AR going forward. What it also does, obviously, it gives us the flexibility to execute on any inorganic opportunities that are in the market. As the market leader, you tend to see a lot of those opportunities, you tend to see a lot of those opportunities before anyone else. We're always assessing those opportunities in the market. Look, we are pretty prescriptive in terms of what we're looking for as well. We are not going to execute on a deal just because we can. It needs to tick a lot of boxes for us. We'll continue to assess those inorganic opportunities as well. That's helpful. Thank you. Thank you. Your next question comes from Wassim Kisirwani from Jarden. Please go ahead. Yeah. Good morning, guys. Can I just ask a question on your active customer numbers and, notwithstanding the comments you made around the longer-term market opportunity that you still see here, how are you thinking about the more short-term outlook for those numbers given that surge that we've seen over the last six to nine months? I guess, is it reasonable to expect some leveling off over the short term as we start to get into that period where you're comping those COVID-impacted areas? Is that how you guys are thinking about it, and will you be adjusting marketing in any way as we enter this period? Look, it's a great question. Of course, everyone knows that we're going to be comping COVID numbers soon. I think the short answer is, we started the year strongly. We are comping still pretty great. We were growing 50% plus in January last year, and we're growing in excess of 100% now. We're already comping big numbers. We're growing pretty quickly. We have those short-term levers, as Mark was saying, so marketing mix and pricing and margins that you play with. We also have the flexibility in the sense that we've told everyone we want to be high growth, and we're not running this for a high EBITDA margin business for now. We want to make sure we're growing quickly. The only thing I'd point to is that Wayfair in 2015, I'm pretty sure it was, had a few quarters of. Was it 2015 or 2016? Had a few quarters of quite high growth. In the U.S., direct growth, like 80%-90% growth. They were still able to comp that following year with 33%, 40%, 45% growth. It is possible to grow. You have to get all your ducks in line and make sure that your marketing mix is right and you've got your repeat strategy right, and you've got your conversion strategies right, et cetera. It all comes back to fundamentals to make sure we keep focusing on the customer and keep executing our strategy. We're definitely focused on making sure we keep growing. Okay, great. Can I just ask around category growth and can you give us a sense of how much of the sales uplift over the last quarter or a couple of quarters has come about through new categories? If you can give us any sense around that at all? Most of our efforts have been focused on our core. We've entered the home improvement categories. We've got a pretty limited range. We still need to beef that up. That's still a future growth play for us. Definitely, the lion's share by a long, long way is our core categories. Okay, great. A final question from me, just on, you made the comment to an earlier question that you don't want to stop investing and that others get an edge. Is logistics an area that you're seeing any sort of deficiencies or opportunities at all, especially in light of some of the delays that were experienced around the Cyber events over November and December? Is that sort of, on a midterm view, an area that you think you'll focus more on, or are you happy with the logistics footprint of the business at the moment? I'm never happy. I think, look, yeah, we've got to tread carefully here, right? Because we don't want to necessarily go too heavy into having our own fleets or loading up the assets of the business with logistics infrastructure. At the same time, we want to make sure we're focusing on the customer. Obviously, there's a balance between ensuring the profile of the business is really nice and clean and asset-light, et cetera, and making sure that the customer is having the experience that we want to give them. As I said, it was just the peak period. Up until the peak, everything was going okay. If we can solve the peak period without having to go too heavy into logistics, I'd much prefer to do that, and that's what our focus is going to be. Never say never, right? If the only way to solve it is to maybe go slightly more deep into logistics, I think we wouldn't rule it out. Wayfair's done that quite successfully in the U.S. They have their own last-mile fleets, and they have their own warehouses where they store their suppliers' goods on, basically, consignment. They have done that. They've proven that actually, with scale, it pays for itself in the last couple of quarters of profitability. I think that's a whole another operational team set-up capability, which we will go into only if we need to. Yeah. That's good color. Appreciate it. Thank you. Thank you. Your next question comes from Louise Sandberg from Bank of America. Please go ahead. Hi, guys. Congratulations. First, your spend per customer is up. How does it compare to the average spend per first-time customer? Is a first-time purchase profitable given your post-marketing spend? That is a first-time customer. That's our CAC with an estimated percentage. We go through by channel and work out what channels the mix is by first time and repeat. Yeah. That's our guess. That's the first-time customer spend. You can see that the ROI on that is still pretty good. Yes, they're still profitable. How does it compare? Obviously if we think about repeat customers, so that's driving up your average customer spend per total customers. How does that compare to the first-time customer spend? As in the CAC or the. As in just the dollar spend per customer. Well, the ROI is essentially the 12-month ROI. It's not only the first order, but it's also the subsequent orders. Any subsequent order will improve the ROI of that CAC. I mean, from an AOV, the first time and repeat customers spend about the same. There's not much difference in an order. Obviously, a repeat customer has more orders than a first-time customer. Yeah. In terms of tax, how much tax benefits do you have left? When do you see yourself paying tax? Yeah, it's a good question, Louise. Probably best to have a look at that once we lodge our balance sheet, which will come through in the audited accounts, and there'll be full visibility of that in a couple of weeks' time. Okay. I guess finally, just you talked about the shipping delays. How did that impact the private label side? Would private label have been stronger and therefore also your gross margin stronger, delivered margin stronger if shipping delays had not existed? I mean, shipping delays were across the board because there's a couple of things. One is the private label actually runs with a slightly longer ship time than our drop shippers because we do pre-sales. We will sell containers which are a few weeks out from port. If a customer wants to buy something which has not yet landed, that will give them the option of buying it a few weeks out. We only do that with a very few select number of our drop shippers because we want to make sure that they can handle the operational complexity of ensuring as soon as a container arrives, that those orders are prioritized and sent out first. We don't do that with all our suppliers. We do that with the private label. On average, actually, the ship time, the delivery time is a bit longer for our private label than our drop shippers because of that time. Really, the delays were more in the ones that were picked up, whether by one of our warehouse or third-party warehouse or one of our drop shippers' warehouse. It was injected into logistics networks, and that's when the delays happened. It was across the board. Our private label is growing faster than our drop shippers, as you can see that calculated because the share of the business. Has gone up. No, it's had to have outgrown the drop shippers to increase share of the business. That's really more about, we've been able to import good products at good pricing. We give a bit more promotional support to our private label in things like emails. We have more margin to play with to do better promotions, et cetera. It's more of the fundamentals of why that private label is growing faster than drop shippers as opposed to the delivery delays. Right. Okay. That's all for me. Thank you. That does conclude the question session. I will now hand back to Mr. Coulter for closing remarks. Thank you, Amanda. Thanks, everyone, for your time today. It was great to take you through the results. Just to conclude on the key messages today, again, we delivered record results. Revenue up 118%, EBITDA up 556% year-on-year. Remember, we operate in large markets. It's still very early in the adoption curve, even after the acceleration of COVID. As you've seen today, we continue to make excellent progress on our strategy and have ended the year growing in excess of 100%. Thank you again. Mark and I look forward to seeing many of you on the virtual road this week. Thank you. Thanks. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.