Thank you for standing by, and welcome to the Temple & Webster Group Limited 2023 Full Year Results Investor Conference Call. 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 one on your telephone keypad. Participants viewing on the webcast are reminded that they can advance the slides themselves using the right-hand side of the player. I would now like to hand the conference over to Mr. Mark Coulter, Chief Executive Officer. Please go ahead. Thanks, Harmony. Good morning, everyone, and thank you for your time. I would like to begin by acknowledging the traditional owners and custodians of the country throughout Australia. I'm joined today by our CFO, Mark Taylor, and together we will be taking you through FY23 and our plans for the future. Please see the investor deck for more details. We knew coming into the 2023 financial year that it was likely to be challenging, following on from 2 years of COVID-impacted trading periods. We also recognized early on that we needed to adjust our strategy as customers began feeling the pinch of rising interest rates and cost of living pressures. For the year, Temple & Webster delivered a strong result with revenue of AUD 396 million, with the business returning to growth in Q4. This positive momentum has continued into the new financial year, the business is back to double-digit growth, and we are seeing growth in both first-time and repeat customers. The headline takeaway from today is that we still see significant growth in our core business. The market opportunity is large. We can look to other markets such as the U.S. and U.K. to show us where we're headed, and we have the financial strength and operational advantages to accelerate our market share. Page 3 of the investor deck details our key performance indicators for the year. While active customers were always going to fall, given we were cycling the COVID-impacted periods of FY22, we still managed to retain around 90% of our peak customer numbers. Revenue per active customer continued to increase, up 6% year-on-year. This increase was driven by an increase in average order value, which benefited from mix shifts towards less discretionary items such as furniture. We were also able to pass on most of our inflationary pressures in our cost base, particularly around shipping. Marketing return on investment is holding despite inflationary pressures, which provides headroom to increase our brand spend in FY24 and FY25 to drive market share. Our focus on growing organic traffic has also begun to take shape. For example, initiatives aiming to boost SEO authority have delivered a 50% improvement in ranking for most of our targeted keywords. Orders from repeat customers now make up 56% of total orders. While the conversion rate has slightly dipped into the high intensities of COVID, we still have the leading conversion rate out of the Australian large retailers dedicated to the home. One of the key drivers of our strong conversion rate has been the deployment of our iOS and Android apps, and by the end of FY23, we had 536,000 lifetime downloads of these apps. These apps are demonstrating high conversion rates, greater customer lifetime values, and higher customer satisfaction. One of the drivers of our increase in customer satisfaction and NPS has been the launch of our scalable asset- light T&W delivery service, now in multiple metro and regional markets throughout Australia. In the past 10 months, we've completed over 70,000 deliveries through the service with a high NPS of 70%. The T&W delivery service operates at a lower cost, reduces product damages, and ensures faster delivery times by eliminating touch points within the traditional delivery networks. Where to from here? Well, we're the leading pure-play online retailer in a market that is poised to grow substantially over time. The Australian furniture and homewares market is worth around AUD 19 billion, but only about 18% of that market has moved online currently, compared to the 27%-28% we see in markets such as the U.S. and U.K. Our sights are firmly set on exceeding AUD 1 billion in revenue over the next three to five years. This growth will mostly be from the core, we also want to diversify our revenue base. We believe the scale will firmly entrench our competitive moats around range, brand, data, artificial intelligence, and technology. To do this, we will be focusing on five key strategic priorities. Firstly, becoming a top-of-mind brand in furniture and home goods. As you can see on page 6, Temple & Webster currently ranks, seventh or eighth in unprompted awareness of furniture and home goods among Australian shoppers. 78% of Australian furniture and home goods shoppers have never visited our website. We also know that customers are most likely to switch brands during tougher economic times as they seek value, where media rates are likely to be the most efficient. We believe now is the time to build our brand equity and salience to gain market share. In FY23, given the strategic importance of brand and direct traffic, we focused on building out our internal and external capabilities, including adding a Chief Marketing Officer, we're in market in Sydney with an out-of-home brand test campaign in Q4. In FY24, we will be launching our first multi-channel, multi-city above-the-line campaign. As the business scales, so will our marketing budgets, allowing us to keep adding brand awareness points with the goal of becoming the top-of-mind brand in the category over the next three to five years. As set out on page seven, we want to be famous for having the best range in the country, a site with an incredible range of high-quality products and at great prices, which cannot be found anywhere else. To do this, we want the majority of our sales to come from exclusive lines. These products include our private label products, usually those imported under the Temple & Webster brand, exclusive dropship products, for example, those designed by Temple & Webster but sold by dropshippers, and made-to-order products. This will involve growing the share of revenue from these products from around 40% in FY23 to our goal of around 70% over the next 3 to 5 years. Our exclusive lines have greater margins, which allow us to more competitively price these products. We also have the ability to value-engineer these products, allowing us to offer on-trend quality price, quality products at even better prices. We will be investing in this area with more data sciences, product development capabilities, and offshore sourcing teams. Importantly, our goal is still to retain our negative working capital model under the strategy using the mix of inventory models. Thirdly, as an online-only business, we are well-placed to benefit from the, frankly, revolutionary potential of new technologies such as AI. In FY23, we increased our investment in our R&D partner, Renovai, which is an Israeli AI startup that is disrupting the way customers shop our category and helping to drive high conversion rates and customer engagement. Our dedicated internal AI team is looking at how we implement AI technology across all of our customer interactions and internal processes. Early initiatives include using generative AI to power all pre-sale product inquiry live chat. We've also used AI to enhance product descriptions across more than 200,000 products. This has led to an increase in conversions, products added to cart, and revenue per visit. In FY24, we are targeting using AI for all first-time care interactions, logistics routing and exception handling, pricing, promotions, and recommendations. As we get larger, so does the size of our data lake. Having more data points on Australian furnishing home buyers than any other business, will help the accuracy of all predictive algorithms that'll be used across the business. For example, our personalization algorithms. Our fourth strategic goal is to aim to significantly decrease our fixed cost as a percentage of sales over the coming years. Given we do not have physical store costs, our fixed cost base will naturally be leveraged across a greater scale, significantly reducing our fixed cost percentage as our revenue increases. Also, most areas in our business can be and will be materially disrupted by AI. For example, care, operations, but also functions like product development, tech, and of course, back office. We are already making early wins and have reduced our customer care and operations overhead as a percentage of revenue from 3% in FY22 to around 2.5% in FY23. In FY23, around 16% of our revenue base was from our growth plays outside of our core B2C furnishing homes business. This included AUD 38 million, or around 10% of the group revenue from our B2B customers, and AUD 23 million from the home improvement category, or around 6% of group revenue. Our 3-to-5-year plan is to have more than 30% of the group revenue from these and new growth plays. This will diversify the revenue mix of the group and also allow us to gain further leverage on our fixed cost base. Our growth plays leverage core capabilities of the group, and they also significantly increase our TAM. For example, the B2B market is a multi-billion dollar, highly fragmented market, while home improvement adds around AUD 20 billion to address the market. The B2B division has been structured to provide a full service offering to business customers, including a newly established design and projects division, responsible for design, procurement, and installation of large-scale projects. The B2B division is targeting accommodation, residential, and SME office market this year, while sales specialists focused on the specific requirements of each sector have been added. Ongoing design and sourcing of a commercial-grade product offering to service these industries will result in large-scale range expansion in FY24. In FY22, we launched a pilot site to The Build as an entry into the Australian home improvement market. We assembled a dedicated team and developed a range across core categories such as bathroom and kitchen fixtures, flooring, and lighting. Importantly, this range was replicated on templeandwebster.com.au, the mothership site. As mentioned, these efforts delivered revenue of AUD 23 million for the year, of which 80% fell on the main Temple & Webster site. This is a great outcome, as it shows the Temple & Webster brand can stretch into adjacent categories, which, to be honest, we were a little worried about before we went to the sector. This was reflected in lower marketing acquisition costs and higher conversion rates than The Build. We are still very bullish about the home improvement category, and have made the decision to focus on the Temple & Webster brand as the single brand across furnishing homes and home improvement. This will allow for easier cross-sells and marketing to our existing customer base and allow us to redeploy The Build team and marketing budget to Temple & Webster. Going forward, we will continue to build out our, our high-quality range, and, excitingly, we will also be trialing our first private label range around bathroom fixtures, which are landing this half. I'll now hand over to Mark Taylor to take you through the results in more detail. Thank you, Mark, and good morning, all. I'm gonna start on page 14, which highlights the group's profit and loss results for FY23. Look, to achieve revenue growth in 2023, look, it was always going to be a challenge, given the prior comparison period, which was significantly impacted by strong e-commerce demand due to COVID lockdowns. However, we're very pleased with the full year revenue of AUD 396 million, and the business returning to revenue and market share growth in Q4 of FY23, which was driven by both by both growth in repeats and also first-time customers. Importantly, against the tougher consumer environment, we continued to deliver positive cash flows whilst maintaining investments into key growth areas such as home improvement, and achieving profitability within our stated 3%-5% range, reflecting the flexibility and resilience of our business model. We increased our private label share of revenue to about 30% and maintained favorable positions with suppliers, with over 90% of non-private label promotions now fully funded by suppliers. We improved our delivered margin position from 30.2%- 30.8% for the year. Contribution margin levels were strong at close to 16%, largely driven by delivered margin gains and focusing on proven high return digital marketing channels, with a minimal brand investment spend in FY23. Our stock costs reduced as a percentage of revenue in the second half versus the PCP, as we leveraged our previous people investments and as we start to see the benefit of AI-led improvements in particular across our customer care team. Our Adjusted EBITDA result was in line with FY22, despite the revenue shortfall. You can see this was up substantially in the second half of 2023 versus 2022 because of stronger gross margins and the leverage I just mentioned. Our full year EBITDA result of 3.7% was within our stated 3%-5% range, with EBITDA for the second half of 2023, up 80% versus the second half of FY22. This result, the full year result, included an investment of AUD 3.2 million in building out our home improvement offering as part of our strategy, as Mark talked to, and we'll leverage this investment heading into FY24. Page 15 highlights, really highlights the strength of the group's balance sheet and the cash flow generative nature of the business. Cash increased from AUD 101 million to just over AUD 105 million, primarily driven by cash from operations and the benefit of the group's drop ship negative working capital model. We continued to manage our inventory levels well with our negative working cap, able to fund further private label investment, and we expect this dynamic to continue during our 3-5-year plan, as Mark outlined earlier. We invested some of this cash in growth CapEx and a further 600K in our Israeli startup, Renovai. Renovai is an important part of our AI strategy to enhance the customer experience, also to improve cost efficiencies in the group. We also commenced an AUD 30 million share buyback in April, which is ongoing, with 2.7 million shares bought back at a total cost of AUD 12.3 million to date. We will continue with our buyback program and continue to assess market conditions and prevailing share prices. Before the share buyback program and the additional Renovai investment, we generated free cash flows of AUD 17 million for the year. We are in an enviable position. With the strength of the balance sheet, we're in a position to fund both organic and also inorganic plans whilst maintaining the buyback program. In terms of our M&A intentions, well, they remain unchanged. We continue to assess opportunities with a stronger focus on our growth plays relative to our core furniture and home goods business. We're ready to execute on the right transaction, should it meet our return on capital criteria and also strategic hurdles. Look, the business has never been in a stronger position. We have room to deploy funds in support of our growth plans, but we will do this in a disciplined way, remaining profitable at all times. Now turning to page 16, which sets out our financial profile for 2024 and 2025, and also reiterates, reiterates our longer-term financial profile. As Mark has stated, we are returning to our growth strategy as a category disruptor. FY24 and 25 will be focused on accelerating our growth and market share gains through executing on our strategic priorities. With over AUD 100 million of cash in the bank, no debt, our strong balance sheet gives us the flexibility to take advantage of what is a once-in-a-generation opportunity to grow more rapidly, which will rebalance our earnings profile in the near term, but then get us to our longer-term goals more quickly. FY24 and 25 will include an additional 2%-3% of revenue invested into marketing, spread across brand and performance channels to increase awareness and grow our market share faster. We'll also be investing in our current future growth plays to diversify our revenue mix and increase our TAM. These growth plays allow us to gain operating leverage in our fixed cost base by leveraging our people and our platforms. BAU EBITDA margin will be between 3%-6% for FY24 and FY25 before the above-mentioned brand investment. We expect EBITDA margins to start incrementally building from FY26 towards our longer-term EBITDA margin of over 15%. This will be driven by increasing scale benefits with suppliers, more private label and exclusive orders, improved logistical efficiencies, and of course, the benefits from our investments into AI. Additionally, over time, we also expect repeat customer orders to grow to over 80% of our total business, which will run at a lower marketing cost. As we know, repeat customers are a lot cheaper to reengage than it is to acquire new customers. Importantly, our fixed cost base will be a key area of operating leverage in the coming years. We know Temple & Webster can drive much larger revenue with existing resources. Going forward, we expect the relationship of revenue to wages to become less linear, as opposed to the variable nature of this line over the last few years as a result of growth investments. We firmly believe the longer-term margin of over 15% is achievable, and some data points to support these aspirations are, firstly, this is on the lower end of what we typically see in our category in terms of profit margins, as the category is a relatively high-margin category. Secondly, we have we've run EBITDA margins much higher than where we are today. For instance, we ran a 9.2% EBITDA margin for the first half of FY21. This period was assisted by positive market conditions, no doubt, but it was achievable very early on in our life cycle. Lastly, as a management team, we have a history of executing on what we set out to achieve, which is evident in the performance of the business over the recent years. Look, we have learned that the path to our North Star of becoming Australia's largest furniture and homewares retailer is never direct and always differs to what you might predict. We incorporate this into our everyday thinking with agile forecasting and having adaptive mindsets. We have a lot of confidence in our plan and firmly believe pushing harder in our growth now will be of a significant benefit to our shareholders. In terms of some housekeeping metrics to assist in modeling out TPW, I'd call out the following in respect of FY24. Expect D&A to come in between. Well, expect D&A to come in around AUD 6 million, CapEx between AUD 2.5 million-AUD 3 million, and an effective tax rate of around 30%. Thank you, all. I'll hand you now back to Mark. Thanks, Mark. As previously mentioned, the positive momentum from Q4 has continued into this financial year. Trading year to date is up 16% versus the prior comparison period. This growth is being driven by first-time and repeat customers. While the situation is tough out there for many Australians, we believe we are well positioned to manage these short-term headwinds and gain market share faster and more efficiently. We also believe that the value we offer our customers through our beautiful products at great prices is a winning proposition in times like these. Our strategy as a category leader, capitalizing on a once-in-a-generation industry disruption, remains unchanged. The three to five-year strategic plan we've outlined today is an important step on our journey of becoming the largest retailer of furniture and homewares in Australia. We believe that becoming the top-of-mind brand in the category, having the best and exclusive range of products, developing market-leading capabilities around technology, data, and AI, lowering our fixed cost percentage, and diversifying our high-growth revenue base, will establish Temple & Webster as the main brand for buying products for the home for generations of Australians. One final piece of news. As part of ensuring we are set up for success, we reviewed the structure of our executive team. We've added, as I said before, a Chief Marketing Officer, Joanna Barr. Joanna is an experienced cross-channel marketer who has worked in e-commerce for many years, including roles in the highly competitive market of online travel. Tim Charlton, who is running our supply chain team, has been promoted to Chief Operating Officer with a particular focus on growth. In addition to the logistics, care, and operations, Tim will take on group strategy, trade, and commercial, and any new growth plays. Lastly, Kate Perkins, who leads our furniture and homewares category management and sourcing teams, has been promoted to Chief Merchandise Officer. In this role, Kate will be responsible for all products we sell across the group, including home improvement and any new categories. As always, I'd like to say a massive thank you to the Temple team. Your commitment, adaptability, and resilience are as inspiring as ever. We wouldn't be able to fulfill our vision of making the world more beautiful, one room at a time, without you. Thank you. We'll now take any questions you may have. 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 the handset to ask your question. Your first question comes from Ben Gilbert from Jarden. Please go ahead. Hi. Morning, team. Just interested just around the July trading update, because it looks like some of the web traffic coming through, I know it's not perfect at all, we only get half the picture, but it looks like it's been much stronger through July and August versus that update. How have you seen things like conversions, customer engagement, etc.? Obviously, it's a great result for trading update. Just trying to understand and marry up the delta between, say, web traffic versus the number you have printed. Thanks, Ben. Look, I think it is important to say first up, that I know all of you look at Similarweb like it's the Bible. It's not the Bible. It is an indicator of trends. It's a panel methodology, which doesn't take into consideration, different sources of traffic. Obviously, has no, you know, real understanding of conversion rate by traffic or AOV. Look, it's a, it's a guide, but it hasn't matched up our own internal data for quite a while. Having said that, it's showing high growth in traffic, and yes, traffic is growing quite strongly. Conversion rates holding. We are seeing a little bit of deflation in our AOV as people shift to more high-value items, and we're passing on, you know, better value through higher promotional activity, et cetera. We were always expecting that. When you look at traffic times conversion rate times AOV, the net result is still a really positive result. Look, you know, 16% up year-on-year, I know that's not-- You know, whatever we do is never, never enough, but we are still in a retail recession. I would say that's one of the best results for all retail in our category that you'll see. The comps actually get easier as the year goes on. Look, at the fact that we've started 16% for July and August, you know, half to date, we're really happy with. We think, actually, the path gets easier as the year plays out. No, I agree. It's a great result. Wasn't, wasn't trying to take that away, that away at all. Just, just the marketing investments next year, again, I think it makes a lot of sense in terms of accelerating top line, given the balance sheet position. Just a couple of things as to keen on is, one, how you saw the results from that out-of-home campaign that you did through May, particularly in New South Wales, that's obviously given you the confidence to this nationally. Give you, give us any color on how that's impacted brand awareness, et cetera. Secondly, just on your, your return on investment from marketing. I noticed that the cost, customer acquisition cost is steady.... Year-on-year, you're starting to see those coming down, 'cause which you're a bit more out there in trade, with more inventory coming on, obviously, Insta, et cetera, is opening up. Do you think you'll start to see that ROI lift on marketing as you move further through into 2024 as just some of the costs come down? Out-of-home, look, out-of-home still ran into July, so we're still in the post-campaign analysis period of that, of that campaign. It, you know, just to set expectations, it was Sydney only, and out-of-home only. It kind of goes against a lot of the marketing lore of having cross-channel, because really you want, you want to make sure people see your brand, you know, multiple times during a campaign, 'cause that's how memory structures work. However, having said that, it still led to a incremental increase in orders in Sydney. It still led to an increase in brand search, quite a significant increase in brand searches in Sydney for the, for the campaign. Positive. It's really combining that, that trial with our previous out, brand trials. We have been on TV. We know TV worked for us. What we've taken those learnings and our, and our new CMO has done is design a campaign which you'll, you'll see play out through the financial year, which is cross-channel, so TV, out-of-home, you know, into audio even, social, et cetera. You'll see the Temple & Webster brand play out over the year. You know, that's not just going to be a, you know, a brand campaign for the sake of it. It is, does tie into a retail campaign. Definitely one of the goals of the campaign is to drive incremental sales. Brand awareness is a little bit of a vanity metric. We're not. We don't just want to have, you know, the, the, the most well-known brand, is people not buying. Clearly the campaign is going to be designed with very clear ROI, and we will be in market, October. October, November is the first place this year. That's the out-of-home. In terms of CAC and the marketing ROI, I think, look, CAC is kind of a function of how much we spend, as much as anything. Yes, we do expect there to be deflation in CPCs across the year as conditions get tougher and competitors pull back marketing spend. If that will be offset with us, by us going harder and pushing, you know, for more incremental customers. I think there's a little bit of, you know, swings and roundabouts in that. These channels we're talking about, and we know from our own experiments, are more expensive. Or the, the, you know, it's, it's harder to draw a straight line to the, to the ROI. We do, we are forecasting our CAC to go up as we go into these channels. That, that's implicit in our marketing investment, which has been split out for you to see, which is that investment in our, in our, in our brand and, you know, brand awareness over this year and, and next year. We firmly believe now is the time to do that, and it's never going to be during down, downtime. You know, marketing, you know, marketing gets more efficient. We know from research that customers switch brands during this time. When things are, things are all great, you go to your trust, tried-and-tested brand, and you don't really care. When things are tough, you start actually caring about every dollar. Things like, you know, supermarket, private label grows, but also in our category, you know, surely you may go out and have a look at a, a sofa, you know, in, in a store, but you'll do that extra bit of research. That, interestingly, a category like sofas and, sofas and chairs is growing really strongly. We know people still need furniture. We know, they're going to be looking at value. We are cheaper than, a lot of our offline competitors. We do have a great value. We do have high-quality products at great prices. Now is the time to let the rest of the country know of our offer. Fantastic. Thanks a lot. Appreciate it. Thank you. Your next question comes from Rachael Harwood, from Macquarie. Please go ahead. Hi, good morning, Mike and Mark. Thanks for taking my questions. Just first question, just around market share. I mean, you spoke to increasing market share, but do you have any sense of how significant these share gains have been and how you're seeing the competitive environment at the moment? Well, to counter, I mean, obviously, we don't have full visibility into our competitors' revenue numbers or not, not all of them yet. Definitely, if you look at things like similar, counter what I just said before, we are taking share of our competitors. If you look at the NAB Online Retail Sales Index, that actually contracted in May and June, and we were, we were up. You look at ABS data, we've actually been in a retail recession, you know, for the last three quarters, and our category is, you know, down and we're up. Definitely you can look at revenue for the category and traffic category, and that points to market share gain. Yeah. Understood. and how are you seeing the competitive environment at the moment? Are you noticing any additional discounting or, or any changes there? I mean, look, I'm a consumer like everybody else. Seems like the whole world's on sale. I think, look, that's standard retail practice. You know, I think it's when things are tough, you wanna make sure you're seen as a site for, for good value. Temple & Webster is no exception. We will be running more promos. We, we'll be shouting about the great deals we have. That is just good retail practice. When things improve, as the cycle kind of, you know, plays itself out, you'll see that kind of promotional message decrease. You know, I think it, it, it is a more com-- more promo, promo-heavy environment, has been for, you know, quite a while now. You know, we're still growing at, at 16% year-on-year in that tougher environment. So obviously our proposition is, is having cut through. Understood. Just a question on AI. I mean, obviously expecting to get some, some good leverage out of the AI, but how should we think about the cost savings just in FY 2024 and 2025? Yeah, I'll, I'll, I'll have a crack at that one, MC. Look, it's interesting. We, we did some analysis not too long ago. We worked with all of our different departments and really looking at what sort of impacts AI could have on individual areas. The response was, was probably more than what we were expecting. There's, there's areas clearly where you can see that benefit, and we're already starting to see that benefit. Areas such as customer care, for instance, we're seeing some material benefits already. If you think about all the different elements of our business, the bulk of our fixed cost base are people in an office doing things, you know? I think there's a big opportunity, whether it's back office, whether it's marketing, whether it's content, you know, we're not, we're not looking at doing, you know, big restructuring, anything like that. What we're saying is we can redeploy people onto more value-add activities. A lot of the grunt work, we believe, can be, can be picked up, can be picked up by AI. It's, you know, we're anticipating anywhere from 20%-80%, across different departments of how influential AI could be. Look, time will tell. It's gonna take some time for us to, you know, for this to play out. I think, you know, I think we're in a very good position, and I think we've, we've, we've got a, a very good head start, relative to a lot of our peers. I think our business model lends itself to being disrupted, if you like, by AI, because of our, because of our structure. If you compare us to an offline retailer, for instance, where a big part of their fixed cost base are people, people in stores and leases of those stores. You can't AI that, unfortunately. I think the ability for us to take our, our fixed cost base and, and elements of our variable cost base as well, and for AI to, you know, I think we'll, we'll reap some pretty material and meaningful benefits. They've already starting to show some benefits in 2023. I think 2024, we'll start to see even further benefits. That's great. Thanks very much. Thank you. Your next question comes from Aryan Norozi from Barrenjoey. Please go ahead. Hi, guys. Hope you're well. just the first one for me, just on your comments around, comps getting easier throughout the rest of the half. I mean, if you look at July, August last year, you were cycling a 20% decline. Then the comps actually got better or got tougher. You finished the first half of 2022, revenue down 13%, versus down 20. Can you just elaborate on how why you think the comps get easier as you progress through the half, please? Yeah, look, I think when we, when we look at kind of the year playing ahead, you know, year and year is 1 factor, it's also how the year plays out from a seasonal fleeting perspective. We kind of look at, you know, month to month growth rates and how does that track versus month to month growth rates over the, over history. That's how we kind of know that last year, Q2, we kind of came off the boil a little bit historically. I think a large part of that was what we did, which, which we talked about the half results that, you know, we knew the half, first half was going to be tough, we focused on, you know, a lot of the bottom line improvements. We, you know, looked at our cost base more tightly. We cut back on marketing a bit. You know, we really, you know, focused on the profitability. Q2 was a good quarter from a bottom line perspective, but it did hurt the top line and, you know, is a little bit cumulative. If you pull back marketing, then you actually have less first-time customers, and therefore, you have less repeat. We're up against that, what we did last year. That's why we're feeling a bit more confident about the half. The extra marketing investment that you called out, and, you know, in addition to the AU, I mean, in July and August, are you tracking it back to the fully loaded marketing costs? Like the 16% growth is basically running at 12% marketing to sales, and that will build throughout the rest of the half? No, not... We've, we've upped our digital performance a little bit, but actually the bulk of that investment will be the brand campaigns I'm talking about, and they're not on, in market until October, November. Okay. It's fair to say that that 16% throughout the rest of this financial year, particularly the 1st half, will actually build or increase or accelerate, as you progress, as you sort of spend more money on that marketing piece. Is that, is that a fair comment? You know, our, our hope is, of course, that, we keep doing better, but we're not putting guidance out around that number. We're pretty happy with how the year started and feeling confident about the year. Perfect. Last one, just around the fixed costs. I mean, your, your wage costs, excluding customer service, grew 2% YoY in the second half 2023. Really good performance there in terms of cost control. How do we think about your wage costs growth into 2024 and 2025? Just, I mean, if you're gonna go back to sort of the high single-digit growth rates, or this AI piece is gonna drive it to sort of low to mid single digits? Yeah, it's a really good question, Ari. Look, I think TBC, I think, is the answer. You obviously will have some inflationary costs coming through in 2024, wage increases off the back of, off the back of 2023. Look, I think, you know, our message to the market is, you know, we should start to be seeing that, that linear sort of relationship between our wages line and our, and our revenue line, for that to really start to separate now. I think if you look at the 2024, the 2024 numbers, you know, we're certainly not expecting, you know, material increases in that, in that wage line. I think any growth that we're seeing from, from that line will be far outweighed by the, by the top line. You know, like I said, really breaking that nexus going into 2024, 2025 between revenue and, and then, and wages. Certainly, we, we don't have any large plans to be doing big staff increases, you know, in the near term or in the longer term. You know, if you look at the pack that we set out today, you know, it's very clear that we think that we can leverage the existing resources, and also leveraging the FY21 and FY22 investments that we made as well. Then overlaying some of the benefits of AI as well, will, will certainly help that going forward as well. Yeah. You've ended the buyback on the 30th of June. Is that just because of blackout periods, and should we expect that to resume, or just- Yeah, that's right. The sort of- Yeah. We can't, we can't trade in a blackout period, so from, from 1st July through to today, essentially, or tomorrow, I should say. The buyback, you know, like I said, we'll, we'll continue to assess the, the market conditions and prevailing prices, but it would be our expectation that we would continue with that, with that buyback. Perfect. Thank you, guys. Thanks, Ary. Thank you. Your next question comes from Aswin Yee, from Bank of America. Please go ahead. Morning, team. Thanks for taking my question. The first one, probably around the marketing spend. I feel like the customer acquisition cost still remains at a rate level, and the percentage of a marketing spend on new customers is lower. Just wondering, do you expect to remain this level, or are you going to reaccelerate spending on acquiring new customers in FY24? The second question, probably around the buying opportunity. Just wondering, are you looking for the buying investment in the logistic capability, or you are still focused on, like, investing in the technology, customer, customer base, or supply side sort of things? Let me take the first question, which is the marketing. I mean, the as repeats grow as a percentage of the base, you know, there is a cost to acquire, but it's significantly less than the cost of a first-time customer. Given our focus is on growth, and we see a lot of opportunity in first-time customers, you definitely should see a greater proportion of our spend going to first-time customers. That definitely will will switch. As I said, in terms of CAC, as we go into more expensive channels, I'm still expecting some inflation in CAC, but our economics means that we can, we can cope with that. In terms of logistics buying, I think your question is, are we going to do something like the Adairs purchase? That is not on our horizon. We definitely have a asset-light model. We don't believe that we need to own logistics. We like the flexibility of having multiple partners. We like the fact that our model isn't about business model isn't about utilization of space, which, you know, is hard in a variable growth business, both when it's really, really high and really low. Logistics gets tough. Definitely our, our strategy is to maintain a third-party logistics network. Then now, that doesn't mean we're not going to be exercising more and more control. For example, the Temple & Webster delivery network is a third-party run network. They are contract trucks run by a third party. We define which orders go on which trucks on what days. Then we have a whole bunch of SLAs in the back. Now, that means that we're getting cost savings because we're paying for a truck on a day as opposed to on a parcel, but we're not paying for the whole fleet. It's still, still quasi, you know, actually quite a lot of variable, 'cause we can define how many trucks in the network. It means we have much, much tighter control over, you know, customer delivery times, customer experience. We can do things like day-of-choice delivery. It reduces the damage rate, et cetera. That's the model we like, where we have more control over the fulfillment experience, both in warehouse and in the delivery part. However, it's not on our balance sheet, and the, the risk of, you know, utilization rates being off is, is not ours to take. The answer is no, we're not looking at acquisitions in the logistics space. Understood. That's helpful. Thank you. Thank you. Your next question comes from Chami Ratnapala from Bell Potter. Please go ahead. Thanks for that. Hi, team. Congratulations on the results for the year, and thanks for taking my question. Just on the brand awareness, I did not see it on the deck, just wondering what it's tracking like to at the moment, and also wanted to follow up on your point on customer switching brands and the benefit of winning customers. We've seen the more recent sort of a traffic, seeing good cross-visitation from other brands to yours. Is this evident in your customer-related data at the moment, and anything you can talk to? Thank you. Sorry, got your, your, first question, which is brand awareness. Can you repeat your second question? That's correct. The aided brand awareness, what is it tracking sort of at the moment? Also on the switching brands, are you seeing any cross-visitation benefits coming from other brands to yours within customers? Okay. I, see. Got it. Thanks. In terms of brand awareness, we, we normally disclose our brand aided brand awareness at the half. It's been tracking up as we've been doing more out-of-home. Look, I think the more important metric that we're focusing on is actually now unaided. That's what's been disclosed in the investor deck, because that's a true more a read of, are you the top of mind? When you ask someone, you know, "When you think of furniture and homes, what brands do you think about?" You can see in that chart that we have quite a long way to go to actually become the top of mind. Now, that's going to take time, but it's also gonna take brand investment. As I said, the aided brand awareness is still tracking up and above our levels that we disclosed before. In terms of switching, you can see definitely in Similarweb, you can see some of the traffic overlap with us versus some of our competitors in the offline. The offline overlap is increasing, used to be definitely we would have more, we'd focus more on the online retailers of the competitors, but increasingly it's more the offline competitors, and that's from anyone to, you know, IKEA to Harvey Norman. You can see that overlap, which is good. I think, you know, it's hard... It's impossible to predict that customer would have gone into an offline or particular offline retailer and then have now has come to us. I would say our revenue growth and our share growth is coming at the expense of the offline channel. That's helpful. Thank you. Thank you. Your next question comes from Wei- Weng Chen from RBC Capital Markets. Please go ahead. Hi, guys. Just a couple of questions from me. Just the first one, on, I guess you guys are targeting a bit of a different sales mix. Just wondering how we should think about, you know, inventory risk as you execute on that strategy? Yeah, I'll take this one. Look, I think there's probably a few points with this one. I think the first point would be, you know, in the last six to seven years where we've been, you know, slowly building out our private label range, we've never had an issue from an inventory perspective, whether it's an aging profile, whether it's a weeks of cover. I think that goes to, you know, the processes that we've got in place to ensure that if we are seeing problematic lines, that we exit those problematic lines pretty quickly. I think secondly, if you look at the process that we go through to acquire inventory, where we take a position on inventory, we essentially take small punts and small bets, and if that bet plays off, then we order some more, and we order some more, and we order some more. You know, we're testing and learning all the time. I think a lot of the things that we're doing in terms of AI and our ability to forecast better now is certainly helping that, helping that scenario as well. If you look at the history in terms of our improvement and our increase from a private label perspective, you know, I think you can see historically that, you know, we've been able to manage things pretty well. In terms of the go-forward position, we're in an enviable position where you've got the benefits of the negative working capital model, essentially funding the investment in private label. Clearly, we've got aspirations to be growing that private label component as we move towards our goal of over 70% exclusives. A lot of that will be driven by both private label and dropship. How that mix actually plays out, in, you know, in the medium term and the longer term, TBC, it could actually be more weighted towards dropship, which would mean that the inventory risk is null and void because of that, because of that model. It could be more skewed towards private label, and clearly, we've got, you know, the balance sheet to support that. You know, and clearly, we've got the benefits of the dropship model to, you know, to support that growth as well. I think, you know, we need to continue to, to assess, and I think as we continue to build scale with our dropship suppliers, the ability for us to leverage those relationships and leverage that consistency in revenue growth for that, for that supplier base, will put us in a really strong position to be negotiating really strong outcomes. Some of those outcomes will be exclusive lines, which we're seeing at the moment. The number of suppliers now that are providing a lot of exclusive lines to us, and what that means is we're getting the benefits. ... of those exclusives without having to carry the inventory risk. I think historically, we've been very strong. How that, how that make up or the break up looks going forward, TBC. You know, we've got rigorous processes in place to ensure that, you know, we, we, we don't have any owned inventory risks. Yeah. Okay, great. Thanks. Then just on the billion-dollar target in three to five years, sorry if I missed this in the presentation part, but just wondering how you're thinking about this. Is this like an aspirational or sort of stretched goal, or do you kind of see a clear pathway there? I guess, a management incentive, you know, directly tied to achieving this goal? I think, look, I think it's a very clear path for us, but obviously I'm a little bit biased. I think the stretch is probably, you know, built into the... Or aspiration is built into the timing. If we, if we execute flawlessly and things work in our favor, it'll be close to three years. If it takes a bit longer, it'll be close to five years, and hence the growth rate, growth rate will, will change. I think it's in the timing, we've built, we've built in, into that flex. Management incentives, when we disclose what the our STI KPIs are for our management team, executive team, revenue growth is a big one of that, a big part of that, and the growth rates and the targets will align to this goal. You know, I'm very much incentivized to grow the business and deliver shareholder returns. I'm tied at the hip to everyone, to all of our shareholders. You know, this is... We're all very much aligned to build Temple & Webster into a much, much, much bigger business. Yeah. Then just last question from me on that billion-dollar target. Would that be considered, you know, long term, when you're talking about long-term margin targets and all of that? Like, at AUD 1 billion, would you anticipate that your EBITDA margin would be, like, 15%? What we're saying, Look, what we're saying is that at the AUD 1 billion, the five strategic priorities, which we think will set us, set us up for success for the, you know, next-generation Australian shopper, which is top-of-mind brand, having a, you know, an exclusive and the best range in the country, you know, having leading capabilities around data, AI, having, you know, the fixed cost base reduced and its growth plays, that are our strategic moats. We wanna focus on getting to the AUD 1 billion to really firmly entrench those strategic moats, 'cause that is the stance for Temple & Webster for a long time. At that point, we're gonna switch into, you know, margin optimization, profit optimization. You'll see from that point on, we will head towards the long-term margin target. Yeah. Cool! All right, thanks so much. That's all from me. Thank you. Your next question comes from Scott Hudson, from MST. Please go ahead. Yeah, morning, gentlemen. Most of my questions have been answered. Just on The Build, am I right in understanding that, I guess, The Build brand and website will be, I guess, ended now, and you'll just be focusing purely on Temple & Webster? From, from a home improvement category, definitely the brand that we'll be focusing on Temple & Webster. Look, it is the actual ideal outcome for the group. Having 2 brands going up to 2 categories was always going to be complicated, but it was a hypothesis that made, we needed a second brand to go after a different category. The hypothesis has been proven wrong. I'm a scientist. I'm a science degree. That's fantastic. Hypothesis is wrong. We've actually got definite learning, which means we can focus on Temple & Webster. It's much, much easier from a go-to-market, from a marketing, from a customer care and logistics, from, you know, you name it, it's easier to, to focus on a single brand and think in a 1 platform. That's great, we have now a site which can sell furniture, homewares, and home improvement. In terms of The Build itself as a site, it's a fully functioning site with, you know, everything set up. You know, I don't think we'll turn it off straight away. We may use it as a test bed to deploy some of our AI, kind of more crazy ideas. It could be, we could do, you know, more radical things with our range. You know, we're reserving the right to play with it as a fully functioning site. If you, in a few months' time, you type in TheBuild.com.au, it'll probably still be live. From a customer proposition and where we're putting our marketing budget and where we're putting our team, the focus is on Temple & Webster. I guess just in relation to that, I thought my understanding, sort of when you launched The Build, was that some of the success around or part of the elements of success in, in that market would have been a sort of gaining share of the, of the trade market. Mm-hmm. How do you still think about that, I guess, in the context of now sort of reshift that investment back towards the Temple & Webster brand, yeah? The trade customers was always gonna be phase two. We're a B2C, B2C business predominantly. Phase one was always going to be, get our range right, develop the B2C proposition, make sure we can fulfill. You know, it's easy to say, "Let's switch on home improvement," but we have to work out how to palletize this ship pallet. You know, tiles don't come in, you know, satchels. They come on pallets. Yeah. We had to work out how to do that, you know, the project management design, customer care expertise. We've put all our efforts into the B2C bit. That's, that is going to be the primary focus for, for a little while. Trade customer is always gonna be phase two. We have already, you know, trade customers, interior designers, decorators, people who work in space builders, developers on the furnishing and homewares. We don't see why we couldn't extend that into home improvement. Again, if we can't, for example, and we really need a dedicated site, potentially the, you know, we're leaving the door open to maybe one day resurrecting The Build. Everything we've seen suggests that if a customer is okay buying, you know, tiling, flooring, vanities, bathtubs from a furnishing and homeware site, then, you know, why wouldn't someone in, in the industry? You know, we think Temple & Webster is still gonna be okay. Okay. Then just on the potential M&A front, are you seeing any increased opportunities given, I guess, the, the retail downturn, and, or can you sort of suggest where you or talk to where you're more likely to deploy that, that capital, whether it be on the sort of the second and third growth horizons or on sort of the main part of the business? Yeah, look, hi. Look, I think, to go back to what I was saying earlier, really, it remains unchanged in terms of what our... where our focuses are. Obviously, we're in a pretty immovable position in terms of the balance sheet and the cash generation of the business. In terms of, in terms of M&A, I think, look, the, the core business itself is in a pretty good position. You know, we've got, you know, the probably the best team and the best platforms. For us, it's really about growing that brand awareness for the, you know, for the core business, but certainly for the growth horizons, in particular, home improvement and B2B. That's been our focus for a little while, from an M&A point of view, and, you know, I think that will including technology as well. Clearly, we've been investing in AI and our Israeli team, Renovai. Certainly, the second and third growth horizons that we've spoken to today, would lend itself more towards inorganic activity relative to, you know, relative to the core business. Yes, look, obviously, we're always having conversations with a number of different parties. You know, we'll continue to assess, assess that. You know, always, as we do any form of capital investment, you know, we, we're gonna be very rigorous in terms and disciplined in terms of how we allocate that capital. You know, if the right opportunity comes along, and it meets our return on capital and strategic hurdles, then, you know, we're, we're ready to go. All right. Appreciate it. Thank you. Thank you. Your next question comes from Tim Piper, from UBS. Please go ahead. Hey, Mark. Sorry, I jumped on this late, so I might have missed some of this. Just first question on the inventory position at June. I think previous commentary was you had a, a pretty strong level of, you know, value-focused inventory landing in the fourth quarter. You've probably sold through most of that, given the momentum in June, July. Expectations around inventory planning at that price point over the next 6 months, given macro conditions and consumer demand at the moment? Hi, Tim. Yeah, look, we will certainly continue to be investing in that, in that part of the range. We had a lot of entry-level and, and value-end, products, dropping in Q4. We've seen really good sell-through, and you can see, you can see with the ending inventory position relative to, relative to 2022, it's actually lower than the, than the 2022 position. Yeah, we've got a lot of stocks, landing in the first half as well, and certainly oriented towards that more value end of the market. Thanks. Just the sort of the sequential change in sales were mentioned across May and then into June, July, pretty clearly. I mean, did you provide any comment around sequentially how the margins sort of changed through the half, particularly into the back end of the half, on the back of that? No. Look, we haven't put any commentary in terms of- well, look, to, to be fair, we, we try to, we try not to get too granular in terms of month-on-month profile, in terms of, in terms of profitability, 'cause it's, it's, you know, things can change, and obviously there's seasonality that comes into, comes into the mix as well. But I think the takeaway is, if you look at the, if you look at the performance, if you look at the delivered margin performance and the contribution margin performance in the second half, relative to FY22, you can see that pretty much every metric has improved. You know, so then that is in a period, you know, where we're returning to growth as well. You know, those metrics set us up well heading into FY24. Okay. Sorry, just one quick last one. On the delivered margin in the second half, or in the year-on-year and half-on-half, can you give us a rough sense around the basis point tailwind contribution from lower freight within gross margin? Yeah, interestingly, we've, we're, we're certainly seeing international shipping prices. They're probably normalizing now, but certainly in the second half, there was a material level of deflation coming through, essentially back to pre-COVID, pre-COVID levels. You know, anywhere from sort of $800-$1,000 for a 40-foot container, which is, which is relatively in line. The question will be whether or not that trend continues. My sense is things have probably bottomed, bottomed out from an international shipping perspective. That's a similar sort of story that what we're seeing from the factory gate as well for product prices. We saw a big period of inflation during 2021, 2022, then a period of deflation coming through in FY23. It looks like things have kind of normalized now, that was off the back of lower demand coming out of Europe and the US. It feels like both the shipping and also the cost prices have pretty much now landed in a similar position to where they were, where they were pre-COVID. You know, so I think that's gonna be the sort of the trend going into 2024. Certainly that, that assisted the delivered margin. We're, we're able to pass on a lot of those inflationary pressures onto consumers and, you know, maintain, maintain a good level of business performance. Also those deflationary, we've been passing on some of those deflationary opportunities as well, which has, you know, helped us get back into growth in, in the in Q4. I think the other thing, too, which I noted on page 14 of the deck, is part of that margin growth, yes, part of it is private label. We've seen a bit of an increase in private label, which runs at a higher margin. Actually, the dropship component of the business has stepped up in terms of its margin profile, even more so than private label. Really starting now, because of our scale, we're really starting to get some strong benefits and negotiate really strong outcomes with our suppliers. One of the metrics that I put on that page was the fact that over 90% now of the promotions that we're running from a dropship perspective are actually funded by our suppliers. I think as we continue to increase our scale point with our, with our dropship network, you know, those, those dynamics should should only improve. Sorry, just on slide 7, FY 2023, that chart on the left. How much percentage of your revenue now is, is from sales? Sorry, what percentage of sales do you hold inventory on now in the business? About 30%, Tim. About 30% of our sales are private label sales. it says private label imported is 40%. That's correct. Exclusive, there's third party branded, which is majority dropship. There's some within that third party branded, which you're holding inventory on. Is that right? That's right, yeah. Okay, got it. Thanks. Thank you. There are no further questions at this time. I'll now hand back to Mr. Coulter for closing remarks. Thank you all for those questions. Hopefully everyone is excited about Temple & Webster's future as much as I am. It's worth ending on the headline takeaway message that there is still much growth in our business. The market opportunity is large, we know where we're headed, thanks to the U.S. and U.K., and we have the financial strength and operational advantages to accelerate and market share gains, which we are already seeing today. Thanks, everyone. That does conclude our conference for today. Thank you for participating. You may now disconnect.