Thank you for standing by and welcome to Temple & Webster's first half results 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 the number 1 on your telephone keypad. Please note that slides for today's webcast are user advanced and can be managed on the webcast player. I would now like to hand the conference over to Mr. Mark Coulter, Chief Executive Officer. Please go ahead. Good morning, everyone, and thank you for joining us today. I'd like to begin by acknowledging the traditional owners and custodians of country throughout Australia. I'm joined today by our CFO, Mark Tayler, and together we will be taking you through our first half FY24 performance. Please see the investor deck for more detail. Now, we are exceptionally pleased with the first half performance. Temple & Webster delivered a record half with revenue up 23% to AUD 254 million. This was in the face of some of the toughest headwinds to our category we have seen. As cost of living pressures impact household budgets, shoppers increasingly are searching for quality products at affordable prices, and it is clear our range and value proposition is resonating with Australians during this time. In particular, the second quarter of the financial year saw revenue growth of 40%, thanks in part to a strong Black Friday and Cyber Monday sales period. This positive momentum has continued into the second half, with trading up 35% year-on-year in the half-to-date. Our EBITDA result of AUD 7.5 million for the first half, up year-on-year even after our brand market investment, gives us confidence to continue investing in growth to take further market share. The online market in Australia remains underpenetrated, and we are demonstrating our willingness to continue to take share even when the overall market is down. We are in a strong financial position and well placed to build a strategic moat around range, brand, and tech capabilities. We remain committed to our goal of hitting AUD 1 billion in sales in 3-5 years while remaining profitable. Page 3 shows our key performance indicators for the half. As you can see, our result was driven by growth in both first-time and repeat customer orders, which has led to record active customer numbers. In fact, just recently we've crossed the 1 million active customer mark for the first time. Marketing return on investment was in line with expectations given our increased brand investment for the half. The slight drop in revenue per active customer reflects a decline in average order values as customers seek more value in the tough environment. However, we're continuing to see a shift towards less discretionary and higher ticket items such as furniture. We still have the leading conversion rate out of the Australian major retailers dedicated to the home and have maintained our strong customer satisfaction levels as we scale. This is in part supported by the ongoing rollout of our asset-like T&W delivery service throughout Australia. As reflected on page 4, our sights remain set on exceeding AUD 1 billion in revenue over the next 3-5 years. We're the leading pure-play online retailer in a market that is poised to grow substantially over time. While we see the most significant growth from the core furniture and homewares business, we also want to diversify our revenue base and focus on our adjacent growth plays, which will benefit from leveraging the core capabilities of the group while adding scale. Page 5 reiterates our vision of being famous for having the best range in the country and highlights our specific 3-5 year strategic goals that we set out in the FY23 result in August. Turning to page 6, in line with our first goal of becoming the top-of-mind brand in the category, in October we launched our first major multi-channel above-the-line brand campaign across Sydney, Melbourne, and Brisbane. The campaign has shown promising early results, including a significant increase in our share of branded searches and direct traffic, as well as incremental orders and first-time customers. As many on the call may have seen, this campaign is centered around Imagine, reinforcing Temple & Webster's role in helping our customers imagine and then achieve a more beautiful home within their budgets. The campaign consists of three bursts spread across FY24, and we will continue to invest in other direct and organic traffic channels and optimize our existing marketing mix for AI and data-driven strategies. Our second goal of delivering the majority of revenue from exclusive products is laid out in more detail on page 7. We've added over 500 new private label products during the half. Our high-margin private label contribution remains steady, even stronger than forecast future growth, which did see a substitution into dropship products given our owned inventory levels. We continue to focus on exclusivity with our key dropship partners, which allows for more of the catalog to be differentiated, exclusive to us, and means there's a big opportunity for high-margin initiatives. This half, we've also established an internal industrial design function with three industrial designers who are exploring a number of tools, including using AI in data-led product design. As many will know, data, AI, and tech is a key customer differentiator for us, and we are building market-leading capabilities to drive further customer conversion as well as cost-based efficiencies. Page 8 highlights some of our recent initiatives. This half, we've trained the whole of the company on AI with the deployment of an internal AI assistant, which we call Pearl, to help with day-to-day tasks and workflows. We also added more customer service use cases, and now around 30% of all customer engagements are handled by our online chatbot Sage. As shown on the chart on page 9, we're progressing well against our goal of significantly decreasing our fixed cost as the percentage of sales as we scale. A low fixed cost percentage allows us to pass from cost-based benefits to customers through better pricing and promotion, and over time will lead to margin benefits as operating leverage translates into bottom-line profitability. Lastly, looking at page 10, we continue to build our future growth plays in order to diversify our revenue mix. I'm pleased to report the B2B, which we call Trade & Commercial division, grew 23% in the first half, contributing 9% to group revenue. We invested in targeting brand and marketing efforts over the half within growth sectors such as accommodation. The Home Improvement division achieved AUD 14 million in revenue and an 18% growth rate, which was a strong result as we were focused on only one site during the half versus two in the prior comparison period, being The Build and Temple & Webster. Pleasingly, we were able to reduce our ad cost by 15% due to this focus. We successfully launched a private label collection of tapware and other categories such as ceiling fans, cabinets, and vanities, are in development. We also developed our delivery capabilities for fragile bulky goods such as stone vanities, ceramic sinks, and bathroom areas. The first half performance in our B2B and Home Improvement division shows the Temple & Webster brand can stretch into adjacent categories, which gives us confidence in continued investment in this growth plays. Page 11 sets out our flywheel. Scale helps each of our strategic priorities, whether it be through bigger marketing budgets, more data for product and customer predictions, or leverage in the fixed cost space. Now, before I hand it over to Mark Tayler to run through the financials, I'd like to take a moment to talk to our news this morning of Mark's intention to transition to another role within the T&W group. This role will be focusing on investor relations and the group's broader growth strategy. On behalf of the board, my fellow co-founders, and the Temple team, I'd like to extend our thanks to Mark for his exceptional contribution and commitment over the past eight years as CFO. Mark has helped lead T&W through some incredibly demanding periods. He's been an instrumental part of our success as we've grown to become one of Australia's largest online retailers, and he's been a great business partner to myself. The business has never been in better shape, and it's great that we still get to benefit from Mark's insight and knowledge of the business, and he's given us time to make sure we find a great new CFO. So thank you, Mark, and over to you for the financial results in more detail. Thank you, Mark. I appreciate that. And look, let me address it as well. Look, it has been almost eight years as CFO of T&W, and look, I can honestly say it's been an incredible journey. I've had the privilege of helping lead an amazing and passionate team, as Mark said, through really some of the most challenging periods that can be thrown at a business. And off the back of these challenges, emerging as one of the leading players in the category has been really rewarding, and I'm very thankful for the journey that we've had together. But thankfully and excitingly, I'm not going anywhere. I get to continue my journey with T&W, look, just in a different role, focusing on a range of different growth initiatives, both organic but also inorganic, really looking at ways we can leverage what we've built and leverage our strong balance sheet. As Mark mentioned, I'll also continue to manage the IR roadmap. We've got a great story to tell, and I'm passionate about getting the word out about how much of an investable proposition T&W is, both locally and also internationally. So I'm very grateful to be handing the keys over, so to speak, at a time when T&W is literally in the best position it's ever been. But to reiterate, I'm not going anywhere, and I'm really excited for the next journey with T&W. So turning to the results, I'm going to start on page 13, which highlights the group's profit and loss results for the half. Our growth strategy as a category disruptor is clearly paying off. We've reported a strong half performance with revenue of AUD 254 million, representing 23% growth on the prior half, which was driven by growth in both repeat and first-time customers. As Mark mentioned, the growth rate for the half was actually 25% if you exclude accounting adjustments, mainly being timing impacts relating to deferred revenue. Improvement in gross and delivered margins were driven by improved shipping recovery and mixed gains as customers shift spend into lower discretionary and essentially higher margin categories such as bedroom, dining, and also living room furniture. The strong margin performance sustained our contribution margin, which was higher year-on-year in dollar value, even after the brand investment of AUD 3 million and ongoing uptick in digital marketing spend. Importantly, our fixed cost as a percentage of revenue were down year-on-year as a result of measured fixed cost investments being essentially outpaced by revenue growth, which is in line with our stated goal of producing fixed costs as a percentage of revenue to below 6%. Our first half FY24 EBITDA dollars were actually up 3% year-on-year with an EBITDA margin of 2.9%, which is at the top end of our full-year guidance. Page 14 reflects our strong financial position and, as our balance sheet continues to grow given the cash-generative nature of the business, with a closing cash balance of AUD 114 million and no debt. This was primarily driven by cash from operations and the benefits of the group's overall negative working capital model. We continue to manage our inventory levels well with the negative working capital model helping to fund further private label investment. We expect this dynamic to continue in our 3- to 5-year plan, as Mark talked to earlier. Our current balance sheet position can fund organic and inorganic plans, also with optionality to return surplus capital to shareholders in the absence of more accretive options. Turning to page 15, which sets out our financial profile for years 2024 and 2025 and reiterates our longer-term financial profile. As we've stated before, years 2024 and 2025 are really focused on executing on our strategic priorities to accelerate our growth and market share gains. Our financial position is allowing us to push hard by investing an additional 2%-3% of revenue into marketing over FY24 and FY25, which is being spread across brand and performance channels to increase awareness and grow market share faster. We're also investing in our current future growth plays to diversify our revenue mix and increase our total addressable market. These growth plays allow us to gain operating leverage in our fixed cost base by leveraging our people and also our platforms. Our AI capabilities will continue to be a focus to enhance the customer experience, but also to improve cost efficiencies as well. We expect this to materially disrupt our fixed cost base long-term. Our strong financial position gives us the flexibility to take advantage of what is 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. As I mentioned, the first half FY24 EBITDA margin of 2.9% is at the top end of our full-year guidance. 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 supplies, more private label, and exclusive products, improved logistical efficiencies, and leveraging brand investments to drive down longer-term digital marketing costs as a result of repeat customers and, of course, the benefits of our investments into AI. For modeling purposes, please expect the following: so CapEx to come in between AUD 2.5 million-AUD 3 million for the year, depreciation and amortization between AUD 5.8 million-AUD 6 million, and an effective tax rate of between 35%-38% as a result of timing differences relating to employee share programs. Thank you all. I'll now hand you back to Mark. Thanks, Mark. So as previously mentioned, the positive momentum has continued into the second half of the financial year, with the half to date being up 35% versus PCP. This growth has been driven by first-time and repeat customers and, as I said, has led us to cross the 1 million active customer mark this month. That means that our amazing range, great value proposition, and incredible service has resonated with 1 million Australians in the last 12 months. Now, while the situation remains tough out there for many, 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 for our beautiful products and our great prices is a winning proposition in times like these. Our strategy as a category leader, capitalizing in a once-in-a-generation industry disruption, remains unchanged. Our 3-5 year strategic plan is an important step on our journey of becoming the largest retailer of furniture and homeware in Australia. Once we reach AUD 1 billion in annual sales, we believe our strategic moats around our range, brand awareness, data, and AI capabilities, our fixed cost base, and diversifying our high growth revenue base will be firmly entrenched and establish T&W or Temple & Webster as the main brand for buying products for the home for generations to come. The group's AUD 30 million on-market buyback will continue to improve shareholder returns in the absence of more creative opportunities, with 4.2 million shares bought back at a total cost of AUD 22.3 million to date. We remain committed to our longer-term goal of becoming Australia's largest retailer for furniture and homeware. As always, I'd like to say a massive thank you to the Temple team. Your commitment, adaptability, and resilience are 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 James Wang from Citi. Please go ahead. Hey, morning, guys. Congratulations on a good result and strong trading update. Mark, as the CFO. Thanks for taking my question. So firstly, I want to start off around the better alignment between what we've been seeing in web traffic activity and the trading update. So would you put this down to better conversion rates when customers visit templeandwebster.com? Maybe it's because of a better range within this period, or is it more down to targeting a more efficient mix of marketing channels, please? I mean, I can't speak to the alignment between independent off-the-shelf traffic reporting and our own revenue. I think there'll be periods where it probably correlates more strongly than others. I think in terms of what we're doing with the traffic when it gets here, then yes, of course, everything we're doing, whether it be better ranging or tighter promotions, better UX insight, more payment options, there's a whole bunch of things we're doing which improve conversion rate. And how we measure that is we A/B test everything to understand. Like for like. Now, overall conversion rate depends as much as kind of what consumer sentiment does versus what we do. So it's hard to disentangle individual initiatives in the overall conversion rate. But you'll have to trust me when I say we're doing a lot of work behind the scenes to improve conversion rate. In terms of traffic mix, actually, during the half, we did the brand campaign. So we saw a massive uptick in channels like our direct channels and branded search. They tend to be, when you get those big spikes, less qualified because they're people who may have seen the ad and then checking out the site, and then they come back for a purchase later. So I don't think it's necessarily that our traffic mix is tighter than it was before. If anything, the more we do brand and the more we do these big campaigns, the more you'll see an unqualified customer-based landing site. However, as I said, that's been offset by all the work we're doing to improve conversion rate. Great. Okay, that's really helpful. My second question is around marketing spend. One of the slides mentioned a healthy annual budget for brand awareness around AUD 30-50 million once you hit that AUD 1 billion revenue target. In the context of that, the AUD 40 million that you spent in the first half on marketing, now how should I think about marketing spending to the second half? I mean, are ROIs in marketing sufficient to warrant spending at the same level, or is there kind of an acceleration of spending in the second half, please? Yeah. So we did kind of say that the brand spend is at a three-burst. So burst 1 was in November, December, and the second burst, burst 2 and burst 3 are in the second half. So you can roughly think of our brand spend being double than it will be in the first half given the timing of those bursts. But we run the business to an overall ad cost as well. So I don't think you'll be you shouldn't see a higher ad cost than it was in the first half. It'll probably be weighted towards brand a bit more as we do more brand. Great. Thank you. Thank you. Your next question comes from Edward Woodgate from Jarden. Please go ahead. Hey, guys. Congrats on the result and thanks for taking the questions. Yeah, also congrats to Mark too, I guess, for the time it saved there. Just quickly, could you just provide some more color on the trading update? It's obviously clearly very strong. How did the comps evolve this new year, particularly in the last couple of weeks? Has it been getting stronger or weaker? I mean, firstly, we shouldn't be saying congratulations. I mean, he's staying in the group. It's not congratulations leaving. He's just changing roles. So no congratulations. He's not going anywhere, people. But in terms of the trading update, so look, there are periods it's hard. We don't really talk about weeks because there's timing difference in terms of promotional periods from year to year and stuff that we do and also kind of the more industry-wide things. So definitely, we look at a longer period as more indicative. So there will be periods of faster growth in the last six weeks than slower growth. But we actually think 35% is the best indicator of how we're trading right now. Okay, great. And then just on customer care costs and AI and the opportunity there. So regarding the timing of those cost decreases, have you seen the full benefit of that, or if you annualize, do we see a little bit more benefit in the second half? And can you just provide some more color what's next in the pipeline? I don't know if you want to crack, but I mean, essentially, I mean, we traded the variable care costs. Obviously, as we bring on initiatives throughout the half, then they will be annualized as they move forward. So there should be some benefit. Also, we're doing a whole bunch of other stuff to increase percentage of contacts to an ultimate goal of much higher. And the vision for a service like a function like customer care is that we will still have a customer service team but focusing on the really tricky problems and also the really high-value customers and also treating our care function as much more of a revenue generation than necessarily a problem resolution function. So if you have design problems or we can cross-sell and upsell or help our customers who may need a bit more help using our care team as opposed to necessarily, "Where's my order?" I think the 30% we've done today should actually be much higher. Now, that will take a little bit of time as we roll through. But the short answer is yes, the annualization of those benefits will mean there's a bit better in second half. And if we continue the rate we're doing, it should even be better than it was. Yeah, I think that's a good summary, Mark. The only thing I'd add there is previously, we have spoken about the number of first-time contacts being handled by AI to be materially higher than 30%. We've spoken about numbers closer to sort of 70%-80%. As Mark said, that will take a bit of time. But certainly, our aspirations are that the majority of our first-time contacts with our customers, a majority of that would be handled by AI. But it will take a little bit of time to get to that point. Okay, great. Thanks for the color. And then I'll just ask 2 quick questions and jump back in the queue. So the refund rates, replacement costs were down. What drove that? And then just also, your Red pack was down slightly. Was that seen equally across your repeat and new customers, or was one saying with new customers down a lot more than the others? Yeah, look, in terms of the refunds provision, we don't actually disclose the number per se, but there's been a lot of work that's gone into, particularly with the logistics and operations and care team, to really improve the customer experience around setting the right expectation for the customers. A lot of work that's gone into packaging to ensure that there's less damage. And certainly, there's been a lot of work actually with our carriers to improve the way in which they're handling our products as well. So you start digging into the next level down, and a lot of that is around quality, and it's around damage in transit, which has been the key driver of getting that refunds and replacement costs down. But look, still a long way to go. There's still some opportunities there. What was the second part of the question? The revenue-backed customer. So look, I think I'll jump in there. Yeah, sure. There's no real skews between particular customer cohorts. It really is the drop in AOV across the board, the slight drop in AOV across the board, which actually is getting better, by the way. We have been experiencing headwinds to our AOV average order value for quite a while now as people are looking for more value. And you'll see a lot of retailers talk about price migration and people negotiating discounts on the floor for placement TVs, etc. I think it was a commentary this week. So we have had that headwind for a little while. It has been getting better. And some of the things that we're doing also are improving that, for example, rolling out complementary items for cross-sells throughout which we accelerate over the half. But yeah, as I said, it's primarily the AOV drop, which has decreased the revenue-backed to customer. Okay. Thanks, guys. I'll jump back in the queue. Thank you. Your next question comes from Rachel Harwood from Macquarie. Please go ahead. Yeah, hi, Mark. And Mark, thanks for taking my questions. Just a quick follow-on, I think, to the last question. Your gross margins and delivered margins are up year-on-year, and you mentioned the decreased refunds. But just going forward, do you expect these benefits just to continue and have these higher margins? Hi, Rachel. Look, I think so. Look, we always look at delivered margin and marketing as a couple of levers that we can push and pull relative to the conditions that are in front of us. So if we're getting better results by having less promotional activity and funding a bit more marketing spend, and that's delivering more contribution dollars, then that's a strategy. If we think price sensitivity is super high, then potentially, we reduce prices and potentially reduce the marketing spend as well. So it's always a push and pull between those two areas. The good thing is, from a refunds replacement perspective, is yes, I do think that is more of a permanent position. In fact, I actually think there's still a lot of room to go there to further improve that. Now, as a category, the overall percentage is still relatively low. We're talking below 5%. It's not like there's multiple, multiple margin points there. There's still some opportunities to be improving that to be improving that rate. That's great. Thanks for that. Your customer acquisition cost, it is up a little bit year-over-year. But is this just a function of that additional marketing spend, or is there something else driving that? Look, I think it's in large part due to the increase in brand spend, which we have been flagging for a while that it is going to be more expensive. They are more expensive channels, and there is a longer payback. So we were expecting that CACs go up. The other thing, as part of our overall growth strategy, we are going harder. And that's in all our channels, including our bread and butter, so our digital performance channels. Obviously, the more you spend, the more aggressively you try to acquire customers, incrementally each customer is more expensive than the last. So we have been expecting our CAC to go up as we kind of pursue this more aggressive growth strategy. I mean, the good thing is that the ROI, the blended ROI, is still pretty good, 1.8. Most retailers would love to have that. That's even with us spending an ad cost of 16%, which is the highest it's been for a very long time. Even after this spend, we've actually increased our EBITDA dollars, our actual dollars. Yeah, CAC has gone up, but as expected. Yeah, understood. I guess just a follow-on from that, just around that brand awareness, could you maybe just give us a quick update how that's going? Is there specific channels that are working really well, and are you noticing any kind of change in the customer demographic as a result of this? So look, in terms of specific channels, that's actually what we will now that we've done the first one, I don't know. Many of you may know there are the tools. They're called media mix modeling, basically. And they're essentially big data tools which allow you to optimize your media mix by channel. And that's how you start to get an understanding of what channels work. Given it's an integrated campaign, for example, in Sydney, we were hoping you may have seen an ad on TV. You saw maybe an ad in a bus shelter. You may have seen an ad when you heard an ad in your favorite podcast. The goal of the campaign is you have multiple touchpoints from multiple different mediums that are trying to change your memory structure and visual and audio and you remember the brand. Isolating individual channels in that is incredibly difficult because you're trying to get multiple touches. However, the tools such as media mix modeling allow you to start optimizing budgets by channel so that you get the most correlate results, things like brand awareness or order uplift versus your budgets by channel. We've only done first one. We're now in the point in both two and both three to start actually implementing those tools. So I'll be able to answer that question more at the end of the year, which is which channel has worked best. But definitely, in terms of the overall campaign, as we say in the result, we've seen a significant increase in things like branded searches and direct traffic through kind of cause analysis. We've been seeing uplift in orders and new customers. So the campaign looks like it's working. It's very early days, though. We've only done the first one. It is the same campaign. It's all about Imagine, the same creative this time around. It's early days, but everything we're seeing says that it's working. Yeah, that's really helpful. Thanks for taking my questions. Thank you. Your next question comes from Tim Piper from UBS. Please go ahead. Hey, morning, guys. So can I confirm you said in the first half, AUD 3 million of that AUD 41-odd million marketing was the brand investment? Is that right? So BAU marketing was AUD 38 million? Yeah, that's correct, Tim. Okay. Can you give us a sense on where CAC is right now, January or the second quarter? I mean, AUD 82 is the trailing 12 months. So the last six months have been higher than that 82. Where's the kind of tracking? Or maybe can you give us a bit of a cadence in CAC between first quarter and second quarter? Because obviously, the revenue growth rate accelerated significantly in that second quarter, and revenue picked up a lot. How much differential was there in the CAC there? Look, we don't go into that much detail. And we don't necessarily want to get into that much detail either about CAC per month because it is an annual marketing calendar. And there'll be periods where we're in market with things like brand campaigns like there was in half, and there'll be periods where we're out. And that's the same as this half as last half. So there were periods where we were growing very strongly, and we weren't on air yet, and we weren't in market. And we were pushing the digital marketing costs higher. And there were periods where it was a blended. So I think actually, the blended CAC is a better way to look at it because, as I said, there'll be months where the marketing mix changes quite dramatically from period to period. I think, look, the one thing I will say, which is really important to note, is that the growth, this was a Sydney, Melbourne, Brisbane campaign. And yes, building a brand awareness and diversifying our marketing mix is a strategic goal, and we are going to do it. And it's something we're focusing on it. The rest of the country was growing really strongly as well outside of, and we weren't on TV or out of home in the markets outside of Sydney, Melbourne, Brisbane. So this growth isn't just because of the brand campaign. The brand campaign has definitely helped and supported, but actually, our growth is coming from around the country in pretty much every market. So I think, yes, it's important, but I don't think we should get too focused on the brand campaign, if you know what I mean. Okay. Yeah, that all makes sense. Sorry to harp on about marketing. Just follow-up to that, the BAU marketing costs for the half is sort of 15% of revenue, and you've got it to 12%, 2024, 2025. But obviously, the brand's only running at 1% so far, so the brand's to lift up. Is it fair to assume that an extra 1%-1.5% in brand, which is a longer payback, is going to see that BAU marketing percentage come from 15% down to 12% or 300 basis points? Yeah, what we're saying with it, BAU doesn't mean channel. So don't confuse BAU with—BAU is just our digital, and everything outside of digital is non-BAU. Essentially, BAU is—we think actually a longer term, and they've got businesses and what we've had periods like an 11% kind of ad cost is enough to kind of make sure you're still acquiring customers. You're still kind of reengaging your engaging customers, and we'll do a steady growth. However, during this period where we want to actually get to AUD 1 billion as quickly as possible, and we've set ourselves the goal of that target growth range, we actually want to spend more than what we think is the more sustainable level, including in our performance channels. And so the 15%, what you're saying of non-brand is not what we think is BAU. That's a more aggressive performance spend as well. It's a spend that we wouldn't and haven't traditionally done. Yes, it costs some money. However, it's actually delivered a business which is one of the fastest-growing businesses in retail in Australia and actually increased profit dollars as well. So we think the strategy is a sound strategy, but it is more than we would normally spend. Normally, we have the discipline of first-order profitability. However, even with this kind of spend and being a bit more aggressive than our digital, there are some channels, even on our performance and digital channels, which we relaxed that constraint to be more 12-month profitability. Got it. Point taken. Thanks for that. Maybe just, sorry, one quick last one. The revised repeat order numbers, what are we comparing now against what you used to report? And then can you confirm maybe what the second half, 2023, numbers were just so we can get a feel for sort of the half-on-half sequential in some of these metrics in the business? Okay. Yeah, hey, Tim. It's Mark T. Yeah. As we were going through the reports for this half, we could see that the column for new customers was actually fine. And these are audits, by the way. So these are audits from both repeats and new customers. But we did recognize that the repeat column had been somewhat understated. Now, the overall shape doesn't actually change. But what it does mean is, in the previous periods, that the repeat percentage was a little bit understated as to what the repeat orders in terms of relative to total orders. So the second half, obviously, will come out at the end of or mid-August as part of the full-year results. But like I said, the overall shape doesn't change. But there was a bit of an understatement in terms of just that repeat column. Got it. Thanks for that. Well done on the update. Thanks, Tim. Thank you. Your next question comes from Chami Ratnapala from Bell Potter Securities. Please go ahead. Yeah, hi. Thank you. Congratulations on the results for Slimak and Mark. And good to hear that Mark's not going anywhere. Just quickly, two questions from me, if that's okay. Within the AOV, I mean, could you talk about how that has shifted? The AOV has shifted as customers shift their spend to the high-margin categories. And maybe any guide you can give on how much of these products are now part of the total product mix. Thank you. Yeah. So it's the similar trend that we've seen for a little while where customers, there's two counteracting forces. One is a shift to less discretionary categories such as furniture. The more customers are buying, for example, coffee tables than they were before compared to a decor item like a mirror. However, within the counteracting forces that within that, customers are buying cheaper coffee tables than they were before. Now, partly, that's our promotional activity. The coffee tables are actually cheaper, but it's also kind of product selection. Now, they kind of counteract each other, and the net result is what you see here. In terms of kind of what the mix is so when we first listed Temple & Webster, we were talking about furniture and homewares being kind of more like 50/50. Now, it's more like 65% furniture, 35% homewares. So there's been quite a big shift towards furniture over the last few years. Perfect. Thanks for that. Then secondly, in growth margins, how has that margin or the product margin performed for the dropship side and also your private label? Thank you. Hey, Chami. Look, both have been performing well, to be honest. There's obviously a small differential between private label margin and dropship margin, which makes sense given the fact that there's inventory risk and we're holding that inventory. So there's obviously distribution costs that are associated with the private label. But look, both are performing well. We've continued to see really strong promotional support from our dropship suppliers, continuing to fund over 90% of our dropship promotions. And we continue to see more deflationary pressures from a factory perspective where we are sourcing than inflationary pressures. So on both of those fronts, the trend is good. Perfect. Thanks, Mark and Mark. Congratulations once again. Thanks, Chami. Thank you. Your next question comes from Aryan Norozi from Barrenjoey. Please go ahead. Hi, guys. Happy all. Just a follow-on from Tim's question for the repeat customer numbers that have been revised. In the appendix, you've given the historics, but you haven't given second half Fiscal 2023 repeat customer orders. Can you please provide that so we can just look at the trend, please? I'm happy to provide that. That number wasn't incorrect, though. That's why we haven't provided it. So that number that has been reported wasn't actually incorrect, hence why we didn't report that. Okay. So the fiscal year 2023 number was correct in the last pro forma in August, like the full year. Okay. Cool. Okay. And then am I correct in saying, based on everything you've said in the Q&A time at the start, a lot of the delivered margin uplift you've seen is sustainable, and that's just giving you more ammunition to spend on paid advertising, which was about 15% versus 12% that you target. And that's continuing. So the key difference out of today's result is basically you've got more ammunition to acquire customers because you've got more margin to play with, basically, and the revenue growth will be stronger for longer. Is that a fair comment? That's pretty fair. Yeah. I think it's a fair comment. Look, I'll go back to my previous comment, though, which is we continually assess and look at both of those lines as levers that we can pull to drive growth. But what we're seeing at the moment in terms of more cost deflation than inflation coming through, some of the positive trends that we're seeing in terms of our refund replacement costs, a lot of the work that we've done from a shipping recovery as well, where we're just a lot smarter now and how we're pricing shipping to customers to ensure we're extracting as much margin as we can and as much recovery as we can. We don't actually make a margin on shipping, but we try to extract as much recovery as we can whilst not impacting conversion. We're just doing that a lot better. Obviously, there is a bit of a mix impact and a mix improvement, a mix gain from where customers are shopping, what categories customers are shopping at the moment. These will continue to be key categories for us going forward. Look, let's see how the second half progresses. But I'm not seeing anything at the moment that would tell me it would be materially different. Perfect. And then. I'm sorry. I just interrupt. I think it's a really important point, though. The easiest way to grow is to slash prices. That's literally the easiest way to grow. However, that's not sustainable. And yes, we're trying to get to AUD 1 billion and get there as quickly as possible because we want to entrench our strategic moats, and we think scale helps everything. And we want to make sure in the next three to five years, we're it for the next generation of shoppers. And so we are investing in brand awareness, investing in capabilities, etc., worldwide, and growing as fast as we can. But we do want to do it in a sustainable way. Just slashing prices and destroying our gross margin, delivered margin by giving away our margin is not sustainable because eventually, we will be switching into profit optimization. So I think for our growth to come from an increase in improvement or increase in marketing and ad costs, it goes to the sustainability of the business because we've been able to live these growth numbers without reducing our gross margin. Delivered margin, in fact, could increase. So it is a very important point to note in the final. Right. And just on the buyback, which you're going to start doing again, I mean, buying back stock at AUD 3 or AUD 4 bucks, and now the stock's at AUD 10, close to AUD 11 bucks. How do you think about capital allocation? How much to direct to the buyback? Sounds like M&A is probably going to be more of a focus area with Mark transitioning to his new role. So how do you guys think about that, please? Yeah. Look, it's a really good question. And look, you're right, Ari. That will definitely be more of a focus for me in terms of capital allocation and in particular, inorganic. We're seeing a lot of opportunities out there. So for me to have a bit more bandwidth to sort of go after these opportunities, I think is a good thing. And when I look at the best way for us at the moment in our stage of our life cycle, the best use of capital, provided the deal makes sense and we can execute on it and it's not overly disruptive, would be inorganic. But look, we're in a very enviable position, right? We've got AUD 140 million of cash. We're profitable. We're growing with a negative working capital model. In terms of the buyback, we do envisage the buyback will continue as we've stated. We still believe the share prices are still trading below fundamental value. But this buyback doesn't impede our ability to execute on our organic and inorganic plan. So if something more accretive comes up, then obviously, we can pivot. But at this stage, we foresee it continuing. Great. And the fixed cost guidance, like 10% of sorry, 11%-12% of sales as a target, you've done about 11% now and growing your revenue by 35%. So why don't we see why shouldn't we see operating leverage from the fixed cost line in second half 2024, FY 2025? I mean, what are you spending the extra 35% of fixed costs on? Yeah. We've still got some investments to come through in the second half in terms of people. And obviously, you're annualizing some costs from the first half of the hires that come through in H1. But look, your point is valid, which is longer term, we definitely see that fixed cost line, the growth in that fixed cost line, separating itself in terms of the growth profile there relative to revenue in each half. And each year, you should be seeing the dispersion of those two lines kind of separating further and further and further. So that will be driven by things that we're doing on the cost base around AI and making our cost base more efficient. But that doesn't mean we're not faring to be investing either. We will be continuing to be investing. We've added 15-20 headcount in this half, and we're still able to reduce our fixed costs as a percentage of revenue. So even with that investment profile that we're envisaging over the coming five years or four and a half years now, our plans, provided we're growing between that 20%-36% range that we've put out there, which is the three to five-year plan, if we're in that area, we're playing in that area, we'll be managing our investments and managing our fixed cost base to be hitting that overall target by that year five point. The last clarification, the 30% of orders coming from so inbounds coming from AI, the chatbot, and you mentioned 70%. What's the difference between those two, or is 70% your target? No. So what we've said is ideally, what we'd like to see over a period is 70%-80% of the first time a customer is contacted or messaged or communicated with any of our customers, if that's done using AI rather than a human being. But like I said, that will take a little bit of time, but we're certainly making good progress. It's 30% today? It's 30% today. People take it. That's right. Yeah. Yeah. But you can see the good thing is that's leading. It's great to say these things, but it's also leading to cost reductions as well. So if you look at our customer service and merchant fee line in the P&L in FY 2024 relative to 2023, even with 23% growth, that line was actually down. So you can see that that's translating to cost savings already. Awesome. Thanks, Steve. Thank you. Your next question comes from Owen Humphries from Canaccord Genuity. Please go ahead. G'day, guys. Again, well done. Straight down the fairway with beats. Just understand, I noticed you said that you've added 500 private label products in the period. Can you just talk through how many of you had? Is there a special mention there because this is a strategy that you guys are going to employ around an inventory investment going forward? Thanks, Owen. I'm not so good on sporting metaphors, but I assume that's a good one. I think in terms of private label, we mention it because it is a key focus. The focus is to get as much of our range by revenue as exclusive to Temple & Webster as possible. Now, it's a journey. This is, of all of them up there with brand awareness, will take time. And it's a mixture of both increasing the share of the business from private label and exclusives from dropshippers. To increase the share of the business from private label, we need to extend the range. Yes, obviously, our private label sales, we want to funnel as many sales as possible into them. So they are high-velocity SKUs. But really, to take the percentage of the business's private label from 30%-35% or 40%, we need to increase the range and the breadth of categories that we offer private label products in and within a category, the breadth of range within that category. So that's why we mention it. It is part of that strategy to increase private label. We are going to do it slowly. And actually, we thought we were going to move the dial on private label the half. And so we ordered more than we've ever ordered before. And then we had an amazing Q2 ahead of forecast. And actually, we didn't have the inventory to keep up to move that percentage. So even keeping at the 30% was a great result. It meant our private label actually beat its budget. So that's the sort of dynamic that we're working with. We don't want to go crazy. We're not going to be ordering, doubling our inventory or tripling our inventory overnight. That's not how we do things. We'd prefer for it to take a bit longer and not make any silly mistakes or end up with massive excess inventory and get ourselves into trouble that way. So we will do it a bit more steadily. But yes, we mention it specifically as it is part of our strategy to increase the share of private label. Gotcha. Okay. And just around the promotional aspect of your, the margin uplift was aided by the promotional activity being funded by your suppliers. Is that steady state? Is it expected to be ongoing, or is that particularly hard given the macro is a bit tougher? Look, I think just given where we're at with our suppliers and the relationship we have, we are increasingly an important partner to them. That importance is growing over time as we the fastest growing channel for our suppliers. I don't think it will move against us. I think actually, that dynamic of we're a great sales channel for them, and we expect them to be a great partner for us. Our growth is their growth. I think that dynamic and that relationship is now here to stay. I don't think it will revert. Good one. Well done. Thank you. Your next question comes from Scott Hudson from MST. Please go ahead. Good morning, gentlemen. A couple of quick questions. Firstly, just in terms of the comps for the second half, I understand last year, you're probably cycling the Omicron outbreak, so you're down sort of mid to high single digits. Could you just get a sense of how the comps look through the remainder of the half? Yeah. Look, the half should be okay. I think we were revenue growth improved over the half this time last year. But given where we're at starting and the number of customers we've acquired over the last six months, we're feeling pretty good about the half. Okay. And then just in terms of, I guess, the return on the investment in the marketing, is it coming through at a better rate or higher than expected relative to maybe expectations back in July, August? You're talking specifically the brand campaign? Or just the marketing spend? I mean, so the performance is run to an ad cost target. So that's actually what we set. We set the ROI, and then we run it to that. So the ROI is basically what we've set in terms of digital. In terms of brand campaigns, as I said, it's early days. Our early read on the campaign is that it has met its incremental sales targets and at its targeted customer acquisition cost. That's an early read. We need to do more data and more work on it because we've only had burst one and it's a cumulative campaign. So I'm not putting out a firm yes, it's met our ROI targets, but it looks like it has. But we need to run burst two, do more work on it, run burst three, and then we'll give a more full update at the full year. Okay. Then I guess just in terms of the sort of commentary maybe around the AGM would suggest that the margin profile in the second half was maybe going to be a little bit lower than first half given the uptick in the brand campaign. Is that still your expectation, or is the sort of the investment of sort of 16% of revenue and overall spend, is that kind of more where it should land for the second half, and that's the savings you're getting out of the delivered margin contribution? Hey, Scott. It's Mark. So yeah, look, I think I'll take a step back, which is we'll continue to monitor, obviously, the environment. And if we're continuing to yield strong delivered margin, that will more than likely be put back into the variable component of our marketing spend being the digital spend with the ultimate goal to be in between the 1%-3% range. And when we say 1%-3%, obviously, if we're targeting somewhere around about that sort of 2%, now, you can't land on the exact percentage. That's why we give a range. But essentially, we're working back from those parameters, which is between a 1%-3%, and we grow as fast as we possibly can within those parameters. Okay. And then lastly, just on M&A and not to throw any water on your new role, Mark. But I mean, the business is obviously performing particularly well. Is there sort of anything that rather need to, I guess, look beyond the sort of current capabilities? Where do you feel like you're falling short or need to improve given, I guess, the strength of your performance? Look, I don't think it's about falling short. I think it's about we've got a goal to grow as fast as we can. So if there's further opportunities to be doing that and we can do it in a sustainable way, strategically and financially for the right reasons, and it's not overly distractionary to the business. Whether that's organic or inorganic, we should be doing that. The focus for the business and the thought process hasn't changed, which is if there's a capability that we don't have or want to build on that will accelerate our growth and, like I said, won't be too distractionary, the deal makes sense, then we'd be silly not to take advantage of that. Yeah. Then just, I guess, on the taking a third growth horizon and some improvements in B2B, is that still the more likely areas where you're looking to invest non-organic growth capital? Yeah, I think that's right. I think they're probably the two areas that the overall mothership in terms of B2C furniture and homewares is clearly doing very well. And the business is set up very well and is taking its rightful position in the market. But certainly, Home Improvement and B2B are more nascent relative to the mothership. And certainly, there's some opportunities there to accelerate both. Appreciate it. Thanks. Thank you. Unfortunately, that is all the time we have for questions today. I'll now hand back to Mr. Coulter for closing remarks. Thanks, everyone, for your time this morning. As you can see, another strong result from Temple & Webster. I think, though, however strong this result has been, I think it's important to remember that the online market in Australia is still under-penetrated and is likely to grow for many years to come. That's if you look at the U.S. and U.K. It's just every four years, we catch up to them. So we've entered the 2024 calendar year. As Mark T. said, it's the strongest position we've ever been in. We're well placed to build our strategic moats, and we remain committed to our goal of hitting AUD 1 billion in sales in three to five years. So thank you again. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.