Online retailer Temple & Webster says it’s getting closer to realising its $1bn sales ambitions target after bucking the 4% dip in market conditions and chalking up record FY24 revenues of $498 million, up 26% year-on-year.

The ASX-listed retailer said growth was driven by an all-time high in active customers, up 31% to 1.1 million, with repeat customers now making up 57% of all orders (874,000). The higher frequency spending was countered by a decline in revenue per active customer of about 3% to $461.

Temple & Webster additionally cited an average conversion rate of 2.8%, which it said was higher than industry peers based on Similar Web figures, and a customer satisfaction score of 61%, just off last year’s 62%. Helping buoy the results was the introduction of more than 850 new private label products over the past year including home improvement products. The growth horizons for B2B and home improvement also got their own mention, growing by 27% and 26% respectively.

EBITDA excluding one-off items was $13.1m, with all margins within or above target ranges. Temple & Webster closed out the year with a cash balance of $166m, and bullish statements that it’s on track to reach its mid-term goal of $1bn in revenue. Overall, the retailer claims to have 2.3% of the total furniture and homewares market in Australia, up 31% year-on-year, with a compound annual growth rate of 34% since 2017. Temple & Webster CEO, Mark Coulter, said: “despite significant cost-of-living pressures, Temple & Webster has once again bucked the trend with another great set of results for FY24. Revenue was up 26% year on year in a market that was down ~4%, which shows the strength in our product offering and the value we offer.”

The 4% figure was derived from ABS 8501.0 Retail Trade, Australia for the year ended 30 June 24 against prior corresponding period.

“Pleasingly, we were able to deliver these results with EBITDA [excluding one-off costs] at the top end of our guidance and a closing cash balance in excess of $100m, with no debt, meaning we are fully funded to execute on all of our growth plans,” Coulter continued.

FY25 has also started strongly, with trading up 26% between 1 July – 11 August.

“Our mid-term target is to reach $1b+in annual sales and we are progressing well against our strategic goals, which includes developing leading AI/data capabilities in our category.”

In the financial report, the retailer cited a customer acquisition cost of $88 and said marketing ROI was in line with expectations at 1.7x, down from the highs of 2.7x in FY19. Total advertising and marketing costs were $77.9 million, up from $48.1m the year before, with about $10m assigned to its first material brand marketing investment, representing 2% of total revenue.

The company said increased spending in FY24 was due to “a year of experimentation – at scale” and designed to get a read on the value of adding incremental channels including TV, video, out-of-home, audio, print, cinema and paid social. While it has seen good growth in direct and branded search traffic, unprompted brand awareness remains low, at under 10%.

The company said it now has media mix modelling in place with recommendations due in the first half of FY24. This will help to optimise campaigns rolling out in the second half.

Also in the spotlight in the results was AI team and utilisation. Temple & Webster revealed it has developed a Generative AI (‘Gen AI’) ‘solutions in a box’, which is now powering a suite of tools from product recommendations to live chat interactions with customers. The tech build has been complemented by new hires in its dedicated AI team covering both Gen AI and machine learning, and the retailer said it now has a dedicated R&D function focused on experimenting with new large language models and building more disruptive solutions. It cited a 9% improvement in conversion off the back of content generation and recommendations plus a 3% improvement thanks to live chat. About 40% of customer pre and post-sales support interactions are also now being handled by AI and technology, which has helped deliver about $4m in annualised cost savings.

“Already, we have seen millions of dollars of cost base savings, and conversion rate improvements of >10% due to the AI initiatives that are live on site,” Coulter said.

Temple & Webster said it also has an internal AI assistant available to all employees and has a roadmap that aims to bring AI in to disrupt aspect of retail value chain elements including ranging, pricing, promotion and personalisation.