Temple & Webster Crashes 30% Despite Posting Strong FY25 Growth

Fear Over Fundamentals: Temple & Webster’s Best Update Meets a Brutal Selloff

Temple & Webster (ASX:TPW) found itself at the centre of a sharp market reaction today, with the share price sliding 30% despite delivering one of its strongest financial updates to date. In a world where geopolitical tension, supply chain uncertainty, and shifting consumer behaviour continue to reshape global retail, investors are searching for companies with resilient growth engines and genuine operating leverage. Temple & Webster’s latest numbers show exactly that, yet the market’s response highlights a widening gap between long-term fundamentals and short-term fear.

The company closed FY25 with revenue of A$601M, up 21%, powered by a surge in active customers and a meaningful uplift in conversion rates driven by AI tools. What stands out is the quality of this growth. Volume did most of the heavy lifting, supported by a 16% jump in active customers and a strong increase in repeat purchases. Even with a cautious consumer backdrop, the business eked out a modest 3% rise in average order value, signalling stable pricing and a healthier product mix. Its exclusive and private-label range now accounts for 45% of sales, giving the company greater control over margin and differentiation.

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Temple & Webster Delivers 43% Profit Jump as AI Drives Margin Expansion

The profitability story is even stronger. EBITDA rose 43% to A$19M, pushing margins up to 3.1%. Operating leverage was evident, with revenue growth comfortably outpacing fixed cost increases. AI and automation have materially reshaped the cost base, with 80% of customer support interactions now handled by AI tools. The fixed cost ratio dropped 70 basis points, and the company finished the year with no debt, providing rare balance sheet strength for an e-commerce player.

Looking ahead, Temple & Webster expects high-teens revenue growth in FY26 and an EBITDA margin between 3 and 5%. Early momentum is strong, with revenue up 18% from July to November. Management reiterated its mid-term ambition to exceed A$1B in annual revenue by FY28, a target that looks increasingly achievable given the mix of expanding categories, AI-driven efficiency, and market share gains across Australia and New Zealand.

The investors takeaway for TPW

Still, today’s price reaction makes clear that investors want certainty, not just potential. The sell-off appears tied to sentiment rather than fundamentals, a reminder that markets often punish good companies when expectations run ahead of near-term clarity. For investors weighing risk and reward from here, the picture is balanced.

The upside rests on Temple & Webster continuing to compound revenue in the high-teens, scaling its private-label mix, and deepening its margin profile through AI-driven efficiency. The downside stems from execution risk, consumer spending volatility, and the possibility that margins stall at current levels rather than expand.

What must go right is ongoing customer growth, stable conversion, and strong cost discipline; what must go wrong is a slowdown in category demand, competitive pressure eroding share gains, or a misstep in new market expansion. The truth is that the company’s fundamentals remain robust, but investors will need to monitor quarterly cash flow, customer growth trends, and margin progress to judge whether the long-term thesis continues to outweigh short-term uncertainty.