TEMPLE & WEBSTER GROUP LTD — Investor Presentation 2021

Feb 1, 2021

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TEMPLE & WEBSTER GROUP LTD ABN 69 608 595 660

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Unit 1, 1-7 Unwins Bridge Road St Peters NSW 2044

ASX ANNOUNCEMENT

2 February 2021

Investor presentation 1st half FY2021

Temple & Webster Group Ltd attaches a 1st half FY2021 results Investor Presentation.

This document has been authorised for release by the Board of Directors.

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H1 FY21 Investor Presentation

Mark Coulter CEO Mark Tayler CFO

Page 1

Summary

H1 FY21 Revenue H1 FY20 Revenue $161.6m $74.1m 118% growth vs pcp H1 FY21 EBITDA H1 FY20 EBITDA $14.8m $2.3m 556% growth vs pcp Dec-20 Cash Jun-20 Cash $85.7m $38.1m

• Temple & Webster is the leading pure play online retailer for furniture & homewares in Australia

• Large addressable market with accelerating online adoption

• Business is profitable with strong top-line growth and a debt free balance sheet

Sources: Euromonitor International Limited; Home Furnishings and Homewares System 2019 edition. Financial metrics are pre-auditor review.

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H1 FY21 Business Update

Record performance

• Revenue up 118%; EBITDA up 556%

• Strong growth across all categories, geographies, channels & demographics

• Scale increasing operating leverage, fixed costs as % of revenue decreasing

Strengthened brand awareness

• National TV campaign, significant lift in brand awareness

• Marketing metrics within target ranges

Customer satisfaction remains a key focus

• Consistent year on year growth in Net Promoter Score (NPS)

• Improvements in quality, range and service

• Working with logistics partners on scaling during peak periods

Accelerated tech investment

• Launch of iOS app; AI generated room ideas

• Grew AR/3D team and capabilities

• Expanded tech and product team (onshore & offshore)

Engaged & expanded team

• Significantly expanded team (onshore & offshore), invested into infrastructure and training

• Key hires: buying & merch, tech & product, operations, care, 3D

• Record level of employee engagement

Financial metrics are pre-auditor review

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Temple & Webster at a glance

Temple & Webster is the leading pure play online retailer for furniture & homewares in Australia, differentiating through range, inspirational content & service

Leading pure play online retailer for furniture & homewares

• iOS App, desktop and mobile optimised sites

• Category expert focused solely on furniture & homewares (~$15b market)

Range & content a key differentiator

• Curated range: ~210k products from 500+ suppliers across 211 categories

• 75% drop-ship (no inventory risk) and 25% private label

• • Large in-house content team (e.g. stylists, photographers, editors)

Large traffic and database

• 28m page impressions (Nov) from 3.8m website users (Nov)

• 2.8m subscribers; ~830k social media reach

• 678k Active Customers

Asset light business but customer-centric

• Leverage 3[rd] party warehouses and carrier networks

• Average time to dispatch ~2.5 days

• Own customer relationship (in-house care team for all enquiries)

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Consistent Revenue Growth
Revenue, $’000s.
160,000
120,000
66% CAGR
80,000
40,000
0
H1 FY18 H1 FY19 H1 FY20 H1 FY21
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Translating to significant operating
leverage & EBITDA
EBITDA, $’000s.
15,000
10,000
5,000
0
H1 FY18 H1 FY19 H1 FY20 H1 FY21
-5,000
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Source: www.templeandwebster.com.au only. Google analytics, Social media platforms, T&W systems. All metrics are as at Dec-20 unless otherwise stated.

Active customers are the number of unique customers who have transacted in the last twelve months (LTM).

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Financial metrics are pre-auditor review

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Temple & Webster Private Label

Key Initiatives

• Expanded Buying and Merchandise Planning teams for range development and inventory forecasting

• Using data to expand range and fill price and product gaps

• Testing machine learning forecasting software for inventory planning

• Geographical diversification of factories into Indonesia, India and Europe

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Private Label Share (% of Total Sales)
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18% 25%
H1 FY20 H1 FY21
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• Expanded Quality & Compliance team

• Developments in product design and new materials for exclusive, on trend collections

• Class expansion especially in Décor to deliver beautiful, affordable inspiration

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Key initiatives driving conversion rate and customer satisfaction

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Conversion Rate
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
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Customer Satisfaction (NPS)
Net Promoter Score (score range: -100% to 100%)
70%
65%
60%
55%
50%
45%
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• iOS app

• H1 Key •

• Launches • New homepage

• AI generated complete the look cross-sell

• Improved range and quality

• Doubled our capacity in Care team

• Added more carriers for bulky delivery

• H2 Pipeline

• Android app

• Swatch service

• • Visual search (search by photo) • Augmented reality with 3D models

• After hours / weekend delivery service

• Category experts for pre-sales

• Data integration for self-service; AI-assisted help

• • Working with logistics partners on peak periods

Conversion rate = number of transactions divided by number of unique visitors (source: Google Analytics)

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Aided brand awareness has increased to 55%, in part driven by national TV campaign in H1

• Successful pilot in June 20 led to a large increase in brand awareness (13 point increase vs. pre-TV campaign)

• Christmas campaign ran Sept – Nov 2020 and yielded another 7 point increase in brand awareness

• Opportunity to further test new creative types and channels (radio, outdoor)

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60%
50%
40%
30%
20%
No brand activity TV activity
10%
0%
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0%

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Active customers up 102% year on year

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Active Customers
700,000
600,000
500,000
400,000
300,000
200,000
100,000
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Repeat and First Time Orders
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
First Time Repeat
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Active customers are the number of unique customers who have transacted in the last twelve months (LTM).

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Customer metrics remain strong even with the increased investment into TV

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12 month Marketing ROI holding at
~2.6x [1]
2.8
2.4
2.0
1.6
1.2
0.8
0.4
0.0
December 19 (LTM) December 20 (LTM)
Customer
Acquisition $44 $50
Cost (CAC)
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Revenue per Active Customer up 6% due
to a higher repeat rate [2]
$420
$400
$380
$360
$340
$320
$300
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1. Marketing ROI = Margin $ / CAC

Margin = Revenue / Active Customer as at 31 December 2020 x Delivered Margin % for CY20

• CAC = Total marketing spend for CY20 x 77% (being the estimated percentage of marketing spent on new customer acquisition, i.e., excludes estimated spend on repeat customers). divided by the number of First-Time customers during CY20

2. Revenue per active customer = Last 12 months revenue divided by Active Customers

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Our Trade and Commercial (B2B) division grew 89%

1 T&C has rebounded quickly with revenue up 89%

$’000s.

• $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0

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• 2 Service model improvements, such as extra care resources and specialised sector-based sales teams, have led to high repeat customer rates

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7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
First Time Orders Repeat Orders
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• 3 H1 focus was to build out specific market sectors including hospitality & residential developers.

Initiatives included:

• Launch of sectorspecific landing pages showcasing portfolios of recently completed projects

• Resourcing sectorspecialised sales teams

• Regional hospitality marketing initiatives to capitalise on domestic tourism boom

• Addition of commercial hospitality furniture ranges

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Revenue based on checkout revenue which is pre accounting adjustments (deferred revenue, refund provision)

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H1 FY21 Financial Results

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H1 FY21: Strong growth and performance

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Revenue $m EBITDA $m
161.6 14.8
Up Up
118% 556%
74.1
2.3
H1 FY20 H1 FY21 H1 FY20 H1 FY21
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Active Customers $ per Active Customer
678k 401
380
Up Up 6%
102%
335k
31-Dec-19 31-Dec-20 H1 FY20 H1 FY21
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EBITDA %

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9.2%
Up
6.1 pts
3.1%
H1 FY20 H1 FY21
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Fixed Costs (% of Rev)
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11.6%
Down
7.5% 4.1 pts
H1 FY20 H1 FY21
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NB. Active customers are the number of unique customers who have transacted in the last twelve months (LTM). Revenue per active customer = Last 12 months revenue divided by active customers.. Financial metrics are pre-auditor review.

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H1 produced record revenue and profitability

A$m	H1FY20	H1FY21
Revenue	74.1	161.6
Cost of Sales	(41.3)	(88.1)
Gross Margin	32.8	73.5
	44.2%	45.5%
Distribution	(10.8)	(20.2)
Delivered Margin	22.0	53.4
	29.7%	33.0%
Advertising & Marketing	(8.3)	(20.7)
Customer Service &
	(2.4)	(5.2)
Merchant Fees
Contribution Margin	11.3	27.5
	15.3%	17.0%
Wages	(7.0)	(9.4)
Other	(2.0)	(3.3)
EBITDA	2.3	14.8
	3.1%	9.2%
Share Based Payments	0.4	0.5
Adjusted EBITDA	2.7	15.3
	3.6%	9.5%

Record revenue

• Revenue of $161.6m was up 118% YoY (124% on a checkout revenue basis which is pre-accounting adjustments for deferred revenue and refunds)

Investment into private label inventory and team paying dividends

• Delivered margins currently tracking above short-mid term target of ~30%, primarily driven by the growth in private label, which now represents ~25% of sales

Investment into brand building channels

• Marketing as a % of revenue increased from 11.1% to 12.8%, primarily driven by investment into brand building channels, e.g. TV

Contribution margin above target level

• Contribution margin levels currently tracking above short-mid term target of ~15% as a result of the delivered margin % growth

Fixed costs as a % of revenue continue to reduce

• Fixed costs as a % of revenue down to 7.5% from 11.6% last year (ex share based payments), however the full cost of H1 people investment will be realised in H2

Record profitability

• Record profitability with EBITDA up 556% YoY

Classification of the prior period (H1FY20) foreign exchange loss of $0.1m has been reclassified from Other expenses to Cost of sales.. Financial metrics are pre-auditor review .

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High growth strategy yielding operating leverage

Revenue 100% 100% 100% Gross Margin 44.1% 44.6% 44.6% Delivered Margin (after all distribution costs) 31.0% 30.1% 30.6% Customer Service Staff & Merchant Fees 3.3% 3.3% 3.3% Advertising Costs 11.3% 10.9% 11.9% Contribution Margin 16.4% 15.9% 15.3% Fixed Costs (ex share based payments) 16.1% 13.4% 10.0% Adjusted EBITDA 0.3% 2.5% 5.3% FY19 FY18 FY20	100% 45.5% 33.0% 3.2% 12.8% 17.0% 7.5% 9.5% H1FY21 • • •

• Margin growth driven by increase in private label which is now 25% of revenue, however mid term target closer to 30%

• Increase in marketing % driven by investment (~$1.7m) in national TV campaign to drive brand awareness

• Reduction in fixed cost % drove operating leverage. The full costs of people investments made in H1 (3D/AR/B2B/Tech) will be realised in H2 and this will be reflected in EBITDA % and $

All periods include the impact of the new accounting standard AASB16. Financial metrics are pre-auditor review .

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Capital light/cash flow positive business model

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Closing cash by half Net cash flow movement
$000 $000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
H1 FY19 H2 FY19 H1 FY20 H2 FY20 H1 FY21
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• Closing cash balance of $85.7m

• Cash flow positive half $47.7m was driven by:

• the positive EBITDA result

• benefits from the group’s negative working capital model, offset by investment (~$13m) in private label inventory

• • capital raise undertaken in early July (~$40m)

• Inventory metrics (WOC/ageing profile) tracking better than target ranges

• Flexible balance sheet position (no debt) to take advantage of organic and inorganic opportunities

A full balance sheet will be presented as part of the finalised auditor reviewed accounts. Financial metrics are pre-auditor review.

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Strategy & Outlook

Page 16

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Our core furniture and homewares category is a $14.6b market, undergoing a structural shift towards online

Furniture and Homewares Market (AUS)

Hypothetical adoption curve for online penetration in the furniture & homewares market: Australia lags US/UK markets

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2019 Data
Total
$14.6b
Online
$744m
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UK: 16.6% (2019)
US: 15.2% (2019)
AUS: Now?
AUS: 5.1% (2019)
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Time

Source: Euromonitor International Limited; Home Furnishings and Homewares System 2019 edition. Sales in 2019 in retail value (inc. sales tax), current terms, and is to scale.

Source: Euromonitor International Limited; Home and Garden system 2019 edition. Internet sales as a percentage of the total retail sales value (inc. sales tax) for home furnishings and homewares in Australia, UK and US. Current terms..

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Demographic and structural changes will drive strong market growth for years to come

1 Millennials are entering our core demographic

Structural changes 2 in our favour

Hypothetical distribution of homewares and furniture spend by age

• Offline exits/store closures

• New consumer habits forming during lock downs

• Faster internet and mobile speeds eg. NBN, 5G

Millennials

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Age 24 - 39
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• New market entrants accelerating online shopping take-up eg. Amazon

• New technologies improving experience and conversion eg. augmented reality

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35 65
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• COVID-19 has accelerated online penetration

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Our strategy is based on range, inspiration and service

Our Core Belief

• We believe everyone wants to live more beautifully.

Our Vision

• Our vision is to make the world more beautiful, one room at a time.

Our Mission

• Our mission is to deliver beautiful solutions for our customers’ homes and work spaces, and for all of our other stakeholders, including suppliers and shareholders.

Our Strategic Pillars

• We want to be famous for having the biggest and best range in our category, the most inspirational content and services and the best delivery experience & customer service .

• Our foundations are built on data-driven marketing, world-class technology and exceptional execution by an amazing team.

Our Goal

• We believe if we can deliver the above, Temple & Webster will become the first place Australians turn to when shopping for their homes and work spaces.

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Scale is allowing us to accelerate investment and grow market share

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Hypothetical drivers of
market share growth
Closer
relationships
with suppliers
with better
terms
More Bigger
inspirational investments
content & in technology
services and platform
Market
share
Deeper growth Faster brand
with logistics integrations awareness
growth
partners
Greater stock
security Bigger and
including better range,
growing with more
import exclusives
division
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We are growing our market share – Average from July to October vs pcp

133% 63% 21% Total Category Growth (offline & NAB Online Sales Index online) (Furniture, Floor ABS Category (homewares & appliances) NAB Online Temple & Coverings, Houseware & Textile Offline & Online Growth Goods) (Homewares & Sales Growth RevenueWebster (Furniture, Floor Appliances – Coverings, domestic sales) Houseware & Textile Goods)

Source: ABS Retail Sales Data (Seasonally Adjusted); NAB Online Retail Sales Index (July 2020 to October 2020) and percentages displayed above reflect the average for July to October 2020.

Revenue growth is based on checkout revenue which is pre accounting adjustments (deferred revenue, refund provision)

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Growth strategy

Add depth and breadth across our core and adjacent categories; grow private label division	Expand digital capabilities: data, personalisation, AI, augmented reality	Increase brand awareness from 55% to +80% through digital and non-digital channels
Add inspirational	Focus on exceptional	Continue to build out
content & service:	customer service and a	Trade & Commercial
video; 3D; AR/VR;	great delivery	division, competing on
design help	experience to drive	range, value and a full-
	repeat behaviour	service offering

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Trading update & outlook

• The second half has started strongly, with January’s revenue growth tracking in excess of 100%.

• We continue to experience strong tailwinds, including:

• the ongoing adoption of online shopping due to structural and demographic shifts

• an acceleration of these trends due to COVID-19

• an increase in discretionary income due to travel restrictions

• the continued recovery of the housing market and unemployment levels

• We will continue our reinvestment strategy, investing into growth areas of the business to cement our online market leadership and drive market share.

Revenue growth is based on checkout revenue which is pre accounting adjustments (deferred revenue, refund provision) and is pre-auditor review.

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