Reporting season for most ASX shares has finished for another six months. Some results drove the share price of that business significantly higher, while others caused it to drop or even plummet.
The two businesses I will discuss impressed me for different reasons. One delivered impressive revenue growth and profit margin improvement, while the other's shareholder returns excited me.
At a time when inflation is driving up business costs and the Australian economy faces challenges, the two companies below inspired investors.
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Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is one of the leading e-commerce businesses in Australia, in my view. It sells hundreds of thousands of products, with suppliers sending most of them directly to customers, enabling the ASX share to maintain a capital-light model.
The business reported an impressive level of profit improvement. In the first six months of FY25, it grew revenue by 23.6% to $313.7 million, the 'delivered' margin increased 25.7% to $101.5 million, operating profit (EBITDA) rose 76.3% to $13.2 million, free cash flow increased 61.4% to $32.5 million and net profit after tax (NPAT) went up 117.9% to $9 million.
It's very good to see profit rising much quicker than revenue. Fixed costs as a percentage of revenue declined to 10.5%, which could continue to improve as the business grows.
The ASX share also said that AI is now handling more than 60% of all customer pre-sales and post-sales support interactions, which has reduced more than 50% of customer care costs.
I anticipate we could see an ongoing improvement in its profit margins in the next few years.
Telstra Group Ltd (ASX: TLS)
As the biggest telecommunications business in Australia, it has several advantages over competitors, such as the widest network coverage, the strongest spectrum assets, and the largest number of subscribers.
I wasn't surprised when the company's numbers revealed positive growth and operating leverage.
The business reported total income increased 0.9% to $11.8 billion, operating profit (EBITDA) grew 6% to $4.2 billion, earnings before interest and tax (EBIT) rose 4.1% to $1.8 billion and net profit for owners of Telstra shares increased 6.5%.
Those numbers were solid in my view, with mobile handheld users growing by 2.5% (or 119,000), helping mobile income rise by 5%.
What impressed me most was how much cash Telstra said it would send to shareholders.
Telstra's board of directors decided to hike the interim dividend per share to 9.5 cents, representing a rise of 5.6%. I was only expecting an interim dividend per share of 9 cents.
The business also announced that it will carry out a share buyback of up to $750 million. This will help increase statistics like return on equity (ROE) and earnings per share (EPS) for the ASX share.
