- Results demonstrate strength of platform model within the
luxury industry; continued market share gains
- Well-capitalized to continue on path to Adjusted EBITDA
profitability – targeted for full year 2021
- Q1 2020 Gross Merchandise Value up 46% year-over-year;
Digital Platform GMV up 19% year-over-year (20% on constant
currency basis)
- $107 million Brand Platform GMV in Q1 2020 on continued
strength of New Guards brand portfolio
- Q1 2020 Revenue increased 90% year-over-year to $331
million
- Q1 2020 Loss After Tax remained relatively unchanged and
Adjusted EBITDA improved, year-over-year; Adjusted EBITDA Margin
improved to (7)%
- Cash and cash equivalents of $422 million at quarter-end;
$400 million Convertible Senior Notes issuance in April 2020
further strengthens liquidity position
Farfetch Limited (NYSE: FTCH), the leading global platform for
the luxury fashion industry, today reported its financial results
for the first quarter ended March 31, 2020.
José Neves, Farfetch Founder, CEO and Co-Chair said: “When I
founded Farfetch 12 years ago, I never imagined that the global
platform I was building for the luxury industry would be put to the
test in such a devastating crisis. Our hearts go out to everyone
who has been impacted by this global pandemic, and we are deeply
grateful to the frontline and essential workers who are helping us
all manage through this situation.
“Over the past few months, as we have responded to an
ever-changing environment to serve the community of creators,
curators, and consumers of this industry we so love, our teams have
stretched beyond perceived limits, and demonstrated the resilience
of our business model. I am extremely proud of them for rising to
this unbelievable challenge. I can’t think of a better example of
when our people have embodied our values, and I thank every
Farfetcher for their resilience and dedication throughout this
difficult period.
“The investments we have made to build the global platform for
the luxury fashion industry have been paying off, with features
such as our global logistics capabilities, geo-diversified supply
network, and localized services for a global consumer base,
enabling the continuity of our operations and delivery of our
strong first quarter 2020 results. But one thing that has become
evident over the past weeks, is that the world will not go back to
the same ‘normal’ as we knew it pre-COVID-19. As we consider the
structural changes that will likely impact the luxury industry, I
am confident that our unique set of capabilities position Farfetch
to be even stronger in the future.”
Elliot Jordan, CFO of Farfetch, said: “I am very pleased by our
financial results in first quarter 2020, which highlight the
strength of our business model. GMV growth across the quarter,
stable unit economics and cost base leverage means we have
significantly outperformed on Adjusted EBITDA, continuing on our
path to profitability. Our strong balance sheet positions us well
to navigate near-term uncertainties as we continue to build on our
position as the leading global platform for the luxury fashion
industry by focusing on delivering sustainable growth, while also
improving cost efficiencies.”
Consolidated Financial Summary and Key Operating Metrics
(in thousands, except per share data, Average Order Value, or
otherwise stated):
Three months ended March
31,
2019
2020
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
419,273
$
610,874
Revenue
174,064
331,437
Adjusted Revenue
146,374
301,152
Gross profit
83,291
153,376
Gross profit margin
47.9%
46.3%
Loss after tax
$
(77,686)
$
(79,177)
Adjusted EBITDA
(30,236)
(22,319)
Adjusted EBITDA Margin
(20.7)%
(7.4)%
Earnings per share (“EPS”)
$
(0.26)
$
(0.24)
Adjusted EPS
(0.11)
(0.24)
Digital Platform:
Digital Platform GMV
$
414,737
$
494,899
Digital Platform Services Revenue
141,838
185,177
Digital Platform Gross Profit
80,941
97,207
Digital Platform Gross Profit Margin
57.1%
52.5%
Digital Platform Order Contribution
$
49,518
$
59,241
Digital Platform Order Contribution
Margin
34.9%
32.0%
Active Consumers
1,699
2,149
Average Order Value (“AOV”) -
Marketplace
$
601
$
571
AOV - Stadium Goods
300
314
Brand Platform:
Brand Platform GMV
$
-
$
107,459
Brand Platform Revenue
-
107,459
Brand Platform Gross Profit
-
52,480
Brand Platform Gross Profit Margin
-
48.8%
See “Metrics Definitions” on page 17 for further explanations.
See “Non-IFRS and Other Financial and Operating Metrics” on page 17
for reconciliations of non-IFRS measures to IFRS measures.
Recent Business Highlights
Liquidity
- Further strengthened liquidity position in April 2020 with the
private placement of $400 million 3.75% convertible senior notes
due 2027. Net proceeds of $390 million supplements quarter-end cash
and cash equivalents balance of $422 million. Quarter-end cash
balance also includes net proceeds from February 2020 issuance of
$250 million convertible senior notes to Tencent Holdings Ltd. and
Dragoneer Investment Group
Impacts and Actions Taken in Light of
COVID-19
- Prioritized the health and wellbeing of Farfetch employees,
partners and customers
- Temporarily closed Browns Fashion, Stadium Goods and NGG brands
retail stores, production studios in Los Angeles and Hong Kong (the
latter now fully operational), as well as most office locations,
enabling employees to work safely from home
- Enhanced social distancing of Portugal and Brazil production
studio employees by reducing capacity and dividing teams into
rotating part-time shifts
- Ensured safety of all employees in production studios and
Fulfilment by Farfetch centers by meeting and exceeding government
guidelines
- To date, implemented safety measures have not resulted in a
material impact to operations and supply chain
- Many of the brands, boutiques and department stores that serve
as our luxury sellers are temporarily offline, as they are
currently unable to fulfil orders. To date, this has not had a
material impact on GMV due to the fact that 85% of products in our
main SS20 catalog were available from multiple sellers
- Towards the latter part of the quarter we observed a slowdown
in growth from our larger markets in Europe and North America,
coinciding with the implementation of lockdown policies in various
countries in those regions. As indicated by the strong growth of
GMV year-over-year, this did not have a material impact on our
first quarter 2020 results. However, while there were encouraging
signs in the China region, the first market to experience the
impacts of COVID-19, where we saw a meaningful acceleration in the
last two months of the quarter, we did observe a deceleration in
Group GMV growth in the latter part of the quarter
- Launched a comprehensive #SupportBoutiques initiative to help
boutique partners weather a challenging environment for physical
retail
- Engagement: Encouraged the
Farfetch community to support boutiques through marketing campaigns
aimed at driving customer engagement with boutique supply
- Financial: Eased certain service
level obligations and lowered some customary platform service
fees
- Operational: Helped boutiques
remain operational by warehousing and fulfilling their orders from
one of our Fulfilment by Farfetch facilities, and waiving the
related service fees
- Safety: Provided guidance and
protective wear to help ensure the safety of boutique
employees
- Collaborated closely with global logistics partners to ensure
availability of global service routes. During the quarter we
incurred some minor disruptions in the fulfilment network and
shipments, which did not have a material impact on our
operations
- Reduced spend plans for marketing, headcount growth, technology
investments, capital expenditures, and other discretionary
costs
Digital Platform
- Third-party transactions generated 86% of Digital Platform GMV
at a 29.9% take rate in Q1 2020
- Continued to capture market share of the online luxury fashion
industry
- Continued to offer consumers an exceptionally broad selection
of luxury fashion through partnerships with more than 1,200
sellers, including over 500 direct brand e-concessions
- Q1 in-season stock exceeded 300,000 SKUs from more than 3,400
brands
- Signed new e-concession with Balmain, among other luxury
brands
- Maintained 100% three-year retention of top 100 direct brand
and top 100 boutique partners
- ACCESS loyalty program accelerated to 1.4 million enrolled
customers at the end of March 2020, with program members
demonstrating higher propensity to upgrade to higher tiers as
compared to control group
- Following the February 2020 launch of Harrods.com by Farfetch
Platform Solutions, Farfetch has enabled Harrods’ global e-commerce
business, including throughout the department store’s temporary
closure in light of COVID-19 lockdown measures
- As part of Positively Farfetch, our mission to be the global
platform for good in luxury fashion, Farfetch announced Climate
Conscious Delivery, a commitment to offset the carbon impact of all
deliveries and returns, or 85% of our total carbon footprint, by
funding global environmental projects
New Guards
- For the fourth consecutive quarter, GMV from NGG brands, in
aggregate, exceeded GMV for the single largest brand on the
Farfetch Marketplace in Q1 2020
- New Guards’ brand portfolio continued to create culturally
relevant collections
- Off-White retained the #1 ranking as Hottest Brand according to
Lyst Index for the third consecutive quarter; also released a Lunar
New Year capsule collection, exclusively available online at
Farfetch and off---white.com
- In response to heightened interest from women, Palm Angels
launched its first women’s ready-to-wear collection for
Spring-Summer 2020
- Heron Preston collaborated with HP Inc. to develop compostable
pouches intended to replace plastic bags used in retail
packaging
- In conjunction with the release of the Beastie Boys Story
documentary, Opening Ceremony collaborated with the influential
band to create a limited-edition collection, sold exclusively on
Farfetch
First Quarter 2020 Results Summary
Gross Merchandise Value (in thousands):
Three months ended March
31,
2019
2020
Digital Platform GMV
$
414,737
$
494,899
Brand Platform GMV
-
107,459
In-Store GMV
4,536
8,516
GMV
$
419,273
$
610,874
Gross Merchandise Value (“GMV”) increased by $191.6 million from
$419.3 million in first quarter 2019 to $610.9 million in first
quarter 2020, representing year-over-year growth of 45.7%. Digital
Platform GMV increased by $80.2 million from $414.7 million in
first quarter 2019 to $494.9 million in first quarter 2020,
representing year-over-year growth of 19.3%. Excluding the impact
of changes in foreign exchange rates, Digital Platform GMV would
have increased by approximately 20.1%.
The increase in GMV primarily reflects the growth in Digital
Platform GMV and the addition of $107.5 million of Brand Platform
GMV from New Guards which we acquired in August 2019. The increase
in Digital Platform GMV was primarily driven by growth in Active
Consumers to 2.1 million in first quarter 2020, increased supply
available from over 1,200 partners, and the addition of
direct-to-consumer brand sales from New Guards. This was partially
offset by a decrease in the blended Marketplace and Stadium Goods
Average Order Values across the Digital Platform. During first
quarter 2020, we also saw a year-over-year growth in transactions
through our managed websites supported by Farfetch Platform
Solutions, primarily driven by the launch of the Harrods e-commerce
site at the end of February 2020.
Revenue (in thousands):
Three months ended March
31,
2019
2020
Digital Platform Services Revenue
$
141,838
$
185,177
Digital Platform Fulfilment Revenue
27,690
30,285
Brand Platform Revenue
-
107,459
In-Store Revenue
4,536
8,516
Revenue
$
174,064
$
331,437
Revenue increased by $157.3 million year-over-year from $174.1
million in first quarter 2019 to $331.4 million in first quarter
2020, representing growth of 90.4%. The increase was primarily
driven by 30.6% growth in Digital Platform Services Revenue to
$185.2 million and the addition of Brand Platform Revenue from New
Guards. In-Store Revenue increased by 87.7% to $8.5 million
primarily due to the addition of revenue from New Guards, as well
as growth in Browns and Stadium Goods directly-operated stores,
despite COVID-19-related store closures toward the end of the
quarter.
The increase in Digital Platform Services Revenue of 30.6% was
driven by 19.3% overall growth in Digital Platform GMV and an
increase in the mix of first-party GMV, which grew 39.6%
year-over-year, and is included in Digital Platform Services
Revenue at 100% of the GMV.
Digital Platform Fulfilment Revenue represents the pass-through
of delivery and duties charges incurred by our global logistics
solutions, net of any Farfetch-funded consumer promotions and
incentives. Whilst Digital Platform Fulfilment Revenue would be
expected to grow in line with the cost of delivery and duties,
which increase as Digital Platform GMV and order volumes grow,
variations in the level of Farfetch-funded promotions and
incentives will impact Digital Platform Fulfilment Revenue. In
first quarter 2020, Digital Platform Fulfilment Revenue increased
9.4%, a lower rate as compared to Digital Platform Services Revenue
growth, due to an increased proportion of orders that qualified for
free shipping year-on-year, as well as some targeted consumer
engagement activities.
Cost of Revenue (in thousands):
Three months ended March
31,
2019
2020
Digital Platform Services cost of
revenue
$
60,897
$
87,970
Digital Platform Fulfilment cost of
revenue
27,690
30,285
Brand Platform cost of revenue
-
54,979
In-Store cost of goods sold
2,186
4,827
Cost of revenue
$
90,773
$
178,061
Cost of revenue increased by $87.3 million, or 96.1%
year-over-year from $90.8 million in first quarter 2019 to $178.1
million in first quarter 2020. The increase was primarily driven by
the addition of Brand Platform cost of revenue related to New
Guards and growth in first-party GMV and the associated cost of
goods, as well as delivery costs and duties on an increased volume
of transactions, and growth in our In-Store revenue and the
associated costs of goods sold. As we are reliant on third-parties
to provide shipping and delivery services, potential changes in
their operations in light of COVID-19 could result in future
impacts to our service levels or cost of revenue.
Gross profit (in thousands):
Three months ended March
31,
2019
2020
Digital Platform Gross Profit
$
80,941
$
97,207
Brand Platform Gross Profit
-
52,480
In-Store Gross Profit
2,350
3,689
Gross profit
$
83,291
$
153,376
Gross profit increased by $70.1 million, or 84.2%
year-over-year, from $83.3 million in first quarter 2019 to $153.4
million in first quarter 2020, primarily due to the addition of New
Guards Brand Platform operations and the growth in our Digital
Platform Services Revenue. Gross profit margin in first quarter
decreased from 47.9% to 46.3% year-over-year, primarily driven by a
lower Digital Platform Gross Profit Margin due to an increase of
first-party sales in our total sales volumes which has a lower
gross margin profile, as well as increased Farfetch-funded consumer
promotions and a decrease in In-Store Gross Profit Margin,
partially offset by the addition of New Guards Brand Platform.
Selling, general and administrative expenses by type (in
thousands):
Three months ended March
31,
2019
2020
Demand generation expense
$
31,423
$
37,966
Technology expense
20,159
26,307
Depreciation and amortization
14,106
51,323
Share based payments
38,714
26,760
General and administrative
61,945
111,422
Other items
2,493
5,025
Selling, general and administrative
expense
$
168,840
$
258,803
First quarter 2020 demand generation expense increased 20.8%
year-over-year to $38.0 million, while remaining relatively flat as
a percentage of Digital Platform GMV at 7.7% as we drove an
increased mix of GMV through unpaid channels, and continued to
invest in paid channels to engage new customers on the Farfetch
Marketplace.
Technology expense, which is primarily related to development
and operations of our platform features and services, and also
includes software, hosting and infrastructure expenses, increased
by $6.1 million, or 30.5%, in first quarter 2020 from first quarter
2019, primarily driven by an increase in technology staff
headcount. We continue to operate three globally distributed data
centers, which support the processing of our growing base of
transactions, including one in Shanghai dedicated to serving our
Chinese customers. First quarter 2020 technology expense as a
percentage of Adjusted Revenue decreased from 13.8% to 8.7%
year-over-year as Adjusted Revenue grew at a rate greater than the
underlying costs.
Depreciation and amortization expense increased by $37.2 million
or 263.8% year-over-year from $14.1 million in first quarter 2019
to $51.3 million in first quarter 2020. Amortization expense
increased principally due to $30.7 million of amortization
recognized on intangible assets acquired in recent acquisitions.
Amortization expense also increased as a result of the historic
investment into technology, where qualifying technology development
costs are capitalized and amortized over a three-year period.
Depreciation expense increased as a result of new leases entered
into across the group.
Share based payments decreased by $12.0 million or (30.9%)
year-over-year in first quarter 2020 from first quarter 2019. The
decrease was driven by a $24.7 million year-over-year difference in
the fair value remeasurement for cash-settled payment awards and
the related employment taxes, as result of an increase in our share
price during first quarter 2019 ($22.5 million fair value increase)
as compared to a decrease in our share price during first quarter
2020 ($2.2 million fair value decrease). This was partially offset
by a $12.7 million year-over-year increase in share based payment
expense for equity-settled awards, which was driven by a $9.4
million increase related to additional employee awards and $3.3
million from long-term employee incentives related to the
acquisition of New Guards.
General and administrative expense increased by $49.5 million,
or 79.9%, year-over-year in first quarter 2020 compared to first
quarter 2019, primarily due to the incorporation of New Guards into
the group and an increase in non-technology headcount across a
number of areas to support the expansion of our business. General
and administrative costs decreased as a percentage of Adjusted
Revenue to 37.0% compared to 42.3% in first quarter 2019 primarily
due to Adjusted Revenue growing more than the general and
administrative expense cost base, and the addition of New Guards,
which operates with lower general and administrative costs as a
percentage of Adjusted Revenue.
Other items of $5.0 million in first quarter 2020 primarily
reflects transaction-related legal and advisory expenses.
Gains on items held at fair value (in thousands):
Three months ended March
31,
2019
2020
Fair value gains on put and call option
liabilities
$
-
$
21,420
Fair value gains on embedded derivative
liabilities
-
44,014
Gains on items held at fair
value
$
-
$
65,434
In first quarter 2020 the gain of $65.4 million comprised of a
$44.0 million fair value revaluation gain related to the embedded
derivative liability associated with Tencent and Dragoneer
convertible senior notes, and a $21.4 million fair value
revaluation gain related to Chalhoub Group’s put option over their
non-controlling interest in Farfetch International Limited. There
were no such items in first quarter 2019.
Impairment losses on tangible assets (in thousands):
Three months ended March
31,
2019
2020
Impairment losses on right-of-use
asset
$
-
$
(1,535)
Impairment losses on property, plant and
equipment
-
(757)
Impairment losses on tangible
assets
$
-
$
(2,292)
The impairment charge of $2.3 million in first quarter 2020
relates to a reduction in the carrying value of the right-of-use
asset, and property, plant and equipment at one of our smaller
retail locations. This resulted from our quarterly considerations
of potential impairment of assets, including our retail stores,
whereby indicators of impairment were present. For first quarter
2020, our impairment assessment incorporated the potential impacts
of COVID-19 across the broader economy as well as from the current
temporary store closures.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA improved by $7.9 million, to $(22.3) million in
first quarter 2020, for the reasons described above. Adjusted
EBITDA Margin improved from (20.7)% to (7.4)% over the same prior
year period, primarily reflecting lower general and administrative
expenses, demand generation and technology expenses as percentages
of Adjusted Revenue, and was partially offset by lower gross profit
margin.
Loss After Tax
Loss after tax increased by $1.5 million, to $79.2 million in
first quarter 2020. The decrease in the operating loss from $85.5
million to $42.3 million was broadly fully offset by a higher
charge in relation to unrealized foreign exchange revaluations of
non-United States Dollar denominated receivables and payables. The
quarterly improvement in operating loss was primarily due to the
$65.4 million gain realized on items held at fair value during
first quarter 2020, as described above.
Liquidity
At March 31, 2020 cash and cash equivalents were $422.0 million,
an increase of $99.6 million compared to $322.4 million at December
31, 2019. The increase in cash and cash equivalents is primarily
due to the private placement of convertible senior notes to Tencent
and Dragoneer, pursuant to which we received $250 million
(excluding transaction-related legal and advisory expenses) in
first quarter 2020. This was partially offset by a net cash outflow
from operating activities, primarily due to the seasonal reversal
of working capital benefit in first quarter 2020, as well as New
Guards’ acquisitions of Ambush and the Opening Ceremony brand.
On April 30, 2020, we completed the private offering of $400
million in aggregate principal amount of convertible senior notes
for net proceeds of $390 million. The notes will mature on May 1,
2027, unless earlier converted, redeemed or repurchased in
accordance with their terms. The notes will bear interest at a rate
of 3.75% per year payable semi-annually in arrears on May 1 and
November 1 of each year, beginning on November 1, 2020.
Outlook
While the COVID-19 pandemic has not had a material impact on our
first quarter 2020 performance, the uncertainties resulting from
the evolving nature of the situation could have material impacts on
our future performance. Factors involving COVID-19 that could
potentially impact our future performance include, among
others:
- extended disruptions to our operations, fulfilment network,
shipments
- reduced supply from fewer sellers being able to sell on the
marketplace and/or production shutdowns potentially delaying
Fall-Winter 2020 collections
- weakened consumer sentiment and discretionary income
potentially arising from a prolonged shutdown and declining
macro-economic conditions
We cannot estimate the duration of the COVID-19 pandemic or the
potential impacts we could ultimately see on our business and
results of operations, however, depending on the duration and
scope, it could be material.
In light of the heightened uncertainty surrounding the evolving
COVID-19 global health pandemic, we are not providing
forward-looking financial guidance at this time, but we remain
focused on our path to profitability and continue to target
Adjusted EBITDA profitability for full year 2021.
Conference Call Information
Farfetch will host a conference call today, May 14, 2020 at 4:30
p.m. Eastern Time to discuss the Company’s results as well as
expectations about Farfetch’s business. Listeners may access the
live conference call via audio webcast at
http://farfetchinvestors.com, where listeners can also access
Farfetch’s earnings press release and slide presentation. Following
the call, a replay of the webcast will be available at the same
website for 30 days.
Unaudited interim condensed
consolidated statements of operations
for the three months ended March
31
(in $ thousands, except share and per
share data)
2019
2020
Revenue
174,064
331,437
Cost of revenue
(90,773)
(178,061)
Gross profit
83,291
153,376
Selling, general and administrative
expenses
(168,840)
(258,803)
Gains on items held at fair value
-
65,434
Impairment losses on tangible assets
-
(2,292)
Share of results of associates
15
(31)
Operating loss
(85,534)
(42,316)
Finance income
9,167
1,241
Finance cost
(759)
(35,596)
Loss before tax
(77,126)
(76,671)
Income tax expense
(560)
(2,506)
Loss after tax
(77,686)
(79,177)
(Loss)/profit after tax attributable
to:
Equity holders of the parent
(77,686)
(82,067)
Non-controlling interests
-
2,890
(77,686)
(79,177)
Loss per share attributable to equity
holders of the parent
Basic and diluted
(0.26)
(0.24)
Weighted-average ordinary shares
outstanding
Basic and diluted
304,444,601
340,272,047
Unaudited interim condensed
consolidated statements of comprehensive loss
for the three months ended March
31
(in $ thousands, except share and per
share data)
2019
2020
Loss after tax
(77,686)
(79,177)
Other comprehensive
income/(loss):
Items that may be subsequently
reclassified to the consolidated
statement of operations (net of tax):
Exchange differences on translation of
foreign operations
29,448
12,896
Loss on cash flow hedges
(267)
(14,205)
Items that will not be subsequently
reclassified to the consolidated statement of operations (net of
tax):
Remeasurement loss on severance plan
-
(3)
Other comprehensive income/(loss) for
the period, net of tax
29,181
(1,312)
Total comprehensive loss for the
period, net of tax
(48,505)
(80,489)
Total comprehensive (loss)/income
attributable to:
Equity holders of the parent
(48,505)
(83,379)
Non-controlling interests
-
2,890
(48,505)
(80,489)
Unaudited interim condensed consolidated statements of financial
position
(in $ thousands)
December 31,
2019
March 31,
2020
Non-current assets
Trade and other receivables
12,388
13,721
Deferred tax assets
5,324
5,663
Intangible assets, net
1,362,967
1,371,690
Property, plant and equipment, net
67,999
68,543
Right-of-use assets
115,176
118,328
Investments
16,229
6,649
Investments in associates
2,466
2,362
Total non-current assets
1,582,549
1,586,956
Current assets
Inventories
128,107
105,269
Trade and other receivables
191,770
214,479
Derivative financial assets
3,024
8,171
Cash and cash equivalents
322,429
422,013
Total current assets
645,330
749,932
Total assets
2,227,879
2,336,888
Liabilities and equity
Non-current liabilities
Provisions
23,704
22,046
Lease liabilities
100,833
106,233
Deferred tax liabilities
219,789
214,558
Derivative financial liabilities
-
37,898
Borrowings
-
168,093
Employee benefit obligations
16,455
16,156
Put and call option liabilities
61,268
39,848
Total non-current liabilities
422,049
604,832
Current liabilities
Trade and other payables
413,696
381,923
Current tax liability
28,289
37,538
Derivative financial liabilities
5,601
25,490
Lease liabilities
18,485
18,926
Put and call option liabilities
1,118
1,118
Other financial liabilities
809
158
Total current liabilities
467,998
465,153
Total liabilities
890,047
1,069,985
Equity
Share capital
13,584
13,627
Share premium
878,007
878,007
Merger reserve
783,529
783,529
Foreign exchange reserve
(30,842)
(17,946)
Other reserves
349,463
342,598
Accumulated losses
(826,135)
(885,513)
Equity attributable to the
parent
1,167,606
1,114,302
Non-controlling interests
170,226
152,601
Total equity
1,337,832
1,266,903
Total equity and liabilities
2,227,879
2,336,888
Unaudited interim condensed consolidated statements of cash
flows
for the three months ended March
31
(in $ thousands)
2019
2020
Cash flows from operating
activities
Loss before tax
(77,126)
(76,671)
Adjustments to reconcile loss before tax
to net cash provided by operating activities:
Depreciation
6,136
9,332
Amortization
7,970
41,991
Non-cash employee benefits expense
24,064
28,822
Net loss on sale of non-current assets
84
-
Share of results of associates
(15)
31
Net finance (income)/expense
(8,408)
34,355
Net exchange differences
(5)
-
Impairment losses on tangible assets
-
2,292
Impairment of investments
-
102
Fair value gains on put and call option
liabilities
-
(21,420)
Fair value gains on convertible note
embedded derivative liabilities
-
(44,014)
Change in working capital
Increase in receivables
(11,375)
(20,527)
(Increase)/decrease in inventories
(15,255)
23,617
Decrease in payables
(734)
(65,013)
Change in other assets and
liabilities
Increase in non-current receivables
(1,443)
(864)
Decrease in other liabilities
-
(852)
Decrease in provisions
-
(2,291)
Increase/(decrease) in derivative
financial instruments
776
(4,248)
Income taxes paid
(295)
(619)
Net cash outflow from operating
activities
(75,626)
(95,977)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
(148,522)
(12,016)
Payments for property, plant and
equipment
(5,082)
(4,376)
Payments for intangible assets
(16,721)
(24,257)
Payments for investments
(5,520)
(1,109)
Interest received
2,554
1,264
Dividends received from associate
-
58
Net cash outflow from investing
activities
(173,291)
(40,436)
Cash flows from financing
activities
Repayment of the principal elements of
lease payments
(3,683)
(3,459)
Interest paid and fees paid on loan
notes
(95)
(10,458)
Dividends paid to holders of
non-controlling interests
-
(1,369)
Proceeds from issue of convertible loan
notes
-
250,000
Proceeds from issue of shares, net of
issue costs
1,013
1,254
Net cash (outflow)/inflow from
financing activities
(2,765)
235,968
Net (decrease)/increase in cash and
cash equivalents
(251,682)
99,555
Cash and cash equivalents at the beginning
of the period
1,044,786
322,429
Effects of exchange rate changes on cash
and cash equivalents
1,554
29
Cash and cash equivalents at end of
period
794,658
422,013
Unaudited interim condensed consolidated statements of changes
in equity
(in $ thousands)
Share
capital
Share
premium
Merger
reserve
Foreign
exchange reserve
Other
reserves
Accumulated
losses
Equity
attributable to
the parent
Non- controlling
interest
Total
equity
Balance at January 1, 2019
11,994
772,300
783,529
(23,509)
67,474
(483,357)
1,128,431
-
1,128,431
Changes in equity
Loss after tax for the period
-
-
-
-
-
(77,686)
(77,686)
-
(77,686)
Other comprehensive (loss)/income
-
-
-
29,448
(267)
-
29,181
-
29,181
Issue of share capital, net of transaction
costs
289
51,975
-
-
26,920
-
79,184
-
79,184
Share based payment – equity settled
-
-
-
-
3,587
4,335
7,922
-
7,922
Share based payment – reverse vesting
shares
-
-
-
-
(48,839)
-
(48,839)
-
(48,839)
Balance at March 31, 2019
12,283
824,275
783,529
5,939
48,875
(556,708)
1,118,193
-
1,118,193
Balance at January 1, 2020
13,584
878,007
783,529
(30,842)
349,463
(826,135)
1,167,606
170,226
1,337,832
Changes in equity
Loss after tax for the period
-
-
-
-
-
(82,067)
(82,067)
2,890
(79,177)
Other comprehensive (loss)/income
-
-
-
12,896
(14,208)
-
(1,312)
-
(1,312)
Issue of share capital, net of transaction
costs
43
-
-
-
-
-
43
-
43
Share based payment – equity settled
-
-
-
-
820
22,689
23,509
-
23,509
Share based payment – reverse vesting
shares
-
-
-
-
6,523
-
6,523
-
6,523
Dividends paid to non-controlling
interests
-
-
-
-
-
-
-
(20,515)
(20,515)
Balance at March 31, 2020
13,627
878,007
783,529
(17,946)
342,598
(885,513)
1,114,302
152,601
1,266,903
Supplemental Metrics 1
2018
2019
2020
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
(in thousands, except per share
data or otherwise stated)
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
338,543
$
309,973
$
466,490
$
419,273
$
488,475
$
492,014
$
739,937
$
610,874
Revenue
146,693
134,541
195,533
174,064
209,260
255,481
382,232
331,437
Adjusted Revenue
118,677
112,742
170,089
146,374
180,738
228,227
337,738
301,152
In-Store Revenue
3,170
4,090
4,314
4,536
4,220
9,077
9,788
8,516
Gross profit
75,693
67,387
94,197
83,291
85,280
115,139
176,136
153,376
Gross profit margin
51.6%
50.1%
48.2%
47.9%
40.8%
45.1%
46.1%
46.3%
Demand generation expense
$
(21,895)
$
(22,103)
$
(33,934)
$
(31,423)
$
(34,444)
$
(34,321)
$
(51,162)
$
(37,966)
Technology expense
(17,135)
(19,034)
(18,159)
(20,159)
(19,073)
(22,322)
(22,653)
(26,307)
Share based payments
(5,956)
(38,475)
(2,821)
(38,714)
(45,710)
(31,760)
(42,238)
(26,760)
Depreciation and amortization
(5,463)
(6,014)
(7,185)
(14,106)
(14,323)
(35,097)
(50,065)
(51,323)
General and administrative
(62,080)
(58,561)
(56,679)
(61,945)
(69,339)
(94,134)
(120,247)
(111,422)
Other items
-
-
-
(2,493)
1,764
(10,061)
(5,584)
(5,025
Gains / (losses) on items held at fair
value
-
-
-
-
-
32,286
(10,565)
65,434)
Impairment losses on tangible assets
-
-
-
-
-
-
-
(2,292)
Loss after tax
(17,681)
(77,255)
(9,912)
(77,686)
(95,392)
(90,484)
(110,126)
(79,177)
Adjusted EBITDA
(25,417)
(32,311)
(14,575)
(30,236)
(37,576)
(35,638)
(17,926)
(22,319)
Adjusted EBITDA Margin
(21.4)%
(28.7)%
(8.6)%
(20.7)%
(20.8)%
(15.6)%
(5.3)%
(7.4)%
Earnings per share (“EPS”)
$
(0.07)
$
(0.30)
$
(0.03)
$
(0.26)
$
(0.31)
$
(0.30)
$
(0.34)
$
(0.24)
Adjusted EPS
(0.05)
(0.15)
(0.02)
(0.11)
(0.16)
(0.20)
(0.08)
(0.24)
Digital Platform:
Digital Platform GMV
$
335,373
$
305,883
$
462,176
$
414,737
$
484,255
$
420,266
$
628,610
$
494,899
Digital Platform Services Revenue
115,507
108,652
165,775
141,838
176,518
156,479
226,411
185,177
Digital Platform Fulfilment Revenue
28,016
21,799
25,444
27,690
28,522
27,254
44,494
30,285
Digital Platform Gross Profit
74,222
65,487
92,632
80,941
84,106
83,294
123,572
97,207
Digital Platform Gross Profit Margin
64.3%
60.3%
55.9%
57.1%
47.6%
53.2%
54.6%
52.5%
Digital Platform Order Contribution
$
52,327
$
43,384
$
58,698
$
49,518
$
49,662
$
48,973
$
72,410
$
59,241
Digital Platform Order Contribution
Margin
45.3%
39.9%
35.4%
34.9%
28.1%
31.3%
32.0%
32.0%
Active Consumers
1,139
1,240
1,382
1,699
1,773
1,889
2,068
2,149
AOV - Marketplace
$
602
$
585
$
637
$
601
$
600
$
582
$
636
$
571
AOV - Stadium Goods
-
-
-
300
336
327
301
314
Brand Platform:
Brand Platform GMV
$
-
$
-
$
-
$
-
$
-
$
62,671
$
101,539
$
107,459
Brand Platform Revenue
-
-
-
-
-
62,671
101,539
107,459
Brand Platform Gross Profit
-
-
-
-
-
27,464
47,543
52,480
Brand Platform Gross Profit Margin
-
-
-
-
-
43.8%
46.8%
48.8%
Forward Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements contained in this release that do not relate to
matters of historical fact should be considered forward-looking
statements, including, without limitation, statements regarding our
profitability for 2021, the anticipated impact of the COVID-19
pandemic on our operations and supply chain and the broader luxury
industry, as well as statements that include the words “expect,”
“intend,” “plan,” “believe,” “project,” “forecast,” “estimate,”
“may,” “should,” “anticipate” and similar statements of a future or
forward-looking nature. These forward-looking statements are based
on management’s current expectations. These statements are neither
promises nor guarantees, but involve known and unknown risks,
uncertainties and other important factors that may cause actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements, including, but not
limited to: purchasers of luxury products may not choose to shop
online in sufficient numbers; our ability to generate sufficient
revenue to be profitable or to generate positive cash flow on a
sustained basis; the volatility and difficulty in predicting the
luxury fashion industry, in particular in light of COVID-19 and its
impact on consumer spending patterns; our reliance on a limited
number of retailers and brands for the supply of products on our
Marketplace; our reliance on retailers and brands to anticipate,
identify and respond quickly to new and changing fashion trends,
consumer preferences and other factors; our reliance on retailers
and brands to make products available to our consumers on our
Marketplace and to set their own prices for such products;
fluctuation in foreign exchange rates; our reliance on information
technologies and our ability to adapt to technological
developments; our ability to acquire or retain consumers and to
promote and sustain the Farfetch brand; our ability or the ability
of third parties to protect our sites, networks and systems against
security breaches, or otherwise to protect our confidential
information; our ability to successfully launch and monetize new
and innovative technology; our acquisition and integration of other
companies or technologies, for example, Stadium Goods and New
Guards, could divert management’s attention and otherwise disrupt
our operations and harm our operating results; we may be
unsuccessful in integrating any acquired businesses or realizing
any anticipated benefits of such acquisitions; our dependence on
highly skilled personnel, including our senior management, data
scientists and technology professionals, and our ability to hire,
retain and motivate qualified personnel; the effect of the COVID-19
pandemic on our business and results of operations, as well as on
the luxury fashion industry and consumer spending more broadly, and
our ability to successfully implement our business plan during a
global economic downturn caused by the COVID-19 pandemic; José
Neves, our chief executive officer, has considerable influence over
important corporate matters due to his ownership of us, and our
dual-class voting structure will limit your ability to influence
corporate matters, including a change of control; and the other
important factors discussed under the caption “Risk Factors” in our
Annual Report on Form 20-F filed with the U.S. Securities and
Exchange Commission (“SEC”) for the fiscal year ended December 31,
2019 and in Exhibit 99.2 to our Current Report on Form 6-K filed
with the SEC on April 27, 2020, as such factors may be updated from
time to time in our other filings with the SEC, which are
accessible on the SEC’s website at www.sec.gov and on our website
at http://farfetchinvestors.com. In addition, we operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time. It is not possible for our management to predict all
risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statements that we may make. In light of these
risks, uncertainties and assumptions, the forward-looking events
and circumstances discussed in this release are inherently
uncertain and may not occur, and actual results could differ
materially and adversely from those anticipated or implied in the
forward-looking statements. Accordingly, you should not rely upon
forward-looking statements as predictions of future events. In
addition, the forward-looking statements made in this release
relate only to events or information as of the date on which the
statements are made in this release. Except as required by law, we
undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date on which the statements
are made or to reflect the occurrence of unanticipated events.
Metrics Definitions
The introduction of the term “Digital Platform” with reference
to GMV, Revenue and other metrics is intended to distinguish
between activities that occurred through our owned and operated
e-commerce platforms (e.g. Farfetch.com, BrownsFashion.com,
off---white.com) and the Brand Platform operations of New Guards,
where GMV and Revenue are derived from our transactions with
independent third party retailers or wholesalers. Such metrics were
previously referred to as “Platform.” No changes have been made to
how we calculate the Digital Platform metrics from how we
calculated Platform metrics.
We acquired New Guards in August 2019, therefore our results for
first quarter 2019 do not include New Guards’ performance.
Segment Realignment
Following the acquisition of New Guards in August 2019,
management determined that it had three operating segments: (i)
Digital Platform, (ii) Brand Platform and (iii) In-Store, given our
new organizational structure and the manner in which our business
is reviewed and managed. In fourth quarter 2019, we realigned our
reportable operating segments to reflect how our Chief Operating
Decision-Maker was making operating decisions, allocating resources
and evaluating operating performance. The comparative periods have
been revised to reflect this segment realignment.
Revisions to Previously Reported Financial
Information
We have revised previously reported finance income and costs,
loss after tax, and loss per share for each of the first three
quarters of 2019. Refer to fourth quarter 2019 earnings release
furnished on February 27, 2020 for further information.
Impairment Considerations
Based on current forecast information we did not identify any
additional impairment losses further to those described within this
release. Assumptions and judgments are required in calculating the
fair value of cash generating units and individual assets whereby
indicators of impairment were present. In developing our discounted
cash flow analysis, assumptions about future revenues and expenses,
capital expenditures and changes in working capital, are based on
our annual operating and long-term business plans. These plans take
into consideration numerous factors including historical
experience, anticipated future economic conditions, discount rates,
changes in the cost of goods and services, prices and growth
expectations for the markets we operate in. As the COVID-19
pandemic and its potential impacts on our business and results of
operations continue to develop, our assumptions and judgments may
change. Such changes to our assumptions and judgements will be
reflected in our future assessments.
Non-IFRS and Other Financial and Operating Metrics
This release includes certain financial measures not based on
IFRS, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted
EPS, Adjusted Revenue, Digital Platform Gross Profit Margin,
Digital Platform Order Contribution, and Digital Platform Order
Contribution Margin (together, the “Non-IFRS Measures”), as well as
operating metrics, including GMV, Digital Platform GMV, Brand
Platform GMV, In-Store GMV, Active Consumers and Average Order
Value.
Management uses the Non-IFRS Measures:
- as measurements of operating performance because they assist us
in comparing our operating performance on a consistent basis, as
they remove the impact of items not directly resulting from our
core operations;
- for planning purposes, including the preparation of our
internal annual operating budget and financial projections;
- to evaluate the performance and effectiveness of our strategic
initiatives; and
- to evaluate our capacity to fund capital expenditures and
expand our business.
The Non-IFRS Measures may not be comparable to similar measures
disclosed by other companies, because not all companies and
analysts calculate these measures in the same manner. We present
the Non-IFRS Measures because we consider them to be important
supplemental measures of our performance, and we believe they are
frequently used by securities analysts, investors and other
interested parties in the evaluation of companies. Management
believes that investors’ understanding of our performance is
enhanced by including the Non-IFRS Measures as a reasonable basis
for comparing our ongoing results of operations. Many investors are
interested in understanding the performance of our business by
comparing our results from ongoing operations period over period
and would ordinarily add back non-cash expenses such as
depreciation, amortization and items that are not part of normal
day-to-day operations of our business. By providing the Non-IFRS
Measures, together with reconciliations to IFRS, we believe we are
enhancing investors’ understanding of our business and our results
of operations, as well as assisting investors in evaluating how
well we are executing our strategic initiatives.
Items excluded from the Non-IFRS Measures are significant
components in understanding and assessing financial performance.
The Non-IFRS Measures have limitations as analytical tools and
should not be considered in isolation, or as an alternative to, or
a substitute for loss after tax, revenue or other financial
statement data presented in our consolidated financial statements
as indicators of financial performance. Some of the limitations
are:
- such measures do not reflect revenue related to fulfilment,
which is necessary to the operation of our business;
- such measures do not reflect our expenditures, or future
requirements for capital expenditures or contractual
commitments;
- such measures do not reflect changes in our working capital
needs;
- such measures do not reflect our share based payments, income
tax expense or the amounts necessary to pay our taxes;
- although depreciation and amortization are eliminated in the
calculation of Adjusted EBITDA, the assets being depreciated and
amortized will often have to be replaced in the future and such
measures do not reflect any costs for such replacements; and
- other companies may calculate such measures differently than we
do, limiting their usefulness as comparative measures.
Due to these limitations, Adjusted EBITDA, Adjusted EBITDA
Margin, Adjusted Revenue and Digital Platform Gross Profit Margin
should not be considered as measures of discretionary cash
available to us to invest in the growth of our business and are in
addition to, not a substitute for or superior to, measures of
financial performance prepared in accordance with IFRS. In
addition, the Non-IFRS Measures we use may differ from the non-IFRS
financial measures used by other companies and are not intended to
be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with IFRS.
Furthermore, not all companies or analysts may calculate similarly
titled measures in the same manner. We compensate for these
limitations by relying primarily on our IFRS results and using the
Non-IFRS Measures only as supplemental measures.
Digital Platform Order Contribution and Digital Platform Order
Contribution Margin are not measurements of our financial
performance under IFRS and do not purport to be alternatives to
gross profit or loss after tax derived in accordance with IFRS. We
believe that Digital Platform Order Contribution and Digital
Platform Order Contribution Margin are useful measures in
evaluating our operating performance within our industry because
they permit the evaluation of our digital platform productivity,
efficiency and performance. We also believe that Digital Platform
Order Contribution and Digital Platform Order Contribution Margin
are useful measures in evaluating our operating performance because
they take into account demand generation expense and are used by
management to analyze the operating performance of our digital
platform for the periods presented.
Farfetch reports under International Financial Reporting
Standards (“IFRS”). Farfetch provides earnings guidance on a
non-IFRS basis and does not provide earnings guidance on an IFRS
basis. A reconciliation of the Company’s Adjusted EBITDA guidance
to the most directly comparable IFRS financial measure cannot be
provided without unreasonable efforts and is not provided herein
because of the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations,
including adjustments that are made for future changes in the fair
value of cash-settled share based payment liabilities; foreign
exchange gains/(losses) and the other adjustments reflected in our
reconciliation of historical non-IFRS financial measures, the
amounts of which, could be material.
Reconciliations of these non-IFRS measures to the most directly
comparable IFRS measure are included in the accompanying
tables.
The following table reconciles Adjusted EBITDA to the most
directly comparable IFRS financial
performance measure, which is loss after tax:
(in $ thousands, except as otherwise
noted)
2018
2019
2020
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Loss after tax
$
(17,681)
$
(77,255)
$
(9,912)
$
(77,686)
$
(95,392)
$
(90,484)
$
(110,126)
$
(79,177)
Net finance (income)/expense
(19,319)
(733)
(14,915)
(8,408)
(1,249)
10,689
(16,182)
34,355
Income tax expense/(benefit)
187
1,183
261
560
813
(104)
(108)
2,506
Depreciation and amortization
5,463
6,014
7,185
14,106
14,323
35,097
50,065
51,323
Share based payments (a)
5,956
38,475
2,821
38,714
45,710
31,760
42,238
26,760
(Gains)/losses on items held at fair value
(b)
-
-
-
-
-
(32,286)
10,565
(65,434)
Other items (c)
-
-
-
2,493
(1,764)
10,061
5,584
5,025
Impairment losses on tangible assets
-
-
-
-
-
-
-
2,292
Share of results of associates
(23)
5
(15)
(15)
(17)
(371)
38
31
Adjusted EBITDA
$
(25,417)
$
(32,311)
$
(14,575)
$
(30,236)
$
(37,576)
$
(35,638)
$
(17,926)
$
(22,319)
- Represents share-based payment expense.
- Represents (gains)/losses on items held at fair value. There
was a net gain in third quarter 2019 of $32.3 million, a loss in
fourth quarter 2019 of $10.6 million, and a gain in first quarter
2020 of $65.4 million recognized on the revaluation of liabilities
held at fair value and impacted by movements in our share price. In
third quarter 2019 the net gain of $32.3 million comprised of a
$53.8 million fair value revaluation gain related to Chalhoub
Group’s put option over their non-controlling interest in Farfetch
International Limited, partially offset by a charge in respect of
the fair value remeasurement ($21.5 million) of shares issued
following the acquisition of New Guards Group. In fourth quarter
2019 the loss of $10.6 million comprised of a $9.0 million fair
value revaluation loss related to Chalhoub Group’s put option over
their non-controlling interest in Farfetch International Limited,
and a $1.6 million fair value revaluation loss related to our call
option over the remaining non-controlling interest in
CuriosityChina. In first quarter 2020 the gain of $65.4 million
comprised of a $44.0 million fair value revaluation gain related to
the embedded derivative liability associated with Tencent and
Dragoneer convertible senior notes, and a $21.4 million fair value
revaluation gain related to Chalhoub Group’s put option over their
non-controlling interest in Farfetch International Limited.
- Represents other items, which are outside the normal scope of
our ordinary activities. See “Other items” on page 22 for a
breakdown of these expenses. Other items is included within
selling, general and administrative expenses.
The following table reconciles Adjusted Revenue to the most
directly comparable IFRS financial performance measure, which is
revenue:
(in $ thousands, except as otherwise
noted)
2018
2019
2020
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Revenue
$
146,693
$
134,541
$
195,533
$
174,064
$
209,260
$
255,481
$
382,232
$
331,437
Less: Digital Platform Fulfilment
Revenue
(28,016)
(21,799)
(25,444)
(27,690)
(28,522)
(27,254)
(44,494)
(30,285)
Adjusted Revenue
$
118,677
$
112,742
$
170,089
$
146,374
$
180,738
$
228,227
$
337,738
$
301,152
The following table reconciles Digital Platform Order
Contribution to the most directly comparable IFRS financial
performance measure, which is Digital Platform Gross Profit:
(in $ thousands, except as otherwise
noted)
2018
2019
2020
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Digital Platform Gross Profit
$
74,222
$
65,487
$
92,632
$
80,941
$
84,106
$
83,294
$
123,572
$
97,207
Less: Demand generation expense
(21,895)
(22,103)
(33,934)
(31,423)
(34,444)
(34,321)
(51,162)
(37,966)
Digital Platform Order
Contribution
$
52,327
$
43,384
$
58,698
$
49,518
$
49,662
$
48,973
$
72,410
$
59,241
The following table reconciles Adjusted EPS to the most directly
comparable IFRS financial performance measure, which is Earnings
per share:
(per share amounts)
2018
2019
2020
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Earnings per share
$
(0.07)
$
(0.30)
$
(0.03)
$
(0.26)
$
(0.31)
$
(0.30)
$
(0.34)
$
(0.24)
Share based payments (a)
0.02
0.15
0.01
0.13
0.15
0.11
0.12
0.08
Amortization of acquired intangible
assets
-
-
-
0.01
0.01
0.06
0.09
0.09
(Gains)/losses on items held at fair value
(b)
-
-
-
-
-
(0.10)
0.03
(0.19)
Other items (c)
-
-
-
0.01
(0.01)
0.03
0.02
0.01
Impairment losses on tangible assets
-
-
-
-
-
-
-
0.01
Share of results of associates
(0.00)
0.00
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
Adjusted EPS
$
(0.05)
$
(0.15)
$
(0.02)
$
(0.11)
$
(0.16)
$
(0.20)
$
(0.08)
$
(0.24)
- Represents share-based payment expense on a per share
basis.
- Represents (gains)/losses on items held at fair value. There
was a net gain in third quarter 2019 of $32.3 million, a loss in
fourth quarter 2019 of $10.6 million, and a gain in first quarter
2020 of $65.4 million recognized on the revaluation of liabilities
held at fair value and impacted by movements in our share price. In
third quarter 2019 the net gain of $32.3 million comprised of a
$53.8 million fair value revaluation gain related to Chalhoub
Group’s put option over their non-controlling interest in Farfetch
International Limited, partially offset by a charge in respect of
the fair value remeasurement ($21.5 million) of shares issued
following the acquisition of New Guards Group. In fourth quarter
2019 the loss of $10.6 million comprised of a $9.0 million fair
value revaluation loss related to Chalhoub Group’s put option over
their non-controlling interest in Farfetch International Limited,
and a $1.6 million fair value revaluation loss related to our call
option over the remaining non-controlling interest in
CuriosityChina. In first quarter 2020 the gain of $65.4 million
comprised of a $44.0 million fair value revaluation gain related to
the embedded derivative liability associated with Tencent and
Dragoneer convertible senior notes, and a $21.4 million fair value
revaluation gain related to Chalhoub Group’s put option over their
non-controlling interest in Farfetch International Limited.
- Represents other items, which are outside the normal scope of
our ordinary activities. See “Other items” on page 22 for a
breakdown of these expenses. Other items is included within
selling, general and administrative expenses.
The following table represents other items:
2018
2019
2020
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Transaction-related legal and advisory
expenses
$
-
$
-
$
-
$
(2,493)
$
(2,236)
$
(5,061)
$
(5,584)
$
(4,925)
Release of tax provisions
-
-
-
-
4,000
-
-
-
Loss on impairment of investments carried
at fair value
-
-
-
-
-
(5,000)
-
(100)
Other items
$
-
$
-
$
-
$
(2,493)
$
1,764
$
(10,061)
$
(5,584)
$
(5,025)
We define our non-IFRS and other financial and operating metrics
as follows:
“Active Consumers” means active consumers on our directly owned
and operated sites and related apps. A consumer is deemed to be
active if they made a purchase within the last 12-month period,
irrespective of cancellations or returns. Active Consumers includes
Farfetch Marketplace, BrownsFashion.com and Stadium Goods. Due to
technical limitations, Active Consumers is unable to fully de-dupe
Stadium Goods consumers from Farfetch Marketplace or
BrownsFashion.com consumers. Active Consumers does not currently
include those generated from New Guards owned and operated sites.
The number of Active Consumers is an indicator of our ability to
attract and retain our consumer base to our platform and of our
ability to convert platform visits into sale orders.
“Adjusted EBITDA” means loss after taxes before net finance
expense/ (income), income tax (credit)/expense and depreciation and
amortization, further adjusted for share based compensation
expense, share of results of associates and items outside the
normal scope of our ordinary activities (including other items,
within selling, general and administrative expenses, (losses)/gains
on items held at fair value through profit and loss, and impairment
losses on tangible assets). Adjusted EBITDA provides a basis for
comparison of our business operations between current, past and
future periods by excluding items that we do not believe are
indicative of our core operating performance. Adjusted EBITDA may
not be comparable to other similarly titled metrics of other
companies.
“Adjusted EBITDA Margin” means Adjusted EBITDA calculated as a
percentage of Adjusted Revenue.
“Adjusted EPS” means earnings per share further adjusted for
share based payments, amortization of acquired intangible assets,
items outside the normal scope of our ordinary activities
(including other items, within selling, general and administrative
expenses, (losses)/gains on items held at fair value through profit
and loss, and impairment losses on tangible assets) and the related
tax effects of these adjustments. Adjusted EPS provides a basis for
comparison of our business operations between current, past and
future periods by excluding items that we do not believe are
indicative of our core operating performance. Adjusted EPS may not
be comparable to other similarly titled metrics of other
companies.
“Adjusted Revenue” means revenue less Digital Platform
Fulfilment Revenue.
“Average Order Value” (“AOV”) means the average value of all
orders excluding value added taxes placed on either the Farfetch
Marketplace or the Stadium Goods Marketplace, as indicated.
“Brand Platform Gross Profit” means Brand Platform Revenue less
the direct cost of goods sold relating to Brand Platform
Revenue.
“Brand Platform GMV” and “Brand Platform Revenue” mean revenue
relating to the New Guards operations less revenue from New
Guards’: (i) owned e-commerce websites, (ii) direct to consumer
channel via our Marketplaces and (iii) directly operated stores.
Revenue realized from Brand Platform is equal to GMV as such sales
are not commission based.
“Digital Platform Fulfilment Revenue” means revenue from
shipping and customs clearing services that we provide to our
digital consumers, net of Farfetch-funded consumer promotional
incentives, such as free shipping and promotional codes. Digital
Platform Fulfilment Revenue was referred to as Platform Fulfilment
Revenue in previous filings with the SEC.
“Digital Platform GMV” means GMV excluding In-Store GMV and
Brand Platform GMV. Digital Platform GMV was referred to as
Platform GMV in previous filings with the SEC.
“Digital Platform Gross Profit” means gross profit excluding
In-Store Gross Profit and Brand Platform Gross Profit. Digital
Platform Gross Profit was referred to as Platform Gross Profit in
previous filings with the SEC.
“Digital Platform Gross Profit Margin” means Digital Platform
Gross Profit calculated as a percentage of Digital Platform
Services Revenue.
“Digital Platform Order Contribution” means Digital Platform
Gross Profit after deducting demand generation expense, which
includes fees that we pay for our various marketing channels.
Digital Platform Order Contribution provides an indicator of our
ability to extract digital consumer value from our demand
generation expense, including the costs of retaining existing
consumers and our ability to acquire new consumers. Digital
Platform Order Contribution was referred to as Platform Order
Contribution in previous filings with the SEC.
“Digital Platform Order Contribution Margin” means Digital
Platform Order Contribution calculated as a percentage of Digital
Platform Services Revenue. Digital Platform Order Contribution
Margin was referred to as Platform Order Contribution Margin in
previous filings with the SEC.
“Digital Platform Revenue” means the sum of Digital Platform
Services Revenue and Digital Platform Fulfilment Revenue. Digital
Platform Revenue was referred to as Platform Revenue in previous
filings with the SEC.
“Digital Platform Services Revenue” means Revenue less Digital
Platform Fulfilment Revenue, In-Store Revenue and Brand Platform
Revenue. Digital Platform Services Revenue is driven by our Digital
Platform GMV, including revenue from first-party sales, and
commissions from third-party sales. The revenue realized from
first-party sales is equal to the GMV of such sales because we act
as principal in these transactions, and thus related sales are not
commission based. Digital Platform Services Revenue was also
referred to as Adjusted Platform Revenue or Platform Services
Revenue in previous filings with the SEC.
“Gross Merchandise Value” (“GMV”) means the total dollar value
of orders processed. GMV is inclusive of product value, shipping
and duty. It is net of returns, value added taxes and
cancellations. GMV does not represent revenue earned by us,
although GMV and revenue are correlated.
“In-Store Gross Profit” means In-Store Revenue less the direct
cost of goods sold relating to In-Store Revenue.
“In-Store GMV” and “In-Store Revenue” mean revenue generated in
our retail stores which include Browns, Stadium Goods and New
Guards’ directly operated stores. Revenue realized from In-Store
sales is equal to GMV of such sales because such sales are not
commission based.
“Third-Party Take Rate” means Digital Platform Services Revenue
excluding revenue from first-party sales, as a percentage of
Digital Platform GMV excluding GMV from first-party sales and
Digital Platform Fulfilment Revenue. Revenue from first-party
sales, which is equal to GMV from first-party sales, means revenue
derived from sales on our platform of inventory purchased by
us.
Certain figures in the release may not recalculate exactly due
to rounding. This is because percentages and/or figures contained
herein are calculated based on actual numbers and not the rounded
numbers presented.
About Farfetch
Farfetch Limited is the leading global platform for the luxury
fashion industry. Founded in 2007 by José Neves for the love of
fashion, and launched in 2008, Farfetch began as an e-commerce
marketplace for luxury boutiques around the world. Today the
Farfetch Marketplace connects customers in over 190 countries with
items from more than 50 countries and over 1,200 of the world’s
best brands, boutiques and department stores, delivering a truly
unique shopping experience and access to the most extensive
selection of luxury on a single platform. Farfetch’s additional
businesses include Farfetch Platform Solutions, which services
enterprise clients with e-commerce and technology capabilities;
Browns and Stadium Goods, which offer luxury products to consumers;
and New Guards, a platform for the development of global fashion
brands. Farfetch also invests in innovations such as its Store of
the Future augmented retail solution, and develops key
technologies, business solutions, and services for the luxury
fashion industry.
For more information, please visit www.farfetchinvestors.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200514005701/en/
Investor Relations: Alice
Ryder VP Investor Relations IR@farfetch.com
Media: Susannah Clark VP
Communications, Global susannah.clark@farfetch.com +44 7788
405224
Brunswick Group farfetch@brunswickgroup.com US: +1 (212) 333
3810 UK: +44 (0) 207 404 5959
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