- Q1 2021 Gross Merchandise Value and Digital Platform GMV
growth of 50% and 60% year-over-year, respectively, to $916 million
and $790 million, respectively
- Q1 2021 Revenue increases 46% year-over-year to $485
million
- Q1 2021 Digital Platform Order Contribution Margin improves
100 bps year-over-year to 33%; Gross Profit Margin declines 80 bps
year-over-year to 46%
- Q1 2021 Profit After Tax of $517 million includes $660
million non-cash benefit arising from lower share price impact on
items held at fair value and remeasurements
- Q1 2021 Adjusted EBITDA improves to $(19) million, from
$(22) million in Q1 2020
- Upgrades Digital Platform GMV outlook for full year
2021
Farfetch Limited (NYSE: FTCH), the leading global platform for
the luxury fashion industry, today reported financial results for
the first quarter ended March 31, 2021.
José Neves, Farfetch Founder, Chairman and CEO said: “Farfetch
is off to a tremendous start in 2021 with stronger than expected
acceleration in the business in the first quarter and higher
full-year growth expectations than initially anticipated. Our brand
partnerships have never been stronger, and our customer and brand
building initiatives are resonating well to drive awareness of our
value proposition and retention of our valuable consumers. I am
also very enthused by the positive consumer reaction to our recent
launch on Tmall’s Luxury Pavilion, and the momentum building behind
our Luxury New Retail vision as we see it being adopted by luxury
partners around the world. I am more confident than ever in our
position to go after the significant growth opportunities we see as
a digital enabler of the global luxury industry – a nearly $300
billion opportunity which we remain laser-focused on and plan to
continue investing behind to deliver significant value over the
long-term.”
Elliot Jordan, CFO of Farfetch, said: “I’m extremely pleased
with Farfetch’s strong first quarter where we exceeded our own
expectations for GMV growth, while also achieving improved unit
economics, operating leverage and adjusted EBITDA as compared to
the prior year period. In light of the continuation of this strong
momentum against a more favorable consumer backdrop, we are even
more optimistic about our growth expectations for the year, and the
value in continuing to invest behind our long-term growth
opportunities as we continue to focus on delivering our first full
year of adjusted EBITDA profitability 2021.”
Consolidated Financial Summary and Key Operating Metrics
(in thousands, except per share data, Average Order Value, or
otherwise stated):
Three months ended March
31,
2020
2021
Consolidated Group:
Gross Merchandise Value
(“GMV”)
$
610,874
$
915,604
Revenue
331,437
485,079
Adjusted Revenue
301,152
408,851
Gross profit
153,376
220,869
Gross profit margin
46.3%
45.5%
(Loss) / Profit after tax
$
(79,177)
$
516,667
Adjusted EBITDA
(22,319)
(19,196)
Adjusted EBITDA Margin
(7.4)%
(4.7)%
Basic (Loss) / Earnings per
share (“EPS”)
$
(0.24)
$
1.44
Diluted EPS
(0.24)
(0.28)
Adjusted EPS
(0.24)
(0.22)
Digital Platform:
Digital Platform GMV
$
494,899
$
790,014
Digital Platform Services
Revenue
185,177
285,861
Digital Platform Gross
Profit
97,207
156,335
Digital Platform Gross Profit
Margin
52.5%
54.7%
Digital Platform Order
Contribution
$
59,241
$
94,468
Digital Platform Order
Contribution Margin
32.0%
33.0%
Active Consumers
2,149
3,272
Average Order Value (“AOV”) -
Marketplace
$
571
$
618
AOV - Stadium Goods
314
326
Brand Platform:
Brand Platform GMV
$
107,459
$
112,315
Brand Platform Revenue
107,459
112,315
Brand Platform Gross Profit
52,480
57,735
Brand Platform Gross Profit
Margin
48.8%
51.4%
See “Notes and Disclosures” on page 18 for further explanations.
See “Non-IFRS and Other Financial and Operating Metrics” on page 18
for reconciliations of non-IFRS measures to IFRS measures.
Recent Business Highlights
Group
- Farfetch was recognized as a TIME100 Most Influential Companies
of 2021, for our relevance, impact, innovation, leadership and
success
- COVID-19:
- Maintained continuity of operations throughout the business and
continued to work closely with our global logistics partners to
preserve continuity of fulfilment and delivery with no material
disruptions during first quarter 2021
- Retail stores remained closed due to lockdown measures in
affected locations across Europe
Digital Platform
- Third-party transactions generated 85% of Digital Platform GMV
at a take rate of 29.7% in first quarter 2021
- Launched new brand campaign labeled “The Perfect Match” in
April 2021, highlighting Farfetch’s role as a platform connecting
consumers with boutiques around the world
- The Farfetch Marketplace offered a record number of stock units
across more than 3,550 brands from nearly 1,400 sellers as both
multi-brand retailer and e-concession supply growth accelerated,
including from our Top 10 brand e-concessions who more than doubled
available stock units year-over-year
- Elevated the customer experience with introduction of
interactive livestream events enabling Private Clients to engage
with creators of brands such as AZ Factory and JAY AHR
- Continued to partner with brands to highlight their products
and collections on the Marketplace, including the first of a
four-part year-long ‘Imagined Futures’ collaboration with Gucci
focused on sustainability, as well as Burberry’s genderless
Spring-Summer 2021 collection and the Tag Heuer Connected
watch
- Advanced Luxury New Retail (LNR) initiative:
- Full launch of Farfetch storefront on Tmall Luxury Pavilion –
making over 3,000 brands available to Alibaba consumers
- Opened newly relocated Browns boutique in London, fully
equipped with latest version of Connected Retail technology to
offer visitors an integrated, personalized and interactive
experience
- Expanded partnership with CHANEL with the implementation of
Connected Retail technology in CHANEL boutique in Monaco
- Signed global department store, Printemps, to help design the
in-store technology and connected retail experience for their new
300,000 square foot flagship planned for Doha, Qatar
- Expanded e-concession-as-a-service integrations for Harrods
with additions of Zegna and Brunello Cucinelli
- Appointed by Cidade Matarazzo complex in development in Sao
Paolo, to implement our Connected Retail solution to create a
technologically advanced luxury experience across the complex’s
entire 300,000 square foot retail village
New Guards
- New Guards’ portfolio continued to create culturally relevant
collections
- Off-White launched ‘I Support Black Women’ initiative with
Trinice McNally, which aims to amplify the voices of black women,
as part of its quarterly PSA fundraising program and unveiled
second activewear collection, named “OFF ACTIVE”
- Palm Angels introduced new staple sneaker, the “Palm One,” and
collaborated with famed art book publisher, Rizzoli, to launch a
limited-edition zine in celebration of its Spring-Summer 2021
collection
- Ambush released a capsule collection with Nike and partnered
with Moet & Chandon to design limited editions of their iconic
champagne bottle
Environmental, Social and Governance
(ESG)
- In partnership with African fashion, art and culture media
brand, Nataal, worked to raise the profiles of Black-owned brands,
boutiques and creatives via the Farfetch Marketplace
- Collaborated with 30 Middle Eastern and international designers
to release an exclusive capsule collection for Ramadan
- Launched Farfetch Fix, a luxury restoration service powered by
The Restory, enabling customers to seamlessly book a repair or
restoration service online and extend the life of their luxury
purchases
- Highlighted ability for European customers to make a positive
choice to reduce emissions by opting for standard delivery
- Released our 2020 Conscious Luxury Trends report on the
behaviors of luxury consumers and the luxury industry with regards
to sustainability issues, leveraging the power of our data to
support our brand and boutique partners
- As part of Earth day celebrations in April, Farfetchers
remotely planted over 5,500 trees to drive positive change and help
reduce the impact of carbon emissions
First Quarter 2021 Results Summary
Gross Merchandise Value (in thousands):
Three months ended March
31,
2020
2021
Digital Platform GMV
$
494,899
$
790,014
Brand Platform GMV
107,459
112,315
In-Store GMV
8,516
13,275
GMV
$
610,874
$
915,604
Gross Merchandise Value (“GMV”) increased by $304.7 million from
$610.9 million in first quarter 2020 to $915.6 million in first
quarter 2021, representing year-over-year growth of 49.9%. Digital
Platform GMV increased by $295.1 million from $494.9 million in
first quarter 2020 to $790.0 million in first quarter 2021,
representing year-over-year growth of 59.6%. Excluding the impact
of changes in foreign exchange rates, Digital Platform GMV would
have increased by approximately 54.3%.
The increase in GMV primarily reflects the growth in Digital
Platform GMV driven by strong order growth, new consumer
acquisition and an increase in Marketplace AOV from $571 to $618
resulting from a higher average selling price, foreign exchange
rate movements, higher full price mix of items sold and increased
number of items per order. During first quarter 2021, we also saw
year-over-year growth in transactions through websites managed by
Farfetch Platform Solutions, primarily driven by incremental
activity from newly launched e-commerce sites over the past year,
including Harrods.com and Off---White.com which were launched in
first quarter 2020.
Revenue (in thousands):
Three months ended March
31,
2020
2021
Digital Platform Services third-party
revenue
$
119,201
$
181,057
Digital Platform Services first-party
revenue
65,976
104,804
Digital Platform Services
Revenue
185,177
285,861
Digital Platform Fulfilment
Revenue
30,285
76,228
Brand Platform Revenue
107,459
112,315
In-Store Revenue
8,516
10,675
Revenue
$
331,437
$
485,079
Revenue increased by $153.6 million year-over-year from $331.4
million in first quarter 2020 to $485.1 million in first quarter
2021, representing growth of 46.4%. The increase was primarily
driven by 68.1% growth in Digital Platform Revenue to $362.1
million partially offset by comparatively lower Brand Platform
Revenue growth of 4.5% year-over-year.
The increase in Digital Platform Services Revenue of 54.4% was
driven by 59.6% overall growth in Digital Platform GMV with Digital
Platform Services first-party GMV, which is comprised of our sales
of owned-inventory including First-Party Original, and included in
Digital Platform Services Revenue at 100% of the GMV. Digital
Platform Services first-party revenue increased 58.9%
year-over-year to $104.8 million, primarily driven by our continued
focus on growing New Guards direct-to-consumer sales on the
Marketplace and the respective websites of the New Guards portfolio
brands.
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 2021, Digital Platform Fulfilment Revenue increased
151.7% year-over-year driven by Digital Platform Fulfilment cost
growth, due to increased pass-through costs resulting from a shift
in regional mix of sales and impacts of Brexit leading to higher
duties, in addition to a decrease in promotional activity.
In-Store Revenue increased by 25.4% to $10.7 million and was
primarily driven by the opening of additional New Guards portfolio
brand stores over the past year, partially offset by temporary
store closures and reduced foot traffic across our retail store
network as a result of COVID-19 restrictions.
Cost of Revenue (in thousands):
Three months ended March
31,
2020
2021
Digital Platform Services third-party cost
of revenue
$
38,677
$
61,358
Digital Platform Services first-party cost
of revenue
49,293
68,168
Digital Platform Services cost
of revenue
87,970
129,526
Digital Platform Fulfilment
cost of revenue
30,285
76,228
Brand Platform cost of
revenue
54,979
54,580
In-Store cost of goods sold
4,827
3,876
Cost of revenue
$
178,061
$
264,210
Cost of revenue increased by $86.1 million, or 48.4%,
year-over-year from $178.1 million in first quarter 2020 to $264.2
million in first quarter 2021 slightly ahead of Revenue growth. The
increase was driven by 151.7% growth in Digital Platform Fulfilment
cost of revenue where pass-through duty costs increased as a result
of Brexit and a shift in regional sales mix, and 47.2% growth in
Digital Platform Services cost of revenue to $129.5 million. Brand
Platform cost of revenue remained stable year-over-year, and
In-Store cost of revenue decreased due to temporary
COVID-19-related store closures.
Digital Platform Services cost of revenue increased at a lower
rate than Digital Platform Services Revenue primarily driven by the
increased margins across first-party products sold on the Digital
Platform as a result of increased mix of full price sales and other
higher profit margin products.
We rely on third parties to provide shipping services, and
changes in their operations due to the ongoing impacts of COVID-19,
as well as supply and demand for delivery services as online
adoption accelerates across industries, may impact our service
levels or cost of revenue.
Gross profit (in thousands):
Three months ended March
31,
2020
2021
Digital Platform third-party gross
profit
$
80,524
$
119,699
Digital Platform first-party gross
profit
16,683
36,636
Digital Platform Gross
Profit
97,207
156,335
Brand Platform Gross Profit
52,480
57,735
In-Store Gross Profit
3,689
6,799
Gross profit
$
153,376
$
220,869
Gross profit increased by $67.5 million, or 44.0%
year-over-year, slightly below Revenue growth, to $220.9 million in
first quarter 2021. Gross profit margin marginally declined
year-over-year to 45.5% from 46.3%, primarily driven by fulfilment
revenue growth at a higher rate than Gross profit growth and
therefore margin dilutive.
Digital Platform Gross Profit Margin increased to 54.7% in first
quarter 2021, from 52.5% in first quarter 2020 primarily driven by
an increase in the mix of full price sales within Browns, and more
sales in higher profit margin products from New Guards Group
brands. This was partially offset by an increase in certain unit
costs associated with operating a global ecommerce business and the
recognition of European Digital Services Tax which was previously
included within Selling, General and Administrative expenses
through second quarter 2020.
Brand Platform Gross Profit Margin increased 260bps
year-over-year to 51.4% primarily driven by exchange rate
fluctuations.
Selling, general and administrative expenses by type (in
thousands):
Three months ended March
31,
2020
2021
Demand generation expense
$
37,966
$
61,867
Technology expense
26,307
33,532
Share based payments
26,760
40,516
Depreciation and amortization
51,323
53,992
General and administrative
111,422
144,666
Other items
5,025
4,721
Selling, general and
administrative expense
$
258,803
$
339,294
Demand generation expense increased $23.9 million year-over-year
to $61.9 million in first quarter 2021. As a percentage of Digital
Platform Service Revenue, first quarter 2021 demand generation
expense increased from 20.5% to 21.6%. The movement was driven by
increased mix of paid channels and increased investment in demand
generation as we continue to target new customer acquisition.
Technology expense primarily relates to maintenance and
operations of our platform features and services, as well as
software, hosting and infrastructure expenses, which includes three
globally distributed data centers, including one in Shanghai, which
support the processing of our growing base of transactions.
Technology expense increased by $7.2 million, or 27.5%, in first
quarter 2021 year-over-year. The increase was mainly driven by an
increase in technology staff headcount.
First quarter 2021 technology expense continued to scale as a
percentage of Adjusted Revenue, decreasing from 8.7% to 8.2%
year-over-year as Adjusted Revenue growth outpaced growth of our
underlying technology costs.
Depreciation and amortization expense increased by $2.7 million,
or 5.2%, year-over-year from $51.3 million in first quarter 2020 to
$54.0 million in first quarter 2021. Amortization expense increased
principally due to an increase in amortization of our technology
investments, where qualifying technology development costs are
capitalized and amortized over their useful lives. Depreciation
expense primarily increased as a result of new leases entered into
over the past year.
Share based payments increased by $13.8 million or 51.4%
year-over-year in first quarter 2021. The increase was mainly due
to additional grants of equity-settled awards. This is partially
offset by a decrease in employment related taxes and the cost of
cash-settled awards, primarily as a result of the change in share
price and quarterly revaluation.
General and administrative expense increased by $33.2 million,
or 29.8%, year-over-year in first quarter 2021, primarily due to an
increase in non-technology headcount and Digital Platform
operational costs across a number of areas to support longer-term
strategic initiatives. General and administrative expense decreased
as a percentage of Adjusted Revenue to 35.4% compared to 37.0% in
first quarter 2020 as we continued to leverage our operations base
to efficiently grow Adjusted Revenue.
Other items of $4.7 million in first quarter 2021 primarily
reflect transaction-related legal and advisory expenses.
Gains on items held at fair value and remeasurements (in
thousands):
Three months ended March
31,
2020
2021
Remeasurement gains on put and call option
liabilities
$
21,420
$
28,696
Fair value gains on embedded derivative
liabilities
44,014
630,390
Fair value remeasurement of previously
held equity interest
-
784
Gains on items held at fair
value and remeasurements
$
65,434
$
659,870
The $630.4 million fair value gains on embedded derivative
liabilities in first quarter 2021 was primarily driven by the
decrease in our share price during the period. The fair value gains
on embedded derivative liabilities in first quarter 2021 is
comprised of the following revaluation gains on our convertible
senior notes: (i) $214.3 million fair value gain related to $250
million 5.00% notes due 2025 (the “February 2020 Notes”); (ii)
$256.4 million fair value gain related to $400 million 3.75% notes
due 2027; and (iii) $159.6 million fair value gain related to $600
million 0.00% notes due 2030. These notes have provided strong
liquidity to fund ongoing capital needs and invest in various
growth initiatives. The $44.0 million fair value gains on embedded
derivative liabilities in first quarter 2020 was primarily driven
by the decrease in our share price during the period and the fair
value gains on embedded derivative liabilities related to the
February 2020 Notes. The remeasurement gains on put and call option
liabilities in first quarter 2021 related to a $28.7 million
remeasurement gain in connection with Chalhoub Group’s put option
over non-controlling interest in Farfetch International Limited,
compared to a $21.4 million remeasurement gain in first quarter
2020.
Impairment losses on tangible and intangible assets (in
thousands):
Three months ended March
31,
2020
2021
Impairment losses on right-of-use
asset
$
(1,535)
$
-
Impairment losses on property, plant and
equipment
(757)
-
Impairment losses on
tangible assets
$
(2,292)
$
-
There were no impairment losses in first quarter 2021. The first
quarter 2020 impairment charge of $2.3 million related 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.
Profit After Tax
Profit after tax increased by $595.8 million year-over-year to
$516.7 million in first quarter 2021. The increase was primarily
driven by gains on items held at fair value and remeasurements,
which increased $594.4 million year-over-year.
EPS and Diluted EPS
First quarter 2021 diluted EPS was $(0.28) and basic EPS was
$1.44. Diluted EPS assumes a full conversion of the convertible
notes and that the settlement of the Chalhoub liability held on the
statement of financial position at March 31, 2021, would have been
exercised and settled respectively in shares at the beginning of
2021. As such, diluted EPS excludes the gains on items held at fair
value and interest costs related to the Chalhoub liability and the
convertible notes, net of any applicable tax, while including all
outstanding equity instruments that have a dilutive impact.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA improved by $3.1 million, to $(19.2) million in
first quarter 2021 as a result of our growth, improving unit
economics and scaling of the fixed cost base. Adjusted EBITDA
Margin improved from (7.4)% to (4.7)% year-over-year, primarily
reflecting declines in both general and administrative expenses and
in technology expense as percentage of Adjusted Revenue.
Liquidity
At March 31, 2021 cash and cash equivalents were $1,247.6
million, a decrease of $325.8 million compared to $1,573.4 million
at December 31, 2020. The decrease in cash and cash equivalents was
primarily due to the seasonal reversal of working capital benefit
in fourth quarter 2020.
Outlook
The following forward-looking statements reflect Farfetch’s
expectations as of May 13, 2021.
For Full Year 2021:
- Digital Platform GMV of $3.725 billion to $3.865 billion,
representing growth of 35% to 40% year-over-year
- Adjusted EBITDA margin of 1% to 2%
For Second Quarter 2021:
- Digital Platform GMV of $910 million to $945 million,
representing growth of 40% to 45% year-over-year
- Brand Platform GMV of $50 million to $60 million
- Adjusted EBITDA of $(23) million to $(25) million
Uncertainties resulting from the COVID-19 pandemic and the
evolving nature of the situation could have material impacts on our
future performance and projections. Factors involving COVID-19 that
could potentially impact our future performance include, among
others:
- disruptions to our operations, fulfilment network, and
shipments
- weakened consumer sentiment and discretionary income arising
from various macro-economic conditions
- increased costs to support our operations
- slowing e-commerce consumer activity as vaccinations gain
acceptance and populations resume to pre-pandemic activities and
lifestyles
Conference Call Information
Farfetch will host a conference call today, May 13, 2021 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)
2020
2021
Revenue
331,437
485,079
Cost of revenue
(178,061)
(264,210)
Gross profit
153,376
220,869
Selling, general and administrative
expenses
(258,803)
(339,294)
Impairment losses on tangible assets
(2,292)
-
Operating loss
(107,719
)
(118,425)
Gains on items held at fair value and
remeasurements
65,434
659,870
Share of results of associates
(31)
(69)
Finance income
1,241
1,019
Finance costs
(35,596)
(25,679)
(Loss)/profit before tax
(76,671)
516,716
Income tax expense
(2,506)
(49)
(Loss)/profit after tax
(79,177)
516,667
(Loss)/profit after tax attributable
to:
Equity holders of the parent
(82,067)
511,236
Non-controlling interests
2,890
5,431
(79,177)
516,667
(Loss)/profit per share attributable to
equity holders of the parent
Basic
(0.24)
1.44
Diluted
(0.24)
(0.28)
Weighted-average ordinary shares
outstanding
Basic
340,272,047
355,052,843
Diluted
340,272,047
457,887,449
Unaudited interim condensed
consolidated statements of comprehensive income
for the three months ended March
31
(in $ thousands)
2020
2021
(Loss)/profit after tax
(79,177)
516,667
Other comprehensive
income/(loss):
Items that may be subsequently
reclassified to the consolidated
statement of operations or financial
position (net of tax):
Exchange differences gain/(loss) on
translation of foreign operations
12,896
(7,281)
(Loss)/gain on cash flow hedges recognized
in equity
(17,364)
6,273
Loss on cash flow hedges recognized in
equity - time value
-
(1,897)
Less: Loss/(gain) on cash flow hedges
reclassified and reported in net loss
3,159
(2,691)
Items that will not be subsequently
reclassified to the consolidated statement of operations (net of
tax):
Remeasurement loss on severance plan
(3)
-
Other comprehensive loss for the
period, net of tax
(1,312)
(5,596)
Total comprehensive (loss)/income for
the period, net of tax
(80,489)
511,071
Total comprehensive (loss)/income
attributable to:
Equity holders of the parent
(83,379)
508,106
Non-controlling interests
2,890
2,965
(80,489)
511,071
Unaudited interim condensed
consolidated statements of financial position
(in $ thousands)
December 31,
2020
March 31,
2021
Non-current assets
Other receivables
58,081
47,291
Deferred tax assets
13,556
14,315
Intangible assets, net
1,279,328
1,266,843
Property, plant and equipment, net
89,082
87,995
Right-of-use assets
179,227
169,008
Investments
8,278
17,318
Investments in associates
2,319
52
Total non-current assets
1,629,871
1,602,822
Current assets
Inventories
145,309
173,068
Trade and other receivables
209,946
283,766
Current tax assets
2,082
2,141
Derivative financial assets
30,242
26,890
Cash and cash equivalents
1,573,421
1,247,580
Total current assets
1,961,000
1,733,445
Total assets
3,590,871
3,336,267
Liabilities and deficit
Non-current liabilities
Provisions
129,113
104,301
Deferred tax liabilities
182,463
176,517
Lease liabilities
165,275
158,327
Employee benefit obligations
26,116
21,251
Derivative financial liabilities
2,996,220
2,365,830
Borrowings (a)
617,789
633,123
Put and call option liabilities
348,937
320,241
Other financial liabilities
4,853
4,624
Total non-current liabilities
4,470,766
3,784,214
Current liabilities
Trade and other payables
666,144
556,155
Provisions
27,146
21,204
Current tax liability
3,098
9,871
Lease liabilities
26,128
27,240
Employee benefit obligations
38,286
10,057
Derivative financial liabilities
17,427
13,207
Other financial liabilities
518
941
Total current liabilities
778,747
638,675
Total liabilities
5,249,513
4,422,889
Equity/(Deficit)
Share capital
14,168
14,250
Share premium
927,931
927,931
Merger reserve
783,529
783,529
Foreign exchange reserve
(7,271)
(12,086)
Other reserves
447,753
466,956
Accumulated losses (a)
(3,993,308)
(3,441,060)
Deficit attributable to owners of the
parent
(1,827,198)
(1,260,480)
Non-controlling interests
168,556
173,858
Total deficit
(1,658,642)
(1,086,622)
Total deficit and liabilities
3,590,871
3,336,267
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 18
Unaudited interim condensed
consolidated statements of cash flows
for the three months ended March
31
(in $ thousands)
2020
2021
Cash flows from operating
activities
Operating loss
(107,719)
(118,425)
Adjustments to reconcile operating loss to
net cash outflow from operating activities:
Depreciation
9,332
11,158
Amortization
41,991
42,834
Non-cash employee benefits
expense
28,822
44,399
Impairment losses on tangible
assets
2,292
-
Impairment of investments
102
67
Change in working capital
Increase in receivables
(20,527)
(73,179)
Decrease/(increase) in
inventories
23,617
(25,658)
Decrease in payables
(65,013)
(114,166)
Change in other assets and
liabilities
Increase in non-current
receivables
(864)
(213)
Decrease in other
liabilities
(852)
(32,879)
Decrease in provisions
(2,291)
(17,537)
(Decrease)/increase in
derivative financial instruments
(4,248)
2,409
Income taxes paid
(619)
(771)
Net cash outflow from operating
activities
(95,977)
(281,961)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
(12,016)
-
Payments for property, plant and
equipment
(4,376)
(5,379)
Payments for intangible assets
(24,257)
(24,736)
Payments for investments
(1,109)
(9,107)
Interest received
1,264
938
Dividends received from associate
58
-
Net cash outflow from investing
activities
(40,436)
(38,284)
Cash flows from financing
activities
Repayment of the principal elements of
lease payments
(3,459)
(5,630)
Interest paid and fees paid on loans
(10,458)
(5,265)
Dividends paid to holders of
non-controlling interests
(1,369)
-
Proceeds from exercise of employee share
based awards
1,254
13,086
Proceeds from borrowings, net of issue
costs
250,000
-
Net cash inflow from financing
activities
235,968
2,191
Net increase/(decrease) in cash and
cash equivalents
99,555
(318,054)
Cash and cash equivalents at the beginning
of the period
322,429
1,573,421
Effects of exchange rate changes on cash
and cash equivalents
29
(7,787)
Cash and cash equivalents at end of
period
422,013
1,247,580
Unaudited interim condensed
consolidated statements of changes in equity/(deficit)
(in $ thousands)
Share
capital
Share
premium
Merger
reserve
Foreign
exchange reserve
Other
reserves
Accumulated
losses
Equity/ (deficit)
attributable to owners of the
parent
Non- controlling
interests
Total
equity/ (deficit)
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)/income after tax for the period
-
-
-
-
-
(82,067)
(82,067)
2,890
(79,177)
Other comprehensive income/(loss)
-
-
-
12,896
(14,208)
-
(1,312)
-
(1,312)
Total comprehensive income/(loss) for the
period, net of tax
-
-
-
12,896
(14,208)
(82,067)
(83,379)
2,890
(80,489)
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
Balance at January 1, 2021 (a)
14,168
927,931
783,529
(7,271)
447,753
(3,993,308)
(1,827,198)
168,556
(1,658,642)
Changes in deficit
Income after tax for the period
-
-
-
-
-
511,236
511,236
5,431
516,667
Other comprehensive (loss)/income
-
-
-
(4,815)
1,685
-
(3,130)
(2,466)
(5,596)
Total comprehensive (loss)/income for the
period, net of tax
-
-
-
(4,815)
1,685
511,236
508,106
2,965
511,071
Loss on cashflow hedge transferred to
inventory
-
-
-
-
1,209
-
1,209
-
1,209
Issue of share capital, net of transaction
costs
82
-
-
-
-
-
82
-
82
Share based payment – equity settled
-
-
-
-
9,786
41,012
50,798
-
50,798
Share based payment – reverse vesting
shares
-
-
-
-
6,523
-
6,523
-
6,523
Acquisition of non-controlling
interest
-
-
-
-
-
-
-
2,337
2,337
Balance at March 31, 2021
14,250
927,931
783,529
(12,086)
466,956
(3,441,060)
(1,260,480)
173,858
(1,086,622)
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 18
Supplemental Metrics 1
2019
2020
2021
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”)
$
488,475
$
492,014
$
739,937
$
610,874
$
721,310
$
797,840
$
1,056,990
$
915,604
Revenue
209,260
255,481
382,232
331,437
364,680
437,700
540,105
485,079
Adjusted Revenue
180,738
228,227
337,738
301,152
307,877
386,778
464,887
408,851
In-Store Revenue
4,220
9,077
9,788
8,516
3,926
11,416
13,666
10,675
In-Store GMV
4,220
9,077
9,788
8,516
3,926
11,416
13,666
13,275
Gross profit
85,280
115,139
176,136
153,376
159,375
209,029
249,148
220,869
Gross profit margin
40.8%
45.1%
46.1%
46.3%
43.7%
47.8%
46.1%
45.5%
Demand generation expense
$
(34,444)
$
(34,321)
$
(51,162)
$
(37,966)
$
(47,378)
$
(46,185)
$
(67,258)
$
(61,867)
Technology expense
(19,073)
(22,322)
(22,653)
(26,307)
(29,284)
(29,809)
(29,827)
(33,532)
Share based payments
(45,710)
(31,760)
(42,238)
(26,760)
(61,915)
(81,840)
(121,118)
(40,516)
Depreciation and amortization
(14,323)
(35,097)
(50,065)
(51,323)
(51,758)
(54,007)
(60,135)
(53,992)
General and administrative
(69,339)
(94,134)
(120,247)
(111,422)
(107,888)
(143,349)
(141,687)
(144,666)
Other items
1,764
(10,061)
(5,584)
(5,025)
(1,302)
(860)
(17,080)
(4,721)
Impairment losses on tangible assets
-
-
-
(2,292)
-
-
(699)
-
Impairment losses on intangible assets
-
-
-
-
-
-
(36,269)
-
Gains / (losses) on items held at fair
value and remeasurements
-
32,286
(10,565)
65,434
(278,622)
(373,079)
(2,057,306)
659,870
(Loss) / Profit after tax (a)
(95,392)
(90,484)
(110,126)
(79,177)
(435,899)
(536,960)
(2,263,587)
516,667
Adjusted EBITDA
(37,576)
(35,638)
(17,926)
(22,319)
(25,175)
(10,314)
10,376
(19,196)
Adjusted EBITDA Margin
(20.8)%
(15.6)%
(5.3)%
(7.4)%
(8.2)%
(2.7)%
2.2%
(4.7)%
Basic EPS (a)
$
(0.31)
$
(0.30)
$
(0.34)
$
(0.24)
$
(1.29)
$
(1.58)
$
(6.47)
$
1.44
Diluted EPS
(0.31)
(0.30)
(0.34)
(0.24)
(1.29)
(1.58)
(6.47)
(0.28)
Adjusted EPS (a)
(0.16)
(0.20)
(0.08)
(0.24)
(0.20)
(0.17)
(0.00)
(0.22)
Digital Platform:
Digital Platform GMV
$
484,255
$
420,266
$
628,610
$
494,899
$
651,036
$
674,097
$
939,444
$
790,014
Digital Platform Services Revenue
176,518
156,479
226,411
185,177
237,603
263,035
347,341
285,861
Digital Platform Fulfilment Revenue
28,522
27,254
44,494
30,285
56,803
50,922
75,218
76,228
Digital Platform Gross Profit
84,106
83,294
123,572
97,207
130,579
143,318
189,102
156,335
Digital Platform Gross Profit Margin
47.6%
53.2%
54.6%
52.5%
55.0%
54.5%
54.4%
54.7%
Digital Platform Order Contribution
$
49,662
$
48,973
$
72,410
$
59,241
$
83,201
$
97,133
$
121,844
$
94,468
Digital Platform Order Contribution
Margin
28.1%
31.3%
32.0%
32.0%
35.0%
36.9%
35.1%
33.0%
Active Consumers
1,773
1,889
2,068
2,149
2,524
2,742
3,024
3,272
AOV - Marketplace
$
600
$
582
$
636
$
571
$
493
$
574
$
626
$
618
AOV - Stadium Goods
336
327
301
314
304
340
308
326
Brand Platform:
Brand Platform GMV
$
-
$
62,671
$
101,539
$
107,459
$
66,348
$
112,327
$
103,880
$
112,315
Brand Platform Revenue
-
62,671
101,539
107,459
66,348
112,327
103,880
112,315
Brand Platform Gross Profit
-
27,464
47,543
52,480
27,729
58,738
51,857
57,735
Brand Platform Gross Profit Margin
-
43.8%
46.8%
48.8%
41.8%
52.3%
49.9%
51.4%
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 18
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
Luxury New Retail initiative, operations in China and anticipated
future opportunities and business levels, future financial or
operating performance, planned activities and objectives,
anticipated growth resulting therefrom, market opportunities,
strategies and other expectations, strategic initiatives, our
growth and expected performance for the second quarter of 2021 and
full year 2021, statements regarding our expected profitability for
full year 2021, 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; the
effect of the COVID-19 global pandemic on our business and results
of operations; 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; our reliance on a limited number of luxury sellers for
the supply of products on our Marketplace; our reliance on luxury
sellers 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; New Guards’ dependence on its production, inventory
management and fulfilment processes and systems; the operation of
retail stores subjects us to numerous risks, some of which are
beyond our control; our ability to acquire or retain consumers and
to promote and sustain the Farfetch brand; our reliance on highly
complex software, which may contain undetected errors; 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 reliance on information technologies
and our ability to adapt to technological developments; our
reliance on third-party providers to host certain websites and
applications; our ability to successfully utilize our data; our
ability to manage our growth effectively; the increased focus on
social, environmental and sustainability matters could increase our
costs, harm our reputation and adversely affect our financial
results, and our ability to implement our environmental,
sustainability, responsible sourcing, social and inclusion and
diversity goals; 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, 2020, as such factors may be updated from
time to time in our other filings with the SEC, 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.
NOTES AND DISCLOSURES
Revisions to Previously Reported Financial
Information
In connection with the preparation of the Company’s condensed
consolidated financial statements for the quarter ended March 31,
2021, a misstatement was identified in relation to the accounting
for interest expense reported in our results for the year ended
December 31, 2020. This was recorded and reported in the condensed
consolidated statements of operations in the finance cost line
item, which is not included within operating loss and only impacts
the fourth quarter of 2020. As compared to what was previously
reported, the correction decreased the finance cost line item by
$17.4 million and resulted in a $17.4 million decrease in loss
after tax, and a decrease in loss per share of $0.05 for both the
quarterly period and the annual period ended December 31, 2020. The
correction also resulted in a decrease of $17.4 million to the
non-current borrowings line in the statement of financial position
on December 31, 2020. This revision had no impact on gross profit,
operating loss, or Adjusted EBITDA in the periods mentioned, and
had no impact on total assets, total deficit and liabilities, or
total cash flows in the relevant periods. The Company evaluated
these amounts and has concluded that while they are immaterial to
the previously reported consolidated financial statements, they
should be corrected by revising the previously reported financial
information when such amounts are presented for comparative
purposes. The results presented herein have been corrected to
reflect the above.
Presentation Change
Beginning in second quarter 2020, we changed the presentation of
our operating loss to reflect losses on items held at fair value
and remeasurements, and share of results of associates, as
non-operating items in the consolidated statement of operations.
These items are now presented below operating loss, and all prior
periods in this release reflect this change. We have made this
presentation change in order to improve comparability of our
period-over-period operating loss, particularly given the increased
volatility of the items with a valuation dependent on our market
share price. As a result of this presentation change, the
consolidated statement of cash flows starts with operating loss
from second quarter 2020, rather than loss before tax as previously
reported. This change had no impact on our historical loss after
tax or on any of our historical unaudited condensed consolidated
statements of financial position, changes in equity, cash flows or
on our previously provided non-IFRS and operational measures. We
determined that these presentation changes had no material impact
on the previously reported financial information or on any
previously issued annual financial statements.
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 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. See the “Definitions” section below for a
further explanation of these terms.
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 benefit/(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, and Adjusted Revenue 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 the historical non-IFRS measures presented in
this press release to their most directly comparable IFRS measures
are included in the accompanying tables.
The following tables reconcile Adjusted EBITDA and Adjusted
EBITDA Margin to the most directly comparable IFRS financial
performance measure, which are loss after tax and loss after tax
margin, respectively:
(in $ thousands, except as otherwise
noted)
2019
2020
2021
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
(Loss)/Profit after tax (a)
$
(95,392)
$
(90,484)
$
(110,126)
$
(79,177)
$
(435,899)
$
(536,960)
$
(2,263,587)
$
516,667
Net finance (income)/expense (a)
(1,249)
10,689
(16,182)
34,355
20,751
14,363
(2,874)
24,660
Income tax expense/(benefit)
813
(104)
(108)
2,506
(4,118)
2,882
(15,704)
49
Depreciation and amortization
14,323
35,097
50,065
51,323
51,758
54,007
60,135
53,992
Share based payments (b)
45,710
31,760
42,238
26,760
61,915
81,840
121,118
40,516
(Gains)/losses on items held at fair value
and remeasurements (c)
-
(32,286)
10,565
(65,434)
278,622
373,079
2,057,306
(659,870)
Other items (d)
(1,764)
10,061
5,584
5,025
1,302
860
17,080
4,721
Impairment losses on tangible assets
-
-
-
2,292
-
-
699
-
Impairment losses on intangible assets
-
-
-
-
-
-
36,269
-
Share of results of associates
(17)
(371)
38
31
494
(385)
(66)
69
Adjusted EBITDA
$
(37,576)
$
(35,638)
$
(17,926)
$
(22,319)
$
(25,175)
$
(10,314
)
$
10,376
$
(19,196)
Revenue
$
209,260
$
255,481
$
382,232
$
331,437
$
364,680
$
437,700
$
540,105
$
485,079
(Loss)/Profit after tax margin
(a)
(45.6)%
(35.4)%
(28.8)%
(23.9)%
(119.5)%
(122.7)%
(419.1)%
106.5%
Adjusted Revenue
$
180,738
$
228,227
$
337,738
$
301,152
$
307,877
$
386,778
$
464,887
$
408,851
Adjusted EBITDA Margin
(20.8)%
(15.6)%
(5.3)%
(7.4)%
(8.2)%
(2.7)%
2.2%
(4.7)%
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 18.
- Represents share based payment expense.
- Represents (gains)/losses on items held at fair value and
remeasurements. See “gains/(losses) on items held at fair value and
remeasurements” on page 23 for a breakdown of these items.
- Represents other items, which are outside the normal scope of
our ordinary activities. See “other items” on page 23 for a
breakdown of these expenses. Other items is included within
selling, general and administrative expenses.
The following tables reconcile Adjusted Revenue to the most
directly comparable IFRS financial performance measure, which is
revenue:
(in $ thousands, except as otherwise
noted)
2019
2020
2021
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Revenue
$
209,260
$
255,481
$
382,232
$
331,437
$
364,680
$
437,700
$
540,105
$
485,079
Less: Digital Platform Fulfilment
Revenue
(28,522)
(27,254)
(44,494)
(30,285)
(56,803)
(50,922)
(75,218)
(76,228)
Adjusted Revenue
$
180,738
$
228,227
$
337,738
$
301,152
$
307,877
$
386,778
$
464,887
$
408,851
The following tables reconcile Digital Platform Order
Contribution and Digital Platform Order Contribution Margin to the
most directly comparable IFRS financial performance measure, which
are Digital Platform Gross Profit and Digital Platform Gross Profit
Margin, respectively:
(in $ thousands, except as otherwise
noted)
2019
2020
2021
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Digital Platform Gross Profit
$
84,106
$
83,294
$
123,572
$
97,207
$
130,579
$
143,318
$
189,102
$
156,335
Less: Demand generation expense
(34,444)
(34,321)
(51,162)
(37,966)
(47,378)
(46,185)
(67,258)
(61,867)
Digital Platform Order
Contribution
$
49,662
$
48,973
$
72,410
$
59,241
$
83,201
$
97,133
$
121,844
$
94,468
Digital Platform Services Revenue
$
176,518
$
156,479
$
226,411
$
185,177
$
237,603
$
263,035
$
347,341
$
285,861
Digital Platform Gross Profit
Margin
47.6%
53.2%
54.6%
52.5%
55.0%
54.5%
54.4%
54.7%
Digital Platform Order
Contribution Margin
28.1%
31.3%
32.0%
32.0%
35.0%
36.9%
35.1%
33.0%
The following tables reconcile Adjusted EPS to the most directly
comparable IFRS financial performance measure, which is Earnings
per share:
(per share amounts)
2019
2020
2021
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
(Loss)/earnings per share (a)
$
(0.31)
$
(0.30)
$
(0.34)
$
(0.24)
$
(1.29)
$
(1.58)
$
(6.47)
$
1.44
Share based payments (b)
0.15
0.11
0.12
0.08
0.18
0.24
0.35
0.11
Amortization of acquired intangible
assets
0.01
0.06
0.09
0.09
0.09
0.09
0.09
0.08
(Gains)/losses on items held at fair value
and remeasurements (c)
-
(0.10)
0.03
(0.19)
0.82
1.08
5.88
(1.86)
Other items (d)
(0.01)
0.03
0.02
0.01
0.00
0.00
0.05
0.01
Impairment losses on tangible assets
-
-
-
0.01
-
-
-
-
Impairment losses on intangible assets
-
-
-
-
-
-
0.10
0.00
Share of results of associates
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
Adjusted (Loss)/earnings per
share
$
(0.16)
$
(0.20)
$
(0.08)
$
(0.24)
$
(0.20)
$
(0.17)
$
(0.00)
$
(0.22)
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 18.
- Represents share based payment expense on a per share
basis.
- Represents (gains)/losses on items held at fair value and
remeasurements on a per share basis. See “gains/(losses) on items
held at fair value and remeasurements” on page 23 for a breakdown
of these items.
- Represents other items on a per share basis, which are outside
the normal scope of our ordinary activities. See “other items” on
page 23 for a breakdown of these expenses. Other items included
within selling, general and administrative expenses.
The following tables represent gains/(losses) on items held at
fair value and remeasurements:
(in $ thousands, except as otherwise
noted)
2019
2020
2021
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Fair value remeasurements:
Shares issued as part of New Guards
acquisition
$
-
$
(21,526)
$
-
$
-
$
-
$
-
$
-
$
-
$250 million 5.00% Notes due 2025 embedded
derivative
-
-
-
44,014
(135,093)
(138,171)
(749,004)
214,345
$400 million 3.75% Notes due 2027 embedded
derivative
-
-
-
-
(77,758)
(157,108)
(869,078)
256,438
$600 million 0.00% Notes due 2030 embedded
derivative
-
-
-
-
-
-
(272,522)
159,607
FV remeasurement of previously held equity
interest
-
-
-
-
-
-
-
784
Present value remeasurements:
Chalhoub put option
-
53,812
(8,959)
21,420
(65,771)
(77,800)
(165,776)
28,696
CuriosityChina call option
-
-
(1,606)
-
-
-
(926)
-
Gains / (losses) on items
held at fair value and remeasurements
$
—
$
32,286
$
(10,565)
$
65,434
$
(278,622)
$
(373,079)
$
(2,057,306)
$
659,870
Farfetch share price (end of day)
$
20.80
$
8.64
$
10.35
$
7.90
$
17.27
$
25.16
$
63.81
$
53.02
The following tables represent other items:
(in $ thousands, except as otherwise
noted)
2019
2020
2021
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Transaction-related legal and advisory
expenses
$
(2,236)
$
(5,061)
$
(5,584)
$
(4,925)
$
(1,799)
$
(860)
$
(17,014)
$
(4,654)
Release of tax provisions
4,000
-
-
-
-
-
-
-
Loss on impairment of investments carried
at fair value
-
(5,000)
-
(100)
(69)
-
(66)
(67)
Other
-
-
-
-
566
-
-
-
Other items
$
1,764
$
(10,061)
$
(5,584)
$
(5,025)
$
(1,302)
$
(860)
$
(17,080)
$
(4,721)
Definitions
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, Stadium Goods, and New
Guards-owned sites operated by Farfetch Platform Solutions. Due to
technical limitations, Active Consumers is unable to fully de-dupe
Stadium Goods consumers from consumers on our other 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 net income/(loss) after taxes before net
finance expense/(income), income tax expense/(benefit) 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 and remeasurements
through profit and loss, impairment losses on tangible assets, and
impairment losses on intangible 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 and
remeasurements through profit and loss, impairment losses on
tangible assets, and impairment losses on intangible 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. We provide fulfilment services to Marketplace
consumers and receive revenue from the provision of these services,
which is primarily a pass-through cost with no economic benefit to
us. Therefore, we calculate our Digital Platform Gross Profit
Margin, including Digital Platform third-party and first-party
gross profit margin, excluding Digital Platform Fulfilment
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 commissions from third-party sales and
revenue from first-party sales. Digital Platform Services Revenue
was also referred to as Adjusted Platform Revenue or Platform
Services Revenue in previous filings with the SEC.
“Digital Platform Services third-party revenues” represent
commissions and other income generated from the provision of
services to sellers in their transactions with consumers conducted
on our dematerialized platforms, as well as fees for services
provided to brands and retailers.
“Digital Platform Services first-party revenues” represents
sales of owned-product, including First-Party Original through our
digital platform. The revenue realized from first-party sales is
equal to the GMV of such sales because we act as principal in these
transactions and, therefore, related sales are not commission
based.
“Digital Platform Services third-party cost of revenues” and
“Digital Platform Services first-party cost of revenues" include
packaging costs, credit card fees, and incremental shipping costs
provided in relation to the provision of these services. Digital
Platform Services first-party cost of revenues also includes the
cost of goods sold of the owned products.
“First-Party Original” refers to brands developed by New Guards
and sold direct to consumers on the digital platform.
“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. Historically, revenue realized
from In-Store sales was equal to GMV of such sales as third-party
sales made in certain of our directly-operated stores were
accounted for within our Digital Platform segment. Starting in
first quarter of 2021, such sales are accounted for within our
In-Store segment.
“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 and
territories with items from more than 50 countries and over 1,300
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 Browns and Stadium Goods, which offer
luxury products to consumers, and New Guards Group, a platform for
the development of global fashion brands. Farfetch offers its broad
range of consumer-facing channels and enterprise level solutions to
the luxury industry under its Luxury New Retail initiative. The
Luxury New Retail initiative also encompasses Farfetch Platform
Solutions, which services enterprise clients with e-commerce and
technology capabilities, and innovations such as Store of the
Future, its connected retail solution.
For more information, please visit www.farfetchinvestors.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210513005816/en/
Investor Relations Contact:
Alice Ryder VP Investor Relations IR@farfetch.com
Media Contacts: 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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