- Gross Merchandise Value (“GMV”) exceeds $1 billion, up 40%
year-over-year and more than double compared to Q2 2019
- Full-price sales growth of 90% drives Q2 2021 Digital
Platform GMV increases of 40% year-over-year and 89% compared to Q2
2019
- Q2 2021 Revenue increases 43% year-over-year to $523
million
- Q2 2021 Gross Profit Margin improves by 30 bps
year-over-year to 44%; Digital Platform Order Contribution Margin
declines 90 bps year-over-year to 34%
- Q2 2021 Profit After Tax of $88 million includes $246
million non-cash benefit arising from impact of lower share price
on items held at fair value and remeasurements
- Q2 2021 Adjusted EBITDA improves to $(21) million, from
$(25) million in Q2 2020
Farfetch Limited (NYSE: FTCH), the leading global platform for
the luxury fashion industry, today reported financial results for
the second quarter ended June 30, 2021.
José Neves, Farfetch Founder, Chairman and CEO said: “I am truly
impressed with the resilience of the luxury industry, which after
an unprecedented period, is already back to growth with even
stronger fundamentals. I am very proud that Farfetch was a close
partner for both retailers and brands in this time, delivering
strong growth to our sellers, and as a result doubling our GMV in
the last 24 months.
“Our strong performance in second quarter 2021 reflects powerful
flywheel dynamics in play at full force. Our stronger Farfetch
brand is drawing marketing partnerships and even greater supply
from brands to drive a 90% increase in full-price sales
year-over-year from the highly valuable luxury audience we have
attracted. All this boosts our progress towards becoming the global
platform for luxury, as we continue to advance our initiatives in
China, Farfetch Platform Solutions, Farfetch Connected Retail and
our Luxury New Retail vision.”
Elliot Jordan, CFO of Farfetch, said: “I am very pleased with
Farfetch’s results in second quarter 2021. We executed across the
platform to deliver high quality top line growth, significantly
increasing our full-price mix and generating record media solutions
revenue. This in combination with further efficiencies in demand
generation and operating costs resulted in strong Adjusted EBITDA
margin performance, which positions us well to achieve our
full-year Adjusted EBITDA profitability target through the
continued sustainable growth of our platform.”
Consolidated Financial Summary and Key Operating Metrics
(in $ thousands, except per share data, Average Order Value, Active
Consumers or otherwise stated):
Three months ended June
30,
2020
2021
Consolidated Group:
Gross Merchandise Value
(“GMV”)
$
721,310
$
1,007,811
Revenue
364,680
523,313
Adjusted Revenue
307,877
439,488
Gross profit
159,375
230,082
Gross profit margin
43.7%
44.0%
(Loss) / Profit after tax
$
(435,899)
$
87,925
Adjusted EBITDA
(25,175)
(20,579)
Adjusted EBITDA Margin
(8.2)%
(4.7)%
Basic (Loss) / Earnings per
share (“EPS”)
$
(1.29)
$
0.24
Diluted EPS
(1.29)
(0.31)
Adjusted EPS
(0.20)
(0.17)
Digital Platform:
Digital Platform GMV
$
651,036
$
913,350
Digital Platform Services
Revenue
237,603
349,131
Digital Platform Gross
Profit
130,579
184,999
Digital Platform Gross Profit
Margin
55.0%
53.0%
Digital Platform Order
Contribution
$
83,201
$
119,111
Digital Platform Order
Contribution Margin
35.0%
34.1%
Active Consumers
2,524
3,394
Average Order Value (“AOV”) -
Marketplace
$
493
$
599
AOV - Stadium Goods
304
335
Brand Platform:
Brand Platform GMV
$
66,348
$
72,722
Brand Platform Revenue
66,348
72,722
Brand Platform Gross Profit
27,729
34,252
Brand Platform Gross Profit
Margin
41.8%
47.1%
See “Notes and Disclosures” on page 19 for further explanations.
See “Non-IFRS and Other Financial and Operating Metrics” on page 19
for reconciliations of non-IFRS measures to IFRS measures.
Recent Business Highlights
Digital Platform
- Strong Digital Platform GMV growth of 40% year-over-year,
driven by 90% growth of full-price sales and increased mix of
demand from existing customers on the Farfetch Marketplace
- Third-party transactions, including a record level of media
solutions revenue, generated 83% of Digital Platform GMV at a take
rate of 30.3% in second quarter 2021
- First-party transactions grew 64% year-over-year, supported by
First-Party Original which generated 4% of Digital Platform GMV in
second quarter 2021
- The Farfetch Marketplace continued to offer customers an
exceptionally broad selection of luxury fashion with more than
390,000 SKUs from nearly 1,400 sellers, as supply from both
multi-brand retailers and e-concession partners continued to
increase
- Top 10 third-party e-concession partners expanded available
stock units more than 70% year-over-year and saw a more than
doubling of sales over the same period
- Partnered with brands to showcase their products and
collections to our nearly 3.4 million active consumers on the
Marketplace, with campaigns featuring:
- Exclusive immersive 3D shopping experience for the launch of
Burberry’s ‘Olympia’ bag
- Launch of Chopard’s ‘Happy Sport’ collection with interactive
virtual try-on capabilities
- Second installment of year-long ‘Imagined Futures’ partnership
with Gucci titled ‘Fluid Futures’, launching Gucci’s 25 Eschatology
collection
- Continued to roll-out and enhance platform capabilities
available to Farfetch Platform Solutions clients, such as live
chat, improved personalization, and re-purchase capabilities for
pre-owned products, among others
- In August 2021, initiated Farfetch Connected Retail technology
pilot with select retail partners, which will enable omni-channel,
personalized experiences for Farfetch consumers and drive footfall
to retailers' physical locations
- Launched kidswear on Brownsfashion.com in July 2021, offering
collections from luxury brands including Balmain, Fendi, and
Givenchy along with exclusive capsules from newer to kidswear
brands such as Off-White and Palm Angels
New Guards
- Increased ownership position of Palm Angels operating company
to 100%, and interest in the Palm Angels trademark to 60% in July
2021, bringing New Guards majority ownership of its largest growth
contributor
- New Guards’ portfolio continued to create culturally relevant
collections, focusing on full-price sales and direct-to-consumer
channels, which contributed to Off-White and Palm Angels’ positions
within the top 10 brands on the Farfetch Marketplace:
- Off-White released first kidswear collection, launched
‘Lemonade’ Off-White x Air Force 1 sneakers, collaborated with
Pioneer for the release of a limited-edition capsule titled ‘Sound
Engineering’ and presented its Fall-Winter 2021 collection in Paris
in a show titled ‘Laboratory of Fun’
- Palm Angelslaunched first kidswear collection, as well as
capsule collections with Missoni and Vilebrequin
- Ambushreleased the third drop of its sneaker collaboration with
Nike and partnered with Porter & Stanley for a capsule
collection
Environmental, Social and Governance
(“ESG”)
- Partnered with thredUP to expand Farfetch Donate to consumers
in the United States
- Farfetch Marketplace spotlighted Positively Farfetch offerings
throughout June, highlighting the different services available to
our consumers such as Second Life, Farfetch Donate and Farfetch
Fix
- Furthered alignment with shareholder interests through
long-term equity award granted to Company's Founder, Chairman and
CEO, which provides compensation solely in the form of share price
performance-based restricted share units
Second Quarter 2021 Results Summary
Gross Merchandise Value (in thousands):
Three months ended June
30,
2020
2021
Digital Platform GMV
$
651,036
$
913,350
Brand Platform GMV
66,348
72,722
In-Store GMV
3,926
21,739
GMV
$
721,310
$
1,007,811
GMV increased by $286.5 million from $721.3 million in second
quarter 2020 to $1,007.8 million in second quarter 2021,
representing year-over-year growth of 39.7%. Digital Platform GMV
increased by $262.3 million from $651.0 million in second quarter
2020 to $913.4 million in second quarter 2021, representing
year-over-year growth of 40.3%. Excluding the impact of changes in
foreign exchange rates, Digital Platform GMV would have increased
by 33.3%.
The increase in GMV primarily reflects the growth in Digital
Platform GMV driven by order growth and an increase in Marketplace
AOV from $493 to $599. This increase in AOV is due to a higher
full-price mix and higher average selling price as customers
shifted back to higher-priced category items. During second quarter
2021, we also saw year-over-year growth in transactions through
websites managed by Farfetch Platform Solutions, primarily driven
by strong growth within first-party businesses, including
Off---White.com, and BrownsFashion.com.
Revenue (in thousands):
Three months ended June
30,
2020
2021
Digital Platform Services third-party
revenue
$
151,861
$
208,597
Digital Platform Services first-party
revenue
85,742
140,534
Digital Platform Services
Revenue
237,603
349,131
Digital Platform Fulfilment
Revenue
56,803
83,825
Brand Platform Revenue
66,348
72,722
In-Store Revenue
3,926
17,635
Revenue
$
364,680
$
523,313
Revenue increased by $158.6 million year-over-year from $364.7
million in second quarter 2020 to $523.3 million in second quarter
2021, representing growth of 43.5%. The increase was primarily
driven by 47.1% growth in Digital Platform Revenue to $433.0
million with overall growth impacted by comparatively lower Brand
Platform Revenue year-over-year growth of 9.6%.
The increase in Digital Platform Services Revenue of 46.9% was
driven by 40.3% 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, increasing
63.9% year-over-year to $140.5 million. Digital Platform Services
first-party revenue growth was primarily driven by our continued
strategic focus on growing New Guards direct-to-consumer sales on
the Marketplace and the respective websites of the New Guards
portfolio brands, as well as strong full-price performance through
Browns’ sales on the marketplace and Brownsfashion.com.
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 as Digital Platform GMV and order volumes
increase, in second quarter 2021, Digital Platform Fulfilment
Revenue increased 47.6% year-over-year, above Digital Platform GMV
growth of 40.3%. This was driven by increased pass-through costs
resulting from higher duties due to a shift in regional mix of
sales and impacts of Brexit. As we are transitioning our inventory
to our Netherlands warehouse, we could continue to see this impact
in the interim.
In-Store Revenue increased by 349.2% to $17.6 million and was
primarily driven by revenue from additional New Guards portfolio
brand stores opened within the last twelve months, as well as
strong year-over-year growth due to temporary store closures in
second quarter 2020, related to COVID-19 restrictions.
Cost of Revenue (in thousands):
Three months ended June
30,
2020
2021
Digital Platform Services third-party cost
of revenue
$
46,699
$
69,700
Digital Platform Services first-party cost
of revenue
60,325
94,432
Digital Platform Services cost
of revenue
107,024
164,132
Digital Platform Fulfilment
cost of revenue
56,803
83,825
Brand Platform cost of
revenue
38,619
38,470
In-Store cost of goods sold
2,859
6,804
Cost of revenue
$
205,305
$
293,231
Cost of revenue increased by $87.9 million, or 42.8%,
year-over-year from $205.3 million in second quarter 2020 to $293.2
million in second quarter 2021 at a slightly lower rate than
Revenue growth. The increase was driven by growth in Digital
Platform cost of revenue and In-Store cost of goods sold.
Digital Platform Services cost of revenue increased at a higher
rate than Digital Platform Services Revenue primarily due to an
increase in subsidized shipping, for the benefit of customers, a
shift in country mix to higher shipping cost regions and the
recognition of European Digital Services Tax which was previously
included within Selling, general and administrative expenses
through second quarter 2020.
As we continue to rely on third parties to provide shipping
services, 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 June
30,
2020
2021
Digital Platform third-party gross
profit
$
105,162
$
138,897
Digital Platform first-party gross
profit
25,417
46,102
Digital Platform Gross
Profit
130,579
184,999
Brand Platform Gross Profit
27,729
34,252
In-Store Gross Profit
1,067
10,831
Gross profit
$
159,375
$
230,082
Gross profit increased by $70.7 million, or 44.4%,
year-over-year, slightly above Revenue growth, to $230.1 million in
second quarter 2021. Gross profit margin increased 30 bps
year-over-year to 44.0% from 43.7%, due to Digital Platform
Services first-party and In-Store growth.
Digital Platform Gross Profit Margin decreased 200 bps to 53.0%
in second quarter 2021, from 55.0% in second quarter 2020 primarily
driven by Digital Platform Services cost of revenue increasing at a
higher rate than Digital Platform Services Revenue. This decrease
reflects a decrease in Digital Platform third-party gross profit
margin due to an increase in subsidized shipping and a shift in
country mix to higher shipping cost regions, which was partially
offset by an increase in Digital Platform first-party gross profit
margin driven by an increase in the mix of full-price sales, and
more sales in higher profit margin products from New Guards
brands.
Brand Platform Gross Profit Margin increased 530 bps
year-over-year to 47.1% primarily driven by optimizing cost
improvements as well as consultancy income, with minimal related
cost of revenue.
Selling, general and administrative expenses by type (in
thousands):
Three months ended June
30,
2020
2021
Demand generation expense
$
47,378
$
65,888
Technology expense
29,284
34,545
Share-based payments
61,915
60,173
Depreciation and amortization
51,758
62,720
General and administrative
107,888
150,229
Other items
1,302
6,828
Selling, general and
administrative expense
$
299,525
$
380,383
Demand generation expense increased $18.5 million year-over-year
to $65.9 million in second quarter 2021. As a percentage of Digital
Platform Service Revenue, second quarter 2021 demand generation
expense decreased from 19.9% to 18.9%. The improvement reflects our
underlying strategy to gain efficiencies in demand generation spend
by leveraging data insights to drive more targeted digital
marketing, and visits from lower cost channels and from existing
customers.
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 $5.3 million, or 18.0%, in second
quarter 2021 year-over-year. The increase was mainly driven by an
increase in technology staff headcount as well as software and
hosting costs to support growth.
Second quarter 2021 technology expense continued to scale as a
percentage of Adjusted Revenue, decreasing from 9.5% to 7.9%
year-over-year as Adjusted Revenue growth outpaced growth of our
underlying technology costs.
Depreciation and amortization expense increased by $11.0
million, or 21.2%, year-over-year from $51.8 million in second
quarter 2020 to $62.7 million in second quarter 2021. Amortization
expense increased principally due to increased technology
investments, where qualifying technology development costs are
capitalized and amortized over their useful lives. Depreciation
expense primarily increased as a result of new stores and office
leases entered into within the last twelve months.
Share-based payments decreased by $1.7 million or (2.8%)
year-over-year in second quarter 2021 due to the reduced cost of
cash-settled awards and employment related taxes, primarily as a
result of the share price movement and quarterly revaluation,
partially offset by additional grants of equity-settled awards,
including the performance-based restricted share unit (“PSU”) award
granted to the Company’s Founder, Chairman and CEO, José Neves.
Refer to “Notes and Disclosure” on Page 19 for more details.
General and administrative expense increased by $42.3 million,
or 39.2%, year-over-year in second quarter 2021, primarily due to
an increase in costs related to our platform, across a number of
areas to support longer-term strategic initiatives including brand
campaign investments and an increase in non-technology headcount.
General and administrative expense decreased as a percentage of
Adjusted Revenue to 34.2% compared to 35.0% in second quarter 2020
as we continued to leverage our operations base to efficiently grow
Adjusted Revenue.
Other items of $6.8 million in second quarter 2021 primarily
reflect transaction-related legal and advisory expenses.
(Losses)/gains on items held at fair value and remeasurements
(in thousands):
Three months ended June
30,
2020
2021
Remeasurement (losses)/gains on put and
call option liabilities
$
(65,771)
$
38,864
Fair value (losses)/gains on embedded
derivative liabilities
(212,851)
206,874
(Losses)/gains on items held
at fair value and remeasurements
$
(278,622)
$
245,738
The $206.9 million fair value gains on embedded derivative
liabilities in second quarter 2021 was primarily driven by the
decrease in our share price during the period. The fair value gains
on embedded derivative liabilities in second quarter 2021 is
comprised of the following revaluation gains on our convertible
senior notes: (i) $88.4 million fair value gain related to $250
million 5.00% notes due 2025 (the “February 2020 Notes”); (ii)
$69.0 million fair value gain related to $400 million 3.75% notes
due 2027; and (iii) $49.4 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 $212.9 million fair value losses on
embedded derivative liabilities in second quarter 2020 was
primarily driven by the increase in our share price during the
period. The fair value losses on embedded derivatives in second
quarter 2020 comprised a $135.1 million fair value revaluation loss
related to $250 million 5.00% convertible senior notes issued in
February 2020, and a $77.8 million fair value revaluation loss
related to $400 million 3.75% convertible senior notes issued in
April 2020.
The remeasurement gains on put and call option liabilities in
second quarter 2021 related to a $38.9 million remeasurement gain
in connection with Chalhoub Group’s put option over non-controlling
interest in Farfetch International Limited, compared to a $65.8
million remeasurement losses in second quarter 2020.
Profit After Tax
Profit after tax increased by $523.8 million year-over-year from
a loss of $435.9 million to a profit of $87.9 million in second
quarter 2021. The increase was primarily driven by gains on items
held at fair value and remeasurements, which increased $524.4
million year-over-year.
EPS and Diluted EPS
Second quarter 2021 basic EPS was $0.24 and diluted EPS was
$(0.31). Diluted EPS assumes a full conversion of the convertible
notes into shares, and that the settlement of the Chalhoub
liability held on the statement of financial position at June 30,
2021 would have been in shares, with both transactions occurring 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 $4.6 million, to $(20.6) million in
second quarter 2021 as a result of our growth and scaling of the
fixed cost base. Adjusted EBITDA Margin improved from (8.2)% to
(4.7)% year-over-year, primarily reflecting declines in both
general and administrative expenses and in technology expense as
percentage of Adjusted Revenue.
Conversion of 5.00% Convertible Senior Notes due 2025 (“5.00%
Notes”)
In May 2021, Dragoneer elected to convert $39.1 million
aggregate principal amount of 5.00% Notes. We elected to physically
settle the conversion of the notes in shares, resulting in the
issuance of 3.2 million Class A ordinary shares. Refer to “Post
Balance Sheet Events” below on Page 9 for disclosure of additional
conversions of 5.00% Notes.
Liquidity
At June 30, 2021, cash and cash equivalents were $1,048.7
million, a decrease of $524.7 million compared to $1,573.4 million
at December 31, 2020. The decrease in cash and cash equivalents was
primarily related to funding working capital and a $100 million
short-term investment in variable money market instruments.
Post Balance Sheet Events
On July 20, 2021, New Guards completed the acquisition of 60% of
the outstanding equity interests of Palm Angels S.r.l, the owner of
the Palm Angels trademark. Palm Angels is a luxury fashion label
based in Italy that has experienced growth in revenue and
profitability since the acquisition of New Guards by the Company in
2019. In addition, New Guards agreed to a put and call option with
the remaining shareholders of Palm Angels S.r.l, which would
require New Guards to purchase the remaining 40% of outstanding
equity interests of Palm Angels S.r.l in 2026, to the extent either
the put or call option was exercised. In conjunction with this
transaction, New Guards also increased total ownership of Palm
Angels’ operating company to 100% through the acquisition of the
remaining 31% of the outstanding equity interests of Venice
S.r.l.
On August 2, 2021, the Company formally signed an agreement to
enter into a global strategic partnership with Alibaba Group and
Richemont, which was initially announced on November 5, 2020. The
partnership aims to provide luxury fashion brands with enhanced
access to the China market as well as accelerate the digitization
of the global luxury industry. As part of the global partnership,
Alibaba and Richemont invested $500 million ($250 million each) in
Farfetch China, taking a combined 25% stake (12.5% each) in
Farfetch China Holdings Ltd and its subsidiaries, the group through
which Farfetch’s marketplace operations in the China region are
conducted.
On August 6, 2021, Dragoneer elected to convert its remaining
$85.9 million aggregate principal amount of 5.00% Notes. We elected
to physically settle this conversion in shares, resulting in the
issuance of 7 million Class A ordinary shares on August 10,
2021.
Outlook
The following forward-looking statements reflect Farfetch’s
expectations as of August 19, 2021.
For Full Year 2021:
- Digital Platform GMV growth of 35% to 40% year-over-year
- Adjusted EBITDA margin of 1% to 2%
For Third Quarter 2021:
- Digital Platform GMV growth of approximately 30%
year-over-year
- Brand Platform GMV growth of approximately 45%
year-over-year
- Adjusted EBITDA of approximately $10 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 Limited (the “Company” or “Farfetch”) will host a
conference call today, August 19, 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 at least 30 days.
Unaudited interim condensed
consolidated statements of operations
for the three months ended June
30
(in $ thousands, except share and per
share data)
2020
2021
Revenue
364,680
523,313
Cost of revenue
(205,305)
(293,231)
Gross profit
159,375
230,082
Selling, general and administrative
expenses
(299,525)
(380,383)
Operating loss
(140,150)
(150,301)
(Losses)/gains on items held at fair value
and remeasurements
(278,622)
245,738
Share of results of associates
(494)
18
Finance income
2,360
9,906
Finance costs
(23,111)
(20,631)
(Loss)/profit before tax
(440,017)
84,730
Income tax benefit
4,118
3,195
(Loss)/profit after tax
(435,899)
87,925
(Loss)/profit after tax attributable
to:
Equity holders of the parent
(439,639)
86,647
Non-controlling interests
3,740
1,278
(435,899)
87,925
(Loss)/earnings per share attributable
to equity holders of the parent
Basic
(1.29)
0.24
Diluted
(1.29)
(0.31)
Weighted-average shares
outstanding
Basic
341,223,981
358,188,280
Diluted
341,223,981
455,666,358
Unaudited interim condensed
consolidated statements of comprehensive (loss) / income
for the three months ended June
30
(in $ thousands)
2020
2021
(Loss)/profit after tax
(435,899)
87,925
Other comprehensive
income/(loss):
Items that may be subsequently
reclassified to the consolidated
statement of operations or financial
position (net of tax):
Exchange gain on translation of foreign
operations
2,701
1,674
Loss on cash flow hedges recognized in
equity
(3,893)
(7,970)
Loss/(gain) on cash flow hedges
reclassified and reported in net (loss)/profit
10,068
(4,997)
Loss on cash flow hedges recognized in
equity - time value
-
(654)
Other comprehensive income/(loss) for
the period, net of tax
8,876
(11,947)
Total comprehensive (loss)/income for
the period, net of tax
(427,023)
75,978
Total comprehensive (loss)/income
attributable to:
Equity holders of the parent
(430,763)
73,373
Non-controlling interests
3,740
2,605
(427,023)
75,978
Unaudited interim condensed
consolidated statements of operations
for the six months ended June
30
(in $ thousands, except share and per
share data)
2020
2021
Revenue
696,117
1,008,392
Cost of revenue
(383,366)
(557,441)
Gross profit
312,751
450,951
Selling, general and administrative
expenses
(558,328)
(719,677)
Impairment losses on tangible assets
(2,292)
-
Operating loss
(247,869)
(268,726)
(Losses)/gains on items held at fair value
and remeasurements
(213,188)
905,608
Share of results of associates
(524)
(51)
Finance income
3,601
10,924
Finance costs
(58,708)
(46,310)
(Loss)/profit before tax
(516,688)
601,445
Income tax benefit
1,612
3,147
(Loss)/profit after tax
(515,076)
604,592
(Loss)/profit after tax attributable
to:
Equity holders of the parent
(521,706)
597,882
Non-controlling interests
6,630
6,710
(515,076)
604,592
(Loss)/earnings per share attributable
to owners of the company
Basic
(1.53)
1.68
Diluted
(1.53)
(0.59)
Weighted-average shares
outstanding
Basic
340,747,663
356,634,987
Diluted
340,747,663
455,288,968
Unaudited interim condensed
consolidated statements of comprehensive (loss) / income
for the six months ended June
30
(in $ thousands)
2020
2021
(Loss)/profit after tax
(515,076)
604,592
Other comprehensive
income/(loss):
Items that may be subsequently
reclassified to the consolidated
statement of operations or financial
position (net of tax):
Exchange gain/(loss) on translation of
foreign operations
15,597
(5,605)
Loss on cash flow hedges recognized in
equity
(21,095)
(1,697)
Loss/(gain) on cash flow hedges
reclassified and reported in net (loss)/profit
13,227
(7,689)
Loss on cash flow hedges recognized in
equity - time value
-
(2,552)
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 year, net of tax
7,726
(17,543)
Total comprehensive (loss)/income for
the year, net of tax
(507,350)
587,049
Total comprehensive (loss)/income
attributable to:
Equity holders of the parent
(513,980)
581,479
Non-controlling interests
6,630
5,570
(507,350)
587,049
Unaudited interim condensed
consolidated statements of financial position
(in $ thousands)
December 31,
2020
June 30,
2021
Non-current assets
Other receivables
58,081
46,342
Deferred tax assets
13,556
15,263
Intangible assets, net
1,279,328
1,244,758
Property, plant and equipment, net
89,082
92,215
Right-of-use assets
179,227
193,116
Investments
8,278
17,318
Investments in associates
2,319
70
Total non-current assets
1,629,871
1,609,082
Current assets
Inventories
145,309
206,719
Trade and other receivables
209,946
318,009
Current tax assets
2,082
2,468
Short term investments
-
100,075
Derivative financial assets
30,242
19,163
Cash and cash equivalents
1,573,421
1,048,748
Total current assets
1,961,000
1,695,182
Total assets
3,590,871
3,304,264
Liabilities and deficit
Non-current liabilities
Provisions
129,113
103,391
Deferred tax liabilities
182,463
168,901
Lease liabilities
165,275
182,191
Employee benefit obligations
26,116
21,047
Derivative financial liabilities
2,996,220
2,068,388
Borrowings (1)
617,789
612,890
Put and call option liabilities
348,937
276,773
Other financial liabilities
4,853
4,697
Total non-current liabilities
4,470,766
3,438,278
Current liabilities
Trade and other payables
666,144
614,194
Provisions
27,146
23,391
Current tax liability
3,098
4,039
Lease liabilities
26,128
28,375
Employee benefit obligations
38,286
13,331
Derivative financial liabilities
17,427
19,340
Put and call option liabilities
-
9,467
Other financial liabilities
518
537
Total current liabilities
778,747
712,674
Total liabilities
5,249,513
4,150,952
Deficit
Share capital
14,168
14,456
Share premium
927,931
1,046,723
Merger reserve
783,529
783,529
Foreign exchange reserve
(7,271)
(11,736)
Other reserves
447,753
489,103
Accumulated losses (1)
(3,993,308)
(3,329,133)
Deficit attributable to owners of the
parent
(1,827,198)
(1,007,058)
Non-controlling interests
168,556
160,370
Total deficit
(1,658,642)
(846,688)
Total deficit and liabilities
3,590,871
3,304,264
(1) Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 19
Unaudited interim condensed
consolidated statements of cash flows
for the six months ended June
30
(in $ thousands)
2020
2021
Cash flows from operating
activities
Operating loss
(247,869)
(268,726)
Adjustments to reconcile operating loss to
net cash outflow from operating activities:
Depreciation
18,243
23,640
Amortization
84,838
93,072
Non-cash employee benefits
expense
76,175
99,034
Impairment losses on tangible
assets
2,292
-
Impairment of investments
169
67
Change in working capital
Increase in
receivables
(28,184)
(106,026)
Decrease/(increase) in
inventories
11,925
(57,552)
Increase/(decrease) in
payables
39,730
(71,347)
Change in other assets and
liabilities
Increase in non-current
receivables
(517)
(1,562)
Increase/(decrease) in other
liabilities
6,724
(30,146)
Increase/(decrease) in
provisions
14,833
(14,760)
(Decrease)/increase in
derivative financial instruments
(14,581)
6,846
Income taxes paid
(16,016)
(12,733)
Net cash outflow from operating
activities
(52,238)
(340,193)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
(12,016)
-
Payments for property, plant and
equipment
(9,106)
(11,626)
Payments for intangible assets
(43,102)
(52,767)
Payments for investments
(2,872)
(9,107)
Increase in short-term investments
-
(100,000)
Interest received
2,176
1,804
Dividends received from associate
58
-
Net cash outflow from investing
activities
(64,862)
(171,696)
Cash flows from financing
activities
Repayment of the principal elements of
lease payments
(7,926)
(12,475)
Interest paid and fees paid on loans
(17,288)
(17,679)
Dividends paid to holders of
non-controlling interests
(20,515)
(4,275)
Proceeds from exercise of employee
share-based awards
4,472
24,403
Proceeds from borrowings, net of issue
costs
641,861
-
Net cash inflow/(outflow) from
financing activities
600,604
(10,026)
Net increase/(decrease) in cash and
cash equivalents
483,504
(521,915)
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
(3,820)
(2,758)
Cash and cash equivalents at end of
period
802,113
1,048,748
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
-
-
-
-
-
(521,706)
(521,706)
6,630
(515,076)
Other comprehensive income/(loss)
-
-
-
15,597
(7,871)
-
7,726
-
7,726
Total comprehensive income/(loss) for the
period, net of tax
-
-
-
15,597
(7,871)
(521,706)
(513,980)
6,630
(507,350)
Gain on cashflow hedge transferred to
inventory
-
-
-
-
(615)
-
(615)
-
(615)
Issue of share capital, net of transaction
costs
79
-
-
-
-
-
79
-
79
Share-based payment – equity settled
-
-
-
-
29,924
35,236
65,160
-
65,160
Share-based payment – reverse vesting
shares
-
-
-
-
13,046
-
13,046
-
13,046
Dividends paid to non-controlling
interests
-
-
-
-
-
-
-
(20,515)
(20,515)
Balance at June 30, 2020
13,663
878,007
783,529
(15,245)
383,947
(1,312,605)
731,296
156,341
887,637
Balance at January 1, 2021
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
-
-
-
-
-
597,882
597,882
6,710
604,592
Other comprehensive loss
-
-
-
(4,465)
(11,938)
-
(16,403)
(1,140)
(17,543)
Total comprehensive (loss)/income for the
period, net of tax
-
-
-
(4,465)
(11,938)
597,882
581,479
5,570
587,049
Loss on cashflow hedge transferred to
inventory
-
-
-
-
2,023
-
2,023
-
2,023
Issue of share capital, net of transaction
costs
160
-
-
-
-
-
160
-
160
Early conversion of convertible loan
notes
128
118,792
-
-
-
-
118,920
-
118,920
Share-based payment – equity settled
-
-
-
-
43,953
66,293
110,246
-
110,246
Share-based payment – reverse vesting
shares
-
-
-
-
13,046
-
13,046
-
13,046
Acquisition of non-controlling
interest
-
-
-
-
-
-
-
2,434
2,434
Dividends paid to non-controlling
interests
-
-
-
-
-
-
-
(17,063)
(17,063)
Non-controlling interest put option
-
-
-
-
(4,861)
-
(4,861)
-
(4,861)
Other
-
-
-
-
(873)
-
(873)
873
-
Balance at June 30, 2021
14,456
1,046,723
783,529
(11,736)
489,103
(3,329,133)
(1,007,058)
160,370
(846,688)
Supplemental Metrics 1
2019
2020
2021
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
(in $ thousands, except per share
data, Average Order Value, Active Consumers or otherwise
stated)
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
492,014
$
739,937
$
610,874
$
721,310
$
797,840
$
1,056,990
$
915,604
$
1,007,811
Revenue
255,481
382,232
331,437
364,680
437,700
540,105
485,079
523,313
Adjusted Revenue
228,227
337,738
301,152
307,877
386,778
464,887
408,851
439,488
In-Store Revenue
9,077
9,788
8,516
3,926
11,416
13,666
10,675
17,635
In-Store GMV
9,077
9,788
8,516
3,926
11,416
13,666
13,275
21,739
Gross profit
115,139
176,136
153,376
159,375
209,029
249,148
220,869
230,082
Gross profit margin
45.1%
46.1%
46.3%
43.7%
47.8%
46.1%
45.5%
44.0%
Demand generation expense
$
(34,321)
$
(51,162)
$
(37,966)
$
(47,378)
$
(46,185)
$
(67,258)
$
(61,867)
$
(65,888)
Technology expense
(22,322)
(22,653)
(26,307)
(29,284)
(29,809)
(29,827)
(33,532)
(34,545)
Share-based payments
(31,760)
(42,238)
(26,760)
(61,915)
(81,840)
(121,118)
(40,516)
(60,173)
Depreciation and amortization
(35,097)
(50,065)
(51,323)
(51,758)
(54,007)
(60,135)
(53,992)
(62,720)
General and administrative
(94,134)
(120,247)
(111,422)
(107,888)
(143,349)
(141,687)
(144,666)
(150,229)
Other items
(10,061)
(5,584)
(5,025)
(1,302)
(860)
(17,080)
(4,721)
(6,828)
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
245,738
(Loss) / Profit after tax (1)
(90,484)
(110,126)
(79,177)
(435,899)
(536,960)
(2,263,587)
516,667
87,925
Adjusted EBITDA
(35,638)
(17,926)
(22,319)
(25,175)
(10,314)
10,376
(19,196)
(20,579)
Adjusted EBITDA Margin
(15.6)%
(5.3)%
(7.4)%
(8.2)%
(2.7)%
2.2%
(4.7)%
(4.7)%
Basic (Loss)/Earnings per share ("EPS")
(1)
$
(0.30)
$
(0.34)
$
(0.24)
$
(1.29)
$
(1.58)
$
(6.47)
$
1.44
$
0.24
Diluted EPS
(0.30)
(0.34)
(0.24)
(1.29)
(1.58)
(6.47)
(0.28)
(0.31)
Adjusted EPS (1)
(0.20)
(0.08)
(0.24)
(0.20)
(0.17)
(0.00)
(0.22)
(0.17)
Digital Platform:
Digital Platform GMV
$
420,266
$
628,610
$
494,899
$
651,036
$
674,097
$
939,444
$
790,014
$
913,350
Digital Platform Services Revenue
156,479
226,411
185,177
237,603
263,035
347,341
285,861
349,131
Digital Platform Fulfilment Revenue
27,254
44,494
30,285
56,803
50,922
75,218
76,228
83,825
Digital Platform Gross Profit
83,294
123,572
97,207
130,579
143,318
189,102
156,335
184,999
Digital Platform Gross Profit Margin
53.2%
54.6%
52.5%
55.0%
54.5%
54.4%
54.7%
53.0%
Digital Platform Order Contribution
$
48,973
$
72,410
$
59,241
$
83,201
$
97,133
$
121,844
$
94,468
$
119,111
Digital Platform Order Contribution
Margin
31.3%
32.0%
32.0%
35.0%
36.9%
35.1%
33.0%
34.1%
Active Consumers
1,889
2,068
2,149
2,524
2,742
3,024
3,272
3,394
AOV - Marketplace
$
582
$
636
$
571
$
493
$
574
$
626
$
618
$
599
AOV - Stadium Goods
327
301
314
304
340
308
326
335
Brand Platform:
Brand Platform GMV
$
62,671
$
101,539
$
107,459
$
66,348
$
112,327
$
103,880
$
112,315
$
72,722
Brand Platform Revenue
62,671
101,539
107,459
66,348
112,327
103,880
112,315
72,722
Brand Platform Gross Profit
27,464
47,543
52,480
27,729
58,738
51,857
57,735
34,252
Brand Platform Gross Profit Margin
43.8%
46.8%
48.8%
41.8%
52.3%
49.9%
51.4%
47.1%
(1) Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 19
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
Farfetch China, Farfetch Connected Retail, anticipated future
expense recognition in connection with equity-settled awards,
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 third
quarter of 2021 and full year 2021, as well as statements that
include the words “expect,” “intend,” “plan,” “aim,” “enable,”
“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
We have revised previously reported finance cost, loss after
tax, loss per share, and non-current borrowings for both the fourth
quarter and annual periods ended December 31, 2020. The revision
had no impact on the Company’s results for previously reported
second quarter 2020 or the current quarter. Refer to our Form 6-K
furnished with the SEC on May 13, 2021, for further
information.
Performance-based Restricted Share Unit (“PSU”) Award to the
Company’s Founder, Chairman and CEO, José Neves
As previously disclosed, on May 24, 2021, the Board unanimously
approved the recommendation of the Compensation Committee of the
Board to grant a long-term PSU award to the Company’s Founder,
Chairman and CEO, José Neves. On May 28, 2021, the fair value of
this PSU award, which was initially estimated to be $77.0 million,
was finalized and the fair value upon grant was determined to be
$99.0 million, to be recognized in the consolidated statement of
operations from the date of grant to May 19, 2027. Taking into
account of performance-based conditions, where the vesting of each
tranche of units is dependent on the achievement of a certain share
price hurdle within a specified performance period, expense
recognition is front-loaded in the early years of the award,
resulting in expected expenses of $15.1 million, $25.3 million,
$22.0 million, $17.4 million, $11.5 million, $6.5 million and $1.2
million from 2021 to 2027. Refer to the Report of Foreign Private
Issuer on Form 6-K furnished with the SEC on May 28, 2021, for
further information.
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”) issued by the IASB. 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
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
(Loss)/Profit after tax(a)
$
(90,484)
$
(110,126)
$
(79,177)
$
(435,899)
$
(536,960)
$
(2,263,587)
$
516,667
$
87,925
Net finance expense/(income)(a)
10,689
(16,182)
34,355
20,751
14,363
(2,874)
24,660
10,726
Income tax (benefit)/expense
(104)
(108)
2,506
(4,118)
2,882
(15,704)
49
(3,195)
Depreciation and amortization
35,097
50,065
51,323
51,758
54,007
60,135
53,992
62,720
Share-based payments (b)
31,760
42,238
26,760
61,915
81,840
121,118
40,516
60,173
(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)
(245,738)
Other items (d)
10,061
5,584
5,025
1,302
860
17,080
4,721
6,828
Impairment losses on tangible assets
-
-
2,292
-
-
699
-
-
Impairment losses on intangible assets
-
-
-
-
-
36,269
-
-
Share of results of associates
(371)
38
31
494
(385)
(66)
69
(18)
Adjusted EBITDA
$
(35,638)
$
(17,926)
$
(22,319)
$
(25,175)
$
(10,314)
$
10,376
$
(19,196)
$
(20,579)
Revenue
$
255,481
$
382,232
$
331,437
$
364,680
$
437,700
$
540,105
$
485,079
$
523,313
(Loss)/Profit after tax
margin(a)
(35.4)%
(28.8)%
(23.9)%
(119.5)%
(122.7)%
(419.1)%
106.5%
16.8%
Adjusted Revenue
$
228,227
$
337,738
$
301,152
$
307,877
$
386,778
$
464,887
$
408,851
$
439,488
Adjusted EBITDA Margin
(15.6)%
(5.3)%
(7.4)%
(8.2)%
(2.7)%
2.2%
(4.7)%
(4.7)%
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 19.
- 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 24 for a breakdown of these items.
- Represents other items, which are outside the normal scope of
our ordinary activities. See “other items” on page 24 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
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Revenue
$
255,481
$
382,232
$
331,437
$
364,680
$
437,700
$
540,105
$
485,079
$
523,313
Less: Digital Platform Fulfilment
Revenue
(27,254)
(44,494)
(30,285)
(56,803)
(50,922)
(75,218)
(76,228)
(83,825)
Adjusted Revenue
$
228,227
$
337,738
$
301,152
$
307,877
$
386,778
$
464,887
$
408,851
$
439,488
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
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Digital Platform Gross Profit
$
83,294
$
123,572
$
97,207
$
130,579
$
143,318
$
189,102
$
156,335
$
184,999
Less: Demand generation expense
(34,321)
(51,162)
(37,966)
(47,378)
(46,185)
(67,258)
(61,867)
(65,888)
Digital Platform Order
Contribution
$
48,973
$
72,410
$
59,241
$
83,201
$
97,133
$
121,844
$
94,468
$
119,111
Digital Platform Services Revenue
$
156,479
$
226,411
$
185,177
$
237,603
$
263,035
$
347,341
$
285,861
$
349,131
Digital Platform Gross Profit
Margin
53.2%
54.6%
52.5%
55.0%
54.5%
54.4%
54.7%
53.0%
Digital Platform Order
Contribution Margin
31.3%
32.0%
32.0%
35.0%
36.9%
35.1%
33.0%
34.1%
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
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
(Loss)/earnings per share (a)
$
(0.30)
$
(0.34)
$
(0.24)
$
(1.29)
$
(1.58)
$
(6.47)
$
1.44
$
0.24
Share-based payments (b)
0.11
0.12
0.08
0.18
0.24
0.35
0.11
0.17
Amortization of acquired intangible
assets
0.06
0.09
0.09
0.09
0.09
0.09
0.08
0.09
(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)
(0.69)
Other items (d)
0.03
0.02
0.01
0.00
0.00
0.05
0.01
0.02
Impairment losses on tangible assets
-
-
0.01
-
-
-
-
-
Impairment losses on intangible assets
-
-
-
-
-
0.10
0.00
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
$
(0.20)
$
(0.08)
$
(0.24)
$
(0.20)
$
(0.17)
$
(0.00)
$
(0.22)
$
(0.17)
- Refer to “Revisions to Previously Reported Financial
Information” in Notes and Disclosures on page 19.
- 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 24 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 24 for a breakdown of these expenses. “Other items” is
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
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
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
88,393
$400 million 3.75% Notes due 2027 embedded
derivative
-
-
-
(77,758)
(157,108)
(869,078)
256,438
69,047
$600 million 0.00% Notes due 2030 embedded
derivative
-
-
-
-
-
(272,522)
159,607
49,434
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
38,864
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
$
245,738
Farfetch share price (end of day)
$
8.64
$
10.35
$
7.90
$
17.27
$
25.16
$
63.81
$
53.02
$
50.36
The following tables represent other items:
(in $ thousands, except as otherwise
noted)
2019
2020
2021
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Transaction-related legal and advisory
expenses
$
(5,061)
$
(5,584)
$
(4,925)
$
(1,799)
$
(860)
$
(17,014)
$
(4,654)
$
(6,828)
Loss on impairment of investments carried
at fair value
(5,000)
-
(100)
(69)
-
(66)
(67)
-
Other
-
-
-
566
-
-
-
-
Other items
$
(10,061)
$
(5,584)
$
(5,025)
$
(1,302)
$
(860)
$
(17,080)
$
(4,721)
$
(6,828)
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 basic 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 GMV” means GMV excluding In-Store GMV and
Brand Platform GMV.
“Digital Platform Gross Profit” means gross profit excluding
In-Store Gross Profit and Brand Platform Gross Profit.
“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 Margin” means Digital
Platform Order Contribution calculated as a percentage of Digital
Platform Services Revenue.
“Digital Platform Revenue” means the sum of Digital Platform
Services Revenue and Digital Platform Fulfilment Revenue.
“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 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 nearly 1,400
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/20210819005630/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
Farfetch (NYSE:FTCH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Farfetch (NYSE:FTCH)
Historical Stock Chart
From Jul 2023 to Jul 2024