- Digital Platform GMV and Digital Platform Services Revenue
growth accelerate to 7% and 10% year-over-year
- Strong supply growth of over 40% year-over-year on the
Farfetch Marketplace
- Record Active Consumers of 4.1 million, up 7%
year-over-year
- Operating cost base reduced year-over-year, delivering
operating cost leverage
- Progress on strategic initiatives underpins 2023
expectations for strong growth, Adjusted EBITDA profitability and
positive Free Cash Flow
Farfetch Limited (NYSE: FTCH) ("Farfetch" or the "Company"), the
leading global platform for the luxury fashion industry, today
reported financial results for the second quarter ended June 30,
2023.
José Neves, Farfetch Founder, Chairman and CEO, said: “Our Q2
results show Farfetch is growing, becoming more efficient, and
executing on our key strategic priorities. We have also taken
decisive action to adapt to the macro environment of the last 18
months. 2023 is set up to be a great year for Farfetch, toward
strong GMV growth, Adjusted EBITDA profitability and positive free
cash flow. All the while we remain steadfast on delivering our
strategic vision of becoming the global platform for luxury.”
Elliot Jordan, Farfetch Chief Financial Officer said: “I’m
pleased with our second quarter performance, which demonstrates our
progress towards delivering profitable growth and positive free
cash flow in 2023. Our Digital Platform has performed particularly
well, returning to growth while maintaining a stable order
contribution margin. This, coupled with significant savings in the
cost base across all areas of the business, means our digital
platform is more profitable than last year. We enter the second
half well positioned to achieve faster levels of growth, with a
lower cost base and strong liquidity.”
Consolidated Financial Summary and Key Operating Metrics
(in $ thousands, except per share data, Average Order Value, Active
Consumers or as otherwise stated):
Three months ended
June 30,
2022
2023
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
1,020,448
$
1,032,617
Revenue
579,347
572,086
Adjusted Revenue (1)
499,416
481,390
Gross profit
267,670
242,873
Gross profit margin
46.2
%
42.5
%
Profit/(loss) after tax
$
67,670
$
(281,338
)
Adjusted EBITDA (1)
(24,224
)
(30,570
)
Adjusted EBITDA Margin (1)
(4.9
)%
(6.4
)%
Basic Earnings per share (“EPS”)
$
0.18
$
(0.68
)
Diluted EPS
(0.50
)
(0.68
)
Adjusted EPS (1)
(0.21
)
(0.21
)
Digital Platform:
Digital Platform GMV
$
883,130
$
944,298
Digital Platform Services Revenue
356,038
391,264
Digital Platform Gross Profit
187,784
193,059
Digital Platform Gross Profit Margin
52.7
%
49.3
%
Digital Platform Order Contribution
(1)
$
112,759
$
122,169
Digital Platform Order Contribution Margin
(1)
31.7
%
31.2
%
Active Consumers (in thousands)
3,844
4,132
Average Order Value (“AOV”) -
Marketplace
$
596
$
561
AOV - Stadium Goods
313
247
Brand Platform:
Brand Platform GMV
$
107,137
$
63,429
Brand Platform Revenue
116,577
67,383
Brand Platform Gross Profit
61,406
35,389
Brand Platform Gross Profit Margin
52.7
%
52.5
%
(1) 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
- In the second quarter 2023, third-party transactions generated
80% of Digital Platform GMV; Third-Party Take Rate was 31.8%
- First-Party Original generated 5% of Digital Platform GMV in
second quarter 2023
- The Farfetch Marketplace continued to offer customers the most
extensive selection of in-season luxury fashion on a global
platform from over 1,400 sellers, as supply from both multi-brand
retailers and e-concession partners increased over 40%
year-over-year to nearly seventeen million total stock units in
second quarter 2023
- Signed over 30 new e-concession brand partners in first half
2023
- Continued to build on digital capabilities to increase
personalization and drive engagement on the Farfetch Marketplace
- Active consumers grew to 4.1 million, supported by a higher mix
of personalized communications which have demonstrated higher
conversion
- Launched capability allowing consumers to shop in their
preferred language, no matter where they are in the world
- Media Solutions signed new advertisers including Ami Paris,
Zadig&Voltaire, Axel Arigato and Nina Ricci, and featured new
and innovative campaigns during the second quarter such as:
- Karl Lagerfeld Met Capsule Ultima Collection which also
included an exclusive in-person event for an audience of New York
based Private Clients and art and fashion collectors of Chanel,
Fendi and Balmain
- Exclusive launch of the Gucci Mac 80 sneaker which increased
traffic to the Gucci product listing page with unique user uplifts
for Womenswear and Menswear
- Launched installment of Farfetch BEAT, a concept retail series
that introduces exclusive product experiences to an international
audience:
- Browns joined forces with Crenshaw Skate Club to create an
exclusive 20-piece unisex capsule of skate and streetwear
classics
- Farfetch Platform Solutions (FPS) continued to strengthen
partnership with Harrods
- Signed early contract renewal, extending partnership to
2028
- Launched three new e-concessions-as-a-service for Harrods,
adding Chanel-owned Orlebar Brown, Malone Souliers and Han
Kjøbenhavn
New Guards Group
- New Guards’ portfolio continued to create culturally relevant
collections:
- Off-White x Nike dropped Air Force 1 ‘Sheed’, celebrating
former basketball star Rasheed Wallace
- There Was One, a sustainable brand jointly created by New
Guards Group and Farfetch, launched its first-ever partnership, an
exclusive collaboration with Nigerian fashion designer Lisa
Folawiyo
- Palm Angels expanded its global store footprint with a new
boutique in Mykonos, Greece
- Previewed first iteration of Reebok's premium brand in July
2023
ESG
- Released our third annual Conscious Luxury Trends report, which
offers a comprehensive overview of the latest conscious thinking
amongst luxury consumers and the industry including:
- Report highlights rising global demand for Conscious products,
according to Farfetch criteria, and growth opportunities in the
luxury industry
- 10% higher conversion rate for Conscious products on the
Farfetch Marketplace, compared to non-Conscious products
- Searches for Conscious product terms on FARFETCH grew 78%
year-on-year in 2022
Outlook
The following reflects Farfetch’s expectations for Full Year
2023 as of August 17, 2023:
- Group GMV of approximately $4.4 billion, up from $4.1 billion
in 2022
- Digital Platform GMV of approximately $3.85 billion, up from
$3.5 billion in 2022
- Brand Platform GMV of approximately $0.45 billion, broadly flat
compared to 2022
- Revenue of approximately $2.5 billion, up from $2.3 billion in
2022
- Digital Platform Order Contribution Margin of 33% to 35%, up
from 32% in 2022
- Positive Adjusted EBITDA Margin up to 1%, improving from (5)%
in 2022
- Positive Free Cash Flow, improving from negative in 2022
Conference Call Information
Farfetch Limited will host a conference call today, August 17,
2023, at 4:30 p.m. Eastern Time to discuss the Company’s financial
results as well as expectations about Farfetch’s business.
Listeners may access the live conference call and accompanying
slides via live webcast at http://farfetchinvestors.com, where
listeners can also access Farfetch’s earnings press release.
Following the call, a replay of the webcast and slide presentation
will be available at the same website for at least 30 days.
Management's Discussion and Analysis of Results of
Operations
Second Quarter 2023 Results Summary
Gross Merchandise Value (in thousands):
Three months ended June
30,
2022
2023
Digital Platform GMV
$
883,130
$
944,298
Brand Platform GMV
107,137
63,429
In-Store GMV
30,181
24,890
GMV
$
1,020,448
$
1,032,617
GMV increased 1.2% in second quarter 2023 to $1,032.6 million,
compared to $1,020.4 million in second quarter 2022. Excluding the
impact of changes in foreign exchange rates, GMV would have
increased 0.8% year-over-year. Digital Platform GMV increased $61.2
million from $883.1 million in second quarter 2022 to $944.3
million in second quarter 2023, representing a year-over-year
increase of 6.9%. Excluding the impact of changes in foreign
exchange rates, Digital Platform GMV would have increased 6.6%
year-over-year.
Digital Platform GMV performance in second quarter 2023 reflects
a return to growth as the prior year period no longer includes
Russia following the March 2022 stoppage of our operations in the
region. Digital Platform GMV performance also reflects an increase
in Marketplace orders and growth of FPS GMV. These were partially
offset by a decrease in Marketplace AOV from $596 to $561 driven
largely by an increased mix of markdown sales, as well as a
continued decrease in Digital Platform GMV in the U.S. and
China.
Brand Platform GMV decreased 40.8% year-over-year from $107.1
million in second quarter 2022 to $63.4 million in second quarter
2023. Excluding the impact of changes in foreign exchange rates,
Brand Platform GMV would have decreased 41.9% year-over-year. The
decrease was primarily due to the timing of shipments and a decline
in wholesale orders. The decline in second quarter 2023 Brand
Platform GMV also reflects an uplift in second quarter 2022 Brand
Platform GMV from a partial recovery of delayed first quarter 2022
shipments. This decrease was partially offset by Brand Platform GMV
from the European partnership with Reebok, which was commercially
launched in May 2023.
In-Store GMV decreased 17.5% year-over-year from $30.2 million
in second quarter 2022 to $24.9 million in second quarter 2023.
Excluding the impact of changes in foreign exchange rates, In-Store
GMV would have decreased 18.6% year-over-year. The decrease was
primarily driven by lower sales in stores in the U.S., partially
offset by growth in stores in Europe.
Revenue (in thousands):
Three months ended June
30,
2022
2023
Digital Platform Services third-party
revenue
$
203,347
$
216,210
Digital Platform Services first-party
revenue
152,691
175,054
Digital Platform Services Revenue
356,038
391,264
Digital Platform Fulfilment Revenue
79,931
90,696
Brand Platform Revenue
116,577
67,383
In-Store Revenue
26,801
22,743
Revenue
$
579,347
$
572,086
Revenue decreased $7.3 million year-over-year from $579.3
million in second quarter 2022 to $572.1 million in second quarter
2023, representing a year-over-year decrease of 1.3%. This decrease
was primarily driven by a 42.2% decrease in Brand Platform Revenue
to $67.4 million, as well as a 15.1% decrease in In-Store Revenue
to $22.7 million. These decreases were partially offset by an
increase in Digital Platform Revenue of 10.5% to $482.0 million.
Excluding the impact of changes in foreign exchange rates, revenue
would have decreased 2.1% year-over-year.
Digital Platform Services Revenue increased 9.9% year-over-year,
reflecting a 14.6% increase in first-party revenue and a 6.3%
increase in third-party revenue. Digital Platform Services
first-party revenue increased as continued stock clearance activity
drove increased sales of first-party products on the Marketplace.
The increase in Digital Platform Services third-party revenue was
driven by growth in third-party Digital Platform GMV, alongside an
increased Third-Party Take Rate. Excluding the impact of changes in
foreign exchange rates, Digital Platform Services Revenue would
have increased 9.2% year-over-year.
Digital Platform Fulfilment Revenue represents the pass-through
to consumers of delivery and duties charges incurred by our global
logistics solutions, net of any Farfetch-funded consumer
promotions, subsidized shipping and incentives. Digital Platform
Fulfilment Revenue increased 13.5% year-over-year, due to an
increase in duties and a decrease in Farfetch-funded
promotions.
Brand Platform Revenue decreased 42.2% year-over-year primarily
due to the same reasons as Brand Platform GMV. In addition, second
quarter 2022 included a full quarter of net economic benefit from
Reebok, compared to second quarter 2023, where we recognized lower
net economic benefit from Reebok following the commercial launch of
the European partnership in May 2023. Excluding the impact of
changes in foreign exchange rates, Brand Platform Revenue would
have decreased 43.3% year-over-year.
Cost of Revenue (in thousands):
Three months ended June
30,
2022
2023
Digital Platform Services third-party cost
of revenue
$
62,067
$
68,509
Digital Platform Services first-party cost
of revenue
106,187
129,696
Digital Platform Services cost of
revenue
168,254
198,205
Digital Platform Fulfilment cost of
revenue
79,931
90,696
Brand Platform cost of revenue
55,171
31,994
In-Store cost of goods sold
8,321
8,318
Cost of revenue
$
311,677
$
329,213
Cost of revenue increased $17.5 million, or 5.6%, year-over-year
from $311.7 million in second quarter 2022 to $329.2 million in
second quarter 2023, primarily driven by an increase in Digital
Platform Services and Digital Platform Fulfilment costs of revenue,
partially offset by a decrease in Brand Platform cost of
revenue.
Digital Platform Services cost of revenue increased
year-over-year primarily due to growth of Digital Platform Services
first-party revenue in second quarter 2023.
Gross profit (in thousands):
Three months ended June
30,
2022
2023
Digital Platform third-party gross
profit
$
141,280
$
147,701
Digital Platform first-party gross
profit
46,504
45,358
Digital Platform Gross Profit
187,784
193,059
Brand Platform Gross Profit
61,406
35,389
In-Store Gross Profit
18,480
14,425
Gross profit
$
267,670
$
242,873
Gross profit decreased $24.8 million or 9.3%, year-over-year,
from $267.7 million in second quarter 2022 to $242.9 million in
second quarter 2023. Gross Profit Margin decreased 370 bps
year-over-year to 42.5%, driven primarily by the decline in Digital
Platform Gross Profit Margin.
Digital Platform Gross Profit Margin decreased 340 bps to 49.3%
in second quarter 2023, from 52.7% in second quarter 2022. This
decrease was driven by an increased mix of Digital Platform
first-party revenue (which generates a lower margin), driven by
increased sales of first-party products as we continued to
sell-through Browns inventory. Additionally, third-party gross
profit margin decreased as a result of increased duties and
shipping charges as compared to the previous year.
Brand Platform Gross Profit Margin decreased 20 bps
year-over-year to 52.5%, primarily due to a higher mix of lower
margin sales.
Selling, general and administrative expenses (in thousands):
Three months ended June
30,
2022
2023
Demand generation expense
$
75,025
$
70,890
Technology expense
31,120
24,131
Share-based payments
58,069
71,124
Depreciation and amortization
80,557
90,215
General and administrative
185,749
178,422
Other items
4,765
21,626
Selling, general and administrative
expense
$
435,285
$
456,408
Selling, general and administrative expenses increased $21.1
million or 4.9% year-over-year, from $435.3 million in second
quarter 2022 to $456.4 million in second quarter 2023.
Demand generation expense decreased $4.1 million or 5.5%
year-over-year to $70.9 million in second quarter 2023. As a
percentage of Digital Platform Services Revenue, demand generation
expense was 18.1%, compared to 21.1% in second quarter 2022. This
decrease was driven by increased marketing efficiencies achieved by
redistributing spend between territories during second quarter
2023.
Our total investment in technology, of $71.8 million in second
quarter 2023, which includes technology expense and our investments
in longer term development projects which are treated as capital
items, was 14.9% of Adjusted Revenue in second quarter 2023, as
compared to $67.0 million or 13.4% in second quarter 2022,
reflecting our increased investment in capitalized spend, as
detailed below.
Technology expense primarily relates to maintenance and
operations of our platform features and services, as well as
software, hosting and infrastructure expenses, which include three
globally distributed data centers, including one in Shanghai, which
support the processing of our growing base of transactions.
Technology expense decreased $7.0 million in second quarter 2023
year-over-year, or 22.5%, as we continued to lower our internal
spend through cost efficiencies and repositioned external spend
towards longer term capitalizable projects with payback in future
periods, including marketplace initiatives and re-platforming
projects, such as Reebok.
Share-based payments increased $13.1 million or 22.5%
year-over-year in second quarter 2023 primarily as a result of the
impact of a share price increase on employment related taxes and
cash-settled awards during the period, compared to the impact of a
share price decrease during second quarter 2022.
Depreciation and amortization expense increased $9.7 million or
12.0% year-over-year in second quarter 2023. This was principally
due to increased technology investments, where qualifying
technology development costs are capitalized and amortized over
their useful lives.
General and administrative expense decreased $7.3 million or
3.9%, year-over-year in second quarter 2023. This decline was
primarily driven by cost saving initiatives that have been
introduced as we continue to rationalize our fixed costs and drive
efficiencies. At the end of second quarter 2023, we began
implementing further cost saving initiatives, including reductions
in headcount and overheads, and plans to further focus on our core
businesses, which we expect will drive incremental savings
throughout the remainder of 2023.
General and administrative expense decreased as a percentage of
Adjusted Revenue to 37.1% compared to 37.2% in second quarter 2022.
This decrease was primarily driven by the streamlining of our cost
base.
Other items increased $16.9 million, year-over-year in second
quarter 2023. This increase was primarily driven by restructuring
costs incurred as part of the aforementioned cost saving
initiatives.
Gains/(losses) on items held at fair value and remeasurements
(in thousands):
Three months ended June
30,
2022
2023
Remeasurement gains/(losses) on put and
call option liabilities
$
162,894
$
(28,438
)
Fair value gains/(losses) on embedded
derivative liabilities
94,143
(8,456
)
Fair value remeasurement of equity
investment carried at fair value through profit or loss
("FVTPL")
(6,335
)
(106
)
Gain on disposal of investment carried at
FVTPL
1,461
-
Gains/(losses) on items held at fair
value and remeasurements
$
252,163
$
(37,000
)
The $28.4 million of remeasurement losses on put and call option
liabilities in second quarter 2023 are related to a $19.3 million
loss on the put and call option resulting from the November 2020
strategic agreement with Alibaba Group Holding Limited (“Alibaba
Group”) and Compagnie Financiere Richemont SA (“Richemont”), a $2.6
million loss on the put option over the non-controlling interest in
Alanui S.r.l., and a $6.6 million loss on the put and call option
over the 40% of Palm Angels share capital not owned by New
Guards.
The $162.9 million of remeasurement gains on put and call option
liabilities in second quarter 2022 were related to a $123.7 million
gain on the put and call option resulting from the November 2020
strategic agreement with Alibaba Group and Richemont, a $50.5
million gain in connection with the Chalhoub Group’s put option
over the non-controlling interest in Farfetch International
Limited, partially offset by a $6.8 million loss on the put and
call option over the 40% share capital in Palm Angels not owned by
New Guards, and a $4.4 million loss on the put and call option over
the non-controlling interest in Alanui S.r.l.
The $8.5 million of fair value losses on embedded derivative
liabilities in second quarter 2023 related to $6.5 million of fair
value losses related to the $400 million 3.75% notes due in 2027
(the “April 2020 Notes”), and $1.9 million of fair value losses
related to the $600 million 0.00% notes due in 2030 (the “November
2020 Notes”).
The $94.1 million fair value gains on embedded derivative
liabilities in second quarter 2022 related to $20.0 million of fair
value gains related to the $250 million 5.00% notes due in 2025
(the "February 2020 Notes"), $104.4 million of fair value gains
related to the April 2020 Notes and $30.2 million of fair value
losses related to the November 2020 Notes.
Profit/(Loss) After Tax
Profit/(loss) after tax decreased $349.0 million year-over-year
from a $67.7 million profit in second quarter 2022 to a $281.3
million loss in second quarter 2023, primarily driven by
gains/(losses) on items held at fair value and remeasurements,
which decreased $289.2 million year over year.
EPS and Diluted EPS
Second quarter 2023 basic EPS was $(0.68). Diluted EPS was also
$(0.68) as the effect of all potentially dilutive instruments was
antidilutive.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA decreased $6.3 million to a loss of $30.6
million for second quarter 2023, representing a 26.2% decline
compared to second quarter 2022. Adjusted EBITDA Margin decreased
by (150) bps from (4.9)% in second quarter 2022 to (6.4)% in second
quarter 2023, primarily due to the aforementioned decline in Brand
Platform Revenue.
Liquidity and Capital Resources
Liquidity as of June 30, 2023 was composed of cash and cash
equivalents of $453.8 million. During the six months ended June 30,
2023, the Company's cash and cash equivalents decreased $287.2
million compared to a decrease of $788.1 million during the six
months ended June 30, 2022. This decrease in cash outflow was
primarily driven by cost saving initiatives, improved working
capital management and an overall reduction in investing
activity.
We believe that cash flow generated from operations and our
cash, cash equivalents and marketable securities balances, as well
as borrowing arrangements, will be sufficient to meet our
anticipated operating cash needs for at least the next twelve
months. However, any projections of future cash needs and cash
flows are subject to inherent uncertainty. In the ordinary course,
we continually evaluate opportunities to raise additional equity or
debt, obtain credit facilities, enter into leasing arrangements,
enter into financing obligations, repurchase common stock, or
repurchase, refinance or otherwise restructure debt for strategic
reasons or to further strengthen our financial position.
Post Balance Sheet Events
On August 11, 2023, Farfetch US Holdings, Inc., entered into the
Second Amendment to the credit agreement previously entered into on
October 20, 2022 (the "Credit Agreement"), with certain banks and
financial institutions, amongst others, for a $200.0 million
delayed draw term loan facility (the “Term Loan”) which will be
issued with a 5.60% original issue discount and, to the extent
drawn, will be due and payable on October 20, 2027 (unless payable
earlier in accordance with the terms of the Credit Agreement). The
net proceeds to Farfetch will be approximately $180 million after
certain fees.
For further information, refer to the Form 6-K furnished with
the SEC on August 17, 2023, also available at
http://farfetchinvestors.com.
Foreign Exchange Rate Fluctuations
"Constant currency" means translating current period financial
data at the prior period average exchange rates applicable to the
local currency in which the transactions are denominated.
Three months ended
June 30,
Three months ended
June 30,
2022
2023
%
2023 at constant
currency
%
GMV
$
1,020,448
1,032,617
1.2
%
$
1,028,166
0.8
%
Digital Platform GMV
883,130
944,298
6.9
%
941,356
6.6
%
Brand Platform GMV
107,137
63,429
(40.8
%)
62,239
(41.9
%)
In-store GMV
30,181
24,890
(17.5
%)
24,571
(18.6
%)
Revenue
579,347
572,086
(1.3
%)
567,091
(2.1
%)
Adjusted Revenue
499,416
481,390
(3.6
%)
477,410
(4.4
%)
Digital Platform Services Revenue
356,038
391,264
9.9
%
388,850
9.2
%
Brand Platform Revenue
116,577
67,383
(42.2
%)
66,136
(43.3
%)
Our financial information is presented in U.S. dollars, which
differs from the underlying functional currencies of certain of our
subsidiaries (including New Guards whose functional currency is the
euro), exposing us to foreign exchange translation risk on
consolidation. This risk is currently not hedged and therefore our
results of operations have in the past, and will in the future,
fluctuate due to movements in exchange rates when currencies are
translated into U.S. dollars.
At a subsidiary level we are also exposed to transactional
foreign exchange risk because we earn revenues and incur expenses
in a number of different foreign currencies relative to the
relevant subsidiary’s functional currency, mainly the pound
sterling and the euro. Movements in exchange rates therefore impact
our subsidiaries and thus, our consolidated results and cash flows.
We hedge a portion of our core transactional exposures using
forward foreign exchange contracts and foreign exchange option
contracts; however, we are exposed to fluctuations in exchange
rates on the unhedged portion of the exposures.
Unaudited condensed consolidated
statement of operations
For the three and six months ended June
30
(in $ thousands, except share and per
share data)
Three months ended
June 30,
Six months ended
June 30,
2022
2023
2022
2023
Revenue
579,347
572,086
1,094,150
1,128,477
Cost of revenue
(311,677
)
(329,213
)
(595,964
)
(644,972
)
Gross profit
267,670
242,873
498,186
483,505
Selling, general and administrative
expenses
(435,285
)
(456,408
)
(826,676
)
(875,169
)
Impairment losses on tangible assets
-
(14,766
)
-
(14,766
)
Operating loss
(167,615
)
(228,301
)
(328,490
)
(406,430
)
Gains/(losses) on items held at fair value
and remeasurements
252,163
(37,000
)
1,160,423
(43,887
)
Share of results of associates
12
(61
)
30
(5
)
Finance income
2,374
4,475
4,220
21,232
Finance costs
(26,558
)
(40,015
)
(43,964
)
(70,548
)
Profit/(loss) before tax
60,376
(300,902
)
792,219
(499,638
)
Income tax benefit
7,294
19,564
4,203
44,024
Profit/(loss) after tax
67,670
(281,338
)
796,422
(455,614
)
Profit/(loss) after tax attributable
to:
Equity holders of the parent
70,483
(271,866
)
804,809
(443,793
)
Non-controlling interests
(2,813
)
(9,472
)
(8,387
)
(11,821
)
67,670
(281,338
)
796,422
(455,614
)
Earnings/(loss) per share attributable
to equity holders of the parent
Basic
0.18
(0.68
)
2.11
(1.11
)
Diluted
(0.50
)
(0.68
)
(0.77
)
(1.11
)
Weighted-average shares
outstanding
Basic
382,806,025
401,891,362
382,232,170
399,597,359
Diluted
438,030,699
401,891,362
460,821,030
399,597,359
Unaudited condensed consolidated
statement of comprehensive income/(loss)
For the three and six months ended June
30
(in $ thousands)
Three months ended
June 30,
Six months ended
June 30,
2022
2023
2022
2023
Profit/(loss) after tax
67,670
(281,338
)
796,422
(455,614
)
Other comprehensive
(loss)/income:
Items that may be subsequently
reclassified to the consolidated statement of operations (net of
tax):
Exchange (loss)/gain on translation of
foreign operations
(36,291
)
2,936
(33,368
)
9,624
(Loss)/gain on cash flow hedges recognized
in equity
(43,949
)
10,433
(42,842
)
19,249
Loss on cash flow hedges reclassified and
reported in net profit/(loss)
15,549
1,263
21,405
10,241
Hedge discontinuation gains transferred to
statement of operations
-
-
(23,387
)
-
Items that will not be subsequently
reclassified to the consolidated statement of operations (net of
tax):
Remeasurement loss on severance plan
-
(327
)
-
(327
)
Other comprehensive (loss)/income for
the period, net of tax
(64,691
)
14,305
(78,192
)
38,787
Total comprehensive income/(loss) for
the period, net of tax
2,979
(267,033
)
718,230
(416,827
)
Total comprehensive income/(loss)
attributable to:
Equity holders of the parent
5,907
(257,442
)
726,717
(405,019
)
Non-controlling interests
(2,928
)
(9,591
)
(8,487
)
(11,808
)
2,979
(267,033
)
718,230
(416,827
)
Unaudited condensed consolidated
statement of financial position
(in $ thousands)
December 31,
2022
June 30,
2023
Non-current assets
Other receivables
21,204
40,069
Derivative financial assets
-
721
Deferred tax assets
19,566
19,342
Intangible assets
1,547,830
1,503,925
Property, plant and equipment
91,141
92,632
Right-of-use assets
187,640
195,115
Investments
218,977
217,505
Investments in associates
138
276
Total non-current assets
2,086,496
2,069,585
Current assets
Inventories
345,969
436,408
Trade and other receivables
492,565
501,225
Current tax assets
16,193
25,945
Derivative financial assets
472
10,971
Cash and cash equivalents
734,221
453,820
Total current assets
1,589,420
1,428,369
Total assets
3,675,916
3,497,954
Liabilities and equity
Non-current liabilities
Provisions
12,166
15,636
Deferred tax liabilities
127,348
88,596
Lease liabilities
178,247
194,584
Employee benefit obligations
2,930
3,833
Derivative financial liabilities
206,564
206,967
Borrowings
892,700
916,923
Put and call option liabilities
169,218
208,610
Other financial liabilities
298,244
287,358
Total non-current liabilities
1,887,417
1,922,507
Current liabilities
Trade and other payables
740,848
829,662
Provisions
12,053
8,427
Current tax liability
6,075
6,503
Lease liabilities
36,996
41,614
Employee benefit obligations
2,403
2,051
Derivative financial liabilities
22,041
4,934
Put and call option liabilities
26,029
30,194
Other financial liabilities
36,433
45,891
Total current liabilities
882,878
969,276
Total liabilities
2,770,295
2,891,783
Equity
Equity attributable to owners of the
parent
748,214
460,568
Non-controlling interests
157,407
145,603
Total equity
905,621
606,171
Total equity and liabilities
3,675,916
3,497,954
Unaudited condensed consolidated
statement of cash flows
For the six months ended June
30,
(in $ thousands)
2022
2023
Cash flows from operating
activities
Operating loss
(328,490
)
(406,430
)
Adjustments to reconcile operating loss to
net cash outflow from operating activities:
Depreciation
27,355
32,982
Amortization
134,697
144,677
Non-cash employee benefits expense
140,061
116,197
Impairment losses on tangible assets
-
14,766
Impairment of investments
65
580
Change in working capital
Increase in receivables
(89,925
)
(8,234
)
Increase in inventories
(42,509
)
(86,773
)
(Decrease)/increase in payables
(146,388
)
102,350
Change in other assets and
liabilities
Decrease/(increase) in non-current
receivables
12,379
(203
)
Decrease in other liabilities
(45,225
)
(7,522
)
(Decrease)/increase in provisions
(55,061
)
20
Increase/(decrease) in derivative
financial instruments
237
(7,315
)
Income taxes paid
(4,100
)
(2,891
)
Net cash outflow from operating
activities
(396,904
)
(107,796
)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
(69,988
)
-
Payments for property, plant and
equipment
(11,773
)
(12,830
)
Payments for intangible assets
(70,013
)
(89,910
)
Payments for investments
(206,531
)
(567
)
Interest received
3,150
12,209
Proceeds on disposal of investment
1,461
-
Transaction costs paid on investment in
associate
-
(18,369
)
Net cash outflow from investing
activities
(353,694
)
(109,467
)
Cash flows from financing
activities
Repayment of the principal elements of
lease payments
(16,639
)
(20,885
)
Interest paid
(13,483
)
(35,190
)
Dividends paid to holders of
non-controlling interests
(4,391
)
(6,071
)
Acquisition of non-controlling
interests
-
(4,750
)
Settlement of equity-based awards
(4,409
)
(1,040
)
Proceeds from exercise of employee
share-based awards
1,395
-
Repayment of borrowings
-
(2,000
)
Net cash outflow from financing
activities
(37,527
)
(69,936
)
Net decrease in cash and cash
equivalents
(788,125
)
(287,199
)
Cash and cash equivalents at the beginning
of the period
1,363,128
734,221
Effects of exchange rate changes on cash
and cash equivalents
570
6,798
Cash and cash equivalents at end of
period
575,573
453,820
Unaudited condensed consolidated
statement of changes in equity/(deficit)
(in $ thousands)
Share
capital
Share
premium
Merger
reserve
Foreign
exchange
reserve
Other
reserves
Accumulated
losses
Equity
attributable
to owners of
the parent
Non- controlling
interests
Total
equity
Balance at January 1, 2022
15,231
1,641,674
783,529
(24,544)
59,520
(2,386,802)
88,608
182,008
270,616
Changes in equity/(deficit)
Profit/(loss) after tax for the period
-
-
-
-
-
804,809
804,809
(8,387)
796,422
Other comprehensive loss
(33,268)
(44,824)
-
(78,092)
(100)
(78,192)
Total comprehensive (loss)/income for the
period, net of tax
-
-
-
(33,268)
(44,824)
804,809
726,717
(8,487)
718,230
Cashflow hedge transferred to
inventory
-
-
-
-
(686)
-
(686)
-
(686)
Issue of share capital
116
4,135
-
-
-
-
4,251
-
4,251
Share-based payment – equity settled
-
-
-
-
65,948
42,008
107,956
-
107,956
Share-based payment – reverse vesting
shares
14
5,872
-
22,301
-
28,187
-
28,187
Dividends to non-controlling interests
-
-
-
-
-
-
-
(17,764)
(17,764)
Non-controlling interest arising on
purchase of asset
-
-
-
-
-
-
-
5,493
5,493
Other
-
-
-
-
-
(1,453)
(1,453)
1,611
158
Balance at June 30, 2022
15,361
1,651,681
783,529
(57,812)
102,259
(1,541,438)
953,580
162,861
1,116,441
Balance at January 1, 2023
15,793
1,685,809
783,529
(36,557)
172,829
(1,873,189)
748,214
157,407
905,621
Changes in equity/(deficit)
Loss after tax for the period
-
-
-
-
-
(443,793)
(443,793)
(11,821)
(455,614)
Other comprehensive income
-
-
-
9,611
29,163
-
38,774
13
38,787
Total comprehensive income/(loss) for the
period, net of tax
-
-
-
9,611
29,163
(443,793)
(405,019)
(11,808)
(416,827)
Cashflow hedge transferred to
inventory
-
-
-
-
(77)
-
(77)
-
(77)
Issue of share capital
335
4,323
-
-
-
-
4,658
-
4,658
Share-based payment – equity settled
-
-
-
-
29,513
74,090
103,603
-
103,603
Share-based payment – reverse vesting
shares
-
-
-
-
10,119
-
10,119
-
10,119
Dividends to non-controlling interests
-
-
-
-
-
-
-
(6,881)
(6,881)
Purchase of non-controlling interest
-
-
-
-
-
(1,288)
(1,288)
1,288
-
Non-controlling interest arising on
purchase of asset
-
-
-
-
-
-
-
5,597
5,597
Other
-
-
-
-
-
358
358
-
358
Balance at June 30, 2023
16,128
1,690,132
783,529
(26,946)
241,547
(2,243,822)
460,568
145,603
606,171
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. We
intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. 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
expectations in relation to our outlook, our cost rationalization
initiatives, our future performance in mainland China and the
United States, our digital capabilities, new
e-concessions-as-a-service for Harrods, our partnership with
Reebok, the phasing of Brand Platform shipments, future financial
or operating performance, planned activities and objectives,
anticipated growth resulting therefrom, management's short and
long-term objectives, anticipated trends and evolving market
demands for conscious products, strategic initiatives and
partnerships, our growth and expected performance for the fiscal
year ending December 31, 2023, statements regarding our
profitability, the sufficiency of our cash, cash equivalents and
other resources to meet our anticipated operating cash needs for at
least the next twelve months as well as statements that include the
words “expect,” “intend,” “plan,” “aim,” “enable,” “believe,”
“project,” “forecast,” “estimate,” “may,” “should,” “anticipate,”
“might,” “target,” “seek,” “outlook” or the negative of these terms
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: general
economic factors, pandemics, geopolitical events or other
unexpected events may adversely affect our business, financial
performance and results of operations; purchasers of luxury
products may not choose to shop online, which would prevent us from
growing our business; we may be unable to generate sufficient
revenue to be profitable or to generate positive cash flow on a
sustained basis, and our revenue growth rate may decline; we have
experienced losses in the past, and we may experience losses in the
future; luxury sellers set their own prices for the products they
make available on our Marketplaces, which could affect our ability
to respond to consumer preferences and trends; the luxury fashion
industry can be volatile and difficult to predict; we rely on a
limited number of luxury sellers for the supply of products that we
make available to consumers on the Farfetch Marketplace; our
efforts to acquire or retain consumers may not be successful, which
could prevent us from maintaining or increasing our sales; if our
luxury sellers fail to anticipate, identify and respond quickly to
new and changing luxury trends in consumer preferences, our
business could be harmed; our software is highly complex and may
contain undetected errors; our failure or the failure of third
parties to protect our or their sites, networks and systems against
security breaches, or otherwise to protect our or consumers’ and
luxury sellers’ confidential information, could damage our
reputation and brand and substantially harm our business and
operating results; we may not succeed in promoting and sustaining
our brand, which could have an adverse effect on our future growth,
reputation, business and sales; our growth depends in part on the
success of our FPS business; fluctuations in exchange rates may
adversely affect our results of operations; we rely on information
technologies and systems to operate our business and maintain our
competitiveness, and any failure to invest in and adapt to
technological developments and industry trends could harm our
business; any significant disruption in service on our websites or
apps or in our computer systems, some of which are currently hosted
by third-party providers, could damage our reputation and result in
a loss of consumers, which would harm our business and results of
operations; the growth of our business may adversely impact our
ability to successfully utilize our data and impact our sustained
growth; we may not be able to manage our growth or cost
rationalization initiatives effectively, which may adversely affect
our corporate culture; we face significant competition in the
global retail industry and may be unsuccessful in competing against
current and future competitors; we are subject to governmental
regulation and other legal obligations related to privacy, data
protection and information security and if we are unable to comply
with these, we may be subject to governmental enforcement actions,
litigation, fines and penalties or adverse publicity; we rely on
our luxury sellers, suppliers, third-party warehousing providers,
third-party carriers and transportation providers as part of our
fulfilment process, and these third parties may fail to adequately
serve our consumers; our failure to address the operational,
compliance and regulatory risks associated with our payment methods
or practices could damage our reputation and brand and may cause
our business and results of operations to suffer; our New Guards
business is dependent on its production, inventory management and
fulfilment processes and systems, which could adversely affect its
business if not successfully executed; our Chief Executive Officer,
José Neves, 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
and could discourage others from pursuing any change of control
transactions that holders of our Class A ordinary shares may view
as beneficial; our indebtedness could adversely affect our
financial health and competitive position; 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, 2022, 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 information relating to
total investment in technology as a percentage of Adjusted Revenue
to correct for an overstatement of capitalized employee-related
costs. We have revised the information for each of the first,
second and third fiscal quarters for the year ended December 31,
2022. The revision had no impact on the fourth quarter for the year
ended December 31, 2022 or the full fiscal year. It also had no
impact on gross profit, operating loss or Adjusted EBITDA in these
periods and had no impact on total assets, total equity and
liabilities, or total cash flows as of the end of such periods. As
revised, our total investment in technology as a percentage of
Adjusted Revenue was 13.4% for first quarter 2022, 13.4% for second
quarter 2022 and 12.8% for third quarter 2022.
Non-IFRS and Other Financial and Operating Metrics
This release includes certain financial measures not based on
International Financial Reporting Standards ("IFRS"), including
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, Adjusted
Revenue, Digital Platform Order Contribution, Digital Platform
Order Contribution Margin and constant currency information
(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.
Constant currency information should be viewed in addition to,
and not in lieu of or as superior to, the Company’s operating
performance calculated in accordance with IFRS.
Farfetch reports under International Financial Reporting
Standards (“IFRS”) issued by the International Accounting Standards
Board (“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 table reconciles Adjusted EBITDA and Adjusted
EBITDA Margin to the most directly comparable IFRS financial
performance measures, which are profit/(loss) after tax and
profit/(loss) after tax margin, respectively:
(in $ thousands, except as otherwise
noted)
Three months ended June
30,
2022
2023
Profit/(loss) after tax
$
67,670
$
(281,338
)
Net finance expense
24,184
35,540
Income tax benefit
(7,294
)
(19,564
)
Depreciation and amortization
80,557
90,215
Share-based payments (1)
58,069
71,124
(Gains)/losses on items held at fair value
and remeasurements (2)
(252,163
)
37,000
Other items (3)
4,765
21,626
Impairment losses on tangible assets
-
14,766
Share of results of associates
(12
)
61
Adjusted EBITDA
$
(24,224
)
$
(30,570
)
Revenue
$
579,347
$
572,086
Profit/(loss) after tax margin
11.7
%
(49.2
%)
Adjusted Revenue
$
499,416
$
481,390
Adjusted EBITDA Margin
(4.9
%)
(6.4
%)
1. Represents share-based payment
expense.
2. Represents (gains)/losses on items held
at fair value and remeasurements. See “gains/(losses) on items held
at fair value and remeasurements” on page 22 for a breakdown of
these items.
3. 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 table reconciles Adjusted Revenue to the most
directly comparable IFRS financial performance measure, which is
Revenue:
(in $ thousands, except as otherwise
noted)
Three months ended June
30,
2022
2023
Revenue
$
579,347
$
572,086
Less: Digital Platform Fulfilment
Revenue
(79,931
)
(90,696
)
Adjusted Revenue
$
499,416
$
481,390
The following tables reconcile Revenue at constant currency to
the most directly comparable IFRS performance measure, which is
Revenue:
(in $ thousands, except as otherwise
noted)
Three months ended June 30,
2023
Digital Platform
Services
Digital Platform
Fulfilment
Revenue
Brand Platform
In-Store
Total
Revenue
$
391,264
90,696
$
67,383
$
22,743
$
572,086
Foreign exchange impact
(2,414
)
(1,014
)
(1,247
)
(320
)
(4,995
)
Revenue at constant currency
$
388,850
$
89,682
$
66,136
$
22,423
$
567,091
Revenue growth
9.9
%
13.5
%
(42.2
%)
(15.1
%)
(1.3
%)
Foreign exchange impact on revenue
growth
(0.7
%)
(1.3
%)
(1.1
%)
(1.2
%)
(0.8
%)
Revenue growth at constant
currency
9.2
%
12.2
%
(43.3
%)
(16.3
%)
(2.1
%)
The following table reconciles Digital Platform Order
Contribution and Digital Platform Order Contribution Margin to the
most directly comparable IFRS financial performance measures, which
are Digital Platform Gross Profit and Digital Platform Gross Profit
Margin, respectively:
(in $ thousands, except as otherwise
noted)
Three months ended June
30,
2022
2023
Digital Platform Gross Profit
$
187,784
$
193,059
Less: Demand generation expense
(75,025
)
(70,890
)
Digital Platform Order
Contribution
$
112,759
$
122,169
Digital Platform Services Revenue
$
356,038
$
391,264
Digital Platform Gross Profit Margin
52.7
%
49.3
%
Digital Platform Order Contribution
Margin
31.7
%
31.2
%
The following table reconciles Adjusted EPS to the most directly
comparable IFRS financial performance measure, which is Earnings
per share:
(per share amounts)
Three months ended June
30,
2022
2023
Earnings/(loss) per share
$
0.18
$
(0.68
)
Share-based payments (1)
0.15
0.18
Amortization of acquired intangible
assets
0.11
0.11
(Gains)/losses on items held at fair value
and remeasurements (2)
(0.66
)
0.09
Other items (3)
0.01
0.05
Impairment losses on tangible assets
0.00
0.04
Share of results of associates
0.00
0.00
Adjusted loss per share
$
(0.21
)
$
(0.21
)
1. Represents share-based payment expense
on a per share basis.
2. 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 22 for a breakdown of these items.
3. Represents other items on a per share
basis, which are outside the normal scope of our ordinary
activities. See “other items” on page 22 for a breakdown of these
expenses. “Other items” is included within selling, general and
administrative expenses.
The following table represents gains/(losses) on items held at
fair value and remeasurements:
(in $ thousands, except as otherwise
noted)
Three months ended June
30,
2022
2023
Fair value remeasurements:
$250 million 5.00% Notes due 2025 embedded
derivative
$
19,991
$
-
$400 million 3.75% Notes due 2027 embedded
derivative
104,397
(6,513
)
$600 million 0.00% Notes due 2030 embedded
derivative
(30,245
)
(1,943
)
FV remeasurement of minority
investments
(6,335
)
(106
)
Gain on disposal of investment carried at
FVTPL
1,461
-
Present value remeasurements:
Chalhoub put option
50,467
-
Palm Angels put call option and
earn-out
(6,834
)
(6,565
)
Alibaba and Richemont put option
123,663
(19,292
)
Alanui put option
(4,402
)
(2,581
)
Gains/(losses) on items held at fair
value and remeasurements
$
252,163
$
(37,000
)
Farfetch share price (end of day)
$
7.16
$
6.04
The following table represents other items:
(in $ thousands, except as otherwise
noted)
Three months ended June
30,
2022
2023
Transaction-related legal and advisory
expenses
$
(4,765
)
$
(4,700
)
Restructuring
-
(16,926
)
Other items
$
(4,765
)
$
(21,626
)
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 or on third-party websites or
platforms on which we operate. A consumer is deemed to be active if
they made a purchase within the last twelve-month period,
irrespective of cancellations or returns. Active Consumers includes
the Farfetch Marketplace, BrownsFashion.com, Stadium Goods, and the
New Guards owned sites operated by Farfetch Platform Solutions plus
third-party websites or platforms on which we operate, including
Amazon.com and Tmall Luxury Pavilion. Due to limitations in the
data we are provided by certain third-party websites or platforms
on which we operate, a limited number of consumers who transact on
such websites or platforms and on our directly owned and operated
sites and related apps, may be duplicated in the number of Active
Consumers we report. 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 profit/(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 generally equal to GMV as
such sales are not commission based. However, revenue relating to
royalties, commission and other fees arising on commercial
arrangements may be recognized within Brand Platform Revenue and
not Brand Platform GMV.
"Constant currency" means translating current period financial
data at the prior year average exchange rates applicable to the
local currency in which the transactions are denominated.
“Digital Platform Fulfilment Revenue” means revenue from
shipping and customs clearing services that we provide to our
digital consumers, net of centrally 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 third-party GMV represents
transactions on our technology platforms from third-party sellers,
excluding fulfilment. Digital Platform first-party GMV represents
sales of owned-product, including First-Party Original through our
digital platform. The revenue realized from Digital Platform
Services first-party sales, excluding fulfilment, is equal to the
Digital Platform GMV from such sales.
“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 technology 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 first-party revenues represent
sales net of promotional incentives, such as free shipping and
promotional codes, where these incentives are not designated as
Farfetch-funded.
“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.
"Free Cash Flow" is comprised of Adjusted EBITDA, plus change in
working capital less capital expenditure on technology and tangible
assets.
“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. First-party GMV is also net of promotions. GMV does
not represent revenue earned by us, although GMV and revenue are
correlated.
“In-Store Gross Profit” means In-Store Revenue less the direct
cost of goods sold relating to In-Store Revenue.
“In-Store GMV” and “In-Store Revenue” mean revenue generated in
our retail stores, which include Browns, Stadium Goods and New
Guards’ directly operated stores. Revenue realized from In-Store
sales for Browns and New Guards’ directly operated stores is equal
to GMV of such sales because such sales are not commission based.
Revenue realized from In-store sales for Stadium Goods does not
equal GMV of such sales as a certain portion of those sales are
third-party and are commission based.
"Media solutions revenue" is revenue derived from advertising
products and solutions provided to luxury sellers to enable them to
leverage our luxury audience and first-party data in pursuing their
respective marketing opportunities on the Farfetch Marketplace.
“Order Contribution” means gross profit after deducting demand
generation expense, which includes fees that we pay for our various
marketing channels to support the Digital Platform. Order
Contribution provides an indicator of our ability to extract
consumer value from our demand generation expense, including the
costs of retaining existing consumers and our ability to acquire
new consumers.
“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 territories
and over 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 global 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 Future Retail, which
develops innovations such as our Connected Retail solutions.
For more information, please visit www.farfetchinvestors.com. We
use this investor section of our website as a means of disclosing
material, non-public information. Accordingly, investors should
monitor this section of our website, in addition to following our
press releases, SEC filings and public conference calls and
webcasts. Investors may also receive email alerts and other
information about us by enrolling their email address under
“Investor Resources” of our investors page. We have included our
website address in this release solely for informational purposes,
and the information contained on our website is not incorporated by
reference in this release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230817241384/en/
Investor Relations Contact:
Alice Ryder VP Investor Relations IR@farfetch.com
Media Contacts: Susannah
Clark Executive VP, Communications 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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