- Q1 2023 Revenue increases 8% year-over-year (or increases
12% year-over-year at constant currency) to $556.4 million
- Q1 2023 Gross Merchandise Value (“GMV”) increases 0.1%
year-over-year (or increases 4% year-over-year at constant
currency) to $931.7 million
- Q1 2023 Digital Platform GMV decreases 1% year-over-year (or
increases 2% year-over-year at constant currency) to $799.7
million
- Q1 2023 Brand Platform GMV increases 10% year-over-year (or
increases 15% year-over-year at constant currency) to $109.7
million
- Q1 2023 Gross Profit Margin of 43.2% (a decrease of 160 bps
year-over-year) and Digital Platform Order Contribution Margin of
32.4% (a decrease of 30 bps year-over-year)
- Q1 2023 Loss after Tax of $174 million
- Q1 2023 Adjusted EBITDA of $(35) million
Farfetch Limited (NYSE: FTCH) ("Farfetch" or the "Company"), the
leading global platform for the luxury fashion industry, today
reported financial results for the first quarter ended March 31,
2023.
José Neves, Farfetch Founder, Chairman and CEO, said: “I am
delighted to report that Farfetch was back to growth in first
quarter 2023. Our first quarter results represent the first step
towards achieving our plan for 2023, our Year of Execution, and
demonstrate our strong execution in the face of continued macro
headwinds. Our sequential improvement in GMV growth in the US and
China, our two largest markets, as well as in orders across the
Farfetch Marketplace, indicate the strength and resilience of our
core business. This, on top of our recent launches of Ferragamo and
Reebok, with Neiman Marcus Group on track for the second half of
the year, and progress we are making on our profitability and cash
flow initiatives, confirm we remain on track to deliver on our plan
for 2023.
At the same time, we continue to focus on our medium- and
longer-term goals, including our mission to be the leading global
platform for the more than $360 billion luxury industry. We believe
we are uniquely positioned to go after this opportunity, and have
demonstrated a track record of strong growth over the years, having
grown GMV three times as fast as the industry between 2019 and
2022. I am extremely confident in our ability to continue expanding
our reach across this resilient luxury industry, and in our
prospects of delivering sustained profitability and free cash flow
over the coming years.”
Elliot Jordan, Farfetch Chief Financial Officer said: “I am very
pleased with our first quarter 2023 results. We have delivered what
we set out to achieve, with accelerating underlying growth,
disciplined cost control and improved cash flows. We have
successfully navigated through unprecedented macro challenges, and
through continued focused execution, we remain on track to deliver
a year of luxury market-beating growth, a return to profitability
and positive free cash flow.”
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 March
31,
2022
2023
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
930,752
$
931,658
Revenue
514,803
556,391
Adjusted Revenue (1)
435,937
476,188
Gross profit
230,516
240,632
Gross profit margin
44.8
%
43.2
%
Profit/(loss) after tax
$
728,752
$
(174,276
)
Adjusted EBITDA (1)
(35,782
)
(34,741
)
Adjusted EBITDA Margin (1)
(8.2
)%
(7.3
)%
Basic Earnings per share (“EPS”)
$
1.93
$
(0.43
)
Diluted EPS
(0.37
)
(0.43
)
Adjusted EPS (1)
(0.24
)
(0.16
)
Digital Platform:
Digital Platform GMV
$
809,509
$
799,654
Digital Platform Services Revenue
316,780
341,269
Digital Platform Gross Profit
171,905
168,060
Digital Platform Gross Profit Margin
54.3
%
49.2
%
Digital Platform Order Contribution
(1)
$
103,726
$
110,554
Digital Platform Order Contribution Margin
(1)
32.7
%
32.4
%
Active Consumers (in thousands)
3,822
3,992
Average Order Value (“AOV”) -
Marketplace
$
632
$
566
AOV - Stadium Goods
323
257
Brand Platform:
Brand Platform GMV
$
99,739
$
109,685
Brand Platform Revenue
100,492
114,460
Brand Platform Gross Profit
49,116
59,698
Brand Platform Gross Profit Margin
48.9
%
52.2
%
(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
- Third-party transactions generated 78% of Digital Platform GMV
in first quarter 2023 with Third-Party Take Rate of 32.9%
- 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 continued to increase
year-over-year to a record 17 million total stock units in first
quarter 2023
- Continued to deliver on our comprehensive strategic partnership
with Ferragamo
- Farfetch Platform Solutions (FPS) launched Ferragamo’s European
e-commerce channel, representing the initial phase of the brand’s
global replatforming initiative
- Launched an in-store app in Ferragamo flagship stores,
empowering sales associates with a single-view of customers to
deliver a unified shopping experience
- Expanded FPS relationship with Harrods with launch of
www.harrods.cn, a fully localized destination to boost Harrods'
recognition and engagement with Chinese luxury shoppers; also
implemented Harrods’ e-concessions-as-a-service with JW
Anderson
- Continued to build on digital and artificial intelligence (AI)
capabilities to increase personalization and drive engagement on
the Farfetch Marketplace
- Active customers grew to approximately 4 million driven
primarily by higher retention which was supported by an increase in
personalized communications which on average over the last twelve
months to date have demonstrated 90% higher conversion than
broadcast messages for Farfetch
- Rolled out Creative AITM, Allure’s proprietary AI algorithm,
automatically combining the virtual model with the garment, to
improve the quality of imagery on the Marketplace, which is
expected to result in 10% efficiency to overall production costs in
full year 2023
- Media Solutions signed new clients including Brunello
Cucinelli, Stone Island, Giuseppe Zanotti, MOON BOOT, JNBY Design
and Studio Tomboy, and featured new and innovative campaigns such
as:
- Swarovski’s Valentine’s Day edit accompanied by a shoppable
livestream video amplified across web, app, social, and CRM
channels, which was the top performing Farfetch livestream to date
based on views
- Emerging Asian fashion brands JNBY and Studio Tomboy, partnered
with Media Solutions to engage a global audience and boost their
launches on the Farfetch Marketplace
- Launched new #YourChoiceYourFARFETCH brand campaign starring
iconic celebrity, Marcia Cross, highlighting unique fashion choices
offered by the Farfetch Marketplace
New Guards Group
- New Guards’ portfolio continued to focus on direct-to-consumer
channels while creating culturally relevant collections:
- As the Official Style & Culture Creator for AC Milan,
Off-White partnered with AC Milan’s charity foundation Fondazione
Milan to launch a limited edition t-shirt exclusively available on
www.off---white.com, with 100% of proceeds donated to Fondazione
Milan
- Palm Angels teamed up with Barbour to debut three brightly hued
takes on Barbour's classic Bedale wax jacket
- There Was One, a sustainable brand jointly created by New
Guards Group and Farfetch, added activewear and kidswear categories
to its collection
- Palm Angels expanded its global store footprint with its first
boutique in South Korea
- In May 2023, commercially launched European partnership with
Reebok
- Reebok e-commerce sites in Europe replatformed by FPS
- Wholesale operations now engaging with key strategic
accounts
- In May 2023, established NGG++, a division within New Guards
Group to operate the Reebok license and grow the sportswear and
sneaker business across NGG
ESG
- Modes, an Italian boutique partner on the Marketplace and FPS
client, partnered with Luxclusif in launching a trade-in program
for pre-owned bags
First Quarter 2023 Results Summary
Gross Merchandise Value (in thousands):
Three months ended March
31,
2022
2023
Digital Platform GMV
$
809,509
$
799,654
Brand Platform GMV
99,739
109,685
In-Store GMV
21,504
22,319
GMV
$
930,752
$
931,658
GMV increased 0.1% in first quarter 2023 at $931.7 million,
compared to $930.8 million in first quarter 2022. Excluding the
impact of changes in foreign exchange rates, GMV would have
increased 3.6% year-over-year. Digital Platform GMV decreased $9.9
million from $809.5 million in first quarter 2022 to $799.7 million
in first quarter 2023, representing a year-over-year decline of
1.2%. Excluding the impact of changes in foreign exchange rates,
Digital Platform GMV would have increased 1.9% year-over-year.
Digital Platform GMV performance in first quarter 2023 reflects
continuing headwinds from the suspension of trade in Russia, where
trade ceased in March 2022, and mainland China, where demand has
not yet fully recovered following the relaxation of regional
COVID-19 restrictions. These factors were partially offset by
growth in other markets. Digital Platform GMV performance also
reflects a decrease in Marketplace AOV from $632 to $566 driven by
an increased mix of markdown sales, the currency translation impact
of a strengthened US Dollar and a shift in customer demand towards
lower-priced products, partially offset by an increase in the
number of items per order.
Brand Platform GMV increased 10.0% year-over-year from $99.7
million in first quarter 2022 to $109.7 million in first quarter
2023. Excluding the impact of changes in foreign exchange rates,
Brand Platform GMV would have increased 15.4% year-over-year. This
increase was due to a larger portion of the Spring-Summer
collections being shipped in first quarter 2023 than in first
quarter 2022.
In-Store GMV increased 3.8% year-over-year from $21.5 million in
first quarter 2022 to $22.3 million in first quarter 2023.
Excluding the impact of changes in foreign exchange rates, In-Store
GMV would have increased 10.0% year-over-year. The increase was
driven by additional openings of New Guards brands' stores in the
last twelve months, as well as like-for-like growth from existing
stores.
Revenue (in thousands):
Three months ended March
31,
2022
2023
Digital Platform Services third-party
revenue
$
195,139
$
185,326
Digital Platform Services first-party
revenue
121,641
155,943
Digital Platform Services Revenue
316,780
341,269
Digital Platform Fulfilment Revenue
78,866
80,203
Brand Platform Revenue
100,492
114,460
In-Store Revenue
18,665
20,459
Revenue
$
514,803
$
556,391
Revenue increased $41.6 million year-over-year from $514.8
million in first quarter 2022 to $556.4 million in first quarter
2023, representing a year-over-year increase of 8.1%. The increase
was driven by an increase in Digital Platform Revenue of 6.5% to
$421.5 million, a 13.9% increase in Brand Platform Revenue to
$114.5 million, as well as a 9.6% increase in In-Store Revenue to
$20.5 million. Excluding the impact of changes in foreign exchange
rates, revenue would have increased 11.8% year-over-year.
Digital Platform Services Revenue increased 7.7% year-over-year
driven by first-party revenue. Digital Platform Services
first-party revenue increased 28.2% as compared to the previous
year, as continued stock clearance activity drove increased sales
of first-party products on the Marketplace. Digital Platform
Services third-party revenue decreased 5.0% year-over-year driven
by a decline in third-party Digital Platform GMV, partially offset
by an increased third-party Take Rate. Excluding the impact of
changes in foreign exchange rates, Digital Platform Services
Revenue would have increased 11.0% 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 1.7% year-over-year, exceeding the
overall Digital Platform GMV decline of 1.2% due to the growth in
duties and delivery charges, which was greater than the change in
Digital Platform GMV.
Brand Platform Revenue increased 13.9% year-over-year, which is
greater than the increase in Brand Platform GMV due to $4.8 million
net economic benefit from the Reebok partnership that commenced in
March 2022. Excluding the impact of changes in foreign exchange
rates, Brand Platform Revenue would have increased 20.0%
year-over-year.
Cost of Revenue (in thousands):
Three months ended March
31,
2022
2023
Digital Platform Services third-party cost
of revenue
$
56,218
$
60,719
Digital Platform Services first-party cost
of revenue
88,657
112,490
Digital Platform Services cost of
revenue
144,875
173,209
Digital Platform Fulfilment cost of
revenue
78,866
80,203
Brand Platform cost of revenue
51,376
54,762
In-Store cost of goods sold
9,170
7,585
Cost of revenue
$
284,287
$
315,759
Cost of revenue increased $31.5 million, or 11.1%,
year-over-year from $284.3 million in first quarter 2022 to $315.8
million in first quarter 2023, primarily driven by increases in
Digital Platform Services and Brand Platform cost of revenue,
partially offset by a decrease in In-Store cost of goods sold.
Digital Platform Services cost of revenue increased
year-over-year primarily due to strong growth of Digital Platform
Services first-party revenue in first quarter 2023.
Gross profit (in thousands):
Three months ended March
31,
2022
2023
Digital Platform third-party gross
profit
$
138,921
$
124,607
Digital Platform first-party gross
profit
32,984
43,453
Digital Platform Gross Profit
171,905
168,060
Brand Platform Gross Profit
49,116
59,698
In-Store Gross Profit
9,495
12,874
Gross profit
$
230,516
$
240,632
Gross profit increased $10.1 million or 4.4%, year-over-year,
from $230.5 million in first quarter 2022 to $240.6 million in
first quarter 2023. Gross Profit Margin decreased 160 bps
year-over-year to 43.2%, driven by a decline in Digital Platform
Gross Profit Margin, partially offset by increases in Brand
Platform and In-Store Gross Profit Margins.
Digital Platform Gross Profit Margin decreased 510 bps to 49.2%
in first quarter 2023, from 54.3% in first quarter 2022, as Digital
Platform Services costs of revenue increased at a higher rate than
Digital Platform Services revenue. The decrease in Digital Platform
Gross Profit Margin was driven by one-off charges related to duties
and shipping, alongside an increased mix of Digital Platform
first-party revenue (which typically generate a lower margin),
driven by increased sales of first-party products as we continued
sell-through activity of Browns inventory.
Brand Platform Gross Profit Margin increased 330 bps
year-over-year to 52.2%, driven by the inclusion of a full quarter
of net economic benefit from the Reebok partnership, which
commenced in March 2022, in addition to inventory provisioning
related to delayed deliveries in the prior year.
Selling, general and administrative expenses (in thousands):
Three months ended March
31,
2022
2023
Demand generation expense
$
68,179
$
57,506
Technology expense
34,103
29,269
Share-based payments
35,407
49,310
Depreciation and amortization
81,495
87,444
General and administrative
164,016
188,598
Other items
8,191
6,634
Selling, general and administrative
expense
$
391,391
$
418,761
Selling, general and administrative expenses increased $27.4
million or 7.0% year-over-year, from $391.4 million in first
quarter 2022 to $418.8 million in first quarter 2023.
Demand generation expense decreased $10.7 million or 15.7%
year-over-year to $57.5 million in first quarter 2023. As a
percentage of Digital Platform Services Revenue, demand generation
expense was 16.9%, compared to 21.5% in first quarter 2022. This
decrease was driven by increased marketing efficiencies and
continued redistribution of spend between territories during first
quarter 2023.
Our total investment in technology, which includes technology
expense and our investments in longer term development projects
which are treated as capital items, was 14.0% of Adjusted Revenue
in first quarter 2023, as compared to 13.4% in first 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 $4.8 million in first quarter 2023
year-over-year, or 14.2%, as we lowered 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 $13.9 million or 39.3%
year-over-year in first quarter 2023 primarily due to the lower
impact of share price movements on employment-related taxes,
partially offset by a decrease in equity-settled share-based
payment expense due to certain awards fully vesting in 2022.
Depreciation and amortization expense increased $5.9 million or
7.3%, year-over-year from $81.5 million in first quarter 2022 to
$87.4 million in first quarter 2023. This was driven by the
amortization of the $364.1 million intangible asset recognized in
relation to the Reebok partnership which commenced in March
2022.
General and administrative expense increased $24.6 million, or
15.0%, year-over-year in first quarter 2023. This increase was
primarily driven by investments to support the new Reebok business
and a $25.2 million increase in relation to a one-time favourable
gain on our foreign exchange hedges in first quarter 2022, which
were in position to cover our future receipts of Russian rubles.
These were partially offset by underlying cost savings, as we
continue to rationalize our fixed costs and drive efficiencies.
General and administrative expense increased as a percentage of
Adjusted Revenue to 39.6% compared to 37.6% in first quarter 2022.
This increase was primarily driven by the gain on settlement of our
foreign exchange hedges in the previous year.
Gains/(losses) on items held at fair value and remeasurements
(in thousands):
Three months ended March
31,
2022
2023
Remeasurement gains/(losses) on put and
call option liabilities
$
365,941
$
(12,745
)
Fair value gains on embedded derivative
liabilities
542,490
6,888
Fair value remeasurement of equity
investment carried at fair value through profit or loss
("FVTPL")
1,468
(1,030
)
Loss on disposal of investment carried at
FVTPL
(1,639
)
-
Gains/(losses) on items held at fair
value and remeasurements
$
908,260
$
(6,887
)
The $12.7 million of remeasurement losses on put and call option
liabilities in first quarter 2023 are related to a $7.2 million
loss on the put and call option over the 40% of Palm Angels share
capital not owned by New Guards, a $4.2 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”), and a $1.3 million loss on
the put option over the non-controlling interest in Alanui
S.r.l.
The $365.9 million of remeasurement gains on put and call option
liabilities in first quarter 2022 were related to a $271.4 million
gain on the put and call option resulting from the November 2020
strategic agreement with Alibaba Group and Richemont, a $105.8
million gain in connection with the Chalhoub Group’s put option
over the non-controlling interest in Farfetch International
Limited, offset by a $6.1 million loss on the put and call option
over the 40% share capital in Palm Angels not owned by New Guards,
and a $5.1 million loss on the put and call option over the
non-controlling interest in Alanui S.r.l.
The $6.9 million of fair value gains on embedded derivative
liabilities in first quarter 2023 related to $0.3 million of fair
value gains related to the $400 million 3.75% notes due in 2027
(the “April 2020 Notes”), and $6.6 million of fair value gains
related to the $600 million 0.00% notes due in 2030 (the “November
2020 Notes”).
The $542.5 million fair value gains on embedded derivative
liabilities in first quarter 2022 related to $65.5 million of fair
value gains related to the $250 million 5.00% notes due in 2025
(the "February 2020 Notes"), $362.1 million of fair value gains
related to the April 2020 Notes and $115.0 million of fair value
gains related to the November 2020 Notes.
Profit/(Loss) After Tax
Profit/(loss) after tax decreased $903.0 million year-over-year
from a $728.8 million profit in first quarter 2022 to a $174.3
million loss in first quarter 2023, primarily driven by
gains/(losses) on items held at fair value and remeasurements,
which decreased $915.1 million year over year.
EPS and Diluted EPS
First quarter 2023 basic EPS was $(0.43) and diluted EPS was
$(0.43), as the effect of all potentially dilutive instruments was
antidilutive.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA increased by $1.0 million to a loss of $34.7
million, representing a 2.9% improvement compared to first quarter
2022. Adjusted EBITDA Margin improved by 90 bps from (8.2)% in
first quarter 2022 to (7.3)% in first quarter 2023, primarily due
to declines in both demand generation expense and technology
expense as a percentage of Adjusted Revenue.
Liquidity
Liquidity as of March 31, 2023 was composed of cash and cash
equivalents of $485.9 million, compared to $734.2 million at
December 31, 2022. The decrease of $248.3 million was primarily
driven by a net cash outflow from operating activities of $155.7
million, primarily related to seasonal working capital needs of the
Farfetch Marketplace, as well as a net cash outflow from investing
activities primarily relating to investments into capitalizable
longer term development projects.
Additional Disclosure
As separately disclosed, on May 18, 2023, the Board of Directors
and José Neves agreed to surrender one-half of the number of the
Company’s ordinary shares Mr. Neves was eligible to earn under the
long-term performance-based restricted share unit award granted to
him on May 28, 2021 (the “Original Award”). In connection with such
surrender, on May 18, 2023, the Board granted Mr. Neves a
replacement equity award under the 2018 Farfetch Employee Equity
Plan comprised of restricted share units and performance share
units with an aggregate value of approximately $9 million, to be
recognized over the vesting period of the awards.
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 March
31,
Three months ended March
31,
2022
2023
%
2023 at constant
currency
%
GMV
$
930,752
$
931,658
0.1
%
$
963,995
3.6
%
Digital Platform GMV
809,509
799,654
(1.2
%)
825,247
1.9
%
Brand Platform GMV
99,739
109,685
10.0
%
115,101
15.4
%
In-store GMV
21,504
22,319
3.8
%
23,646
10.0
%
Revenue
514,803
556,391
8.1
%
575,774
11.8
%
Adjusted Revenue
435,937
476,188
9.2
%
494,014
13.3
%
Digital Platform Services Revenue
316,780
341,269
7.7
%
351,640
11.0
%
Brand Platform Revenue
100,492
114,460
13.9
%
120,587
20.0
%
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.
Outlook
The following reflects Farfetch’s expectations for Full Year
2023 as of May 18, 2023:
- Group GMV of approximately $4.9 billion
- Digital Platform GMV of approximately $4.2 billion
- Brand Platform GMV of approximately $0.6 billion
- Adjusted EBITDA margin of 1% to 3%
Conference Call Information
Farfetch Limited will host a conference call today, May 18,
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.
Unaudited condensed consolidated
statement of operations
for the three months ended March
31
(in $ thousands, except share and per
share data)
2022
2023
Revenue
514,803
556,391
Cost of revenue
(284,287
)
(315,759
)
Gross profit
230,516
240,632
Selling, general and administrative
expenses
(391,391
)
(418,761
)
Operating loss
(160,875
)
(178,129
)
Gains/(losses) on items held at fair value
and remeasurements
908,260
(6,887
)
Share of results of associates
18
56
Finance income
1,846
16,757
Finance costs
(17,406
)
(30,533
)
Profit/(loss) before tax
731,843
(198,736
)
Income tax (expense)/benefit
(3,091
)
24,460
Profit/(loss) after tax
728,752
(174,276
)
Profit/(loss) after tax attributable
to:
Equity holders of the parent
734,326
(171,927
)
Non-controlling interests
(5,574
)
(2,349
)
728,752
(174,276
)
Earnings/(loss) per share attributable
to equity holders of the parent
Basic
1.93
(0.43
)
Diluted
(0.37
)
(0.43
)
Weighted-average shares
outstanding
Basic
381,341,974
398,492,722
Diluted
466,083,711
398,492,722
Unaudited condensed consolidated
statement of comprehensive income/(loss)
for the three months ended March
31
(in $ thousands)
2022
2023
Profit/(loss) after tax
728,752
(174,276
)
Other comprehensive
(loss)/income:
Items that may be subsequently
reclassified to the consolidated statement of operations (net of
tax):
Exchange gain on translation of foreign
operations
2,923
6,688
Gain on cash flow hedges recognized in
equity
1,107
8,816
Loss on cash flow hedges reclassified and
reported in net profit/(loss)
5,856
8,978
Hedge discontinuation gains transferred to
statement of operations
(23,387
)
-
Other comprehensive (loss)/income for
the period, net of tax
(13,501
)
24,482
Total comprehensive income/(loss) for
the period, net of tax
715,251
(149,794
)
Total comprehensive income/(loss)
attributable to:
Equity holders of the parent
720,810
(147,577
)
Non-controlling interests
(5,559
)
(2,217
)
715,251
(149,794
)
Unaudited condensed consolidated
statement of financial position
(in $ thousands)
December 31, 2022
March 31, 2023
Non-current assets
Other receivables
21,204
39,761
Deferred tax assets
19,566
22,359
Intangible assets
1,547,830
1,528,245
Property, plant and equipment
91,141
94,388
Right-of-use assets
187,640
207,530
Investments
218,977
217,770
Investments in associates
138
194
Total non-current assets
2,086,496
2,110,247
Current assets
Inventories
345,969
350,375
Trade and other receivables
492,565
515,647
Current tax assets
16,193
17,783
Derivative financial assets
472
5,989
Cash and cash equivalents
734,221
485,920
Total current assets
1,589,420
1,375,714
Total assets
3,675,916
3,485,961
Liabilities and equity
Non-current liabilities
Provisions
12,166
14,550
Deferred tax liabilities
127,348
98,060
Lease liabilities
178,247
192,384
Employee benefit obligations
2,930
3,318
Derivative financial liabilities
206,564
200,026
Borrowings
892,700
908,419
Put and call option liabilities
169,218
182,900
Other financial liabilities
298,244
296,266
Total non-current liabilities
1,887,417
1,895,923
Current liabilities
Trade and other payables
740,848
640,550
Provisions
12,053
13,040
Current tax liability
6,075
6,227
Lease liabilities
36,996
42,482
Employee benefit obligations
2,403
2,058
Derivative financial liabilities
22,041
8,628
Put and call option liabilities
26,029
27,623
Other financial liabilities
36,433
45,684
Total current liabilities
882,878
786,292
Total liabilities
2,770,295
2,682,215
Equity
Equity attributable to owners of the
parent
748,214
648,556
Non-controlling interests
157,407
155,190
Total equity
905,621
803,746
Total equity and liabilities
3,675,916
3,485,961
Unaudited condensed consolidated
statement of cash flows
for the three months ended March
31
(in $ thousands)
2022
2023
Cash flows from operating
activities
Operating loss
(160,875
)
(178,129
)
Adjustments to reconcile operating loss to
net cash outflow from operating activities:
Depreciation
13,268
16,567
Amortization
68,227
70,877
Non-cash employee benefits expense
66,226
48,074
Impairment of investments
65
-
Change in working capital
Increase in receivables
(45,536
)
(17,593
)
(Increase)/decrease in inventories
(43,720
)
1,229
Decrease in payables
(167,150
)
(89,088
)
Change in other assets and
liabilities
Increase in non-current receivables
(439
)
(2,749
)
(Decrease)/increase in other
liabilities
(40,448
)
7,449
Decrease in provisions
(26,171
)
(2,714
)
Increase/(decrease) in derivative
financial instruments
45
(8,873
)
Income taxes paid
(213
)
(728
)
Net cash outflow from operating
activities
(336,721
)
(155,678
)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
(45,471
)
-
Payments for property, plant and
equipment
(4,892
)
(6,974
)
Payments for intangible assets
(25,649
)
(40,014
)
Interest received
1,140
7,321
Transaction costs paid relating to
investment in associate
-
(15,182
)
Net cash outflow from investing
activities
(74,872
)
(54,849
)
Cash flows from financing
activities
Repayment of the principal elements of
lease payments
(8,096
)
(11,039
)
Interest paid
(2,918
)
(13,528
)
Acquisition of non-controlling
interests
-
(4,750
)
Settlement of equity-based awards
(4,409
)
-
Proceeds from exercise of employee
share-based awards
949
-
Repayment of borrowings
-
(1,000
)
Net cash outflow from financing
activities
(14,474
)
(30,317
)
Net decrease in cash and cash
equivalents
(426,067
)
(240,844
)
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
908
(7,457
)
Cash and cash equivalents at end of
period
937,969
485,920
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
-
-
-
-
-
734,326
734,326
(5,574
)
728,752
Other comprehensive income/(loss)
-
-
-
2,908
(16,424
)
-
(13,516
)
15
(13,501
)
Total comprehensive income/(loss) for the
period, net of tax
-
-
-
2,908
(16,424
)
734,326
720,810
(5,559
)
715,251
Cashflow hedge transferred to
inventory
-
-
-
-
(473
)
-
(473
)
-
(473
)
Issue of share capital
59
-
-
-
-
-
59
-
59
Share-based payment – equity settled
-
-
-
-
18,830
27,977
46,807
-
46,807
Share-based payment – reverse vesting
shares
2
918
-
-
15,414
-
16,334
-
16,334
Other
-
-
-
-
-
(1,452
)
(1,452
)
1,452
-
Balance at March 31, 2022
15,292
1,642,592
783,529
(21,636
)
76,867
(1,625,951
)
870,693
177,901
1,048,594
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
-
-
-
-
-
(171,927
)
(171,927
)
(2,349
)
(174,276
)
Other comprehensive income
-
-
-
6,556
17,794
-
24,350
132
24,482
Total comprehensive income/(loss) for the
period, net of tax
-
-
-
6,556
17,794
(171,927
)
(147,577
)
(2,217
)
(149,794
)
Cashflow hedge transferred to
inventory
-
-
-
-
124
-
124
-
124
Issue of share capital
263
-
-
-
-
-
263
-
263
Share-based payment – equity settled
-
-
-
-
(18,870
)
61,697
42,827
-
42,827
Share-based payment – reverse vesting
shares
-
-
-
-
5,063
-
5,063
-
5,063
Other
-
-
-
-
-
(358
)
(358
)
-
(358
)
Balance at March 31, 2023
16,056
1,685,809
783,529
(30,001
)
176,940
(1,983,777
)
648,556
155,190
803,746
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 the suspension of trade in Russia, the
impact of regional COVID-19 restrictions in mainland China, actions
we are taking to streamline our cost base, our strategic
partnership with Ferragamo, the impact of our digital and
artificial intelligence capabilities and expected reduction in
production costs, our relationship with Harrods, our partnership
with Reebok, Off-White's collaboration with Fondazione Milan,
future financial or operating performance, planned activities and
objectives, anticipated growth resulting therefrom, strategic
initiatives and partnerships, our growth and expected performance
for the fiscal year ending December 31, 2023, statements regarding
our profitability, as well as statements that include the words
“expect,” “intend,” “plan,” “aim,” “enable,” “believe,” “project,”
“forecast,” “estimate,” “may,” “should,” “anticipate,” “might,”
“target,” “seek” 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 March
31,
2022
2023
Profit/(loss) after tax
$
728,752
$
(174,276
)
Net finance expense
15,560
13,776
Income tax expense/(benefit)
3,091
(24,460
)
Depreciation and amortization
81,495
87,444
Share-based payments (1)
35,407
49,310
(Gains)/losses on items held at fair value
and remeasurements (2)
(908,260
)
6,887
Other items (3)
8,191
6,634
Share of results of associates
(18
)
(56
)
Adjusted EBITDA
$
(35,782
)
$
(34,741
)
Revenue
$
514,803
$
556,391
Profit/(loss) after tax margin
141.6
%
(31.3
%)
Adjusted Revenue
$
435,937
$
476,188
Adjusted EBITDA Margin
(8.2
%)
(7.3
%)
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 March
31,
2022
2023
Revenue
$
514,803
$
556,391
Less: Digital Platform Fulfilment
Revenue
(78,866
)
(80,203
)
Adjusted Revenue
$
435,937
$
476,188
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 March 31,
2023
Digital Platform
Services
Digital Platform Fulfilment
Revenue
Brand Platform
In-Store
Total
Revenue
$
341,269
80,203
$
114,460
$
20,459
$
556,391
Foreign exchange impact
10,371
1,558
6,127
1,328
19,384
Revenue at constant currency
$
351,640
$
81,761
$
120,587
$
21,787
$
575,775
Revenue growth
7.7
%
1.7
%
13.9
%
9.6
%
8.1
%
Foreign exchange impact on revenue
growth
3.3
%
2.0
%
6.1
%
7.1
%
3.7
%
Revenue growth at constant
currency
11.0
%
3.7
%
20.0
%
16.7
%
11.8
%
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 March
31,
2022
2023
Digital Platform Gross Profit
$
171,905
$
168,060
Less: Demand generation expense
(68,179
)
(57,506
)
Digital Platform Order
Contribution
$
103,726
$
110,554
Digital Platform Services Revenue
$
316,780
$
341,269
Digital Platform Gross Profit Margin
54.3
%
49.2
%
Digital Platform Order Contribution
Margin
32.7
%
32.4
%
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 March
31,
2022
2023
Earnings/(loss) per share
$
1.93
$
(0.43
)
Share-based payments (1)
0.09
0.12
Amortization of acquired intangible
assets
0.10
0.11
(Gains)/losses on items held at fair value
and remeasurements (2)
(2.38
)
0.02
Other items (3)
0.02
0.02
Share of results of associates
0.00
0.00
Adjusted loss per share
$
(0.24
)
$
(0.16
)
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 March
31,
2022
2023
Fair value remeasurements:
$250 million 5.00% Notes due 2025 embedded
derivative
$
65,481
$
-
$400 million 3.75% Notes due 2027 embedded
derivative
362,053
285
$600 million 0.00% Notes due 2030 embedded
derivative
114,956
6,603
FV remeasurement of minority
investments
1,468
(1,030
)
Loss on disposal of investment carried at
FVTPL
(1,639
)
-
Present value remeasurements:
Chalhoub put option
105,805
-
Palm Angels put call option and
earn-out
(6,103
)
(7,224
)
Alibaba and Richemont put option
271,352
(4,219
)
Alanui put option
(5,113
)
(1,302
)
Gains/(losses) on items held at fair
value and remeasurements
$
908,260
$
(6,887
)
Farfetch share price (end of day)
$
15.12
$
4.91
The following table represents other items:
(in $ thousands, except as otherwise
noted)
Three months ended March
31,
2022
2023
Transaction-related legal and advisory
expenses
$
(8,126
)
$
(3,598
)
Loss on impairment of investments carried
at fair value
(65
)
-
Restructuring
-
(2,978
)
Other
-
(58
)
Other items
$
(8,191
)
$
(6,634
)
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.
“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 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/20230518005685/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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