- 2020 Gross Merchandise Value Exceeds $3 billion, up 49%
year-over-year
- 2020 Revenue increases 64% year-over-year to $1.7
billion
- Strong Q4 2020 Gross Merchandise Value and Digital Platform
GMV growth - up 43% and 49% year-over-year, respectively, to record
highs of $1.1 billion and $939 million, respectively
- Q4 2020 Revenue increases 41% year-over-year to $540
million
- Q4 2020 Digital Platform Order Contribution Margin improves
310 bps year-over-year to 35%; Gross Profit Margin remains flat
year-over-year at 46%
- Q4 2020 Loss After Tax of $2.3 billion includes $2.1 billion
non-cash impact of higher share price on items held at fair value
and remeasurements
- Achieves first ever quarter of positive Adjusted EBITDA; Q4
2020 Adjusted EBITDA increases to $10 million, up from $(18)
million in Q4 2019
Farfetch Limited (NYSE: FTCH), the leading global platform for
the luxury fashion industry, today reported financial results for
the fourth quarter and full year ended December 31, 2020.
José Neves, Farfetch Founder, Chairman and CEO said: “2020 put
the Farfetch platform to the test, but thanks to our robust
capabilities, resilient operations and utmost perseverance from our
more than 5,000 Farfetchers, we rose to the challenge and enabled
our nearly 1,400 Marketplace sellers and Farfetch Platform
Solutions clients to continually serve millions of luxury consumers
across the globe. We cemented our leadership as the largest global
online destination for luxury fashion, accelerated our Chapter 2
initiatives with strategic partnerships advancing our position to
be the global platform for the luxury industry, and demonstrated
the scale and attractiveness of our business model as we achieved
the key milestone of Adjusted EBITDA profitability in the fourth
quarter.
“As we enter 2021, I am more energized than ever by the
prospects of leveraging our incredible achievements to date and our
unique platform capabilities to go after the significant growth
opportunities we see in our vision to be a digital enabler
connecting the creators, curators and consumers of the global
luxury industry, both online and offline – a nearly $300 billion
opportunity we remain laser-focused on and plan to continue
investing behind to deliver significant value over the
long-term.”
Elliot Jordan, CFO of Farfetch, said: “The strong performance of
Farfetch in the fourth quarter completes a remarkable year and is
the result of our focused execution against the long-term strategy
and the leveraging of our investments to date. We exceeded our own
initial expectations for the year; accelerating growth in our
digital platform, improving margins across all areas of the
business and delivering strong operating cash flows. As a result,
we delivered our first ever quarter of positive Adjusted EBITDA.
Our industry partnerships and strategic alliances, as well as our
$1.6 billion of liquidity, position us well to continue investing
behind the long-term growth opportunities we see in digitally
enabling the luxury industry.”
Consolidated Financial Summary and Key Operating Metrics
(in thousands, except per share data, Average Order Value, or
otherwise stated):
Three months
endedDecember 31, Year
ended December 31,
2019
2020
2019
2020
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
739,937
$
1,056,990
$
2,139,699
$
3,187,014
Revenue
382,232
540,105
1,021,037
1,673,922
Adjusted Revenue
337,738
464,887
893,077
1,460,694
Gross profit
176,136
249,148
459,846
770,928
Gross profit margin
46.1%
46.1%
45.0%
46.1%
Loss after tax
$
(110,126)
$
(2,281,035)
$
(373,688)
$
(3,333,071)
Adjusted EBITDA
(17,926)
10,376
(121,376)
(47,432)
Adjusted EBITDA Margin
(5.3)%
2.2%
(13.6)%
(3.2)%
Earnings per share (“EPS”)
$
(0.34)
$
(6.53)
$
(1.21)
$
(9.75)
Adjusted EPS
(0.08)
(0.06)
(0.56)
(0.66)
Digital Platform:
Digital Platform GMV
$
628,610
$
939,444
$
1,947,868
$
2,759,476
Digital Platform Services Revenue
226,411
347,341
701,246
1,033,156
Digital Platform Gross Profit
123,572
189,102
371,913
560,206
Digital Platform Gross Profit Margin
54.6%
54.4%
53.0%
54.2%
Digital Platform Order Contribution
$
72,410
$
121,844
$
220,563
$
361,419
Digital Platform Order Contribution
Margin
32.0%
35.1%
31.5%
35.0%
Active Consumers
2,068
3,024
2,068
3,024
Average Order Value (“AOV”) - Marketplace
$
636
$
626
$
608
$
568
AOV - Stadium Goods
301
308
315
316
Brand Platform:
Brand Platform GMV
$
101,539
$
103,880
$
164,210
$
390,014
Brand Platform Revenue
101,539
103,880
164,210
390,014
Brand Platform Gross Profit
47,543
51,857
75,007
190,804
Brand Platform Gross Profit Margin
46.8%
49.9%
45.7%
48.9%
See “Notes and Disclosures” on page 21 for further explanations.
See “Non-IFRS and Other Financial and Operating Metrics” on page 21
for reconciliations of non-IFRS measures to IFRS measures. As we
acquired New Guards in August 2019, our results for full year 2019
include only five months of New Guards’ performance.
Recent Business Highlights
COVID-19
- Maintained continuity of operations with health and wellbeing
of Farfetch employees, partners and consumers continuing to be our
top priority – rolled out localized initiatives focused on employee
wellbeing throughout the pandemic
- Continued to collaborate with boutique and brand partners to
drive growth of their digital sales via the Marketplace
- Continued to work closely with our global logistics partners to
preserve continuity of fulfilment and delivery operations, with no
material disruptions during fourth quarter 2020
- Following new lockdown measures announced by European
governments towards the end of the fourth quarter, closed our
retail stores in affected locations and postponed the opening of
our newly relocated Browns boutique in London; our retail stores in
the United States and Japan remained open
Digital Platform
- Third-party transactions generated 84% of Digital Platform GMV
at a take rate of 28.8% in fourth quarter 2020
- Over 1,350 total Farfetch Marketplace (or Marketplace) sellers
offered a record number of stock units across more than 3,500
brands
- Signed new seller, Russian luxury group Bosco di Ciliegi, owner
of 40+ mono-brand and four department stores, including historic
department store Gum
- Drove strong momentum in newer categories in 2020
- Watches and Jewelry grew nearly three times as fast as the
Farfetch Marketplace
- Became the global destination with the broadest assortment for
kids’ luxury fashion
- Added new features to enhance customer experience
- Launched order status push notifications for app, globally, and
live customer service chat on our China iOS app
- Offered Gold and Platinum ACCESS members in the United Kingdom
and the United States, a style advisor service in a pilot with
Wishi
- Expanded virtual try-on beyond sneakers and sunglasses, to
luxury watches
- Partnered with brands to market new collections and increase
brand awareness through engaging experiences on the Farfetch
Marketplace
- In January 2021, in our first partnership with a
Richemont-backed brand, launched the global digital premier of
Alber Elbaz’s AZ Factory, consisting of immersive and interactive
experiences with content from the collection
- In February 2021, exclusively partnered with Dolce &
Gabbana to broadcast its men’s Fall-Winter 2021 Digital Show
- Furthered Luxury New Retail initiatives:
- Expanded on the successful Store of the Future roll-out in
CHANEL’s Rue Cambon flagship boutique with the implementation of
Store of the Future in two additional CHANEL boutiques in
Paris
- In February 2021, soft launched Farfetch’s storefront on
Tmall’s Luxury Pavilion, offering Alibaba’s 779 million consumers
access to the broad selection of luxury products available on the
Farfetch Marketplace
- Farfetch Platform Solutions re-platformed e-commerce site for
New Guards brand, Ambush
- Broadened Fulfilment by Farfetch logistics network with signing
of a new third-party warehouse in the Netherlands, expected to
become operational in April 2021
New Guards
- New Guards’ brand portfolio continued to create culturally
relevant collections
- Off-Whitelaunched a capsule collection for the China Region,
exclusively available through Off-White’s WeChat mini program
- In February 2021, Off-White
- Revealed its Spring-Summer 2021 Collection via an immersive
digital experience labeled ‘Imaginary TV’
- Launched its first ever skincare kit ‘The Protection Box’, in
collaboration with South Korean brandAMOREPACIFIC
- Ambushcontinued its expansion into the fashion category with
the unveiling of its first ever campaign for its Spring-Summer 2021
collection
Environmental, Social and Governance
(ESG)
- Unveiled 2030 Positively Farfetch sustainability goals focused
on becoming climate positive, driving revenues from ‘Conscious’
products, selling more circular products, and being a leader in
conscious inclusion
- Significantly reduced logistics carbon emissions per order from
our largest transportation provider through a range of efficiency
measures including better sized packaging and, since April 2020,
committed to offset the carbon impact of every delivery and return
through investments in independently certified and verified
environmental projects
- Delivered on strong consumer demand for ‘Conscious’ products,
which experienced over three times higher GMV growth as compared to
the Farfetch Marketplace in 2020
- Launched Second Life in the United States, following a
successful pilot in the United Kingdom and the European Union
- Delivered on our commitment to employees – achieved improved
happiness and retention results in our annual company-wide Humu
employee survey
Liquidity
- Ended year with Cash and Cash Equivalents of $1.6 billion
- Completed issuance to Alibaba and Richemont of $600 million
aggregate principal amount ($300 million each) of 0% Convertible
Senior Notes due 2030
- Issued 1.89 million Class A ordinary shares to Artemis for
total gross proceeds of approximately $50 million
Fourth Quarter and Full Year 2020 Results Summary
Gross Merchandise Value (in thousands):
Three months ended December
31,
Year ended
December 31,
2019
2020
2019
2020
Digital Platform GMV
$
628,610
$
939,444
$
1,947,868
$
2,759,476
Brand Platform GMV
101,539
103,880
164,210
390,014
In-Store GMV
9,788
13,666
27,621
37,524
GMV
$
739,937
$
1,056,990
$
2,139,699
$
3,187,014
Gross Merchandise Value (“GMV”) increased by $317.1 million from
$739.9 million in fourth quarter 2019 to $1,057.0 million in fourth
quarter 2020, representing year-over-year growth of 42.8%. Digital
Platform GMV increased by $310.8 million from $628.6 million in
fourth quarter 2019 to $939.4 million in fourth quarter 2020,
representing year-over-year growth of 49.4%. Excluding the impact
of changes in foreign exchange rates, Digital Platform GMV would
have increased by approximately 48.8%.
The increase in GMV primarily reflects the growth in Digital
Platform GMV driven by strong order growth and new consumer
acquisition. This was partially offset by a slight decrease in the
Marketplace AOV within the Digital Platform from $636 to $626 due
to a higher mix of sales with fewer items per basket, partially
offset by a higher full price mix. During fourth quarter 2020, we
also saw year-over-year growth in transactions through websites
managed by Farfetch Platform Solutions, primarily driven from
incremental activity from new e-commerce sites launched throughout
2020, including Harrods.com, Off---White.com and Palmangels.com,
among others.
Revenue (in thousands):
Three months ended December
31,
Year ended
December 31,
2019
2020
2019
2020
Digital Platform Services third-party
revenue
$
156,028
$
209,332
$
496,040
$
637,568
Digital Platform Services first-party
revenue
70,383
138,009
205,206
395,588
Digital Platform Services
Revenue
226,411
347,341
701,246
1,033,156
Digital Platform Fulfilment
Revenue
44,494
75,218
127,960
213,228
Brand Platform Revenue
101,539
103,880
164,210
390,014
In-Store Revenue
9,788
13,666
27,621
37,524
Revenue
$
382,232
$
540,105
$
1,021,037
$
1,673,922
Revenue increased by $157.9 million year-over-year from $382.2
million in fourth quarter 2019 to $540.1 million in fourth quarter
2020, representing growth of 41.3%. The increase was primarily
driven by 56.0% growth in Digital Platform Revenue to $422.6
million. Brand Platform Revenue increased by 2.3%, reflecting a
year-over-year shift in timing of Spring-Summer collection
shipments.
The increase in Digital Platform Services Revenue of 53.4% was
driven by 49.4% overall growth in Digital Platform GMV, which had
an increased mix of Digital Platform Services first-party GMV.
Digital Platform Services first-party GMV, which is composed of our
sales of owned-inventory including First-Party Original, is
included in Digital Platform Services Revenue at 100% of the GMV.
Digital Platform Services first-party revenue increased 96.1%
year-over-year to $138.0 million, primarily driven by a strategic
focus on increasing New Guards’ direct-to-consumer distribution
since acquiring the business in August 2019. Growth in Browns
digital sales, primarily driven by higher sell-through of
full-price products also contributed to this increase.
Digital Platform Fulfilment Revenue represents the pass-through
of delivery and duties charges incurred by our global logistics
solutions, net of any Farfetch-funded consumer promotions and
incentives. Whilst Digital Platform Fulfilment Revenue would be
expected to grow in line with the cost of delivery and duties,
which increase as Digital Platform GMV and order volumes grow,
variations in the level of Farfetch funded promotions and
incentives will impact Digital Platform Fulfilment Revenue. In
fourth quarter 2020, Digital Platform Fulfilment Revenue increased
69.1% year-over-year, a higher rate as compared to Digital Platform
Services cost growth, due to a slower growth in Farfetch funded
promotion cost and pass through of a higher cost per order for
shipping and duties.
In-Store Revenue increased by 39.6% to $13.7 million and was
primarily driven by the opening of New Guards stores throughout the
year, partially offset by store closures and reduced foot traffic
across our retail store network as a result of COVID-19
restrictions.
Cost of Revenue (in thousands):
Three months ended December
31,
Year ended
December 31,
2019
2020
2019
2020
Digital Platform Services third-party cost
of revenue
$
49,486
$
70,451
$
169,661
$
208,518
Digital Platform Services first-party cost
of revenue
53,353
87,788
159,672
264,432
Digital Platform Services cost
of revenue
102,839
158,239
329,333
472,950
Digital Platform Fulfilment
cost of revenue
44,494
75,218
127,960
213,228
Brand Platform cost of
revenue
53,996
52,022
89,203
199,208
In-Store cost of goods sold
4,767
5,478
14,695
17,608
Cost of revenue
$
206,096
$
290,957
$
561,191
$
902,994
Cost of revenue increased by $84.9 million, or 41.2%,
year-over-year from $206.1 million in fourth quarter 2019 to $291.0
million in fourth quarter 2020 in line with Revenue growth. The
increase was driven by 53.9% growth in Digital Platform Services
cost of revenue to $158.2 million, and partially offset by a slight
reduction in Brand Platform cost of revenue due to a shift in
timing of Spring-Summer collection shipments year-over-year and
higher margin year-over-year.
Digital Platform Services cost of revenue increased at a higher
rate than Digital Platform Services Revenue primarily driven by the
increased mix of first-party revenue where the related cost of
revenue includes the production and purchase cost of products.
We rely on third-parties to provide shipping services, and
changes in their operations due to the ongoing impacts of COVID-19
as well as the impacts of the United Kingdom’s withdrawal from the
European Union starting in January 2021 may impact our service
levels or cost of revenue. There were no such material adverse
impacts to our service levels or cost of revenue in fourth quarter
2020, where our increased costs were primarily duty-related, driven
by a mix shift in regional sales. However, we may experience an
increase in certain unit costs of operating a global e-commerce
business as the increasing adoption of e-commerce by the global
retail industry creates the potential for cost increases.
Gross profit (in thousands):
Three months ended December
31,
Year ended
December 31,
2019
2020
2019
2020
Digital Platform third-party gross
profit
$
106,542
$
138,881
$
326,379
$
429,050
Digital Platform first-party gross
profit
17,030
50,221
45,534
131,156
Digital Platform Gross
Profit
123,572
189,102
371,913
560,206
Brand Platform Gross Profit
47,543
51,858
75,007
190,806
In-Store Gross Profit
5,021
8,188
12,926
19,916
Gross profit
$
176,136
$
249,148
$
459,846
$
770,928
Gross profit increased by $73.0 million, or 41.5% year-over-year
in line with Revenue growth, to $249.1 million in fourth quarter
2020. As a result, Gross Profit margin remained stable
year-over-year at 46.1%.
Digital Platform Gross Profit Margin declined slightly to 54.4%
in fourth quarter 2020, from 54.6% in the fourth quarter 2019 as a
result of a decrease in Digital Platform third-party gross profit
margin, increase in first-party mix and an increase in unit costs
of logistics, which were mostly offset by increased first-party
margin.
Brand Platform Gross Profit Margin increased 310bps
year-over-year to 49.9%. However, this improvement was more than
offset by the increased mix towards Digital Platform Services
Revenue over the same period, resulting in total Gross Profit
Margin remaining flat at 46.1%.
Selling, general and administrative expenses by type (in
thousands):
Three months ended December
31,
Year ended
December 31,
2019
2020
2019
2020
Demand generation expense
$
51,162
$
67,258
$
151,350
$
198,787
Technology expense
22,653
29,827
84,207
115,227
Share based payments
42,238
121,118
158,422
291,633
Depreciation and amortization
50,065
60,135
113,591
217,223
General and administrative
120,247
141,687
345,665
504,346
Other items
5,584
17,080
16,374
24,267
Selling, general and
administrative expense
$
291,949
$
437,105
$
869,609
$
1,351,483
Demand generation expense increased $16.1 million year-over-year
to $67.3 million in fourth quarter 2020. As a percentage of Digital
Platform Service Revenue, fourth quarter 2020 demand generation
expense improved from 22.6% to 19.4%. The improvement reflects our
underlying strategy to gain efficiencies in demand generation spend
by leveraging data insights to drive more targeted digital
marketing, shifting away from lower performing channels.
Technology expense primarily relates to maintenance and
operations of our platform features and services, as well as
software, hosting and infrastructure expenses, which includes three
globally distributed data centers, including one in Shanghai, which
support the processing of our growing base of transactions.
Technology expense increased by $7.2 million, or 31.7%, in fourth
quarter 2020 year-over-year. The increase was mainly driven by an
increase in technology staff headcount. Fourth quarter 2020
technology expense continued to scale as a percentage of Adjusted
Revenue, decreasing from 6.7% to 6.4% year-over-year as Adjusted
Revenue growth outpaced growth of our underlying technology
costs.
Depreciation and amortization expense increased by $10.1
million, or 20.1%, year-over-year from $50.1 million in fourth
quarter 2019 to $60.1 million in fourth quarter 2020. Amortization
expense increased principally due to a $5.5 million increase in
amortization of our technology investments, where qualifying
technology development costs are capitalized and amortized over
their useful lives. Depreciation expense primarily increased as a
result of new leases entered into during the last 12 months.
Share based payments increased by $78.9 million or 186.8%
year-over-year in fourth quarter 2020. The increase was mainly due
to the impact of share price changes on our provisions for
employment-related taxes and the cost of cash-settled awards.
During fourth quarter 2020, our share price increased by $38.65,
significantly more than the $1.71 increase in our share price
during fourth quarter 2019. This resulted in a year-over-year
increase in our provisions, primarily for employment related taxes
and also cost of cash-settled awards. Grants of additional
equity-settled awards in 2020 also contributed to the
year-over-year increase to a lesser extent.
General and administrative expense increased by $21.4 million,
or 17.8%, year-over-year in fourth quarter 2020, primarily due to
an increase in non-technology headcount and Digital Platform
operational costs across a number of areas to support the expansion
of our business. General and administrative expense decreased as a
percentage of Adjusted Revenue to 30.5% compared to 35.6% in fourth
quarter 2019 as we continued to leverage our operations base to
efficiently grow Adjusted Revenue.
Other items of $17.1 million in fourth quarter 2020 primarily
reflect transaction-related legal and advisory expenses, largely
associated with our issuance of the $600 million convertible note
to Alibaba and Richemont.
Gains/(losses) on items held at fair value and remeasurements
(in thousands):
Three months endedDecember 31,
Year ended
December 31,
2019
2020
2019
2020
Remeasurement (losses)/gains on put and call option liabilities
$
(10,565)
$
(166,702)
$
43,247
$
(288,853)
Fair value losses on embedded derivative liabilities
-
(1,890,604)
-
(2,354,720)
Change in fair value of acquisition related consideration
-
-
(21,526)
-
(Losses)/gains on items held
at fair value and remeasurements
$
(10,565)
$
(2,057,306)
$
21,721
$
(2,643,573)
The $1,890.6 million fair value losses on embedded derivative
liabilities in fourth quarter 2020 was primarily driven by the
increase in our share price. The fair value losses on embedded
derivative liabilities in fourth quarter 2020 is comprised of the
following revaluation losses on our convertible senior notes: (i)
$749.0 million fair value loss related to $250 million 5.00% notes
due 2025; (ii) $869.1 million fair value loss related to $400
million 3.75% notes due 2027; and (iii) $272.5 million fair value
loss related to $600 million 0.00% notes due 2030. These notes
provide us with strong liquidity to fund ongoing capital need and
invest in various growth initiatives. There were no fair value
losses on embedded derivatives in fourth quarter 2019. In addition,
remeasurement losses on put and call option liabilities in fourth
quarter 2020 primarily related to a $165.8 million remeasurement
loss in connection with Chalhoub Group’s put option over their
non-controlling interest in Farfetch International Limited,
compared to a $9.0 million remeasurement loss in fourth quarter
2019. The Chalhoub partnership has underpinned our strong growth in
the Middle East, which has outpaced the Farfetch Marketplace GMV
growth for four consecutive quarters.
Impairment losses on tangible and intangible assets (in
thousands):
Three months ended December 31,
Year ended
December 31,
2019
2020
2019
2020
Impairment losses on right-of-use asset $
-
$
(699)
$
-
$
(2,234)
Impairment losses on property, plant and equipment
-
-
-
(757)
Impairment losses on
tangible assets
$
-
$
(699)
$
-
$
(2,991)
Impairment losses
on intangible assets $
-
$
(36,269)
$
-
(36,269)
Impairment losses on
intangible assets
$
-
$
(36,269)
$
-
$
(36,269)
The impairment charge of $36.3 million on intangible assets and
$0.7 million on tangible assets in fourth quarter 2020 is primarily
comprised of a $30.5 million charge related to a reduction in the
carrying value of one of the smaller intangible brand assets within
New Guards portfolio, as well as a $0.7 million reduction in the
carrying value of the corporate right-of-use assets associated with
that same brand. The remaining $5.8 million impairment charge on
intangible assets related to the closure of our direct
consumer-facing channels on JD.com and the associated intangible
asset held for the Farfetch Level 1 access button. This resulted
from our annual considerations of potential impairment of assets,
including our intangible assets, whereby indicators of impairment
were present. For fourth quarter 2020, our impairment assessment
incorporated current and potential ongoing impacts of COVID-19
across the broader economy. There were no impairment losses in
fourth quarter 2019.
Loss After Tax
Loss after tax increased by $2,170.9 million year-over-year to
$2,281.0 million in fourth quarter 2020, which in addition to
losses during the year, drove total equity from $1,337.8 million at
December 31, 2019 to $(1,676.1) million as at December 31, 2020.
The increase was primarily driven by losses on items held at fair
value and remeasurements, which increased $2,046.7 million
year-over-year, as well as increases in share-based payments,
general and administrative expenses, and depreciation and
amortization expense, partially offset by an increase in gross
profit, as explained above.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA improved by $28.3 million, to $10.4 million in
fourth quarter 2020 as a result of our growth, improving unit
economics and scaling of the fixed cost base. Adjusted EBITDA
Margin improved from (5.3)% to 2.2% year-over-year, primarily
reflecting lower demand generation expense, lower general and
administrative expenses, and the decline in technology expense as
percentages of Adjusted Revenue.
Liquidity
At December 31, 2020 cash and cash equivalents were $1,573.4
million, an increase of $1,251.0 million compared to $322.4 million
at December 31, 2019. The increase in cash and cash equivalents is
primarily due to the private placement of convertible senior notes
during 2020, as well as a net cash inflow from operating
activities, and partially offset by a net cash outflow from
investing activities as New Guards continued to invest in its brand
portfolio. Unless earlier converted, redeemed or repurchased in
accordance with their terms, the notes issued in 2020 may be
settled, at Farfetch's election and subject to certain exceptions
and conditions, in Class A ordinary shares of Farfetch, cash, or a
combination of cash and Class A ordinary shares of Farfetch.
Outlook
The following forward-looking statements reflect Farfetch’s
expectations as of February 25, 2021.
For Full Year 2021:
- Digital Platform GMV of $3.6 billion to $3.7 billion,
representing growth of 30% to 35% year-over-year
- Adjusted EBITDA margin of 1% to 2%
For First Quarter 2021:
- Digital Platform GMV of $740 million to $770 million,
representing growth of 50% to 55% year-over-year
- Brand Platform GMV of $95 million to $105 million
- Adjusted EBITDA of $(19) million to (21) million
Uncertainties resulting from the spread of COVID-19 and the
evolving nature of the situation could have material impacts on our
future performance and projections. Factors involving COVID-19 that
could potentially impact our future performance include, among
others:
- disruptions to our operations, fulfilment network, and
shipments
- reduced or delayed supply from potential factors, including
reduced inventory from brands and retailers, as well as additional
shutdowns
- weakened consumer sentiment and discretionary income
potentially arising from a prolonged shutdown and declining
macro-economic conditions
- incurring additional costs to support our operations
Conference Call Information
Farfetch will host a conference call today, February 25, 2021 at
4:30 p.m. Eastern Time to discuss the Company’s results as well as
expectations about Farfetch’s business. Listeners may access the
live conference call via audio webcast at
http://farfetchinvestors.com, where listeners can also access
Farfetch’s earnings press release and slide presentation. Following
the call, a replay of the webcast will be available at the same
website for 30 days.
Unaudited interim condensed consolidated statements of
operations
for the three months ended December 31
(in $
thousands, except share and per share data)
2019
2020
Revenue
382,232
540,105
Cost of
revenue
(206,096)
(290,957)
Gross profit
176,136
249,148
Selling,
general and administrative expenses
(291,949)
(437,105)
Impairment losses on tangible assets
-
(699)
Impairment losses on intangible assets
-
(36,269)
Operating loss
(115,813)
(224,925)
Losses on
items held at fair value and remeasurements
(10,565)
(2,057,306)
Share of results of associates
(38)
66
Finance income
19,252
20,065
Finance costs
(3,070)
(34,639)
Loss before tax
(110,234)
(2,296,739)
Income tax
benefit
108
15,704
Loss after tax
(110,126)
(2,281,035)
(Loss)/profit after tax attributable to:
Equity holders of the parent
(116,907)
(2,284,593)
Non-controlling interests
6,781
3,558
(110,126)
(2,281,035)
Loss per
share attributable to equity holders of the parent
Basic and diluted
(0.34)
(6.53)
Weighted-average ordinary shares outstanding
Basic and diluted
339,495,707
349,603,548
Unaudited interim condensed consolidated statements of
comprehensive loss for
the three months ended December 31
(in $ thousands)
2019
2020
Loss after tax
(110,126)
(2,281,035)
Other comprehensive (loss)/income:
Items that may be subsequently
reclassified to the consolidated
statement of operations or financial position (net of tax):
Exchange differences (loss)/gain on translation of foreign
operations
(25,838)
1,639
Gain on cash flow hedges recognized in equity
1,249
9,775
Gain on cash flow hedges recognized in equity - time value
-
6,145
Less: Loss on cash flow hedges reclassified and reported in net
loss
2,912
2,563
Items that will not be subsequently reclassified to the
consolidated statement of operations (net of tax):
Remeasurement loss on severance
plan
(27)
(21)
Other comprehensive (loss)/income for the period, net of tax
(21,704)
20,101
Total comprehensive loss for the period, net of tax
(131,830)
(2,260,934)
Total
comprehensive (loss)/income attributable to:
Equity holders of the parent
(138,611)
(2,264,824)
Non-controlling interests
6,781
3,890
(131,830)
(2,260,934)
Unaudited interim condensed consolidated statements of
operations for the year
ended December 31 (in $
thousands, except share and per share data)
2019
2020
Revenue
1,021,037
1,673,922
Cost of
revenue
(561,191)
(902,994)
Gross profit
459,846
770,928
Selling,
general and administrative expenses
(869,609)
(1,351,483)
Impairment losses on tangible assets
-
(2,991)
Impairment losses on intangible assets
-
(36,269)
Operating loss
(409,763)
(619,815)
Gains/(losses) on items held at fair value and remeasurements
21,721
(2,643,573)
Share of results of associates
366
(74)
Finance income
34,382
24,699
Finance costs
(19,232)
(108,742)
Loss before tax
(372,526)
(3,347,505)
Income tax
(expense)/benefit
(1,162)
14,434
Loss after tax
(373,688)
(3,333,071)
(Loss)/profit after tax attributable to:
Equity holders of the parent
(385,297)
(3,350,619)
Non-controlling interests
11,609
17,548
(373,688)
(3,333,071)
Loss per share attributable to owners of the company
Basic and diluted
(1.21)
(9.75)
Weighted-average ordinary shares outstanding
Basic and diluted
318,843,239
343,829,481
Unaudited interim condensed consolidated statements of
comprehensive loss for
the year ended December 31
(in $ thousands)
2019
2020
Loss after tax
(373,688)
(3,333,071)
Other comprehensive (loss)/income:
Items that may be subsequently
reclassified to the consolidated
statement of operations or financial
position (net of tax): Exchange differences (loss)/gain on
translation of foreign operations
(7,333)
23,903
Loss on cash flow hedges recognized in equity
(11,863)
(4,227)
Gain on cash flow hedges recognized in equity - time value
-
2,552
Less: Loss on cash flow hedges reclassified and reported in net
loss
8,337
17,612
Items that will not be
subsequently reclassified to the consolidated
statement of operations (net of tax):
Impairment loss on
investments
(100)
-
Remeasurement loss on severance plan
(58)
(24)
Other comprehensive (loss)/income for the year, net of tax
(11,017)
39,816
Total comprehensive loss for the year, net of tax
(384,705)
(3,293,255)
Total
comprehensive (loss)/income attributable to:
Equity holders of the parent
(396,314)
(3,311,135)
Non-controlling interests
11,609
17,880
(384,705)
(3,293,255)
Unaudited interim condensed consolidated statements of financial
position (in $
thousands)
December 31,
December 31,
2019
2020
Non-current assets
Other receivables
12,388
58,081
Deferred tax assets
5,324
13,556
Intangible assets, net
1,362,967
1,279,328
Property, plant and equipment, net
67,999
89,082
Right-of-use assets
115,176
179,227
Investments
16,229
8,278
Investments in associates
2,466
2,319
Total non-current assets
1,582,549
1,629,871
Current assets
Inventories
128,107
145,309
Trade and other receivables
189,897
209,946
Current tax assets
1,873
2,082
Derivative financial assets
3,024
30,242
Cash and cash equivalents
322,429
1,573,421
Total current assets
645,330
1,961,000
Total assets
2,227,879
3,590,871
Liabilities and equity
Non-current liabilities
Provisions
23,704
129,113
Deferred tax liabilities
219,789
182,463
Lease liabilities
100,833
165,275
Employee benefit obligations
16,455
26,116
Derivative financial liabilities
-
2,996,220
Borrowings
-
635,237
Put and call option liabilities
61,268
348,937
Other financial liabilities
-
4,853
Total non-current liabilities
422,049
4,488,214
Current liabilities
Trade and other payables
413,696
666,144
Provisions
-
27,146
Current tax liability
28,289
3,098
Lease liabilities
18,485
26,128
Employee benefit obligations
-
38,286
Derivative financial liabilities
5,601
17,427
Put and call option liabilities
1,118
-
Other financial liabilities
809
518
Total current liabilities
467,998
778,747
Total liabilities
890,047
5,266,961
Equity/(deficit)
Share capital
13,584
14,168
Share premium
878,007
927,931
Merger reserve
783,529
783,529
Foreign exchange reserve
(30,842)
(7,271)
Other reserves
349,463
447,753
Accumulated losses
(826,135)
(4,010,756)
Equity/(deficit) attributable to owners of the parent
1,167,606
(1,844,646)
Non-controlling interests
170,226
168,556
Total equity/(deficit)
1,337,832
(1,676,090)
Total equity/(deficit) and liabilities
2,227,879
3,590,871
Unaudited interim condensed consolidated statements of cash
flows for the year ended
December 31
(in $ thousands)
2019
2020
Cash flows from operating activities
Operating loss
(409,763)
(619,815)
Adjustments to reconcile operating loss to net cash
(outflow)/inflow from operating activities:
Depreciation
28,536
39,366
Amortization
85,055
177,857
Non-cash employee benefits expense
138,195
168,347
Net loss on sale of non-current assets
(144)
-
Impairment losses on tangible assets
-
2,991
Impairment losses on intangible assets
-
36,269
Impairment of investments
5,000
235
Net exchange differences
(842)
-
Change in working capital
Increase in receivables
(51,273)
(15,833)
Increase in inventories
(29,723)
(16,471)
Increase in payables
113,716
280,454
Change in other assets and liabilities
Decrease/(increase) in non-current
receivables
3,723
(1,453)
Increase in other liabilities
11,575
59,640
(Decrease)/increase in provisions
(4,252)
85,001
Decrease in derivative financial instruments
(117)
(15,052)
Income taxes paid
(16,328)
(65,221)
Net cash (outflow)/inflow from operating activities
(126,642)
116,315
Cash
flows from investing activities
Acquisition of subsidiary, net of cash
acquired
(461,691)
(12,016)
Payments for property, plant and equipment
(39,512)
(26,839)
Proceeds on disposal of property, plant and equipment
272
-
Payments for intangible assets
(72,985)
(94,105)
Payments for investments
(20,846)
(2,872)
Interest received
11,259
3,131
Dividends received from associate
-
60
Net cash outflow from investing activities
(583,503)
(132,641)
Cash
flows from financing activities
Repayment of the principal elements of lease
payments
(19,127)
(19,051)
Interest paid and fees paid on loans
(4,776)
(54,154)
Dividends paid to holders of non-controlling interests
-
(20,515)
Proceeds from issue of shares, net of issue costs
-
50,000
Proceeds from exercise of employee share based awards
8,654
62,899
Proceeds from borrowings, net of issue costs
-
1,241,861
Net cash (outflow)/inflow from financing activities
(15,249)
1,261,040
Net
(decrease)/increase in cash and cash equivalents
(725,394)
1,244,714
Cash and cash equivalents at the beginning of the year
1,044,786
322,429
Effects of exchange rate changes on cash and cash equivalents
3,037
6,278
Cash and cash equivalents at end of year
322,429
1,573,421
Unaudited interim condensed consolidated statements of changes
in equity/(deficit)
(in $ thousands)
Share
Share
Merger
Foreign Other
Accumulated
Equity/ (deficit)
Non- controlling Total
capital premium reserve exchange
reserve reserves losses attributable to owners
of the parent interests equity/ (deficit)
Balance at January 1, 2019
11,994
772,300
783,529
(23,509)
67,474
(483,357)
1,128,431
-
1,128,431
Changes in equity
(Loss)/income after tax for the year
-
-
-
-
-
(385,297)
(385,297)
11,609
(373,688)
Other comprehensive loss
-
-
-
(7,333)
(3,684)
-
(11,017)
-
(11,017)
Total comprehensive (loss)/income for the year, net of tax
-
-
-
(7,333)
(3,684)
(385,297)
(396,314)
11,609
(384,705)
Loss on cashflow hedge transferred to inventory
-
-
-
-
142
-
142
-
142
Issue of share capital, net of transaction costs
1,590
105,707
-
-
393,105
-
500,402
-
500,402
Share based payment – equity settled
-
-
-
-
76,383
46,841
123,224
-
123,224
Share based payment – reverse vesting shares
-
-
-
-
(82,646)
-
(82,646)
-
(82,646)
Transaction with non- controlling interests
-
-
-
-
(101,311)
-
(101,311)
-
(101,311)
Non-controlling interest arising from a business combination
-
-
-
-
-
-
-
158,617
158,617
Non-controlling interest put option
-
-
-
-
-
(4,322)
(4,322)
-
(4,322)
Balance at December 31, 2019
13,584
878,007
783,529
(30,842)
349,463
(826,135)
1,167,606
170,226
1,337,832
Balance
at January 1, 2020
13,584
878,007
783,529
(30,842)
349,463
(826,135)
1,167,606
170,226
1,337,832
Changes in equity/(deficit)
(Loss)/income after tax for the year
-
-
-
-
-
(3,350,619)
(3,350,619)
17,548
(3,333,071)
Other comprehensive income
-
-
-
23,571
15,913
-
39,484
332
39,816
Total comprehensive income/(loss) for the year, net of tax
-
-
-
23,571
15,913
(3,350,619)
(3,311,135)
17,880
(3,293,255)
Gain on cashflow hedge transferred to inventory
-
-
-
-
(1,213)
-
(1,213)
-
(1,213)
Issue of share capital, net of transaction costs
584
49,924
-
-
4,808
-
55,316
-
55,316
Share based payment – equity settled
-
-
-
-
52,690
165,998
218,688
-
218,688
Share based payment – reverse vesting shares
-
-
-
-
26,092
-
26,092
-
26,092
Acquisition of non-controlling interest
-
-
-
-
-
-
-
965
965
Dividends paid to non-controlling interests
-
-
-
-
-
-
-
(20,515)
(20,515)
Balance at December 31, 2020
14,168
927,931
783,529
(7,271)
447,753
(4,010,756)
(1,844,646)
168,556
(1,676,090)
Supplemental Metrics 1
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year (in
thousands, except per share data or otherwise stated)
Consolidated Group:
Gross
Merchandise Value (“GMV”) $
419,273
$
488,475
$
492,014
$
739,937
$
2,139,699
Revenue
174,064
209,260
255,481
382,232
1,021,037
Adjusted Revenue
146,374
180,738
228,227
337,738
893,077
In-Store Revenue
4,536
4,220
9,077
9,788
27,621
Gross profit
83,291
85,280
115,139
176,136
459,846
Gross profit margin
47.9%
40.8%
45.1%
46.1%
45.0%
Demand generation expense $
(31,423)
$
(34,444)
$
(34,321)
$
(51,162)
$
(151,350)
Technology expense
(20,159)
(19,073)
(22,322)
(22,653)
(84,207)
Share based payments
(38,714)
(45,710)
(31,760)
(42,238)
(158,422)
Depreciation and amortization
(14,106)
(14,323)
(35,097)
(50,065)
(113,591)
General and administrative
(61,945)
(69,339)
(94,134)
(120,247)
(345,665)
Other items
(2,493)
1,764
(10,061)
(5,584)
(16,374)
Impairment losses on tangible assets
-
-
-
-
-
Gains / (losses) on items held at fair value and remeasurements
-
-
32,286
(10,565)
21,721
Loss after tax
(77,686)
(95,392)
(90,484)
(110,126)
(373,688)
Adjusted EBITDA
(30,236)
(37,576)
(35,638)
(17,926)
(121,376)
Adjusted EBITDA Margin
(20.7)%
(20.8)%
(15.6)%
(5.3)%
(13.6)%
Earnings per share (“EPS”) $
(0.26)
$
(0.31)
$
(0.30)
$
(0.34)
$
(1.21)
Adjusted EPS
(0.11)
(0.16)
(0.20)
(0.08)
(0.56)
Digital Platform:
Digital Platform GMV $
414,737
$
484,255
$
420,266
$
628,610
$
1,947,868
Digital Platform Services Revenue
141,838
176,518
156,479
226,411
701,246
Digital Platform Fulfilment Revenue
27,690
28,522
27,254
44,494
127,960
Digital Platform Gross Profit
80,941
84,106
83,294
123,572
371,913
Digital Platform Gross Profit Margin
57.1%
47.6%
53.2%
54.6%
53.0%
Digital Platform Order Contribution $
49,518
$
49,662
$
48,973
$
72,410
$
220,563
Digital Platform Order Contribution Margin
34.9%
28.1%
31.3%
32.0%
31.5%
Active Consumers
1,699
1,773
1,889
2,068
2,068
AOV - Marketplace $
601
$
600
$
582
$
636
$
608
AOV - Stadium Goods
300
336
327
301
315
Brand Platform:
Brand Platform GMV $
-
$
-
$
62,671
$
101,539
$
164,210
Brand Platform Revenue
-
-
62,671
101,539
164,210
Brand Platform Gross Profit
-
-
27,464
47,543
75,007
Brand Platform Gross Profit Margin
-
-
43.8%
46.8%
45.7%
Supplemental Metrics 1
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year (in
thousands, except per share data or otherwise stated)
Consolidated Group:
Gross Merchandise Value (“GMV”) $
610,874
$
721,310
$
797,840
$
1,056,990
$
3,187,014
Revenue
331,437
364,680
437,700
540,105
1,673,922
Adjusted Revenue
301,152
307,877
386,778
464,887
1,460,694
In-Store Revenue
8,516
3,926
11,416
13,666
37,524
Gross profit
153,376
159,375
209,029
249,148
770,928
Gross profit margin
46.3%
43.7%
47.8%
46.1%
46.1%
Demand generation expense $
(37,966)
$
(47,378)
$
(46,185)
$
(67,258)
$
(198,787)
Technology expense
(26,307)
(29,284)
(29,809)
(29,827)
(115,227)
Share based payments
(26,760)
(61,915)
(81,840)
(121,118)
(291,633)
Depreciation and amortization
(51,323)
(51,758)
(54,007)
(60,135)
(217,223)
General and administrative
(111,422)
(107,888)
(143,349)
(141,687)
(504,346)
Other items
(5,025)
(1,302)
(860)
(17,080)
(24,267)
Impairment losses on tangible assets
(2,292)
-
-
(699)
(2,991)
Impairment losses on intangible assets
-
-
-
(36,269)
(36,269)
Gains / (losses) on items held at fair value and remeasurements
65,434
(278,622)
(373,079)
(2,057,306)
(2,643,573)
Loss after tax
(79,177)
(435,899)
(536,960)
(2,281,035)
(3,333,071)
Adjusted EBITDA
(22,319)
(25,175)
(10,314)
10,376
(47,432)
Adjusted EBITDA Margin
(7.4)%
(8.2)%
(2.7)%
2.2%
(3.2)%
Earnings per share (“EPS”) $
(0.24)
$
(1.29)
$
(1.58)
$
(6.53)
$
(9.75)
Adjusted EPS
(0.24)
(0.20)
(0.17)
(0.06)
(0.66)
Digital Platform:
Digital Platform GMV $
494,899
$
651,036
$
674,097
$
939,444
$
2,759,476
Digital Platform Services Revenue
185,177
237,603
263,035
347,341
1,033,156
Digital Platform Fulfilment Revenue
30,285
56,803
50,922
75,218
213,228
Digital Platform Gross Profit
97,207
130,579
143,318
189,102
560,206
Digital Platform Gross Profit Margin
52.5%
55.0%
54.5%
54.4%
54.2%
Digital Platform Order Contribution $
59,241
$
83,201
$
97,133
$
121,844
$
361,419
Digital Platform Order Contribution Margin
32.0%
35.0%
36.9%
35.1%
35.0%
Active Consumers
2,149
2,524
2,742
3,024
3,024
AOV - Marketplace $
571
$
493
$
574
$
626
$
568
AOV - Stadium Goods
314
304
340
308
316
Brand Platform:
Brand Platform GMV $
107,459
$
66,348
$
112,327
$
103,880
$
390,014
Brand Platform Revenue
107,459
66,348
112,327
103,880
390,014
Brand Platform Gross Profit
52,480
27,729
58,738
51,857
190,804
Brand Platform Gross Profit Margin
48.8%
41.8%
52.3%
49.9%
48.9%
Forward Looking Statements This release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements contained
in this release that do not relate to matters of historical fact
should be considered forward-looking statements, including, without
limitation, statements regarding our growth and strategic
initiatives, the expected timing for our new warehouse to become
operational and our expected performance for the first quarter of
2021 and full year 2021, as well as statements that include the
words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,”
“estimate,” “may,” “should,” “anticipate” and similar statements of
a future or forward-looking nature. These forward-looking
statements are based on management’s current expectations. These
statements are neither promises nor guarantees, but involve known
and unknown risks, uncertainties and other important factors that
may cause actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements, including, but not limited to: purchasers of luxury
products may not choose to shop online in sufficient numbers; our
ability to generate sufficient revenue to be profitable or to
generate positive cash flow on a sustained basis; the volatility
and difficulty in predicting the luxury fashion industry, in
particular in light of COVID-19 and its impact on consumer spending
patterns; our reliance on a limited number of retailers and brands
for the supply of products on our Marketplace; our reliance on
retailers and brands to anticipate, identify and respond quickly to
new and changing fashion trends, consumer preferences and other
factors; our reliance on retailers and brands to make products
available to our consumers on our Marketplace and to set their own
prices for such products; fluctuation in foreign exchange rates;
our reliance on information technologies and our ability to adapt
to technological developments; our ability to acquire or retain
consumers and to promote and sustain the Farfetch brand; our
ability or the ability of third parties to protect our sites,
networks and systems against security breaches, or otherwise to
protect our confidential information; our ability to successfully
launch and monetize new and innovative technology; our acquisition
and integration of other companies or technologies, for example,
Stadium Goods and New Guards, could divert management’s attention
and otherwise disrupt our operations and harm our operating
results; we may be unsuccessful in integrating any acquired
businesses or realizing any anticipated benefits of such
acquisitions; our dependence on highly skilled personnel, including
our senior management, data scientists and technology
professionals, and our ability to hire, retain and motivate
qualified personnel; the effect of the COVID-19 pandemic on our
business and results of operations, as well as on the luxury
fashion industry and consumer spending more broadly, and our
ability to successfully implement our business plan during a global
economic downturn caused by the COVID-19 pandemic; the increased
focus on social, environmental and sustainability matters could
increase our costs, harm our reputation and adversely affect our
financial results, and our ability to implement our environmental,
sustainability, responsible sourcing, social and inclusion and
diversity goals; José Neves, our chief executive officer, has
considerable influence over important corporate matters due to his
ownership of us, and our dual-class voting structure will limit
your ability to influence corporate matters, including a change of
control; and the other important factors discussed under the
caption “Risk Factors” in our Annual Report on Form 20-F filed with
the U.S. Securities and Exchange Commission (“SEC”) for the fiscal
year ended December 31, 2019 and Exhibit 99.2 to our Current Report
on Form 6-K filed with the SEC on April 27, 2020, as such factors
may be updated from time to time in our other filings with the SEC,
including our Annual Report on Form 20-F for the fiscal year ended
December 31, 2020 to be filed 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
Segment Realignment
Following the acquisition of New Guards in August 2019,
management determined that it had three operating segments: (i)
Digital Platform, (ii) Brand Platform and (iii) In-Store, given our
new organizational structure and the manner in which our business
is reviewed and managed. In fourth quarter 2019, we realigned our
reportable operating segments to reflect how our Chief Operating
Decision-Maker was making operating decisions, allocating resources
and evaluating operating performance. The comparative periods have
been revised to reflect this segment realignment.
Our results for first, second, and part of third quarter 2019 do
not include New Guards’ performance.
Presentation Change
Beginning in second quarter 2020, we changed the presentation of
our operating loss to reflect losses on items held at fair value
and remeasurements, and share of results of associates, as
non-operating items in the consolidated statement of operations.
These items are now presented below operating loss, and all prior
periods in this release reflect this change. We have made this
presentation change in order to improve comparability of our
period-over-period operating loss, particularly given the increased
volatility of the items with a valuation dependent on our market
share prices. As a result of this presentation change, the
consolidated statement of cash flows now starts with operating loss
rather than loss before tax as previously reported. This change had
no impact on our historical loss after tax or on any of our
historical unaudited condensed consolidated statements of financial
position, changes in equity, cash flows or on our previously
provided non-IFRS and operational measures. We determined that
these presentation changes had no material impact on the previously
reported financial information or on any previously issued annual
financial statements.
Non-IFRS and Other Financial and Operating Metrics
This release includes certain financial measures not based on
IFRS, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted
EPS, Adjusted Revenue, Digital Platform Order Contribution, and
Digital Platform Order Contribution Margin (together, the “Non-IFRS
Measures”), as well as operating metrics, including GMV, Digital
Platform GMV, Brand Platform GMV, In-Store GMV, Active Consumers
and Average Order Value. See the “Definitions” section below for a
further explanation of these terms.
Management uses the Non-IFRS Measures:
- as measurements of operating performance because they assist us
in comparing our operating performance on a consistent basis, as
they remove the impact of items not directly resulting from our
core operations;
- for planning purposes, including the preparation of our
internal annual operating budget and financial projections;
- to evaluate the performance and effectiveness of our strategic
initiatives; and
- to evaluate our capacity to fund capital expenditures and
expand our business.
The Non-IFRS Measures may not be comparable to similar measures
disclosed by other companies, because not all companies and
analysts calculate these measures in the same manner. We present
the Non-IFRS Measures because we consider them to be important
supplemental measures of our performance, and we believe they are
frequently used by securities analysts, investors and other
interested parties in the evaluation of companies. Management
believes that investors’ understanding of our performance is
enhanced by including the Non-IFRS Measures as a reasonable basis
for comparing our ongoing results of operations. Many investors are
interested in understanding the performance of our business by
comparing our results from ongoing operations period over period
and would ordinarily add back non-cash expenses such as
depreciation, amortization and items that are not part of normal
day-to-day operations of our business. By providing the Non-IFRS
Measures, together with reconciliations to IFRS, we believe we are
enhancing investors’ understanding of our business and our results
of operations, as well as assisting investors in evaluating how
well we are executing our strategic initiatives.
Items excluded from the Non-IFRS Measures are significant
components in understanding and assessing financial performance.
The Non-IFRS Measures have limitations as analytical tools and
should not be considered in isolation, or as an alternative to, or
a substitute for loss after tax, revenue or other financial
statement data presented in our consolidated financial statements
as indicators of financial performance. Some of the limitations
are:
- such measures do not reflect revenue related to fulfilment,
which is necessary to the operation of our business;
- such measures do not reflect our expenditures, or future
requirements for capital expenditures or contractual
commitments;
- such measures do not reflect changes in our working capital
needs;
- such measures do not reflect our share based payments, income
tax benefit/(expense) or the amounts necessary to pay our
taxes;
- although depreciation and amortization are eliminated in the
calculation of Adjusted EBITDA, the assets being depreciated and
amortized will often have to be replaced in the future and such
measures do not reflect any costs for such replacements; and
- other companies may calculate such measures differently than we
do, limiting their usefulness as comparative measures.
Due to these limitations, Adjusted EBITDA, Adjusted EBITDA
Margin, and Adjusted Revenue should not be considered as measures
of discretionary cash available to us to invest in the growth of
our business and are in addition to, not a substitute for or
superior to, measures of financial performance prepared in
accordance with IFRS. In addition, the Non-IFRS Measures we use may
differ from the non-IFRS financial measures used by other companies
and are not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with IFRS. Furthermore, not all companies or analysts
may calculate similarly titled measures in the same manner. We
compensate for these limitations by relying primarily on our IFRS
results and using the Non-IFRS Measures only as supplemental
measures.
Digital Platform Order Contribution and Digital Platform Order
Contribution Margin are not measurements of our financial
performance under IFRS and do not purport to be alternatives to
gross profit or loss after tax derived in accordance with IFRS. We
believe that Digital Platform Order Contribution and Digital
Platform Order Contribution Margin are useful measures in
evaluating our operating performance within our industry because
they permit the evaluation of our digital platform productivity,
efficiency and performance. We also believe that Digital Platform
Order Contribution and Digital Platform Order Contribution Margin
are useful measures in evaluating our operating performance because
they take into account demand generation expense and are used by
management to analyze the operating performance of our digital
platform for the periods presented.
Farfetch reports under International Financial Reporting
Standards (“IFRS”). Farfetch provides earnings guidance on a
non-IFRS basis and does not provide earnings guidance on an IFRS
basis. A reconciliation of the Company’s Adjusted EBITDA guidance
to the most directly comparable IFRS financial measure cannot be
provided without unreasonable efforts and is not provided herein
because of the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations,
including adjustments that are made for future changes in the fair
value of cash-settled share based payment liabilities; foreign
exchange gains/(losses) and the other adjustments reflected in our
reconciliation of historical non-IFRS financial measures, the
amounts of which, could be material.
Reconciliations of the historical non-IFRS measures presented in
this press release to their most directly comparable IFRS measures
are included in the accompanying tables.
The following tables reconcile Adjusted EBITDA and Adjusted
EBITDA Margin to the most directly comparable IFRS financial
performance measure, which are loss after tax and loss after tax
margin, respectively:
(in $ thousands, except as otherwise noted)
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Loss after
tax $
(77,686)
$
(95,392)
$
(90,484)
$
(110,126)
$
(373,688)
Net finance (income)/expense
(8,408)
(1,249)
10,689
(16,182)
(15,150)
Income tax expense/(benefit)
560
813
(104)
(108)
1,161
Depreciation and amortization
14,106
14,323
35,097
50,065
113,591
Share based payments (a)
38,714
45,710
31,760
42,238
158,422
(Gains)/losses on items held at fair value and remeasurements (b)
-
-
(32,286)
10,565
(21,721)
Other items (c)
2,493
(1,764)
10,061
5,584
16,374
Share of results of associates
(15)
(17)
(371)
38
(365)
Adjusted EBITDA $
(30,236)
$
(37,576)
$
(35,638)
$
(17,926)
$
(121,376)
Revenue $
174,064
$
209,260
$
255,481
$
382,232
$
1,021,037
Loss after tax margin
(44.6)%
(45.6)%
(35.4)%
(28.8)%
(36.6)%
Adjusted Revenue $
146,374
$
180,738
$
228,227
$
337,738
$
893,077
Adjusted EBITDA Margin
(20.7)%
(20.8)%
(15.6)%
(5.3)%
(13.6)%
(in $ thousands, except as otherwise noted)
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Loss after
tax $
(79,177)
$
(435,899)
$
(536,960)
$
(2,281,035)
$
(3,333,071)
Net finance (income)/expense
34,355
20,751
14,363
14,574
84,043
Income tax expense/(benefit)
2,506
(4,118)
2,882
(15,704)
(14,434)
Depreciation and amortization
51,323
51,758
54,007
60,135
217,223
Share based payments (a)
26,760
61,915
81,840
121,118
291,633
(Gains)/losses on items held at fair value and remeasurements (b)
(65,434)
278,622
373,079
2,057,306
2,643,573
Other items (c)
5,025
1,302
860
17,080
24,267
Impairment losses on tangible assets
2,292
-
-
699
2,991
Impairment losses on intangible assets
-
-
-
36,269
36,269
Share of results of associates
31
494
(385)
(66)
74
Adjusted EBITDA $
(22,319)
$
(25,175)
$
(10,314)
$
10,376
$
(47,432)
Revenue $
331,437
$
364,680
$
437,700
$
540,105
$
1,673,922
Loss after tax margin
(23.9)%
(119.5)%
(122.7)%
(422.3)%
(199.1)%
Adjusted Revenue $
301,152
$
307,877
$
386,778
$
464,887
$
1,460,694
Adjusted EBITDA Margin
(7.4)%
(8.2)%
(2.7)%
2.2%
(3.2)%
- Represents share based payment expense.
- Represents (gains)/losses on items held at fair value and
remeasurements. See “gains/(losses) on items held at fair value and
remeasurements” on page 27 for a breakdown of these items.
- Represents other items, which are outside the normal scope of
our ordinary activities. See “other items” on page 28 for a
breakdown of these expenses. Other items is included within
selling, general and administrative expenses.
The following tables reconcile Adjusted Revenue to the most
directly comparable IFRS financial performance measure, which is
revenue:
(in $ thousands, except as otherwise noted)
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Revenue
$
174,064
$
209,260
$
255,481
$
382,232
$
1,021,037
Less: Digital Platform Fulfilment Revenue
(27,690)
(28,522)
(27,254)
(44,494)
(127,960)
Adjusted Revenue
$
146,374
$
180,738
$
228,227
$
337,738
$
893,077
(in $ thousands, except as otherwise noted)
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Revenue
$
331,437
$
364,680
$
437,700
$
540,105
$
1,673,922
Less: Digital Platform Fulfilment Revenue
(30,285)
(56,803)
(50,922)
(75,218)
(213,228)
Adjusted Revenue
$
301,152
$
307,877
$
386,778
$
464,887
$
1,460,694
The following tables reconcile Digital Platform Order
Contribution and Digital Platform Order Contribution Margin to the
most directly comparable IFRS financial performance measure, which
are Digital Platform Gross Profit and Digital Platform Gross Profit
Margin, respectively:
(in $ thousands, except as otherwise noted)
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Digital
Platform Gross Profit $
80,941
$
84,106
$
83,294
$
123,572
$
371,913
Less: Demand generation expense
(31,423)
(34,444)
(34,321)
(51,162)
(151,350)
Digital Platform Order Contribution $
49,518
$
49,662
$
48,973
$
72,410
$
220,563
Digital Platform Services Revenue $
141,838
$
176,518
$
156,479
$
226,411
$
701,246
Digital Platform Gross Profit Margin
57.1%
47.6%
53.2%
54.6%
53.0%
Digital Platform Order Contribution Margin
34.9%
28.1%
31.3%
32.0%
31.5%
(in $ thousands, except as otherwise noted)
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Digital
Platform Gross Profit $
97,207
$
130,579
$
143,318
$
189,102
$
560,206
Less: Demand generation expense
(37,966)
(47,378)
(46,185)
(67,258)
(198,787)
Digital Platform Order Contribution $
59,241
$
83,201
$
97,133
$
121,844
$
361,419
Digital Platform Services Revenue $
185,177
$
237,603
$
263,035
$
347,341
$
1,033,156
Digital Platform Gross Profit Margin
52.5%
55.0%
54.5%
54.4%
54.2%
Digital Platform Order Contribution Margin
32.0%
35.0%
36.9%
35.1%
35.0%
The following tables reconcile Adjusted EPS to the most directly
comparable IFRS financial performance measure, which is Earnings
per share:
(per share amounts)
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Earnings
per share $
(0.26)
$
(0.31)
$
(0.30)
$
(0.34)
$
(1.21)
Share based payments (a)
0.13
0.15
0.11
0.12
0.50
Amortization of acquired intangible assets
0.01
0.01
0.06
0.09
0.17
(Gains)/losses on items held at fair value and remeasurements (b)
-
-
(0.10)
0.03
(0.07)
Other items (c)
0.01
(0.01)
0.03
0.02
0.05
Share of results of associates
(0.00)
(0.00)
(0.00)
(0.00)
0.00
Adjusted EPS $
(0.11)
$
(0.16)
$
(0.20)
$
(0.08)
$
(0.56)
(per share amounts)
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Earnings
per share $
(0.24)
$
(1.29)
$
(1.58)
$
(6.53)
$
(9.75)
Share based payments (a)
0.08
0.18
0.24
0.35
0.85
Amortization of acquired intangible assets
0.09
0.09
0.09
0.09
0.36
(Gains)/losses on items held at fair value and remeasurements (b)
(0.19)
0.82
1.08
5.88
7.69
Other items (c)
0.01
0.00
0.00
0.05
0.07
Impairment losses on tangible assets
0.01
-
-
-
0.01
Impairment losses on intangible assets
-
-
-
0.10
0.11
Share of results of associates
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
Adjusted EPS $
(0.24)
$
(0.20)
$
(0.17)
$
(0.06)
$
(0.66)
- Represents share based payment expense on a per share
basis.
- Represents (gains)/losses on items held at fair value and
remeasurements on a per share basis. See “gains/(losses) on items
held at fair value and remeasurements” on page 27 for a breakdown
of these items.
- Represents other items on a per share basis, which are outside
the normal scope of our ordinary activities. See “other items” on
page 28 for a breakdown of these expenses. Other items included
within selling, general and administrative expenses.
The following tables represent gains/(losses) on items held at
fair value and remeasurements:
(in $ thousands, except as otherwise noted)
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year Fair value
remeasurements:
Shares issued as part of New Guards
acquisition $
-
$
-
$
(21,526)
$
-
$
(21,526)
Present value remeasurements:
Chalhoub
put option
-
-
53,812
(8,959)
44,853
CuriosityChina call option
-
-
-
(1,606)
(1,606)
Gains / (losses) on items held at fair value and
remeasurements $
-
$
-
$
32,286
$
(10,565)
$
21,721
Farfetch
share price (end of day) $
26.91
$
20.80
$
8.64
$
10.35
$
10.35
(in $ thousands, except as otherwise noted)
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year Fair value
remeasurements:
$250 million 5.00% Notes due 2025
embedded derivative $
44,014
$
(135,093)
$
(138,171)
$
(749,004)
$
(978,254)
$400 million 3.75% Notes due 2027 embedded derivative
-
(77,758)
(157,108)
(869,078)
(1,103,944)
$600 million 0.00% Notes due 2030 embedded derivative
-
-
-
(272,522)
(272,522)
Present value remeasurements:
Chalhoub
put option
21,420
(65,771)
(77,800)
(165,776)
(287,927)
CuriosityChina call option
-
-
-
(926)
(926)
Gains / (losses) on items held at fair value and
remeasurements $
65,434
$
(278,622)
$
(373,079)
$
(2,057,306)
$
(2,643,573)
Farfetch
share price (end of day) $
7.90
$
17.27
$
25.16
$
63.81
$
63.81
The following tables represent other items:
(in $ thousands, except as otherwise noted)
2019
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Transaction-related legal and advisory expenses $
(2,493)
$
(2,236)
$
(5,061)
$
(5,584)
$
(15,374)
Release of tax provisions
-
4,000
-
-
4,000
Loss on impairment of investments carried at fair value
-
-
(5,000)
-
(5,000)
Other items $
(2,493)
$
1,764
$
(10,061)
$
(5,584)
$
(16,374)
(in $ thousands, except as otherwise noted)
2020
First
Second Third
Fourth
Full Quarter Quarter
Quarter Quarter Year
Transaction-related legal and advisory expenses $
(4,925)
$
(1,799)
$
(860)
$
(17,014)
$
(24,598)
Loss on impairment of investments carried at fair value
(100)
(69)
-
(66)
(235)
Other
-
566
-
-
566
Other items $
(5,025)
$
(1,302)
$
(860)
$
(17,080)
$
(24,267)
Definitions
We define our non-IFRS and other financial and operating metrics
as follows:
“Active Consumers” means active consumers on our directly owned
and operated sites and related apps. A consumer is deemed to be
active if they made a purchase within the last 12-month period,
irrespective of cancellations or returns. Active Consumers includes
Farfetch Marketplace, BrownsFashion.com, Stadium Goods, and New
Guards-owned sites operated by Farfetch Platform Solutions. Due to
technical limitations, Active Consumers is unable to fully de-dupe
Stadium Goods consumers from consumers on our other sites. The
number of Active Consumers is an indicator of our ability to
attract and retain our consumer base to our platform and of our
ability to convert platform visits into sale orders.
“Adjusted EBITDA” means net income/(loss) after taxes before net
finance expense/(income), income tax expense/(benefit) and
depreciation and amortization, further adjusted for share based
compensation expense, share of results of associates and items
outside the normal scope of our ordinary activities (including
other items, within selling, general and administrative expenses,
losses/(gains) on items held at fair value and remeasurements
through profit and loss, impairment losses on tangible assets, and
impairment losses on intangible assets). Adjusted EBITDA provides a
basis for comparison of our business operations between current,
past and future periods by excluding items that we do not believe
are indicative of our core operating performance. Adjusted EBITDA
may not be comparable to other similarly titled metrics of other
companies.
“Adjusted EBITDA Margin” means Adjusted EBITDA calculated as a
percentage of Adjusted Revenue.
“Adjusted EPS” means earnings per share further adjusted for
share based payments, amortization of acquired intangible assets,
items outside the normal scope of our ordinary activities
(including other items, within selling, general and administrative
expenses, losses/(gains) on items held at fair value and
remeasurements through profit and loss, impairment losses on
tangible assets, and impairment losses on intangible assets) and
the related tax effects of these adjustments. Adjusted EPS provides
a basis for comparison of our business operations between current,
past and future periods by excluding items that we do not believe
are indicative of our core operating performance. Adjusted EPS may
not be comparable to other similarly titled metrics of other
companies.
“Adjusted Revenue” means revenue less Digital Platform
Fulfilment Revenue.
“Average Order Value” (“AOV”) means the average value of all
orders excluding value added taxes placed on either the Farfetch
Marketplace or the Stadium Goods Marketplace, as indicated.
“Brand Platform Gross Profit” means Brand Platform Revenue less
the direct cost of goods sold relating to Brand Platform
Revenue.
“Brand Platform GMV” and “Brand Platform Revenue” mean revenue
relating to the New Guards operations less revenue from New
Guards’: (i) owned e-commerce websites, (ii) direct to consumer
channel via our Marketplaces and (iii) directly operated stores.
Revenue realized from Brand Platform is equal to GMV as such sales
are not commission based.
“Digital Platform Fulfilment Revenue” means revenue from
shipping and customs clearing services that we provide to our
digital consumers, net of Farfetch-funded consumer promotional
incentives, such as free shipping and promotional codes. Digital
Platform Fulfilment Revenue was referred to as Platform Fulfilment
Revenue in previous filings with the SEC.
“Digital Platform GMV” means GMV excluding In-Store GMV and
Brand Platform GMV. Digital Platform GMV was referred to as
Platform GMV in previous filings with the SEC.
“Digital Platform Gross Profit” means gross profit excluding
In-Store Gross Profit and Brand Platform Gross Profit. Digital
Platform Gross Profit was referred to as Platform Gross Profit in
previous filings with the SEC.
“Digital Platform Gross Profit Margin” means Digital Platform
Gross Profit calculated as a percentage of Digital Platform
Services Revenue. We provide fulfilment services to Marketplace
consumers and receive revenue from the provision of these services,
which is primarily a pass-through cost with no economic benefit to
us. Therefore, we calculate our Digital Platform Gross Profit
Margin, including Digital Platform third-party and first-party
gross profit margin, excluding Digital Platform Fulfilment
Revenue.
“Digital Platform Order Contribution” means Digital Platform
Gross Profit after deducting demand generation expense, which
includes fees that we pay for our various marketing channels.
Digital Platform Order Contribution provides an indicator of our
ability to extract digital consumer value from our demand
generation expense, including the costs of retaining existing
consumers and our ability to acquire new consumers. Digital
Platform Order Contribution was referred to as Platform Order
Contribution in previous filings with the SEC.
“Digital Platform Order Contribution Margin” means Digital
Platform Order Contribution calculated as a percentage of Digital
Platform Services Revenue. Digital Platform Order Contribution
Margin was referred to as Platform Order Contribution Margin in
previous filings with the SEC.
“Digital Platform Revenue” means the sum of Digital Platform
Services Revenue and Digital Platform Fulfilment Revenue. Digital
Platform Revenue was referred to as Platform Revenue in previous
filings with the SEC.
“Digital Platform Services Revenue” means Revenue less Digital
Platform Fulfilment Revenue, In-Store Revenue and Brand Platform
Revenue. Digital Platform Services Revenue is driven by our Digital
Platform GMV, including commissions from third-party sales and
revenue from first-party sales. Digital Platform Services Revenue
was also referred to as Adjusted Platform Revenue or Platform
Services Revenue in previous filings with the SEC.
“Digital Platform Services third-party
revenues” represent commissions and other income generated from the
provision of services to sellers in their transactions with
consumers conducted on our dematerialized platforms, as well as
fees for services provided to brands and retailers.
“Digital Platform Services first-party
revenues” represents sales of owned-product, including First-Party
Original through our digital platform. The revenue realized from
first-party sales is equal to the GMV of such sales because we act
as principal in these transactions and, therefore, related sales
are not commission based.
“Digital Platform Services third-party cost
of revenues” and “Digital Platform Services first-party cost of
revenues" include packaging costs, credit card fees, and
incremental shipping costs provided in relation to the provision of
these services. Digital Platform Services first-party cost of
revenues also includes the cost of goods sold of the owned
products.
“First-Party Original” refers to brands developed by New Guards
and sold direct to consumers on the digital platform.
“Gross Merchandise Value” (“GMV”) means the total dollar value
of orders processed. GMV is inclusive of product value, shipping
and duty. It is net of returns, value added taxes and
cancellations. GMV does not represent revenue earned by us,
although GMV and revenue are correlated.
“In-Store Gross Profit” means In-Store Revenue less the direct
cost of goods sold relating to In-Store Revenue.
“In-Store GMV” and “In-Store Revenue” mean revenue generated in
our retail stores which include Browns, Stadium Goods and New
Guards’ directly operated stores. Revenue realized from In-Store
sales is equal to GMV of such sales because such sales are not
commission based.
“Third-Party Take Rate” means Digital Platform Services Revenue
excluding revenue from first-party sales, as a percentage of
Digital Platform GMV excluding GMV from first-party sales and
Digital Platform Fulfilment Revenue. Revenue from first-party
sales, which is equal to GMV from first-party sales, means revenue
derived from sales on our platform of inventory purchased by
us.
Certain figures in the release may not recalculate exactly due
to rounding. This is because percentages and/or figures contained
herein are calculated based on actual numbers and not the rounded
numbers presented.
About Farfetch
Farfetch Limited is the leading global platform for the luxury
fashion industry. Founded in 2007 by José Neves for the love of
fashion, and launched in 2008, Farfetch began as an e-commerce
marketplace for luxury boutiques around the world. Today the
Farfetch Marketplace connects customers in over 190 countries and
territories with items from more than 50 countries and over 1,300
of the world’s best brands, boutiques and department stores,
delivering a truly unique shopping experience and access to the
most extensive selection of luxury on a single platform. Farfetch’s
additional businesses include Browns and Stadium Goods, which offer
luxury products to consumers, and New Guards Group, a platform for
the development of global fashion brands. Farfetch offers its broad
range of consumer-facing channels and enterprise level solutions to
the luxury industry under its Luxury New Retail initiative. The
Luxury New Retail initiative also encompasses Farfetch Platform
Solutions, which services enterprise clients with e-commerce and
technology capabilities, and innovations such as Store of the
Future, its connected retail solution.
For more information, please visit www.farfetchinvestors.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210225006151/en/
Investor Relations Contact:
Alice Ryder VP Investor Relations IR@farfetch.com
Media Contacts: Susannah
Clark VP Communications, Global susannah.clark@farfetch.com +44
7788 405224
Brunswick Group farfetch@brunswickgroup.com US: +1 (212) 333
3810 UK: +44 (0) 207 404 5959
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