- 2019 Gross Merchandise Value Exceeds $2 billion, up 52%
Year-on-Year
- 2019 Revenue Exceeds $1 billion, up 69%
Year-on-Year
- Q4 2019 Digital Platform GMV Grows 36% Year-over-Year (37%
on Constant Currency Basis)
- $102 million Brand Platform GMV in Q4 2019 Driven by Strong
Demand Across New Guards Portfolio
- Sequential Improvements in Gross Profit Margin and Digital
Platform Order Contribution Margin in Q4 2019
- Generated Positive Cash Flow in Q4 2019 to End Year with
$322 million Cash and Cash Equivalents; Augmented by $250 million
Convertible Senior Notes Issuance in February 2020
Farfetch Limited (NYSE: FTCH), the leading global technology
platform for the luxury fashion industry, today reported financial
results for the fourth quarter and full year ended December 31,
2019.
José Neves, Farfetch Founder, CEO and Co-Chair said: “2019 was a
landmark year for Farfetch as we grew our digital platform almost
twice as fast as the online luxury industry, and significantly
improved our adjusted EBITDA margins as we marched towards
profitability. With more than two million active customers and
record GMV, Farfetch is firmly established as the largest global
online destination for in-season luxury. At the same time, with
over 500 direct brand partners on the Farfetch Marketplace and more
than 20 enterprise clients for Farfetch Platform Solutions, we are
the clear digital partner of choice for luxury brands.
“As we move into 2020, we remain uniquely positioned to capture
the lion’s share of the $100 billion incremental opportunity in
online luxury. We have continued to attract and retain an
incredibly valuable and loyal luxury consumer base and captured
market share.
“I am also extremely pleased with New Guards’ contribution
towards our business, which, just six months from the acquisition,
is delivering increased traffic to the Marketplace, enhancing our
brand position and is accretive to our financials. On the
enterprise side of our business, I am ecstatic to have launched
Harrods global e-commerce presence on our platform.
“In light of the evolving novel coronavirus situation, which we
have naturally been monitoring to ensure the health and wellbeing
of all our teams, I am pleased to see that from a trading
perspective, there has not been a material impact to the business.
I believe our distributed platform model, which affords us with
more than $3 billion of third-party inventory across more than 50
countries, which we are able to ship to customers in 190 countries,
makes the Farfetch model particularly resilient to the situation,
at least in its current shape. However, circumstances regarding the
novel coronavirus situation remain uncertain, and as such we are
closely monitoring the situation as it evolves.”
Elliot Jordan, CFO of Farfetch, said: “Fourth quarter 2019 was a
record-setting quarter for Farfetch, where we beat our own
expectations of GMV growth, order contribution margin and adjusted
EBITDA. The Farfetch Marketplace continues to underpin GMV and
revenue growth within our digital platform, and the brand platform
is contributing meaningful revenue and profit following the
successful acquisition of New Guards Group in August.
“Looking towards 2020, we are well positioned to continue to
gain market share, and are forecasting strong GMV growth, with
substantial adjusted EBITDA improvement targeted for the year ahead
as we aim to balance our growth initiatives with continued
investments in the business in driving towards profitability in
2021.”
Consolidated Financial Summary and Key Operating Metrics
(in thousands, except per share data, Average Order Value, or
otherwise stated):
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
466,490
$
739,937
$
1,407,698
$
2,139,699
Revenue
195,533
382,232
602,384
1,021,037
Adjusted Revenue
170,089
337,738
504,590
893,077
Gross profit
94,197
176,136
298,450
459,846
Gross profit margin
48.2%
46.1%
49.5%
45.0%
Loss after tax
$
(9,912
)
$
(110,126
)
$
(155,575
)
$
(373,688
)
Adjusted EBITDA
(14,575
)
(17,926
)
(95,960
)
(121,376
)
Adjusted EBITDA Margin
(8.6)%
(5.3)%
(19.0)%
(13.6)%
Earnings per share (“EPS”)
$
(0.03
)
$
(0.34
)
$
(0.59
)
$
(1.21
)
Adjusted EPS
(0.02
)
(0.08
)
(0.38
)
(0.56
)
Digital Platform:
Digital Platform GMV
$
462,176
$
628,610
$
1,392,103
$
1,947,868
Digital Platform Services Revenue
165,775
226,411
488,995
701,246
Digital Platform Gross Profit
92,632
123,572
291,706
371,913
Digital Platform Gross Profit Margin
55.9%
54.6%
59.7%
53.0%
Digital Platform Order Contribution
$
58,698
$
72,410
$
194,411
$
220,563
Digital Platform Order Contribution
Margin
35.4%
32.0%
39.8%
31.5%
Active Consumers
1,382
2,068
1,382
2,068
Average Order Value (“AOV”) -
Marketplace
$
637
$
636
$
619
$
608
AOV - Stadium Goods
-
301
-
315
Brand Platform:
Brand Platform GMV
$
-
$
101,539
$
-
$
164,210
Brand Platform Revenue
-
101,539
-
164,210
Brand Platform Gross Profit
-
47,543
-
75,007
Brand Platform Gross Profit Margin
-
46.8%
-
45.7%
See “Metrics Definitions” on page 21 for further explanations,
including the renaming of previous “Platform” metrics to “Digital
Platform” metrics. See “Non-IFRS and Other Financial and Operating
Metrics” on page 22 for reconciliations of non-IFRS measures to
IFRS measures.
Recent Business Highlights
Digital Platform
- Digital Platform GMV increased 36% year-over-year to a record
$629 million in Q4 2019
- Third-party transactions generated 88% of Digital Platform GMV
at a 30.4% take rate in Q4 2019
- Digital Platform Fulfilment Revenue increased 75%
year-over-year in Q4 2019 on fewer Farfetch-funded promotions
- Largest ever Marketplace product selection offered in Q4 2019
with almost 370,000 SKUs, 7 times higher than the nearest
competitor, across more than 3,400 brands supplied by more than
1,200 sellers, including over 500 direct brand partners
- Maintained 100% three-year retention of top 100 direct brand
and top 100 boutique partners
- More loyal customers than ever, with enrollments in ACCESS
exceeding 1 million members in January 2020, less than one year
after global rollout; program driving uplift through higher
frequency of shopping, higher Average Order Value and increased
customer engagement
- Completed first $1 million customer transaction on the Farfetch
Marketplace in single sale of fine jewelry & watches via
Fashion Concierge, Farfetch’s conversational commerce solution
- Delivered new technology solutions for the Farfetch
Marketplace:
- In-house developed recommendation engine, Inspire, fully
rolled-out, driving improved conversion rates
- Farfetch mobile app experience enhanced through more
inspirational storytelling and browsing content, as well as
improved search navigation; also increased self-serve capabilities
allowing web consumers to manage orders without contacting customer
care
- Rolled out additional localized features for Farfetch consumers
in China
- Augmented reality feature for the China iOS App enabling
consumers to virtually try on shoes while browsing the Farfetch
Marketplace
- Increased search function flexibility enabling searches by
designer using either designers’ Chinese names or synonyms commonly
used in the Chinese language
- Harrods.com launched by Farfetch Platform Solutions in February
2020; now providing the 'world's most famous department store' with
a global e-commerce solution, leveraging the Farfetch platform to
provide e-concessions, global logistics - including China,
e-commerce management, and operations and technical support
New Guards
- New Guards’ brands generated $75 million Brand Platform Gross
Profit in first five months following the August 2019
acquisition
- Q4 2019 Off-White sales on the Farfetch Marketplace increased
more than 80% year-over-year; Off-White also named #1 Hottest Brand
by Lyst Index - the 6th consecutive quarter where it has been
ranked either #1 or #2 by the global fashion search engine
- New Guards added Ambush and Opening Ceremony to brand portfolio
in January 2020
Farfetch Limited
- In February 2020, completed the issuance of an aggregate
principal amount of $250 million convertible senior notes to
Tencent Holdings Ltd. and Dragoneer Investment Group adding to
year-end liquidity; cancelled existing undrawn €300 million senior
secured loan commitment with J.P. Morgan
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.
Fourth Quarter and Full Year 2019 Results Summary
Gross Merchandise Value (in thousands):
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Digital Platform GMV
$
462,176
$
628,610
$
1,392,103
$
1,947,868
Brand Platform GMV
-
101,539
-
164,210
In-Store GMV
4,314
9,788
15,595
27,621
GMV
$
466,490
$
739,937
$
1,407,698
$
2,139,699
Gross Merchandise Value (“GMV”) increased by $273.4 million from
$466.5 million in fourth quarter 2018 to $739.9 million in fourth
quarter 2019, representing year-over-year growth of 58.6%. Digital
Platform GMV increased by $166.4 million from $462.2 million in
fourth quarter 2018 to $628.6 million in fourth quarter 2019,
representing year-over-year growth of 36.0%. Excluding the impact
of changes in foreign exchange rates, Digital Platform GMV would
have increased by approximately 37.2%.
The increase in GMV primarily reflects the growth in Digital
Platform GMV and the addition of $101.5 million of Brand Platform
GMV from New Guards which we acquired in August 2019. The increase
in Digital Platform GMV was primarily driven by increases in Active
Consumers (up 49.6% in fourth quarter 2019) to 2.1 million in the
quarter, increase in supply available from 1,200 partners, growth
in supply from the additions of StadiumGoods.com, and increased
direct-to-consumer brand sales from New Guards driving an increase
in the volume of orders. This was partially offset by a decrease in
the blended Marketplace and Stadium Goods Average Order Values
across the Digital Platform. During fourth quarter 2019, we also
saw a year-over-year growth in transactions through our managed
websites supported by Farfetch Platform Solutions.
Revenue (in thousands):
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Digital Platform Services Revenue
$
165,775
$
226,411
$
488,995
$
701,246
Digital Platform Fulfilment Revenue
25,444
44,494
97,794
127,960
Brand Platform Revenue
-
101,539
-
164,210
In-Store Revenue
4,314
9,788
15,595
27,621
Revenue
$
195,533
$
382,232
$
602,384
$
1,021,037
Revenue increased by $186.7 million year-over-year from $195.5
million in fourth quarter 2018 to $382.2 million in fourth quarter
2019, representing growth of 95.5%. The increase was primarily
driven by 36.6% growth in Digital Platform Services Revenue to
$226.4 million and the addition of Brand Platform Revenue from New
Guards. In-Store Revenue increased by 126.9% to $9.8 million
primarily due to the addition of revenue from New Guards and
Stadium Goods directly-operated stores, as well as growth in Browns
stores.
The increase in Digital Platform Services Revenue of 36.6% was
driven by 36.0% growth in Digital Platform GMV. Digital Platform
Services Revenue was also boosted by growth in first-party GMV,
which increased 55% year-over-year and is included in Digital
Platform Services Revenue at 100% of the GMV. This was partially
offset by a decline in Third-Party Take Rate to 30.4% in fourth
quarter 2019, from 31.9% in fourth quarter 2018.
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 2019, Digital Platform Fulfilment Revenue increased
74.9%, a higher rate as compared to Digital Platform Services
Revenue growth, primarily due to reduced Farfetch-funded consumer
promotions year-over-year.
Cost of Revenue (in thousands)
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Digital Platform Services cost of
revenue
$
73,143
$
102,839
$
197,289
$
329,333
Digital Platform Fulfilment cost of
revenue
25,444
44,494
97,794
127,960
Brand Platform cost of revenue
-
53,996
-
89,203
In-Store cost of goods sold
2,749
4,767
8,851
14,695
Cost of revenue
$
101,336
$
206,096
$
303,934
$
561,191
Cost of revenue increased by $104.8 million, or 103.4%
year-over-year from $101.3 million in fourth quarter 2018 to $206.1
million in fourth quarter 2019. The increase was primarily driven
by the addition of Brand Platform cost of revenue related to New
Guards and growth in first-party GMV and the associated cost of
goods, delivery costs and duties on an increased volume of
transactions, and growth in our In-Store revenue and the associated
costs of goods sold.
Gross profit (in thousands)
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Digital Platform Gross Profit
$
92,632
$
123,572
$
291,706
$
371,913
Brand Platform Gross Profit
-
47,543
-
75,007
In-Store Gross Profit
1,565
5,021
6,744
12,926
Gross profit
$
94,197
$
176,136
$
298,450
$
459,846
Gross profit increased by $81.9 million, or 87.0%
year-over-year, from $94.2 million in fourth quarter 2018 to $176.1
million in fourth quarter 2019, primarily due to the growth in our
Digital Platform Services Revenue and the addition of New Guards
Brand Platform operations. Gross profit margin in fourth quarter
decreased from 48.2% to 46.1% year-over-year, primarily driven by a
lower Digital Platform Gross Profit Margin, due to an increased mix
of brand partner sales in our total third-party sales and an
increase of first-party sales in our total sales volumes, both of
which have lower gross margin profiles. The impacts were partially
offset by an increase of In-Store Gross Profit Margin, primarily
due to New Guards directly-operated stores, and reduced
Farfetch-funded consumer promotions.
Selling, general and administrative expenses by type (in
thousands):
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Demand generation expense
$
33,934
$
51,162
$
97,295
$
151,350
Technology expense
18,159
22,653
68,224
84,207
Depreciation and amortization
7,185
50,065
23,537
113,591
Share based payments
2,821
42,238
53,819
158,422
General and administrative
56,679
120,247
228,891
345,665
Other items
-
5,584
-
16,374
Selling, general and
administrative expense
$
118,778
$
291,949
$
471,766
$
869,609
Fourth quarter 2019 demand generation expense increased 50.8%
year-over-year to $51.2 million, or to 22.6% of Digital Platform
Services Revenue as compared to 20.5% in fourth quarter 2018,
reflecting a higher proportion of paid investments in customer
acquisition and retention efforts. This increase contributed to a
49.6% increase in Active Consumers in fourth quarter 2019, driving
a higher volume of orders.
Technology expense, which is primarily related to development
and operations of our platform features and services, and also
includes software, hosting and infrastructure expenses, increased
by $4.5 million, or 24.7%, in fourth quarter 2019 from fourth
quarter 2018, primarily driven by an increase in technology staff
headcount. We continue to operate three globally distributed data
centers, which support the processing of our growing base of
transactions, including one in Shanghai dedicated to serving our
Chinese customers. Technology expense as a percentage of Adjusted
Revenue in fourth quarter decreased from 10.7% to 6.7%
year-over-year as Adjusted Revenue grew at a rate greater than the
underlying costs.
Depreciation and amortization expense increased by $42.9 million
or 596.8% year-over-year from $7.2 million in fourth quarter 2018
to $50.1 million in fourth quarter 2019. Amortization expense
increased principally due to $30.0 million of amortization
recognized on intangible assets acquired in recent acquisitions.
Depreciation expense increased, driven by the first-time adoption
of the new leasing accounting standard, IFRS 16, on January 1,
2019, resulting in the recognition of $5.4 million of depreciation
related to right-of-use assets in fourth quarter 2019. In fourth
quarter 2018, the comparative expense for operating leases was
included in general and administrative expense. Depreciation
expense also increased as a result of the continued investment into
technology, where qualifying technology development costs are
capitalized and amortized over a three-year period.
Share based payments increased by $39.4 million or 1397%
year-over-year in fourth quarter 2019 from fourth quarter 2018.
This impact was due to a $24.8 million year-over-year increase in
share based payment expense for equity-settled awards, which was
driven by a $17.9 million increase related to additional employee
awards and $6.9 million from acquisition-related long-term employee
incentives. In addition, there was a $14.6 million year-over-year
difference between the quarterly adjustments to provisions for
cash-settled payment awards, which are remeasured to their fair
value based on our share price, and the related employment taxes.
The year-over-year difference was driven by an increase in our
share price during fourth quarter 2019 that resulted in an
additional $2.6 million expense from increase in our provision for
the current period, compared to the decrease in our share price
during fourth quarter 2018 that resulted in a reversal of the
expense by $12 million from a decrease in the provision for the
period.
General and administrative expense increased by $63.6 million,
or 112.2%, year-over-year in fourth quarter 2019 compared to fourth
quarter 2018, reflecting the additional expenses related to the
Stadium Goods and New Guards businesses, both of which were
acquired during 2019, and an increase in non-technology headcount
across a number of areas to support the expansion of our business.
This was partially offset by a lower total employee cost per person
and the impact of adopting IFRS 16 on January 1, 2019. General and
administrative costs as a percentage of Adjusted Revenue increased
from 33.3% in fourth quarter 2018 to 35.6% in fourth quarter 2019,
due to the recognition of employee compensation in the fourth
quarter 2019 compared to a reversal in fourth quarter 2018. This
was partially offset by the addition of New Guards, which operates
with lower general and administrative costs as a percentage of
Adjusted Revenue, and the impact of adopting IFRS 16.
Other items of $5.6 million in fourth quarter 2019 reflect
transaction-related legal and advisory expenses. There were no such
items in fourth quarter 2018.
(Losses)/ gains on items held at fair value (in thousands):
Three months ended December
31,
Twelve Months Ended December
31,
2018
2019
2018
2019
Change in fair value of put and call
option liabilities
$
-
$
(10,565
)
$
-
$
43,247
Change in fair value of acquisition
related consideration
-
-
-
(21,526
)
(Losses)/ gains on items
held at fair value
$
-
$
(10,565
)
$
-
$
21,721
Losses on items held at fair value totaled $10.6 million in
fourth quarter 2019 and relates to acquisition-related and
strategic partnership liabilities held at fair value, which are
impacted by movements in our share price. There were no such items
in fourth quarter 2018.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA loss increased by $3.4 million, or 23.0%,
year-over-year in fourth quarter 2019, to $17.9 million, for the
reasons described above. Adjusted EBITDA Margin improved from
(8.6)% to (5.3)% over the same prior year period, primarily
reflecting lower demand generation and technology expenses as
percentages of Adjusted Revenue, as well as the impact of adopting
IFRS 16 on January 1, 2019, as described above, and was partially
offset by lower gross profit margin and marginally higher general
and administrative expenses as a percentage of Adjusted
Revenue.
Loss After Tax
Loss after tax increased by $100.2 million, or 1011.0%
year-over-year, in fourth quarter 2019 to $110.1 million. The
increase was largely driven by the movements in depreciation and
amortization expense, share based payments, and other items, as
explained above, resulting in an increase in the operating loss
from $24.6 million to $126.4 million, and the impact of net
unrealized foreign exchange gains on revaluation of non-United
States Dollar denominated receivables and payables.
Liquidity
At December 31, 2019 cash and cash equivalents was $322.4
million, a decrease of $722.4 million compared to $1.04 billion at
December 31, 2018. The decrease in cash and cash equivalents is
primarily due to our investing activities which included the
strategic acquisitions of Stadium Goods, New Guards and
CuriosityChina.
On February 5, 2020, we completed the private placement of
convertible senior notes (the “Notes”) to Tencent and Dragoneer,
pursuant to which we received $250 million. The Notes will mature
on December 31, 2025, unless earlier converted, redeemed or
repurchased in accordance with their terms. The Notes are senior,
unsecured obligations and bear interest at a rate of 5.00% per
year, payable quarterly in arrears on March 31, June 30, September
30, and December 31 of each year, commencing on March 31, 2020. The
Notes may be converted at an initial conversion price of $12.25.
Upon conversion, the Notes will be settled, at our election, in our
Class A ordinary shares, cash, or a combination of cash and Class A
ordinary shares (subject to certain exceptions set forth in the
Notes indenture). Holders of the Notes will have the right to
require us to repurchase all or some of their Notes for cash at
100% (or 150%, in the event of a change in control, as defined in
the Indenture) of their principal amount, plus all accrued and
unpaid interest to, and including, the maturity date, upon the
occurrence of certain corporate events, subject to certain
conditions. In conjunction with this transaction, we cancelled our
existing €300 million senior secured loan commitment with J.P.
Morgan.
Outlook
The following forward-looking statements reflect Farfetch’s
expectations as of February 27, 2020. In light of the heightened
uncertainty recently created by the spread of the novel
coronavirus, it is possible that our performance and projections
could be impacted by disruptions caused by this situation.
For Full Year 2020:
- GMV growth of 40% to 45% to $3.00 billion to $3.10 billion
- Digital Platform GMV growth of approximately 30% to $2.50
billion to $2.56 billion
- Brand Platform GMV of $470 million to $510 million
- Adjusted EBITDA loss of $(70) million to $(80) million
For First Quarter 2020:
- GMV growth of 44% to 51% year-over-year
- Digital Platform GMV growth of 20% to 22% year-over-year
- Brand Platform GMV of $100 million to $120 million
- Adjusted EBITDA loss of $(30) million to (35) million
Conference Call Information
Farfetch will host a conference call today, February 27, 2020 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)
2018
2019
Revenue
195,533
382,232
Cost of revenue
(101,336)
(206,096)
Gross profit
94,197
176,136
Selling, general and administrative
expenses
(118,778
)
(291,949
)
Losses on items held at fair value
-
(10,565
)
Share of results of associates
15
(38)
Operating loss
(24,566
)
(126,416
)
Finance income
15,384
19,252
Finance cost
(469)
(3,070)
Loss before tax
(9,651
)
(110,234
)
Income tax (expense)/benefit
(261
)
108
Loss after tax
(9,912)
(110,126)
(Loss)/profit after tax attributable
to:
Owners of the company
(9,912
)
(116,907
)
Non-controlling interests
-
6,781
(9,912
)
(110,126
)
Loss per share attributable to owners
of the company
Basic and diluted
(0.03
)
(0.34
)
Weighted-average ordinary shares
outstanding
Basic and diluted
299,495,657
339,495,707
Unaudited interim condensed
consolidated statements of comprehensive loss
for the three months ended December
31
(in $ thousands, except share and per
share data)
2018
2019
Loss for the period
(9,912
)
(110,126
)
Other comprehensive
(loss)/income:
Items that may be subsequently
reclassified to the consolidated
statement of operations (net of tax):
Exchange differences on translation of
foreign operations
(7,305
)
(25,838
)
Gain on cash flow hedges
436
4,777
Items that will not be subsequently
reclassified to the consolidated statement of operations (net of
tax):
Remeasurement loss on severance plan
-
(27)
Other comprehensive loss for the
period, net of tax
(6,869)
(21,088)
Total comprehensive loss for the
period, net of tax
(16,781)
(131,214)
Total comprehensive (loss)/income
attributable to:
Owners of the company
(16,781)
(137,995
)
Non-controlling interests
-
6,781
(16,781)
(131,214)
Unaudited interim condensed
consolidated statements of operations
for the twelve months ended December
31
(in $ thousands, except share and per
share data)
2018
2019
Revenue
602,384
1,021,037
Cost of revenue
(303,934)
(561,191)
Gross profit
298,450
459,846
Selling, general and administrative
expenses
(471,766
)
(869,609
)
Gains on items held at fair value
-
21,721
Share of profits of associates
33
366
Operating loss
(173,283
)
(387,676
)
Finance income
38,182
34,382
Finance cost
(18,316
)
(19,232
)
Loss before tax
(153,417
)
(372,526
)
Income tax expense
(2,158
)
(1,162
)
Loss after tax
(155,575)
(373,688)
(Loss)/profit after tax attributable
to:
Owners of the company
(155,575
)
(385,297
)
Non-controlling interests
-
11,609
(155,575)
(373,688)
Loss per share attributable to owners
of the company
Basic and diluted
(0.59
)
(1.21
)
Weighted-average ordinary shares
outstanding
Basic and diluted
264,432,214
318,843,239
Unaudited interim condensed
consolidated statements of comprehensive loss
for the twelve months ended December
31
(in $ thousands)
2018
2019
Loss for the period
(155,575
)
(373,688
)
Other comprehensive
(loss)/income:
Items that may be subsequently
reclassified to the consolidated
statement of operations (net of tax):
Exchange differences on translation of
foreign operations
(24,142
)
(7,333
)
Gains/(losses) on cash flow hedges
436
(3,384
)
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)
Other comprehensive loss for the
period, net of tax
(23,706)
(10,875)
Total comprehensive loss for the
period, net of tax
(179,281)
(384,563)
Total comprehensive (loss)/income
attributable to:
Owners of the company
(179,281)
(396,172
)
Non-controlling interests
-
11,609
(179,281)
(384,563)
Unaudited interim condensed
consolidated statements of financial position
(in $ thousands)
December 31,
2018
December 31,
2019
Non-current assets
Trade and other receivables
10,458
12,388
Deferred tax assets
-
5,324
Intangible assets, net
103,345
1,362,967
Property, plant and equipment, net
37,528
67,999
Right-of-use assets
-
115,176
Investments
566
16,229
Investments in associates
86
2,466
Total non-current assets
151,983
1,582,549
Current assets
Inventories
60,954
128,107
Trade and other receivables
93,670
194,794
Cash and cash equivalents
1,044,786
322,429
Total current assets
1,199,410
645,330
Total assets
1,351,393
2,227,879
Equity and liabilities
Equity
Share capital
11,994
13,584
Share premium
772,300
878,007
Merger reserve
783,529
783,529
Foreign exchange reserve
(23,509
)
(30,842
)
Other reserves
67,474
450,774
Accumulated losses
(483,357
)
(826,135
)
Equity attributable to owners of the
company
1,128,431
1,268,917
Non-controlling interests
-
68,915
Total equity
1,128,431
1,337,832
Non-current liabilities
Provisions
13,462
23,704
Lease liabilities
-
100,833
Deferred tax liabilities
-
219,789
Other liabilities
15,342
16,455
Put and call option liabilities
-
61,268
Total non-current liabilities
28,804
422,049
Current liabilities
Trade and other payables
194,158
447,586
Lease liabilities
-
18,485
Put and call option liabilities
-
1,118
Other current financial liabilities
-
809
Total current liabilities
194,158
467,998
Total liabilities
222,962
890,047
Total equity and liabilities
1,351,393
2,227,879
Unaudited interim condensed
consolidated statements of cash flows
for the twelve months ended December
31
(in $ thousands)
2018
2019
Cash flows from operating
activities
Loss before tax
(153,417
)
(372,526
)
Adjustments, net of impact of
acquisitions, for:
Depreciation
7,338
28,536
Amortization
16,199
85,055
Non-cash employee benefits expense
53,819
138,195
Net loss/(gain) on sale of non-current
assets
1,028
(144
)
Share of results of associates
(33
)
(366
)
Net finance income
(19,866
)
(15,150
)
Net exchange differences
7,621
(842
)
Impairment of investments
-
5,000
Change in the fair value of
derivatives
(506
)
(117
)
Change in the fair value of put and call
option liabilities
-
(43,247
)
Change in the fair value of acquisition
related consideration
-
21,526
Change in working capital
Increase in receivables
(72,151
)
(51,273
)
Increase in inventories
(10,345
)
(29,723
)
allIncrease in payables
57,432
113,721
Change in other assets and
liabilities
Increase in non-current receivables
(1,265
)
3,723
Increase in other liabilities
-
11,575
Decrease in provisions
(701
)
(4,252
)
Interest received
-
11,259
Other items
(536
)
(5
)
Income taxes paid
(822
)
(16,328
)
Net cash outflow from operating
activities
(116,205
)
(115,383
)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
-
(461,691
)
Proceeds on disposal of property, plant
and equipment
-
272
Payments for property, plant and
equipment
(21,137
)
(39,512
)
Payments for intangible assets
(50,978
)
(72,985
)
Interest received
8,865
-
Payments for investments
(288
)
(20,846
)
Net cash outflow from investing
activities
(63,538
)
(594,762
)
Cash flows from financing
activities
Proceeds from issue of shares, net of
issue costs
859,526
8,654
Repayment of the principal elements of
lease payments
-
(19,127
)
Interest and fees paid on loan note and
commitment
-
(4,776
)
Net cash inflow/(outflow) from
financing activities
859,526
(15,249
)
Net increase/(decrease) in cash and
cash equivalents
679,783
(725,394
)
Cash and cash equivalents at the beginning
of the period
384,002
1,044,786
Effects of exchange rate changes on cash
and cash equivalents
(18,999
)
3,037
Cash and cash equivalents at end of
period
1,044,786
322,429
Unaudited interim condensed
consolidated statements of changes in equity
(in $ thousands)
Share
capital
Share
premium
Merger
reserve
Foreign
exchange reserve
Other
reserves
Accumulated
losses
Equity
attributable to
the parent
Non- controlling
interest
Total
equity
Balance at January 1, 2018
9,298
677,674
-
633
38,475
(329,177
)
396,903
-
396,903
Changes in equity
Loss for the year
-
-
-
-
-
(155,575
)
(155,575
)
-
(155,575
)
Other comprehensive (loss)/income
-
-
-
(24,142
)
436
(23,706
)
-
(23,706
)
Capital reorganization
652
(677,674
)
783,529
-
-
-
106,507
-
106,507
Issue of share capital, net of transaction
costs
2,044
772,300
-
-
-
-
774,344
-
774,344
Share based payment – equity settled
-
-
-
-
28,563
1,395
29,958
-
29,958
Balance at December 31, 2018
11,994
772,300
783,529
(23,509
)
67,474
(483,357
)
1,128,431
-
1,128,431
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 for the year
-
-
-
-
-
(385,297
)
(385,297
)
11,609
(373,688
)
Other comprehensive loss
-
-
-
(7,333
)
(3,542
)
-
(10,875
)
-
(10,875
)
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
)
Transactions with non-controlling
interests
-
-
-
-
-
-
-
(101,311
)
(101,311
)
Non-controlling interest arising from a
business combination
-
-
-
-
-
-
-
158,617
158,617
Non-controlling interest call option
-
-
-
-
-
(4,322
)
(4,322
)
-
(4,322
)
Balance at December 31, 2019
13,584
878,007
783,529
(30,842
)
450,774
(826,135
)
1,268,917
68,915
1,337,832
Supplemental Metrics1
2018
First
Quarter
Second Quarter
Third
Quarter
Fourth Quarter
Full Year
(in thousands, except per
share data, Average Order Value, or otherwise stated)
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
292,692
$
338,543
$
309,973
$
466,490
$
1,407,698
Revenue
125,617
146,693
134,541
195,533
602,384
Adjusted Revenue
103,082
118,677
112,742
170,089
504,590
In-Store Revenue
4,021
3,170
4,090
4,314
15,595
Gross profit
61,173
75,693
67,387
94,197
298,450
Gross profit margin
48.7%
51.6%
50.1%
48.2%
49.5%
Demand generation expense
$
(19,363
)
$
(21,895
)
$
(22,103
)
$
(33,934
)
$
(97,295
)
Technology expense
(13,896
)
(17,135
)
(19,034
)
(18,159
)
(68,224
)
Share based payments
(6,567
)
(5,956
)
(38,475
)
(2,821
)
(53,819
)
Depreciation and amortization
(4,875
)
(5,463
)
(6,014
)
(7,185
)
(23,537
)
General and administrative
(51,571
)
(62,080
)
(58,561
)
(56,679
)
(228,891
)
Other items
-
-
-
-
-
Loss after tax
(50,727
)
(17,681
)
(77,255
)
(9,912
)
(155,575
)
Adjusted EBITDA
(23,657
)
(25,417
)
(32,311
)
(14,575
)
(95,960
)
Adjusted EBITDA Margin
(22.9)%
(21.4)%
(28.7)%
(8.6)%
(19.0)%
Earnings per share (“EPS”)
$
(0.20
)
$
(0.07
)
$
(0.30
)
$
(0.03
)
$
(0.59
)
Adjusted EPS
(0.18
)
(0.05
)
(0.15
)
(0.02
)
(0.38
)
Digital Platform:
Digital Platform GMV
$
288,671
$
335,373
$
305,883
$
462,176
$
1,392,103
Digital Platform Services Revenue
99,061
115,507
108,652
165,775
488,995
Digital Platform Fulfilment Revenue
22,535
28,016
21,799
25,444
97,794
Digital Platform Gross Profit
59,365
74,222
65,487
92,632
291,706
Digital Platform Gross Profit Margin
59.9%
64.3%
60.3%
55.9%
59.7%
Digital Platform Order Contribution
$
40,002
$
52,327
$
43,384
$
58,698
$
194,411
Digital Platform Order Contribution
Margin
40.4%
45.3%
39.9
%
35.4%
39.8%
Active Consumers
1,034
1,139
1,240
1,382
1,382
AOV - Marketplace
$
647
$
602
$
585
$
637
$
619
AOV - Stadium Goods
-
-
-
-
-
Brand Platform:
Brand Platform GMV
$
-
$
-
$
-
$
-
$
-
Brand Platform Revenue
-
-
-
-
-
Brand Platform Gross Profit
-
-
-
-
-
Brand Platform Gross Profit Margin
-
-
-
-
-
- See “Metrics Definitions” on page 21 for further explanations,
including the renaming of previous “Platform” metrics to “Digital
Platform” metrics. See “Non-IFRS and Other Financial and Operating
Metrics” for reconciliations of non-IFRS measures to IFRS
measures.
Supplemental Metrics1
2019
First
Quarter
Second Quarter
Third
Quarter
Fourth
Quarter
Full Year
(in thousands, except per
share data, Average Order Value, 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
)
Loss after tax 2
(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”) 2
$
(0.26
)
$
(0.31
)
$
(0.30
)
$
(0.34
)
$
(1.21
)
Adjusted EPS 2
(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%
- See “Metrics Definitions” on page 21 for further explanations,
including the renaming of previous “Platform” metrics to “Digital
Platform” metrics. See “Non-IFRS and Other Financial and Operating
Metrics” for reconciliations of non-IFRS measures to IFRS
measures.
- See “Corrections For Foreign Exchange Movements” for further
explanations on the correction of our quarterly EPS
calculations.
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
expected financial performance and operational performance for the
first quarter of 2020 and fiscal year ending December 31, 2020, 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; 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; impact of general economic factors, natural
disasters or other unexpected events, for example the outbreak of
COVID-19; 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, 2018 and our Annual Report on Form 20-F for the fiscal year
ended December 31, 2019 to be filed with the SEC, as such factors
may be updated from time to time in our other filings with the SEC,
which are 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.
Metrics Definitions
We previously defined Active Consumers as active consumers on
the Farfetch Marketplace. Following the acquisition of Stadium
Goods on January 4, 2019, which is included in our consolidated
results, we have multiple marketplaces within our consolidated
group. As a result, Stadium Goods is now included in Active
Consumers, and for completeness we now include BrownsFashion.com, a
directly owned and operated site, within Active Consumers as well.
We have revised our previously reported Active Consumers disclosure
to include BrownsFashion.com Active Consumers for all reported
periods. Active Consumers does not currently include those
generated from New Guards owned and operated sites.
We also believe it is more useful to present AOV for both
Farfetch Marketplace and Stadium Goods, as they operate at two
different price points. We have presented these as separate metrics
from January 4, 2019, being the acquisition date of Stadium
Goods.
In addition, we no longer believe “Number of Orders” on the
Farfetch Marketplace provides a meaningful view of business
performance, and we will not report this metric going forward.
As we acquired New Guards in August 2019, our results for the
year ended December 31, 2019, only reflect five months of New
Guards’ performance.
The introduction of the term “Digital Platform” with reference
to GMV, Revenue and other metrics is intended to distinguish
between activities that occurred through our owned and operated
e-commerce platforms (e.g. Farfetch.com, BrownsFashion.com,
off---white.com) and the Brand Platform operations of New Guards,
where GMV and Revenue are derived from our transactions with
independent third party retailers or wholesalers. Such metrics were
previously referred to as “Platform.” No changes have been made to
how we calculate the Digital Platform metrics from how we
calculated Platform metrics.
Revisions to Previously Reported Financial
Information
Reclassification of Third-Party Sales
We have revised previously reported revenues and cost of
revenues for each of the first three quarters of 2018 to reflect
certain sales originally reported on a third-party basis (i.e., net
revenue presentation), as being on a first-party basis (i.e. gross
revenue presentation). These revisions had no impact on gross
profit or loss after tax in those periods and had no impact on any
of our unaudited condensed consolidated statements of financial
position, changes in equity or cash flows during 2018. We
determined that these revisions are immaterial to the previously
reported financial information, and there is no impact on any
previously issued annual financial statements. There was no impact
to other prior periods.
Corrections for Foreign Exchange Movements
In connection with the preparation of the Company’s consolidated
financial statements for the year ended December 31, 2019, an error
was identified in relation to the accounting for unrealized foreign
exchange movements on intercompany loan balances reported in our
results for the quarterly periods ended March 31, 2019, June 30,
2019 and September 30, 2019. This was recorded and reported in the
unaudited interim condensed consolidated statements of operations
in the finance income and finance cost line items, which are not
included within operating loss and only impacts the mentioned
periods with no impact on the annual 2019 results. As compared to
what was previously reported for each respective period, the
correction results in a $31.6 million decrease in loss after tax
and a decrease in loss per share of $0.10 for the quarterly period
ended March 31, 2019; a $5.8 million increase in loss after tax and
an increase in loss per share of $0.02 for the quarterly period
ended June 30, 2019; and a $5.0 million increase in loss after tax
and an increase in loss per share of $0.02 for the quarterly period
ended September 30, 2019. The cumulative net effect of the
adjustment across the three relevant quarters was a decrease of the
Company’s loss after tax by $20.8 million and a decrease in loss
per share of $0.06. These revisions had no impact on gross profit,
operating loss or Adjusted EBITDA and had no impact on total
assets, total liabilities, total equity or total cash flows, in
those periods. The Company evaluated these amounts for each period
and has concluded that while they are immaterial to the previously
reported financial statements, they should be corrected by revising
the previously reported financial information when such amounts are
presented for comparative purposes. Management will also be
considering this correction alongside the assessment of its
internal control framework as contained within our annual report on
Form 20-F for the fiscal year ended December 31, 2019 to be filed
with the SEC. The results presented within the 2019 Supplemental
Metrics have been corrected to reflect the above.
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 Gross Profit Margin,
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.
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 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 the Non-IFRS Measures 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 these non-IFRS measures to the most directly
comparable IFRS measure are included in the accompanying
tables.
The following table reconciles Adjusted EBITDA to the most
directly comparable IFRS financial performance measure, which is
loss after tax:
(in $ thousands, except as otherwise
noted)
2018
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full Year
Loss after tax
$
(50,727
)
$
(17,681
)
$
(77,255
)
$
(9,912
)
$
(155,575
)
Net finance (income)/expense
15,101
(19,319
)
(733
)
(14,915
)
(19,866
)
Income tax expense
527
187
1,183
261
2,158
Depreciation and amortization
4,875
5,463
6,014
7,185
23,537
Share based payments (a)
6,567
5,956
38,475
2,821
53,819
(Gains)/ losses on items held at fair
value (b)
-
-
-
-
-
Other items (c)
-
-
-
-
-
Share of results of associates
-
(23
)
5
(15
)
(33
)
Adjusted EBITDA
$
(23,657
)
$
(25,417
)
$
(32,311
)
$
(14,575
)
$
(95,960
)
(in $ thousands, except as otherwise
noted)
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full 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 (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
)
- Represents share-based payment expense.
- Represents (gains)/losses on items held at fair value. There
was a net gain in third quarter 2019 of $32.3 million and a loss in
fourth quarter 2019 of $10.6 million recognized on the revaluation
of liabilities held at fair value and impacted by movements in our
share price. In third quarter 2019 the net gain of $32.3 million
comprised of the fair value revaluation gain of $53.8 million in
respect of our partnership with Chalhoub Group, partially offset by
a charge in respect of the fair value remeasurement ($21.5 million)
of shares issued following the acquisition of New Guards Group. In
fourth quarter 2019 the loss of $10.6 million comprised of the fair
value revaluation loss of $9.0 million in respect of our
partnership with Chalhoub Group, and $1.6 million fair value
revaluation loss related to our call option over the remaining
non-controlling interest in CuriosityChina.
- 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 table reconciles Adjusted Revenue to the most
directly comparable IFRS financial performance measure, which is
revenue:
(in $ thousands, except as otherwise
noted)
2018
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full Year
Revenue
$
125,617
$
146,693
$
134,541
$
195,533
$
602,384
Less: Digital Platform Fulfilment
Revenue
(22,535
)
(28,016
)
(21,799
)
(25,444
)
(97,794
)
Adjusted Revenue
$
103,082
$
118,677
$
112,742
$
170,089
$
504,590
(in $ thousands, except as otherwise
noted)
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full 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
The following table reconciles Digital Platform Order
Contribution to the most directly comparable IFRS financial
performance measure, which is Digital Platform Gross Profit:
(in $ thousands, except as otherwise
noted)
2018
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full Year
Digital Platform Gross Profit
$
59,365
$
74,222
$
65,487
$
92,632
$
291,706
Less: Demand generation expense
(19,363
)
(21,895
)
(22,103
)
(33,934
)
(97,295
)
Digital Platform Order
Contribution
$
40,002
$
52,327
$
43,384
$
58,698
$
194,411
(in $ thousands, except as otherwise
noted)
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full 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
The following table reconciles Adjusted EPS to the most directly
comparable IFRS financial performance measure, which is Earnings
per share:
(per share amounts)
2018
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full Year
Earnings per share
$
(0.20
)
$
(0.07
)
$
(0.30
)
$
(0.03
)
$
(0.59
)
Share based payments (a)
0.02
0.02
0.15
0.01
0.20
Amortization of acquired intangible
assets
-
-
-
-
0.01
(Gains)/ losses on items held at fair
value (b)
-
-
-
-
-
Other items (c)
-
-
-
-
-
Share of results of associates
-
(0.00
)
0.00
(0.00
)
(0.00
)
Adjusted EPS
$
(0.18
)
$
(0.05
)
$
(0.15
)
$
(0.02
)
$
(0.38
)
(per share amounts)
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full 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 (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
)
- Represents share-based payment expense on a per share
basis.
- Represents (gains)/losses on items held at fair value. There
was a net gain in third quarter 2019 of $32.3 million and a loss in
fourth quarter 2019 of $10.6 million recognized on the revaluation
of liabilities held at fair value and impacted by movements in our
share price. In third quarter 2019 the net gain of $32.3 million
comprised of the fair value revaluation gain of $53.8 million in
respect of our partnership with Chalhoub Group, partially offset by
a charge in respect of the fair value remeasurement ($21.5 million)
of shares issued following the acquisition of New Guards Group. In
fourth quarter 2019 the loss of $10.6 million comprised of the fair
value revaluation loss of $9.0 million in respect of our
partnership with Chalhoub Group, and $1.6 million fair value
revaluation loss related to our call option over the remaining
non-controlling interest in CuriosityChina.
- 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 table represents other items:
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full 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
)
$
(2,493
)
$
1,764
$
(10,061
)
$
(5,584
)
$
(16,374
)
There were no other items during 2018.
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 and Stadium Goods. Due to
technical limitations, Active Consumers is unable to fully de-dupe
Stadium Goods consumers from Farfetch Marketplace or
BrownsFashion.com consumers. Active Consumers does not currently
include those generated from New Guards owned and operated 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 loss after taxes before net finance
expense/ (income), income tax (credit)/expense 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, and
(losses)/gains on items held at fair value through profit and
loss). 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, and (losses)/gains on items held at fair value through
profit and loss) 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.
“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 revenue from first-party sales, and
commissions from third-party sales. The revenue realized from
first-party sales is equal to the GMV of such sales because we act
as principal in these transactions, and thus related sales are not
commission based. Digital Platform Services Revenue was also
referred to as Adjusted Platform Revenue or Platform Services
Revenue in previous filings with the SEC.
“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 technology 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
with items from more than 50 countries and over 1,200 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 Farfetch Platform Solutions, which services
enterprise clients with e-commerce and technology capabilities;
Browns and Stadium Goods, which offer luxury products to consumers;
and New Guards, a platform for the development of global fashion
brands. Farfetch also invests in innovations such as its Store of
the Future augmented retail solution, and develops key
technologies, business solutions, and services for the luxury
fashion industry.
For more information, please visit www.farfetchinvestors.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20200227005984/en/
Investor Relations: Alice
Ryder VP Investor Relations IR@farfetch.com Media: 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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