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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Farfetch Limited | NYSE:FTCH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.6428 | 0 | 01:00:00 |
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
Digital Platform
New Guards
Environmental, Social and Governance (ESG)
Liquidity
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:
For First Quarter 2021:
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:
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
Revenue382,232
540,105
Cost of revenue(206,096)
(290,957)
Gross profit176,136
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 income19,252
20,065
Finance costs(3,070)
(34,639)
Loss before tax(110,234)
(2,296,739)
Income tax benefit108
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 interests6,781
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 diluted339,495,707
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 equity1,249
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 loss2,912
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 interests6,781
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
Revenue1,021,037
1,673,922
Cost of revenue(561,191)
(902,994)
Gross profit459,846
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 remeasurements21,721
(2,643,573)
Share of results of associates366
(74)
Finance income34,382
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 interests11,609
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 diluted318,843,239
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 loss8,337
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 interests11,609
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 receivables12,388
58,081
Deferred tax assets5,324
13,556
Intangible assets, net1,362,967
1,279,328
Property, plant and equipment, net67,999
89,082
Right-of-use assets115,176
179,227
Investments16,229
8,278
Investments in associates2,466
2,319
Total non-current assets1,582,549
1,629,871
Current assets Inventories128,107
145,309
Trade and other receivables189,897
209,946
Current tax assets1,873
2,082
Derivative financial assets3,024
30,242
Cash and cash equivalents322,429
1,573,421
Total current assets645,330
1,961,000
Total assets2,227,879
3,590,871
Liabilities and equity Non-current liabilities Provisions23,704
129,113
Deferred tax liabilities219,789
182,463
Lease liabilities100,833
165,275
Employee benefit obligations16,455
26,116
Derivative financial liabilities-
2,996,220
Borrowings-
635,237
Put and call option liabilities61,268
348,937
Other financial liabilities-
4,853
Total non-current liabilities422,049
4,488,214
Current liabilities Trade and other payables413,696
666,144
Provisions-
27,146
Current tax liability28,289
3,098
Lease liabilities18,485
26,128
Employee benefit obligations-
38,286
Derivative financial liabilities5,601
17,427
Put and call option liabilities1,118
-
Other financial liabilities809
518
Total current liabilities467,998
778,747
Total liabilities890,047
5,266,961
Equity/(deficit) Share capital13,584
14,168
Share premium878,007
927,931
Merger reserve783,529
783,529
Foreign exchange reserve(30,842)
(7,271)
Other reserves349,463
447,753
Accumulated losses(826,135)
(4,010,756)
Equity/(deficit) attributable to owners of the parent1,167,606
(1,844,646)
Non-controlling interests170,226
168,556
Total equity/(deficit)1,337,832
(1,676,090)
Total equity/(deficit) and liabilities2,227,879
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: Depreciation28,536
39,366
Amortization85,055
177,857
Non-cash employee benefits expense138,195
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 investments5,000
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 payables113,716
280,454
Change in other assets and liabilities Decrease/(increase) in non-current receivables3,723
(1,453)
Increase in other liabilities11,575
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 equipment272
-
Payments for intangible assets(72,985)
(94,105)
Payments for investments(20,846)
(2,872)
Interest received11,259
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 awards8,654
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 year1,044,786
322,429
Effects of exchange rate changes on cash and cash equivalents3,037
6,278
Cash and cash equivalents at end of year322,429
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, 201911,994
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 costs1,590
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, 201913,584
878,007
783,529
(30,842)
349,463
(826,135)
1,167,606
170,226
1,337,832
Balance at January 1, 202013,584
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 costs584
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, 202014,168
927,931
783,529
(7,271)
447,753
(4,010,756)
(1,844,646)
168,556
(1,676,090)
Supplemental Metrics 12019
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
Revenue174,064
209,260
255,481
382,232
1,021,037
Adjusted Revenue146,374
180,738
228,227
337,738
893,077
In-Store Revenue4,536
4,220
9,077
9,788
27,621
Gross profit83,291
85,280
115,139
176,136
459,846
Gross profit margin47.9%
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 Revenue141,838
176,518
156,479
226,411
701,246
Digital Platform Fulfilment Revenue27,690
28,522
27,254
44,494
127,960
Digital Platform Gross Profit80,941
84,106
83,294
123,572
371,913
Digital Platform Gross Profit Margin57.1%
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 Margin34.9%
28.1%
31.3%
32.0%
31.5%
Active Consumers1,699
1,773
1,889
2,068
2,068
AOV - Marketplace $601
$600
$582
$636
$608
AOV - Stadium Goods300
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 12020
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
Revenue331,437
364,680
437,700
540,105
1,673,922
Adjusted Revenue301,152
307,877
386,778
464,887
1,460,694
In-Store Revenue8,516
3,926
11,416
13,666
37,524
Gross profit153,376
159,375
209,029
249,148
770,928
Gross profit margin46.3%
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 remeasurements65,434
(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 Revenue185,177
237,603
263,035
347,341
1,033,156
Digital Platform Fulfilment Revenue30,285
56,803
50,922
75,218
213,228
Digital Platform Gross Profit97,207
130,579
143,318
189,102
560,206
Digital Platform Gross Profit Margin52.5%
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 Margin32.0%
35.0%
36.9%
35.1%
35.0%
Active Consumers2,149
2,524
2,742
3,024
3,024
AOV - Marketplace $571
$493
$574
$626
$568
AOV - Stadium Goods314
304
340
308
316
Brand Platform: Brand Platform GMV $107,459
$66,348
$112,327
$103,880
$390,014
Brand Platform Revenue107,459
66,348
112,327
103,880
390,014
Brand Platform Gross Profit52,480
27,729
58,738
51,857
190,804
Brand Platform Gross Profit Margin48.8%
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:
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:
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 amortization14,106
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)/expense34,355
20,751
14,363
14,574
84,043
Income tax expense/(benefit)2,506
(4,118)
2,882
(15,704)
(14,434)
Depreciation and amortization51,323
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 assets2,292
-
-
699
2,991
Impairment losses on intangible assets-
-
-
36,269
36,269
Share of results of associates31
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)%
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 Margin57.1%
47.6%
53.2%
54.6%
53.0%
Digital Platform Order Contribution Margin34.9%
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 Margin52.5%
55.0%
54.5%
54.4%
54.2%
Digital Platform Order Contribution Margin32.0%
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 assets0.01
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 assets0.09
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 assets0.01
-
-
-
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)
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 option21,420
(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.
View source 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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