- Exceeds Q3 2019 Guidance - Beats on Both Digital Platform
GMV and Adjusted EBITDA Margin
- Strong Outlook for Q4 2019 - Raises Expectations for
Adjusted EBITDA and Reiterates Platform GMV Growth Rate
- Continued to Expand Share of Online Luxury Market - Q3 2019
Digital Platform GMV of $420 million, Up 37% Year-Over-Year, or
approximately 40% on Constant Currency Basis
- Stronger Unit Economics - Digital Platform Order
Contribution Margin Up to 31% and Gross Margin to 45% in Q3 2019,
From 28% and 41%, Respectively, in Q2 2019
- Adjusted EBITDA Loss Margin Improved to (16)% from (29)%,
Loss After Tax Margin Improved to (33)% from (57)%
Year-Over-Year
- Expands Direct Brand and Boutique Network to More Than 1,200
Partners, Maintains 100% Retention of Top 100 Brand Partners Over
Past Three Years
- New Guards Group Contributes to Q3 Financial Performance,
Integrations with Marketplace and Farfetch Platform Solutions
Underway
Farfetch Limited (NYSE: FTCH), the leading global technology
platform for the luxury fashion industry, today reported financial
results for the third quarter ended September 30, 2019.
José Neves, Farfetch Founder, CEO and Co-Chair said: “I am very
pleased with our continued progress in building the global platform
for luxury. We had a fantastic Q3, beating all our expectations,
and continuing to capture market share at a rapid pace. With $1.8
billion of Digital Platform GMV and 1.9 million Active Consumers
over the last twelve months, Farfetch is firmly established as the
#1 in-season luxury player online. Through our revolutionary
technology, services and reach, we will continue to deliver an
amazing service to our community of over 1,200 brands and
boutiques, while also delighting fashion lovers around the world.
We also remain focused on driving the cultural relevance of the
Farfetch brand, and in that context I am delighted with our initial
progress in integrating New Guards Group. A huge congratulations to
all the brilliant Farfetchers who have worked so relentlessly
across our global business to achieve these remarkable
results.”
Elliot Jordan, CFO of Farfetch, said: “Our third quarter 2019
results demonstrate focused execution against our core strategy,
which resulted in strong digital platform GMV growth of 37%
year-over-year, extending our market leading position, balanced
with Order Contribution Margin increasing quarter-over-quarter to
31.3%. We are also pleased by the early strategic and financial
benefits from the acquisition of New Guards Group, which, coupled
with the stronger unit economics and continued operating leverage
in our digital platform, have contributed to a significant
year-over-year improvement in EBITDA margin.”
Consolidated Financial Summary and Key Operating Metrics
(in thousands, except per share data or AOV):
Three months ended September
30,
2018
2019
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
309,973
$
492,014
Revenue
134,541
255,481
Adjusted Revenue
112,742
228,227
Gross Profit
67,387
115,139
Gross Profit Margin
50.1%
45.1%
Loss After Tax
$
(77,255
)
$
(85,457
)
Adjusted EBITDA
(32,311
)
(35,638
)
Adjusted EBITDA Margin
(28.7)%
(15.6)%
Earnings Per Share (“EPS”)
$
(0.30
)
$
(0.28
)
Adjusted EPS
(0.15
)
(0.18
)
Digital Platform:
Digital Platform GMV
$
305,884
$
420,266
Digital Platform Services Revenue
108,652
156,479
Digital Platform Gross Profit
65,487
83,294
Digital Platform Gross Profit Margin
60.3%
53.2%
Digital Platform Order Contribution
$
43,384
$
48,973
Digital Platform Order Contribution
Margin
39.9%
31.3%
Active Consumers
1,240
1,889
Average Order Value (“AOV”) -
Marketplace
$
585
$
582
AOV - Stadium Goods
-
327
Brand Platform:
Brand Platform GMV
$
-
$
62,671
Brand Platform Revenue
-
62,671
Brand Platform Gross Profit
-
27,464
Brand Platform Gross Profit Margin
-
43.8%
See “Metrics Definitions” on page 17 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.
Recent Business Highlights
- Continued to add breadth and depth to the Farfetch Marketplace
offering through expanded partnerships with luxury brands and
retailers:
- Top 10 brands supply more than doubled year-over-year as of the
end of third quarter 2019; also increased supply points with
existing brand partner, Saint Laurent, in the US, Canada and
Mexico
- Signed new e-concessions with Golden Goose and Sunglass Hut,
among others, bringing total brand partner count to just under 500,
and maintained 100% retention of top 100 direct brand partners over
past three years
- Integrated New Guards Group on the Marketplace – all New Guards
Group brands including Off-White and Marcelo Burlon County of Milan
now leveraging Fulfilment by Farfetch and selling directly on the
Marketplace as e-concessions
- Grew boutique network to more than 700 retailers, bringing
total direct brand and retail partners to more than 1,200
- Further distinguished Farfetch’s Marketplace as a premium
destination for global luxury consumers while also helping advance
Prada's direct-to-consumer distribution initiative as their
exclusive third-party partner in offering its Linea Rossa
collection for Autumn/Winter 2019
- In August 2019, extended the Farfetch platform with the
completion of the acquisition of New Guards Group, a luxury fashion
platform with a proven track record of launching culturally
relevant and profitable brands including Palm Angels, Heron
Preston, Marcelo Burlon County of Milan, and Off-White, which was
recently ranked #1 Hottest Brand in Q3 2019 by The Lyst Index.
Addition of New Guards Group further elevates Farfetch’s
Marketplace proposition for fashion lovers worldwide with the
broadest selection and exclusive access to capsule collections from
their portfolio of brands, and brings expertise to launch new
brands
- Along with 55 other leaders in the fashion industry including
Kering, Chanel, Hermes, Burberry and Stella McCartney, signed The
Fashion Pact, aimed at setting practical objectives for reducing
the industry’s impact on the environment. Also furthered Farfetch’s
Positively Farfetch focus on sustainability with the launch of two
new initiatives:
- A new Positively Conscious destination on Farfetch.com offers
an inspirational way to discover and shop the broadest selection of
sustainable luxury products
- Extended our Positively Circular initiative by partnering with
Dream Assembly alumnus, Thrift+, to offer UK customers an on-demand
clothing donation service through which they can earn Farfetch
credits
Third Quarter 2019 Results Summary
Gross Merchandise Value (in thousands):
Three months ended September
30,
2018
2019
Digital Platform GMV
305,883
420,266
Brand Platform GMV
-
62,671
In-Store GMV
4,090
9,077
GMV
$
309,973
$
492,014
Gross Merchandise Value (“GMV”) increased by $182.0 million from
$310.0 million in third quarter 2018 to $492.0 million in third
quarter 2019, representing year-over-year growth of 58.7%. Digital
Platform GMV increased by $114.4 million from $305.9 million in
third quarter 2018 to $420.3 million in third quarter 2019,
representing year-over-year growth of 37.4%. Excluding the impact
of changes in foreign exchange rates, Digital Platform GMV would
have increased by approximately 39.7%.
The increase in GMV primarily reflects the growth in Digital
Platform GMV and the addition of $62.7 million of Brand Platform
GMV from New Guards Group which we acquired in August 2019. The
increase in Digital Platform GMV was primarily driven by increases
in Active Consumers to 1.9 million and average number of orders,
partially offset by decreases in Average Order Values. Other
contributing factors included an increase in the number of clients
supported by Farfetch Platform Solutions, growth in transactions
through our managed websites and the addition of Stadium Goods, our
premier sneaker and streetwear Marketplace.
Revenue (in thousands):
Three months ended September
30,
2018
2019
Digital Platform Services Revenue
$
108,652
$
156,479
Digital Platform Fulfilment Revenue
21,799
27,254
Brand Platform Revenue
-
62,671
In-Store Revenue
4,090
9,077
Revenue
$
134,541
$
255,481
Revenue increased by $121.0 million year-over-year from $134.5
million in third quarter 2018 to $255.5 million in third quarter
2019, representing growth of 89.9%. The increase was primarily
driven by 44.0% growth in Digital Platform Services Revenue to
$156.5 million and the addition of Brand Platform Revenue from New
Guards Group. In-Store Revenue increased by 121.9% to $9.1 million
primarily due to the addition of revenue from New Guards Group’s
directly-operated stores and growth in Browns stores.
The increase in Digital Platform Services Revenue of 44.0% was
driven by 37.4% growth in Digital Platform GMV, partially offset by
a decline in Third-Party Take Rate to 31.2% in third quarter 2019,
from 32.1% in the prior year quarter. Digital Platform Services
Revenue was also boosted by growth in first-party GMV, which nearly
doubled year-on-year and is included in Digital Platform Services
Revenue at 100% of the GMV.
Digital Platform Fulfilment Revenue represents the pass-through
of delivery and duties charges incurred by our global logistics
solutions, net of any customer promotions and incentives funded by
the Company. 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, an
increase in the level of promotions and incentives funded by the
company will decrease Digital Platform Fulfilment Revenue. In third
quarter 2019, Digital Platform Fulfilment Revenue increased 25.0%,
a slower rate as compared to the cost of shipping and duties,
primarily due to an increase in customer promotions year-over-year
in response to the market environment. However, the impact of
promotions in the quarter was lower than that in second quarter
2019, reflecting our strategic decision to reduce promotional
activity.
Cost of Revenue (in thousands)
Three months ended September
30,
2018
2019
Digital Platform Services cost of
revenue
$
43,166
$
73,185
Digital Platform Fulfilment cost of
revenue
21,799
27,254
Brand Platform cost of revenue
-
35,208
In-Store cost of goods sold
2,189
4,695
Cost of Revenue
$
67,154
$
140,342
Cost of revenue increased by $73.2 million, or 109.0%
year-over-year from $67.2 million in third quarter 2018 to $140.3
million in third quarter 2019. The increase was primarily driven by
growth in first-party GMV and the associated cost of goods,
delivery costs associated with order fulfilment, duties incurred on
cross-border transactions, cost of goods sold related to our
In-Store revenue and the addition of Brand Platform cost of revenue
related to New Guards Group.
Gross Profit (in thousands)
Three months ended September
30,
2018
2019
Digital Platform Gross Profit
$
65,487
$
83,294
Brand Platform Gross Profit
-
27,464
In-Store Gross Profit
1,900
4,381
Gross Profit
$
67,387
$
115,139
Gross profit increased by $47.8 million, or 70.9% year-over-year
from $67.4 million in third quarter 2018 to $115.1 million in third
quarter 2019, primarily due to the growth in our Digital Platform
Services Revenue and the addition of New Guards Group’s Brand
Platform operations. Gross profit margin decreased from 50.1% to
45.1% year-over-year, primarily driven by a lower Digital Platform
Gross Profit Margin, due to an increase in promotions
year-over-year, and the introduction of Brand Platform, which has a
lower gross profit margin. The impacts were partially offset by an
increase of In-Store gross profit margin.
Selling, general and administrative expenses by type (in
thousands):
Three months ended September
30,
2018
2019
Demand generation expense
$
22,103
$
34,321
Technology expense
19,034
22,322
Depreciation and amortization
6,014
35,097
Share based payments
38,475
31,760
General and administrative
58,561
94,134
Other items
-
(22,225
)
Selling, general and administrative
expense
$
144,187
$
195,409
Third quarter 2019 demand generation expense increased 55.3%
year-over-year to $34.3 million, or to 21.9% of Digital Platform
Services Revenue, reflecting investments in customer acquisition
and retention efforts to support the continued growth of Digital
Platform GMV and Digital Platform Services Revenue. This increase
contributed to the higher number of orders and Active Consumers as
described above.
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 $3.3 million, or 17.3%, year-over-year in third quarter 2019,
driven by a 21.6% increase in technology staff headcount, which was
partially offset by infrastructure cost efficiencies. 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.
Depreciation and amortization expense increased by $29.1 million
or 483.6% year-over-year from $6.0 million in third quarter 2018 to
$35.1 million in third quarter 2019. Amortization expense increased
principally due to amortization recognized on intangible assets
acquired in recent acquisitions and continued technology
investments, where qualifying technology development costs are
capitalized and amortized over a three-year period. Depreciation
expense also increased, driven by the first-time adoption of the
new leasing accounting standard, IFRS 16, on January 1, 2019. We
recognized $4.6 million of depreciation related to right-of-use
assets in third quarter 2019. In third quarter 2018, the
comparative expense for operating leases was included in general
and administrative expense.
Share based payments decreased by $6.7 million or 17.5%
year-over-year in third quarter 2019. This impact was due to a
$44.6 million year-over-year increase in share based payment
expense for equity settled awards, which was driven by a $27.4
million increase related to additional employee awards and $17.2
million from long-term employee incentives related to the
acquisitions of Stadium Goods and New Guards Group. The $44.6
million increase was more than offset by a $51.4 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 third quarter 2018, which
resulted in a $32.0 million increase to the provision for the
period, as compared to a decrease in our share price during third
quarter 2019, which reduced our provision by $19.4 million for the
current period.
General and administrative expense increased by $35.6 million,
or 60.7%, year-over-year in third quarter 2019, reflecting the
additional expenses related to Stadium Goods and New Guards Group,
which both 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 decreased from 51.9% in third quarter 2018 to 41.2% in
third quarter 2019, reflecting improved efficiency of our
semi-variable and fixed costs, the addition of New Guards Group,
which has a lower percentage of revenue, and the impact of adopting
IFRS 16.
Other items totaled $22.2 million in third quarter 2019,
primarily consisting of a net gain of $32.3 million related to the
revaluation of liabilities held at fair value and impacted by
movements in our share price, partially offset by $5.1 million of
transaction-related legal and advisory expenses and $5.0 million
loss on impairment of investments carried at fair value. The $32.3
million net gain described above resulted from a $53.8 million fair
value revaluation gain from our partnership with Chalhoub Group,
due to the remeasurement of the fair value of the non-cash
consideration due to Chalhoub following the July 2019 completion of
our previously announced partnership, partially offset by a $21.5
million fair value remeasurement charge for shares issued in the
acquisition of New Guards Group. There were no such items in third
quarter 2018.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA loss increased by $3.3 million, or 10.3%,
year-over-year in third quarter 2019, to $35.6 million, for the
reasons described above. Adjusted EBITDA Margin improved from
(28.7)% to (15.6)% over the same period, primarily reflecting lower
Technology and General and Administrative 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 higher demand generation expense as a
percentage of Adjusted Revenue.
Loss After Tax
Loss after tax increased by $8.2 million, or 10.6%
year-over-year, in third quarter 2019 to $85.5 million. The
increase was largely driven by the movements in Adjusted EBITDA,
Depreciation and Amortization Expense, Share Based Payments and
Other Items, as explained above, resulting in an increase in the
operating loss from $76.8 million to $79.9 million, and the impact
of unrealized foreign exchange losses on revaluation of non-United
States Dollar denominated receivables and payables.
Acquisition of New Guards Group
In August 2019, we completed the acquisition of 100% of the
outstanding shares of New Guards Group for a total enterprise value
of $675 million. The consideration was split equally between cash
and Farfetch shares. Net of $102.8 million of acquired cash, total
consideration included $256.1 million and 16.8 million shares.
Pursuant to the sales and purchase agreement, an additional 10.7
million shares were issued in September 2019 to reflect a
remeasurement of the initial estimated share consideration,
resulting in a $21.5 million charge to other items. Purchase price
allocations are expected to be completed in first quarter 2020,
following customary adjustments. As of September 30, 2019, based on
an initial analysis, we recognized goodwill of $183.5 million and
Brand intangibles of $830.2 million, along with other assets of
$90.2 million offset by liabilities of $241.4 million and minority
non-controlling interests of $158.4 million. Goodwill is not
subject to amortization and Brand intangibles will be amortized
over an eight-year weighted average period.
Outlook
The following forward-looking statement reflects Farfetch’s
expectations for fourth quarter 2019 as of November 14, 2019:
- Digital Platform GMV growth of 30% to 35% year-over-year
- Brand Platform GMV of $80 million to $90 million
- Adjusted EBITDA loss of approximately $(21) million to $(31)
million
The expected Adjusted EBITDA loss for the period includes the
estimated impact from the adoption of IFRS 16, which became
effective on January 1, 2019.
Conference Call Information
Farfetch will host a conference call today, November 14, 2019 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 September
30
(in $ thousands, except share and per
share data)
2018
2019
Revenue
134,541
255,481
Cost of revenue
(67,154
)
(140,342
)
Gross profit
67,387
115,139
Selling, general and administrative
expenses
(144,187
)
(195,409
)
Share of results of associates
(5
)
371
Operating loss
(76,805
)
(79,899
)
Finance income
1,770
1,672
Finance cost
(1,037
)
(7,334
)
Loss before tax
(76,072
)
(85,561
)
Income tax (expense)/benefit
(1,183
)
104
Loss after tax
(77,255
)
(85,457
)
(Loss)/profit after tax attributable
to:
Owners of the company
(77,255
)
(90,250
)
Non-controlling interests
-
4,793
(77,255
)
(85,457
)
Loss per share attributable to owners
of the company
Basic and diluted
(0.30
)
(0.28
)
Weighted-average ordinary shares
outstanding
Basic and diluted
256,163,135
322,226,776
Unaudited interim condensed
consolidated statements of comprehensive loss
for the three months ended September
30
(in $ thousands, except share and per
share data)
2018
2019
Loss for the period
(77,255
)
(85,457
)
Other comprehensive
(loss)/income:
Items that may be subsequently
reclassified to consolidated
statement of operations (net of tax):
Exchange differences on translation of
foreign operations
(7,702
)
3,287
Loss on cash flow hedges
-
(3,082
)
Items that will not be subsequently
reclassified to consolidated statement of operations (net of
tax):
Impairment loss on investments
-
(100
)
Remeasurement loss on defined benefit
plans
-
(31
)
Other comprehensive (loss)/income for
the period, net of tax
(7,702
)
75
Total comprehensive loss for the
period, net of tax
(84,957
)
(85,382
)
Total comprehensive (loss)/income
attributable to:
Owners of the company
(84,957
)
(90,175
)
Non-controlling interests
-
4,793
(84,957
)
(85,382
)
Unaudited interim condensed
consolidated statements of operations
for the nine months ended September
30
(in $ thousands, except share and per
share data)
2018
2019
Revenue
406,851
638,805
Cost of revenue
(202,598
)
(355,096
)
Gross profit
204,253
283,709
Selling, general and administrative
expenses
(352,989
)
(545,374
)
Share of profits of associates
19
404
Operating loss
(148,717
)
(261,261
)
Finance income
22,798
10,873
Finance cost
(17,847
)
(32,697
)
Loss before tax
(143,766
)
(283,085
)
Income tax expense
(1,897
)
(1,270
)
Loss after tax
(145,663
)
(284,355
)
(Loss)/profit after tax attributable
to:
Owners of the company
(145,663
)
(289,183
)
Non-controlling interests
-
4,828
(145,663
)
(284,355
)
Loss per share attributable to owners
of the company
Basic and diluted
(0.58
)
(0.93
)
Weighted-average ordinary shares
outstanding
Basic and diluted
252,572,520
311,858,726
Unaudited interim condensed
consolidated statements of comprehensive loss
for the nine months ended September
30
(in $ thousands)
2018
2019
Loss for the period
(145,663
)
(284,355
)
Other comprehensive
(loss)/income:
Items that may be subsequently
reclassified to consolidated
statement of operations (net of tax):
Exchange differences on translation of
foreign operations
(16,836
)
18,507
Losses on cash flow hedges
-
(8,162
)
Items that will not be subsequently
reclassified to consolidated statement of operations (net of
tax):
Impairment loss on investments
-
(100
)
Remeasurement loss on defined benefit
plans
-
(31
)
Other comprehensive (loss)/income for
the period, net of tax
(16,836
)
10,214
Total comprehensive loss for the
period, net of tax
(162,499
)
(274,141
)
Total comprehensive (loss)/income
attributable to:
Owners of the company
(162,499
)
(278,969
)
Non-controlling interests
-
4,828
(162,499
)
(274,141
)
Unaudited interim condensed
consolidated statements of financial position
(in $ thousands)
December 31,
2018
September 30,
2019
Non-current assets
Trade and other receivables
10,458
17,248
Intangible assets
103,345
1,382,481
Property, plant and equipment
37,528
66,930
Right-of-use assets
-
99,374
Investments
566
15,289
Investments in associates
86
2,454
Total non-current assets
151,983
1,583,776
Current assets
Inventories
60,954
105,130
Trade and other receivables
93,670
153,541
Cash and cash equivalents
1,044,786
318,375
Total current assets
1,199,410
577,046
Total assets
1,351,393
2,160,822
Equity and liabilities
Equity
Share capital
11,994
13,570
Share premium
772,300
876,444
Merger reserve
783,529
783,529
Foreign exchange reserve
(23,509
)
(5,004
)
Other reserves
67,474
408,000
Accumulated losses
(483,357
)
(731,118
)
Equity attributable to owners of the
company
1,128,431
1,345,421
Non-controlling interests
-
62,133
Total equity
1,128,431
1,407,554
Non-current liabilities
Provisions
13,462
22,421
Lease liabilities
-
82,553
Deferred tax liabilities
-
227,520
Other liabilities
15,342
19,456
Contingent consideration liabilities
-
47,498
Total non-current liabilities
28,804
399,448
Current liabilities
Trade and other payables
194,158
334,829
Lease liabilities
-
18,023
Other current financial liabilities
-
968
Total current liabilities
194,158
353,820
Total liabilities
222,962
753,268
Total equity and liabilities
1,351,393
2,160,822
Unaudited interim condensed
consolidated statements of cash flows
for the nine months ended September
30
(in $ thousands)
2018
2019
Cash flows from operating
activities
Loss before tax
(143,766
)
(283,085
)
Adjustments for:
Depreciation
4,952
19,533
Amortization
10,581
43,993
Non-cash employee benefits expense
16,692
75,525
Merger relief reserve
-
(7,370
)
Net loss on sale of non-current assets
1,045
5
Share of results of associates
(18
)
(404
)
Net finance (income)/ expense
(4,880
)
21,824
Net exchange differences
3,145
(1,966
)
Impairment of investments
-
5,000
Change in the fair value of
derivatives
1,889
-
Change in the fair value of put option
-
(47,498
)
Change in working capital
Increase in receivables
(93,563
)
(2,124
)
Increase in inventories
(17,678
)
(6,746
)
Increase in payables
34,684
5,824
Change in other assets and
liabilities
Increase in non-current receivables
(4,667
)
(2,558
)
Increase in other liabilities
38,947
39,519
Decrease in deferred tax liability
-
(5,011
)
Interest received
4,948
10,701
Interest paid
(68
)
(2,256
)
Income taxes paid
(780
)
(1,947
)
Net cash outflow from operating
activities
(148,537
)
(139,041
)
Cash flows from investing
activities
Acquisition of subsidiary, net of cash
acquired
-
(461,690
)
Payments for property, plant and
equipment
(18,014
)
(38,013
)
Payments for intangible assets
(31,208
)
(58,497
)
Payments for investments
-
(18,733
)
Net cash outflow from investing
activities
(49,222
)
(576,933
)
Cash flows from financing
activities
Proceeds from issue of shares, net of
issue costs
859,525
8,249
Repayment of the principal elements of
lease payments
-
(13,597
)
Interest paid on loan note
(551
)
Net cash inflow from financing
activities
859,525
(5,899
)
Net increase/(decrease) in cash and
cash equivalents
661,766
(721,873
)
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
(2,259
)
(4,538
)
Cash and cash equivalents at end of
period
1,043,509
318,375
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
Capital reorganization
652
(677,674
)
783,529
-
-
-
106,507
-
106,507
Total comprehensive loss
-
-
-
(16,836
)
-
(145,663
)
(162,499
)
-
(162,499
)
Issue of share capital
2,030
773,045
-
-
-
-
775,075
-
775,075
Share based payment – equity settled
-
-
-
-
16,692
-
16,692
-
16,692
Balance at September 30, 2018
11,980
773,045
783,529
(16,203
)
55,167
(474,840
)
1,132,678
-
1,132,678
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
Total comprehensive loss
-
-
-
18,505
(8,292
)
(289,182
)
(278,969
)
4,828
(274,141
)
Issue of share capital
1,576
104,144
-
-
389,879
-
495,599
-
495,599
Share based payment – equity settled
-
-
-
-
51,364
45,743
97,107
-
97,107
Share based payment – reverse vesting
shares
-
-
-
-
(92,425
)
-
(92,425
)
-
(92,425
)
Transactions with non-controlling
interests
-
-
-
-
-
-
-
158,616
158,616
Non-controlling interest arising from a
business combination
-
-
-
-
-
-
-
(101,311
)
(101,311
)
Non-controlling interest put option
-
-
-
-
-
(4,322
)
(4,322
)
-
(4,322
)
Balance at September 30, 2019
13,570
876,444
783,529
(5,004
)
408,000
(731,118
)
1,345,421
62,133
1,407,554
Supplemental Metrics
2018
2019
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
(in thousands, except per
share data or otherwise stated)
Consolidated Group:
Gross Merchandise Value (“GMV”)
$
310,718
$
292,692
$
338,543
$
309,973
$
466,490
$
419,273
$
488,475
$
492,014
Revenue
126,482
125,617
146,693
134,541
195,533
174,064
209,260
255,481
Adjusted Revenue
102,486
103,082
118,677
112,742
170,089
146,374
180,738
228,227
In-Store Revenue
3,764
4,021
3,170
4,090
4,314
4,536
4,220
9,077
Gross Profit
64,729
61,173
75,693
67,387
94,197
83,291
85,280
115,139
Gross Profit Margin
51.2%
48.7%
51.6%
50.1%
48.2%
47.9%
40.8%
45.1%
Demand Generation Expense
$
(23,255
)
$
(19,363
)
$
(21,895
)
$
(22,103
)
$
(33,934
)
$
(31,423
)
$
(34,444
)
$
(34,321
)
Technology Expense
(12,148
)
(13,896
)
(17,135
)
(19,034
)
(18,159
)
(20,159
)
(19,073
)
(22,322
)
Share Based Payments
(7,715
)
(6,567
)
(5,957
)
(38,475
)
(2,821
)
(38,714
)
(45,710
)
(31,760
)
Depreciation and Amortization
(3,029
)
(4,875
)
(5,463
)
(6,014
)
(7,185
)
(14,106
)
(14,323
)
(35,097
)
General and Administrative
(52,735
)
(51,571
)
(62,080
)
(58,561
)
(56,679
)
(61,945
)
(69,339
)
(94,134
)
Other Items
(126
)
-
-
-
-
(2,493
)
1,764
22,225
Loss After Tax
(54,816
)
(50,727
)
(17,681
)
(77,255
)
(9,912
)
(109,275
)
(89,623
)
(85,457
)
Adjusted EBITDA
(23,409
)
(23,657
)
(25,417
)
(32,311
)
(14,575
)
(30,236
)
(37,576
)
(35,638
)
Adjusted EBITDA Margin
(22.8)%
(22.9)%
(21.4)%
(28.7)%
(8.6)%
(20.7)%
(20.8)%
(15.6)%
Earnings Per Share (“EPS”)
$
(0.25
)
$
(0.20
)
$
(0.07
)
$
(0.30
)
$
(0.03
)
$
(0.36
)
$
(0.29
)
$
(0.28
)
Adjusted EPS
(0.21
)
(0.18
)
(0.05
)
(0.15
)
(0.02
)
(0.22
)
(0.15
)
(0.18
)
Digital Platform:
Digital Platform GMV
$
306,954
$
288,671
$
335,373
$
305,884
$
462,176
$
414,737
$
484,255
$
420,266
Digital Platform Services Revenue
98,722
99,061
115,507
108,652
165,775
141,838
176,518
156,479
Digital Platform Fulfilment Revenue
23,996
22,535
28,016
21,799
25,444
27,690
28,522
27,254
Digital Platform Gross Profit
62,829
59,365
74,222
65,487
92,632
80,941
84,106
83,294
Digital Platform Gross Profit Margin
63.6%
59.9%
64.3%
60.3%
55.9%
57.1%
47.6%
53.2%
Digital Platform Order Contribution
39,574
40,002
52,327
43,384
58,698
49,518
49,662
48,973
Digital Platform Order Contribution
Margin
40.1%
40.4%
45.3%
39.9
%
35.4%
34.9%
28.1%
31.3%
Active Consumers
951
1,034
1,139
1,240
1,382
1,699
1,773
1,889
AOV - Marketplace (actual)
$
670
$
647
$
602
$
585
$
637
$
601
$
600
$
582
AOV - Stadium Goods (actual)
-
-
-
-
-
300
336
327
Brand Platform:
Brand Platform GMV
-
-
-
-
-
-
-
$
62,671
Brand Platform Revenue
-
-
-
-
-
-
-
62,671
Brand Platform Gross Profit
-
-
-
-
-
-
-
27,464
Brand Platform Gross Profit Margin
-
-
-
-
-
-
-
43.8%
1 See “Metrics Definitions” on page 18 for an explanation
regarding changes to the previously reported metrics.
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
fourth quarter of 2019 and fiscal year ending December 31, 2019,
the expected benefits and synergies from our acquisition and
integration of New Guards Group, 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 rate; 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 Group, 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; 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”) on March 1,
2019 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. 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 now 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 Group 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.
Following our acquisition of New Guards Group in August 2019 and
its inclusion in our consolidated results, we are reporting metrics
related to our Brand Platform operations. Brand Platform GMV and
Brand Platform Revenue include revenue related to the New Guards
Group operations less revenue from New Guards Group’s owned
e-commerce websites, direct to consumer channel via Farfetch
marketplaces and directly operated stores. Revenue realized from
Brand Platform is equal to GMV, as such sales are not commission
based. As we acquired New Guards Group in August 2019, our third
quarter 2019 results only reflect two months of New Guards Group’s
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
Group, where GMV and Revenue are derived from the Company’s
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.
Consolidated Statement of Operations
Reclassifications
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.
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 Services Revenue, Digital
Platform Gross Profit, 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 Gross Profit, Digital Platform Gross Profit
Margin, 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 Gross Profit, Digital Platform Gross
Profit Margin, 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)
2017
2018
2019
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Loss after tax
$
(54,816
)
$
(50,727
)
$
(17,681
)
$
(77,255
)
$
(9,912
)
$
(109,275
)
$
(89,623
)
$
(85,457
)
Net finance (income)/expense
20,171
15,101
(19,319
)
(733
)
(14,915
)
23,181
(7,018
)
5,662
Income tax expense
374
527
187
1,183
261
560
813
(104
)
Depreciation and amortization
3,029
4,875
5,463
6,014
7,185
14,106
14,323
35,097
Share based payments (a)
7,715
6,567
5,957
38,475
2,821
38,714
45,710
31,760
Other items (b)
126
-
-
-
-
2,493
(1,764
)
(22,225
)
Share of results of associates
(8
)
-
(24
)
5
(15
)
(15
)
(17
)
(371
)
Adjusted EBITDA
$
(23,409
)
$
(23,657
)
$
(25,417
)
$
(32,311
)
$
(14,575
)
$
(30,236
)
$
(37,576
)
$
(35,638
)
(a)
Represents share-based payment expense.
(b)
Represents other items, which are outside the normal scope
of our ordinary activities or non-cash items, including legal fees
directly related to acquisitions of $126,000 in fourth quarter
2017. There were no other such items in 2018. In 2019, there were
transaction-related legal and advisory expenses of $2.5 million in
first quarter 2019, $2.2 million in second quarter 2019 and $5.1
million in third quarter 2019. There was a release of $4.0 million
of provisions related to taxes in second quarter 2019. There was
also a net gain in third quarter 2019 of $32.3 million recognized
on the revaluation of liabilities held at fair value and impacted
by movements in our share price. This net gain 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 as described
above. Other items in third quarter 2019 also included a $5 million
loss on impairment of investments carried at fair value. Other
items is included within selling, general and administrative
expenses.
The following table reconciles Adjusted Revenue and Digital
Platform Services Revenue to the most directly comparable IFRS
financial performance measure, which is revenue:
(in $ thousands, except as otherwise
noted)
2017
2018
2019
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Revenue
$
126,482
$
125,617
$
146,693
$
134,541
$
195,533
$
174,064
$
209,260
$
255,481
Less: Digital Platform Fulfilment
Revenue
(23,996
)
(22,535
)
(28,016
)
(21,799
)
(25,444
)
(27,690
)
(28,522
)
(27,254
)
Adjusted Revenue
102,486
103,082
118,677
112,742
170,089
146,374
180,738
228,227
Less: Brand Platform Revenue
-
-
-
-
-
-
-
(62,671
)
Less: In-Store Revenue
(3,764
)
(4,021
)
(3,170
)
(4,090
)
(4,314
)
(4,536
)
(4,220
)
(9,077
)
Digital Platform Services
Revenue
$
98,722
$
99,061
$
115,507
$
108,652
$
165,775
$
141,838
$
176,518
$
156,479
The following table reconciles Digital Platform Gross Profit and
Digital Platform Order Contribution to the most directly comparable
IFRS financial performance measure, which is gross profit:
(in $ thousands, except as otherwise
noted)
2017
2018
2019
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Gross profit
$
64,729
$
61,173
$
75,693
$
67,387
$
94,197
$
83,291
$
85,280
$
115,139
Less: Brand Platform Gross Profit
-
-
-
-
-
-
-
(27,464
)
Less: In-Store Gross Profit
(1,900
)
(1,808
)
(1,471
)
(1,900
)
(1,565
)
(2,350
)
(1,174
)
(4,381
)
Digital Platform Gross Profit
62,829
59,365
74,222
65,487
92,632
80,941
84,106
83,294
Less: Demand generation expense
(23,255
)
(19,363
)
(21,895
)
(22,103
)
(33,934
)
(31,423
)
(34,444
)
(34,321
)
Digital Platform Order
Contribution
$
39,574
$
40,002
$
52,327
$
43,384
$
58,698
$
49,518
$
49,662
$
48,973
The following table reconciles Adjusted EPS to the most directly
comparable IFRS financial performance measure, which is Earnings
per share:
(per share amounts)
2017
2018
2019
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Earnings per share
$
(0.25
)
$
(0.20
)
$
(0.07
)
$
(0.30
)
$
(0.03
)
$
(0.36
)
$
(0.29
)
$
(0.28
)
Share based payments (a)
0.04
0.02
0.02
0.15
0.01
0.13
0.15
0.11
Amortization of acquired intangible
assets
-
-
-
-
-
0.01
0.01
0.06
Other items (b)
(0.00
)
-
-
-
-
0.01
(0.01
)
(0.07
)
Share of results of associates
(0.00
)
-
(0.00
)
0.00
(0.00
)
(0.00
)
(0.00
)
(0.00
)
Adjusted EPS
$
(0.21
)
$
(0.18
)
$
(0.05
)
$
(0.15
)
$
(0.02
)
$
(0.21
)
$
(0.14
)
$
(0.18
)
(a)
Represents share-based payment expense on a per share basis.
(b)
Represents other items, which are outside the normal scope
of our ordinary activities or non-cash items, including legal fees
directly related to acquisitions of $126,000 in fourth quarter
2017. There were no other such items in 2018. In 2019, there were
transaction-related legal and advisory expenses of $2.5 million in
first quarter 2019, $2.2 million in second quarter 2019 and $5.1
million in third quarter 2019. There was a release of $4.0 million
of provisions related to taxes in second quarter 2019. There was
also a net gain in third quarter 2019 of $32.3 million recognized
on the revaluation of liabilities held at fair value and impacted
by movements in our share price. This net gain 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 as described
above. Other items in third quarter 2019 also included a $5 million
loss on impairment of investments carried at fair value. Other
items is included within selling, general and administrative.
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 Group owned and operated
sites. The number of Active Consumers is an indicator of our
ability to attract and retain an increasingly large 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, other items (represents items outside the normal scope of
our ordinary activities) and share of results of associates.
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 others.
“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,
other items (outside the normal scope of our ordinary activities),
share of results of associates 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 Group operations less revenue from New
Guards Group’s: (i) owned e-commerce websites, (ii) direct to
consumer channel via Farfetch 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 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” or “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” or “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 Adjusted Revenue less
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 Group’s 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 Group, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191114005853/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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