UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO SECTION 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2020

Commission File Number: 001-38655

 

 

Farfetch Limited

(Exact Name of Registrant as Specified in Its Charter)

 

 

The Bower

211 Old Street

London EC1V 9NR

United Kingdom

+44 (0) 20 7549 5400

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F              Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  

 

 

On February 27, 2020, Farfetch Limited will hold a conference call regarding its unaudited financial results for the fourth quarter ended December 31, 2019. A copy of the related press release is furnished as Exhibit 99.1 hereto.

 


 

 

Exhibit

No.

 

Description

 

 

99.1

 

Press Release of Farfetch Limited, dated February 27, 2020

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Farfetch Limited

 

 

 

Date: February 27, 2020

By:

/s/ José Neves

 

 

José Neves

 

 

Chief Executive Officer

 

 

 

Exhibit 99.1

 

Farfetch Announces Fourth Quarter and Full Year 2019 Results

 

 

2019 Gross Merchandise Value Exceeds $2 billion, up 52% Year-on-Year

 

2019 Revenue Exceeds $1 billion, up 69% Year-on-Year

 

Q4 2019 Digital Platform GMV Grows 36% Year-over-Year (37% on Constant Currency Basis)

 

$102 million Brand Platform GMV in Q4 2019 Driven by Strong Demand Across New Guards Portfolio

 

Sequential Improvements in Gross Profit Margin and Digital Platform Order Contribution Margin in Q4 2019

 

Generated Positive Cash Flow in Q4 2019 to End Year with $322 million Cash and Cash Equivalents; Augmented by $250 million Convertible Senior Notes Issuance in February 2020

 

LONDON, U.K. February 27, 2020 – Farfetch Limited (NYSE: FTCH), the leading global technology platform for the luxury fashion industry, today reported financial results for the fourth quarter and full year ended December 31, 2019.

 

José Neves, Farfetch Founder, CEO and Co-Chair said: “2019 was a landmark year for Farfetch as we grew our digital platform almost twice as fast as the online luxury industry, and significantly improved our adjusted EBITDA margins as we marched towards profitability. With more than two million active customers and record GMV, Farfetch is firmly established as the largest global online destination for in-season luxury. At the same time, with over 500 direct brand partners on the Farfetch Marketplace and more than 20 enterprise clients for Farfetch Platform Solutions, we are the clear digital partner of choice for luxury brands.

“As we move into 2020, we remain uniquely positioned to capture the lion’s share of the $100 billion incremental opportunity in online luxury. We have continued to attract and retain an incredibly valuable and loyal luxury consumer base and captured market share.

“I am also extremely pleased with New Guards’ contribution towards our business, which, just six months from the acquisition, is delivering increased traffic to the Marketplace, enhancing our brand position and is accretive to our financials. On the enterprise side of our business, I am ecstatic to have launched Harrods global e-commerce presence on our platform.

“In light of the evolving novel coronavirus situation, which we have naturally been monitoring to ensure the health and wellbeing of all our teams, I am pleased to see that from a trading perspective, there has not been a material impact to the business. I believe our distributed platform model, which affords us with more than $3 billion of third-party inventory across more than 50 countries, which we are able to ship to customers in 190 countries, makes the Farfetch model particularly resilient to the situation, at least in its current shape. However, circumstances regarding the novel coronavirus situation remain uncertain, and as such we are closely monitoring the situation as it evolves.”


1

 


 

Elliot Jordan, CFO of Farfetch, said: “Fourth quarter 2019 was a record-setting quarter for Farfetch, where we beat our own expectations of GMV growth, order contribution margin and adjusted EBITDA. The Farfetch Marketplace continues to underpin GMV and revenue growth within our digital platform, and the brand platform is contributing meaningful revenue and profit following the successful acquisition of New Guards Group in August.

“Looking towards 2020, we are well positioned to continue to gain market share, and are forecasting strong GMV growth, with substantial adjusted EBITDA improvement targeted for the year ahead as we aim to balance our growth initiatives with continued investments in the business in driving towards profitability in 2021.” 

 

 

2

 


 

Consolidated Financial Summary and Key Operating Metrics (in thousands, except per share data, Average Order Value, or otherwise stated):

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Consolidated Group:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Merchandise Value (“GMV”)

 

$

466,490

 

 

$

739,937

 

 

$

1,407,698

 

 

$

2,139,699

 

Revenue

 

 

195,533

 

 

 

382,232

 

 

 

602,384

 

 

 

1,021,037

 

Adjusted Revenue

 

 

170,089

 

 

 

337,738

 

 

 

504,590

 

 

 

893,077

 

Gross profit

 

 

94,197

 

 

 

176,136

 

 

 

298,450

 

 

 

459,846

 

Gross profit margin

 

48.2%

 

 

46.1%

 

 

49.5%

 

 

45.0%

 

Loss after tax

 

$

(9,912

)

 

$

(110,126

)

 

$

(155,575

)

 

$

(373,688

)

Adjusted EBITDA

 

 

(14,575

)

 

 

(17,926

)

 

 

(95,960

)

 

 

(121,376

)

Adjusted EBITDA Margin

 

(8.6)%

 

 

(5.3)%

 

 

(19.0)%

 

 

(13.6)%

 

Earnings per share (“EPS”)

 

$

(0.03

)

 

$

(0.34

)

 

$

(0.59

)

 

$

(1.21

)

Adjusted EPS

 

 

(0.02

)

 

 

(0.08

)

 

 

(0.38

)

 

 

(0.56

)

Digital Platform:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital Platform GMV

 

$

462,176

 

 

$

628,610

 

 

$

1,392,103

 

 

$

1,947,868

 

Digital Platform Services Revenue

 

 

165,775

 

 

 

226,411

 

 

 

488,995

 

 

 

701,246

 

Digital Platform Gross Profit

 

 

92,632

 

 

 

123,572

 

 

 

291,706

 

 

 

371,913

 

Digital Platform Gross Profit Margin

 

55.9%

 

 

54.6%

 

 

59.7%

 

 

53.0%

 

Digital Platform Order Contribution

 

$

58,698

 

 

$

72,410

 

 

$

194,411

 

 

$

220,563

 

Digital Platform Order Contribution Margin

 

35.4%

 

 

32.0%

 

 

39.8%

 

 

31.5%

 

Active Consumers

 

 

1,382

 

 

 

2,068

 

 

 

1,382

 

 

 

2,068

 

Average Order Value (“AOV”) - Marketplace

 

$

637

 

 

$

636

 

 

$

619

 

 

$

608

 

AOV - Stadium Goods

 

 

-

 

 

 

301

 

 

 

-

 

 

 

315

 

Brand Platform:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand Platform GMV

 

$

-

 

 

$

101,539

 

 

$

-

 

 

$

164,210

 

Brand Platform Revenue

 

 

-

 

 

 

101,539

 

 

 

-

 

 

 

164,210

 

Brand Platform Gross Profit

 

 

-

 

 

 

47,543

 

 

 

-

 

 

 

75,007

 

Brand Platform Gross Profit Margin

 

 

-

 

 

46.8%

 

 

 

-

 

 

45.7%

 

 

See “Metrics Definitions” on page 21 for further explanations, including the renaming of previous “Platform” metrics to “Digital Platform” metrics. See “Non-IFRS and Other Financial and Operating Metrics” on page 22 for reconciliations of non-IFRS measures to IFRS measures.

 

Recent Business Highlights

 

Digital Platform

 

Digital Platform GMV increased 36% year-over-year to a record $629 million in Q4 2019

 

Third-party transactions generated 88% of Digital Platform GMV at a 30.4% take rate in Q4 2019

 

Digital Platform Fulfilment Revenue increased 75% year-over-year in Q4 2019 on fewer Farfetch-funded promotions

 

Largest ever Marketplace product selection offered in Q4 2019 with almost 370,000 SKUs, 7 times higher than the nearest competitor, across more than 3,400 brands supplied by more than 1,200 sellers, including over 500 direct brand partners

 

o

Maintained 100% three-year retention of top 100 direct brand and top 100 boutique partners

3

 


 

 

More loyal customers than ever, with enrollments in ACCESS exceeding 1 million members in January 2020, less than one year after global rollout; program driving uplift through higher frequency of shopping, higher Average Order Value and increased customer engagement

 

Completed first $1 million customer transaction on the Farfetch Marketplace in single sale of fine jewelry & watches via Fashion Concierge, Farfetch’s conversational commerce solution

 

Delivered new technology solutions for the Farfetch Marketplace:

 

o

In-house developed recommendation engine, Inspire, fully rolled-out, driving improved conversion rates

 

o

Farfetch mobile app experience enhanced through more inspirational storytelling and browsing content, as well as improved search navigation; also increased self-serve capabilities allowing web consumers to manage orders without contacting customer care

 

o

Rolled out additional localized features for Farfetch consumers in China

 

Augmented reality feature for the China iOS App enabling consumers to virtually try on shoes while browsing the Farfetch Marketplace

 

Increased search function flexibility enabling searches by designer using either designers’ Chinese names or synonyms commonly used in the Chinese language

 

Harrods.com launched by Farfetch Platform Solutions in February 2020; now providing the 'world's most famous department store' with a global e-commerce solution, leveraging the Farfetch platform to provide e-concessions, global logistics - including China, e-commerce management, and operations and technical support

 

New Guards

 

New Guards’ brands generated $75 million Brand Platform Gross Profit in first five months following the August 2019 acquisition

 

Q4 2019 Off-White sales on the Farfetch Marketplace increased more than 80% year-over-year; Off-White also named #1 Hottest Brand by Lyst Index - the 6th consecutive quarter where it has been ranked either #1 or #2 by the global fashion search engine

 

New Guards added Ambush and Opening Ceremony to brand portfolio in January 2020

 

Farfetch Limited

 

In February 2020, completed the issuance of an aggregate principal amount of $250 million convertible senior notes to Tencent Holdings Ltd. and Dragoneer Investment Group adding to year-end liquidity; cancelled existing undrawn €300 million senior secured loan commitment with J.P. Morgan

 


4

 


 

Segment Realignment

 

Following the acquisition of New Guards in August 2019, management determined that it had three operating segments: (i) Digital Platform, (ii) Brand Platform and (iii) In-Store, given our new organizational structure and the manner in which our business is reviewed and managed. In fourth quarter 2019, we realigned our reportable operating segments to reflect how our Chief Operating Decision-Maker was making operating decisions, allocating resources and evaluating operating performance. The comparative periods have been revised to reflect this segment realignment.

 

Fourth Quarter and Full Year 2019 Results Summary

 

Gross Merchandise Value (in thousands):

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Digital Platform GMV

 

$

462,176

 

 

$

628,610

 

 

$

1,392,103

 

 

$

1,947,868

 

Brand Platform GMV

 

 

-

 

 

 

101,539

 

 

 

-

 

 

 

164,210

 

In-Store GMV

 

 

4,314

 

 

 

9,788

 

 

 

15,595

 

 

 

27,621

 

GMV

 

$

466,490

 

 

$

739,937

 

 

$

1,407,698

 

 

$

2,139,699

 

 

Gross Merchandise Value (“GMV”) increased by $273.4 million from $466.5 million in fourth quarter 2018 to $739.9 million in fourth quarter 2019, representing year-over-year growth of 58.6%. Digital Platform GMV increased by $166.4 million from $462.2 million in fourth quarter 2018 to $628.6 million in fourth quarter 2019, representing year-over-year growth of 36.0%. Excluding the impact of changes in foreign exchange rates, Digital Platform GMV would have increased by approximately 37.2%.

 

The increase in GMV primarily reflects the growth in Digital Platform GMV and the addition of $101.5 million of Brand Platform GMV from New Guards which we acquired in August 2019. The increase in Digital Platform GMV was primarily driven by increases in Active Consumers (up 49.6% in fourth quarter 2019) to 2.1 million in the quarter, increase in supply available from 1,200 partners, growth in supply from the additions of StadiumGoods.com, and increased direct-to-consumer brand sales from New Guards driving an increase in the volume of orders. This was partially offset by a decrease in the blended Marketplace and Stadium Goods Average Order Values across the Digital Platform. During fourth quarter 2019, we also saw a year-over-year growth in transactions through our managed websites supported by Farfetch Platform Solutions.

 

Revenue (in thousands):

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Digital Platform Services Revenue

 

$

165,775

 

 

$

226,411

 

 

$

488,995

 

 

$

701,246

 

Digital Platform Fulfilment Revenue

 

 

25,444

 

 

 

44,494

 

 

 

97,794

 

 

 

127,960

 

Brand Platform Revenue

 

 

-

 

 

 

101,539

 

 

 

-

 

 

 

164,210

 

In-Store Revenue

 

 

4,314

 

 

 

9,788

 

 

 

15,595

 

 

 

27,621

 

Revenue

 

$

195,533

 

 

$

382,232

 

 

$

602,384

 

 

$

1,021,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 


 

Revenue increased by $186.7 million year-over-year from $195.5 million in fourth quarter 2018 to $382.2 million in fourth quarter 2019, representing growth of 95.5%. The increase was primarily driven by 36.6% growth in Digital Platform Services Revenue to $226.4 million and the addition of Brand Platform Revenue from New Guards. In-Store Revenue increased by 126.9% to $9.8 million primarily due to the addition of revenue from New Guards and Stadium Goods directly-operated stores, as well as growth in Browns stores.

The increase in Digital Platform Services Revenue of 36.6% was driven by 36.0% growth in Digital Platform GMV. Digital Platform Services Revenue was also boosted by growth in first-party GMV, which increased 55% year-over-year and is included in Digital Platform Services Revenue at 100% of the GMV. This was partially offset by a decline in Third-Party Take Rate to 30.4% in fourth quarter 2019, from 31.9% in fourth quarter 2018.

Digital Platform Fulfilment Revenue represents the pass-through of delivery and duties charges incurred by our global logistics solutions, net of any Farfetch-funded consumer promotions and incentives. Whilst Digital Platform Fulfilment Revenue would be expected to grow in line with the cost of delivery and duties, which increase as Digital Platform GMV and order volumes grow, variations in the level of Farfetch-funded promotions and incentives will impact Digital Platform Fulfilment Revenue. In fourth quarter 2019, Digital Platform Fulfilment Revenue increased 74.9%, a higher rate as compared to Digital Platform Services Revenue growth, primarily due to reduced Farfetch-funded consumer promotions year-over-year.

Cost of Revenue (in thousands)

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Digital Platform Services cost of revenue

 

$

73,143

 

 

$

102,839

 

 

$

197,289

 

 

$

329,333

 

Digital Platform Fulfilment cost of revenue

 

 

25,444

 

 

 

44,494

 

 

 

97,794

 

 

 

127,960

 

Brand Platform cost of revenue

 

 

-

 

 

 

53,996

 

 

 

-

 

 

 

89,203

 

In-Store cost of goods sold

 

 

2,749

 

 

 

4,767

 

 

 

8,851

 

 

 

14,695

 

Cost of revenue

 

$

101,336

 

 

$

206,096

 

 

$

303,934

 

 

$

561,191

 

 

Cost of revenue increased by $104.8 million, or 103.4% year-over-year from $101.3 million in fourth quarter 2018 to $206.1 million in fourth quarter 2019. The increase was primarily driven by the addition of Brand Platform cost of revenue related to New Guards and growth in first-party GMV and the associated cost of goods, delivery costs and duties on an increased volume of transactions, and growth in our In-Store revenue and the associated costs of goods sold.

 

Gross profit (in thousands)

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Digital Platform Gross Profit

 

$

92,632

 

 

$

123,572

 

 

$

291,706

 

 

$

371,913

 

Brand Platform Gross Profit

 

 

-

 

 

 

47,543

 

 

 

-

 

 

 

75,007

 

In-Store Gross Profit

 

 

1,565

 

 

 

5,021

 

 

 

6,744

 

 

 

12,926

 

Gross profit

 

$

94,197

 

 

$

176,136

 

 

$

298,450

 

 

$

459,846

 

 

 

6

 


 

Gross profit increased by $81.9 million, or 87.0% year-over-year, from $94.2 million in fourth quarter 2018 to $176.1 million in fourth quarter 2019, primarily due to the growth in our Digital Platform Services Revenue and the addition of New Guards Brand Platform operations. Gross profit margin in fourth quarter decreased from 48.2% to 46.1% year-over-year, primarily driven by a lower Digital Platform Gross Profit Margin, due to an increased mix of brand partner sales in our total third-party sales and an increase of first-party sales in our total sales volumes, both of which have lower gross margin profiles. The impacts were partially offset by an increase of In-Store Gross Profit Margin, primarily due to New Guards directly-operated stores, and reduced Farfetch-funded consumer promotions.

 

Selling, general and administrative expenses by type (in thousands):

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Demand generation expense

 

$

33,934

 

 

$

51,162

 

 

$

97,295

 

 

$

151,350

 

Technology expense

 

 

18,159

 

 

 

22,653

 

 

 

68,224

 

 

 

84,207

 

Depreciation and amortization

 

 

7,185

 

 

 

50,065

 

 

 

23,537

 

 

 

113,591

 

Share based payments

 

 

2,821

 

 

 

42,238

 

 

 

53,819

 

 

 

158,422

 

General and administrative

 

 

56,679

 

 

 

120,247

 

 

 

228,891

 

 

 

345,665

 

Other items

 

 

-

 

 

 

5,584

 

 

 

-

 

 

 

16,374

 

Selling, general and administrative expense

 

$

118,778

 

 

$

291,949

 

 

$

471,766

 

 

$

869,609

 

 

Fourth quarter 2019 demand generation expense increased 50.8% year-over-year to $51.2 million, or to 22.6% of Digital Platform Services Revenue as compared to 20.5% in fourth quarter 2018, reflecting a higher proportion of paid investments in customer acquisition and retention efforts. This increase contributed to a 49.6% increase in Active Consumers in fourth quarter 2019, driving a higher volume of orders.

 

Technology expense, which is primarily related to development and operations of our platform features and services, and also includes software, hosting and infrastructure expenses, increased by $4.5 million, or 24.7%, in fourth quarter 2019 from fourth quarter 2018, primarily driven by an increase in technology staff headcount. We continue to operate three globally distributed data centers, which support the processing of our growing base of transactions, including one in Shanghai dedicated to serving our Chinese customers. Technology expense as a percentage of Adjusted Revenue in fourth quarter decreased from 10.7% to 6.7% year-over-year as Adjusted Revenue grew at a rate greater than the underlying costs.

 

Depreciation and amortization expense increased by $42.9 million or 596.8% year-over-year from $7.2 million in fourth quarter 2018 to $50.1 million in fourth quarter 2019. Amortization expense increased principally due to $30.0 million of amortization recognized on intangible assets acquired in recent acquisitions. Depreciation expense increased, driven by the first-time adoption of the new leasing accounting standard, IFRS 16, on January 1, 2019, resulting in the recognition of $5.4 million of depreciation related to right-of-use assets in fourth quarter 2019. In fourth quarter 2018, the comparative expense for operating leases was included in general and administrative expense. Depreciation expense also increased as a result of the continued investment into technology, where qualifying technology development costs are capitalized and amortized over a three-year period.

 

 

7

 


 

Share based payments increased by $39.4 million or 1397% year-over-year in fourth quarter 2019 from fourth quarter 2018. This impact was due to a $24.8 million year-over-year increase in share based payment expense for equity-settled awards, which was driven by a $17.9 million increase related to additional employee awards and $6.9 million from acquisition-related long-term employee incentives. In addition, there was a $14.6 million year-over-year difference between the quarterly adjustments to provisions for cash-settled payment awards, which are remeasured to their fair value based on our share price, and the related employment taxes. The year-over-year difference was driven by an increase in our share price during fourth quarter 2019 that resulted in an additional $2.6 million expense from increase in our provision for the current period, compared to the decrease in our share price during fourth quarter 2018 that resulted in a reversal of the expense by $12 million from a decrease in the provision for the period.

 

General and administrative expense increased by $63.6 million, or 112.2%, year-over-year in fourth quarter 2019 compared to fourth quarter 2018, reflecting the additional expenses related to the Stadium Goods and New Guards businesses, both of which were acquired during 2019, and an increase in non-technology headcount across a number of areas to support the expansion of our business. This was partially offset by a lower total employee cost per person and the impact of adopting IFRS 16 on January 1, 2019. General and administrative costs as a percentage of Adjusted Revenue increased from 33.3% in fourth quarter 2018 to 35.6% in fourth quarter 2019, due to the recognition of employee compensation in the fourth quarter 2019 compared to a reversal in fourth quarter 2018. This was partially offset by the addition of New Guards, which operates with lower general and administrative costs as a percentage of Adjusted Revenue, and the impact of adopting IFRS 16.

 

Other items of $5.6 million in fourth quarter 2019 reflect transaction-related legal and advisory expenses. There were no such items in fourth quarter 2018.

 

(Losses)/ gains on items held at fair value (in thousands):

 

 

 

Three months ended December 31,

 

 

Twelve Months Ended December 31,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Change in fair value of put and call option liabilities

 

$

-

 

 

$

(10,565

)

 

$

-

 

 

$

43,247

 

Change in fair value of acquisition related consideration

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(21,526

)

(Losses)/ gains on items held at fair value

 

$

-

 

 

$

(10,565

)

 

$

-

 

 

$

21,721

 

 

Losses on items held at fair value totaled $10.6 million in fourth quarter 2019 and relates to acquisition-related and strategic partnership liabilities held at fair value, which are impacted by movements in our share price. There were no such items in fourth quarter 2018.

 

Adjusted EBITDA and Adjusted EBITDA Margin

 

Adjusted EBITDA loss increased by $3.4 million, or 23.0%, year-over-year in fourth quarter 2019, to $17.9 million, for the reasons described above. Adjusted EBITDA Margin improved from (8.6)% to (5.3)% over the same prior year period, primarily reflecting lower demand generation and technology expenses as percentages of Adjusted Revenue, as well as the impact of adopting IFRS 16 on January 1, 2019, as described above, and was partially offset by lower gross profit margin and marginally higher general and administrative expenses as a percentage of Adjusted Revenue.

8

 


 

 

Loss After Tax

 

Loss after tax increased by $100.2 million, or 1011.0% year-over-year, in fourth quarter 2019 to $110.1 million. The increase was largely driven by the movements in depreciation and amortization expense, share based payments, and other items, as explained above, resulting in an increase in the operating loss from $24.6 million to $126.4 million, and the impact of net unrealized foreign exchange gains on revaluation of non-United States Dollar denominated receivables and payables.

 

Liquidity

 

At December 31, 2019 cash and cash equivalents was $322.4 million, a decrease of $722.4 million compared to $1.04 billion at December 31, 2018. The decrease in cash and cash equivalents is primarily due to our investing activities which included the strategic acquisitions of Stadium Goods, New Guards and CuriosityChina.

 

On February 5, 2020, we completed the private placement of convertible senior notes (the “Notes”) to Tencent and Dragoneer, pursuant to which we received $250 million. The Notes will mature on December 31, 2025, unless earlier converted, redeemed or repurchased in accordance with their terms. The Notes are senior, unsecured obligations and bear interest at a rate of 5.00% per year, payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing on March 31, 2020. The Notes may be converted at an initial conversion price of $12.25. Upon conversion, the Notes will be settled, at our election, in our Class A ordinary shares, cash, or a combination of cash and Class A ordinary shares (subject to certain exceptions set forth in the Notes indenture). Holders of the Notes will have the right to require us to repurchase all or some of their Notes for cash at 100% (or 150%, in the event of a change in control, as defined in the Indenture) of their principal amount, plus all accrued and unpaid interest to, and including, the maturity date, upon the occurrence of certain corporate events, subject to certain conditions. In conjunction with this transaction, we cancelled our existing €300 million senior secured loan commitment with J.P. Morgan.

 

Outlook

 

The following forward-looking statements reflect Farfetch’s expectations as of February 27, 2020. In light of the heightened uncertainty recently created by the spread of the novel coronavirus, it is possible that our performance and projections could be impacted by disruptions caused by this situation.

 

For Full Year 2020:

 

GMV growth of 40% to 45% to $3.00 billion to $3.10 billion

 

Digital Platform GMV growth of approximately 30% to $2.50 billion to $2.56 billion

 

Brand Platform GMV of $470 million to $510 million

 

Adjusted EBITDA loss of $(70) million to $(80) million

 

For First Quarter 2020:

 

GMV growth of 44% to 51% year-over-year

 

Digital Platform GMV growth of 20% to 22% year-over-year

 

Brand Platform GMV of $100 million to $120 million

 

Adjusted EBITDA loss of $(30) million to (35) million

 


9

 


 

Conference Call Information

 

Farfetch will host a conference call today, February 27, 2020 at 4:30 p.m. Eastern Time to discuss the Company’s results as well as expectations about Farfetch’s business. Listeners may access the live conference call via audio webcast at http://farfetchinvestors.com, where listeners can also access Farfetch’s earnings press release and slide presentation. Following the call, a replay of the webcast will be available at the same website for 30 days.


10

 


 

Unaudited interim condensed consolidated statements of operations

 

 

 

 

 

for the three months ended December 31

 

 

 

 

 

(in $ thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2019

 

Revenue

 

 

195,533

 

 

 

382,232

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

(101,336

)

 

 

(206,096

)

Gross profit

 

 

94,197

 

 

 

176,136

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(118,778

)

 

 

(291,949

)

Losses on items held at fair value

 

 

-

 

 

 

(10,565

)

Share of results of associates

 

 

15

 

 

 

(38

)

Operating loss

 

 

(24,566

)

 

 

(126,416

)

 

 

 

 

 

 

 

 

 

Finance income

 

 

15,384

 

 

 

19,252

 

Finance cost

 

 

(469

)

 

 

(3,070

)

Loss before tax

 

 

(9,651

)

 

 

(110,234

)

 

 

 

 

 

 

 

 

 

Income tax (expense)/benefit

 

 

(261

)

 

 

108

 

Loss after tax

 

 

(9,912

)

 

 

(110,126

)

 

 

 

 

 

 

 

 

 

(Loss)/profit after tax attributable to:

 

 

 

 

 

 

 

 

Owners of the company

 

 

(9,912

)

 

 

(116,907

)

Non-controlling interests

 

 

-

 

 

 

6,781

 

 

 

 

(9,912

)

 

 

(110,126

)

 

 

 

 

 

 

 

 

 

Loss per share attributable to owners of the company

 

 

 

 

 

 

 

 

Basic and diluted

 

 

(0.03

)

 

 

(0.34

)

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding

 

 

 

 

 

 

 

 

Basic and diluted

 

 

299,495,657

 

 

 

339,495,707

 

 


11

 


 

Unaudited interim condensed consolidated statements of comprehensive loss

 

 

 

 

 

for the three months ended December 31

 

 

 

 

 

(in $ thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2019

 

Loss for the period

 

 

(9,912

)

 

 

(110,126

)

 

 

 

 

 

 

 

 

 

Other comprehensive (loss)/income:

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to the consolidated

statement of operations (net of tax):

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

 

(7,305

)

 

 

(25,838

)

Gain on cash flow hedges

 

 

436

 

 

 

4,777

 

Items that will not be subsequently reclassified to the consolidated statement of operations (net of tax):

 

 

 

 

 

 

 

 

Remeasurement loss on severance plan

 

 

-

 

 

 

(27

)

Other comprehensive loss for the period, net of tax

 

 

(6,869

)

 

 

(21,088

)

Total comprehensive loss for the period, net of tax

 

 

(16,781

)

 

 

(131,214

)

 

 

 

 

 

 

 

 

 

Total comprehensive (loss)/income attributable to:

 

 

 

 

 

 

 

 

Owners of the company

 

 

(16,781

)

 

 

(137,995

)

Non-controlling interests

 

 

-

 

 

 

6,781

 

 

 

 

(16,781

)

 

 

(131,214

)

 


12

 


 

Unaudited interim condensed consolidated statements of operations

 

 

 

 

 

for the twelve months ended December 31

 

 

 

 

 

(in $ thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2019

 

Revenue

 

 

602,384

 

 

 

1,021,037

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

(303,934

)

 

 

(561,191

)

Gross profit

 

 

298,450

 

 

 

459,846

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

(471,766

)

 

 

(869,609

)

Gains on items held at fair value

 

 

-

 

 

 

21,721

 

Share of profits of associates

 

 

33

 

 

 

366

 

Operating loss

 

 

(173,283

)

 

 

(387,676

)

 

 

 

 

 

 

 

 

 

Finance income

 

 

38,182

 

 

 

34,382

 

Finance cost

 

 

(18,316

)

 

 

(19,232

)

Loss before tax

 

 

(153,417

)

 

 

(372,526

)

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(2,158

)

 

 

(1,162

)

Loss after tax

 

 

(155,575

)

 

 

(373,688

)

 

 

 

 

 

 

 

 

 

(Loss)/profit after tax attributable to:

 

 

 

 

 

 

 

 

Owners of the company

 

 

(155,575

)

 

 

(385,297

)

Non-controlling interests

 

 

-

 

 

 

11,609

 

 

 

 

(155,575

)

 

 

(373,688

)

 

 

 

 

 

 

 

 

 

Loss per share attributable to owners of the company

 

 

 

 

 

 

 

 

Basic and diluted

 

 

(0.59

)

 

 

(1.21

)

 

 

 

 

 

 

 

 

 

Weighted-average ordinary shares outstanding

 

 

 

 

 

 

 

 

Basic and diluted

 

 

264,432,214

 

 

 

318,843,239

 

 

13

 


 

Unaudited interim condensed consolidated statements of comprehensive loss

 

 

 

 

 

for the twelve months ended December 31

 

 

 

 

 

(in $ thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2019

 

Loss for the period

 

 

(155,575

)

 

 

(373,688

)

Other comprehensive (loss)/income:

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to the consolidated

   statement of operations (net of tax):

 

 

 

 

 

 

 

 

Exchange differences on translation of foreign operations

 

 

(24,142

)

 

 

(7,333

)

Gains/(losses) on cash flow hedges

 

 

436

 

 

 

(3,384

)

Items that will not be subsequently reclassified to the consolidated statement of operations (net of tax):

 

 

 

 

 

 

 

 

Impairment loss on investments

 

 

-

 

 

 

(100

)

Remeasurement loss on severance plan

 

 

-

 

 

 

(58

)

Other comprehensive loss for the period, net of tax

 

 

(23,706

)

 

 

(10,875

)

Total comprehensive loss for the period, net of tax

 

 

(179,281

)

 

 

(384,563

)

 

 

 

 

 

 

 

 

 

Total comprehensive (loss)/income attributable to:

 

 

 

 

 

 

 

 

Owners of the company

 

 

(179,281

)

 

 

(396,172

)

Non-controlling interests

 

 

-

 

 

 

11,609

 

 

 

 

(179,281

)

 

 

(384,563

)

 

 

 

 

 

 

 

 

 

 

14

 


 

Unaudited interim condensed consolidated statements of financial position

 

 

 

 

 

(in $ thousands)

 

 

 

 

 

 

 

December 31,

2018

 

 

December 31,

2019

 

Non-current assets

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

10,458

 

 

 

12,388

 

Deferred tax assets

 

 

-

 

 

 

5,324

 

Intangible assets, net

 

 

103,345

 

 

 

1,362,967

 

Property, plant and equipment, net

 

 

37,528

 

 

 

67,999

 

Right-of-use assets

 

 

-

 

 

 

115,176

 

Investments

 

 

566

 

 

 

16,229

 

Investments in associates

 

 

86

 

 

 

2,466

 

Total non-current assets

 

 

151,983

 

 

 

1,582,549

 

Current assets

 

 

 

 

 

 

 

 

Inventories

 

 

60,954

 

 

 

128,107

 

Trade and other receivables

 

 

93,670

 

 

 

194,794

 

Cash and cash equivalents

 

 

1,044,786

 

 

 

322,429

 

Total current assets

 

 

1,199,410

 

 

 

645,330

 

Total assets

 

 

1,351,393

 

 

 

2,227,879

 

 

 

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Share capital

 

 

11,994

 

 

 

13,584

 

Share premium

 

 

772,300

 

 

 

878,007

 

Merger reserve

 

 

783,529

 

 

 

783,529

 

Foreign exchange reserve

 

 

(23,509

)

 

 

(30,842

)

Other reserves

 

 

67,474

 

 

 

450,774

 

Accumulated losses

 

 

(483,357

)

 

 

(826,135

)

Equity attributable to owners of the company

 

 

1,128,431

 

 

 

1,268,917

 

Non-controlling interests

 

 

-

 

 

 

68,915

 

Total equity

 

 

1,128,431

 

 

 

1,337,832

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

Provisions

 

 

13,462

 

 

 

23,704

 

Lease liabilities

 

 

-

 

 

 

100,833

 

Deferred tax liabilities

 

 

-

 

 

 

219,789

 

Other liabilities

 

 

15,342

 

 

 

16,455

 

Put and call option liabilities

 

 

-

 

 

 

61,268

 

Total non-current liabilities

 

 

28,804

 

 

 

422,049

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

 

194,158

 

 

 

447,586

 

Lease liabilities

 

 

-

 

 

 

18,485