Farfetch : Q4 2021 Earnings Presentation (opens in new window)

FOURTH QUARTER & FULL

YEAR 2021 RESULTS

February 24, 2022

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IMPORTANT NOTICE

This presentation and the accompanying oral presentation contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation and the accompanying oral presentation that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our Luxury New Retail vision and discussions with Richemont, expectations regarding New Guards' license agreement with Reebok, the shift to online within the luxury industry and its future trajectory, anticipated benefits in relation to collaborations, partnerships and license agreements, expectations regarding future opportunities including the anticipated future launch of our beauty offering, future financial or operating performance, planned investments, anticipated growth, market opportunities, strategies and other expectations, our strategic initiatives for 2022, our growth rate and expected performance for the full year 2022, as well as statements that include the words "expect," "plan," "believe," "estimate," "may," "should," "anticipate," "will," "could," "aim," "continue" 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; the effect of the COVID-19 global pandemic on our business and results of operations; 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 luxury sellers for the supply of products on our Marketplace; our reliance on luxury sellers 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; New Guards' dependence on its production, inventory management and fulfilment processes and systems; the operation of retail stores subjects us to numerous risks, some of which are beyond our control; our ability to acquire or retain consumers and to promote and sustain the Farfetch brand; our reliance on highly complex software, which may contain undetected errors; 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 reliance on information technologies and our ability to adapt to technological developments; our reliance on third-party providers to host certain websites and applications; our ability to successfully utilize our data; our ability to manage our growth effectively; the increased focus on social, environmental and sustainability matters could increase our costs, harm our reputation and adversely affect our financial results, and our ability to implement our environmental, sustainability, responsible sourcing, social and inclusion and diversity goals; José Neves, our Chief Executive Officer, has considerable influence over important corporate matters due to his ownership of us, and our dual-class voting structure will limit your ability to influence corporate matters, including a change of control; and the other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 20 -F filed with the U.S. Securities and Exchange Commission ("SEC") for the fiscal year ended December 31, 2020, including our Annual Report on Form 20-F for the fiscal year ended December 31, 2021, to be filed with the SEC, as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC's website at www.sec.gov and on our website at http://farfetchinvestors.com.

In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation and the accompanying oral presentation 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 presentation and the accompanying oral presentation relate only to events or information as of the date on which the statements are made in this presentation and the accompanying oral presentation. 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. Unless otherwise indicated, information contained in this presentation concerning our industry, competitive position and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data, and our experience in, and knowledge of, such industry and markets, which we believe to be reasonable. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in the estimates made by independent parties and by us. All subsequent written and oral forward-looking statements attributable to us, our Board of Directors or any person acting on our behalf are expressly qualified in their entirety by this notice.

This presentation and the accompanying oral presentation include certain financial measures not presented in accordance with International Financial Reporting Standards ("IFRS") including but not limited to, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, Adjusted Revenue, Digital Platform Order Contribution and Digital Platform Order Contribution Margin. These financial measures are not measures of financial performance in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to Loss after tax, Revenue, Gross Profit or other measures of profitability, liquidity or performance under IFRS. You should be aware that our presentation of these measures may not be comparable to similarly-titled measures used by other companies, which may be defined and calculated differently. Reconciliations of these non-IFRS measures to the most directly comparable IFRS measures are provided in the Appendix as applicable.

Certain figures in this presentation 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.

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Q4'21 PERFORMANCE

		Strong results demonstrate differentiated platform strategy
	USDm		Digital Platform		Brand Platform		In-Store	Group
	GMV		$1,146		$117		$26	$1,289
	Adjusted Revenue2		4311		117		22	571
	Gross Profit		230		69		14	313
	Demand generation expense		(90)		n/a		n/a	(90)
	Order Contribution2		140		69		14	223
	% Adjusted Revenue2		32.4%		59.1%		63.4%	39.1%
	Technology expense							$(31)
	General and administrative							(157)
	Adjusted EBITDA2							36
	% Adjusted Revenue2							6.3%

1 Refers to Digital Platform Services Revenue.

2 Non-IFRS financial measures, please refer to the Appendix for a reconciliation to the most directly comparable IFRS financial measures.

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FY'21 PERFORMANCE

		Strong results demonstrate differentiated platform strategy
	USDm		Digital Platform		Brand Platform		In-Store	Group
	GMV		$3,678		$468		$84	$4,230
	Adjusted Revenue2		1,3861		468		71	1,924
	Gross Profit		730		242		45	1,017
	Demand generation expense		(292)		n/a		n/a	(292)
	Order Contribution2		438		242		45	725
	% Adjusted Revenue2		31.6%		51.7%		63.1%	37.7%
	Technology expense							$(131)
	General and administrative							(592)
	Adjusted EBITDA2							2
	% Adjusted Revenue2							0.1%

1 Refers to Digital Platform Services Revenue.

2 Non-IFRS financial measures, please refer to the Appendix for a reconciliation to the most directly comparable IFRS financial measures.

Q4'21 GMV & REVENUE BUILD

USDm

Digital Platform	Digital Platform	1P Digital Platform	3P Digital Platform	Brand Platform
GMV	Fulfilment GMV	GMV1,2	GMV2,3	GMV4
$1,146	$95	$161	$891	$117
	100%	100%	30.4%	100%
drop through	drop through	3P take rate	drop through
	Digital Platform	1P Digital	3P Digital	Brand Platform
Revenue	Fulfilment
Platform Revenue	Platform Revenue	Revenue4
Revenue
$666	$161	$271	$117
$95

Digital Platform Services Revenue

$431

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In-StoreGMV

GMV5 $1,289 $26

In-StoreAdjusted

Revenue6Revenue7

$22$571

Note: GMV is inclusive of product value, shipping and duties and net of returns, value added taxes and cancellations.

1 GMV from first-party sales, which is equal to revenue from first-party sales, means revenue derived from sales on our platform of inventory owned by us.

2 Includes Farfetch Marketplace, BrownsFashion.com, Stadium Goods and New Guards brands' e-commerce websites.

3 GMV from third-party sales refers to GMV generated from third-party supply sourced from brands and retailers, as well as FPS GMV from third-party clients.

4 Includes revenue relating to New Guards Group operations less revenue from New Guards Group's owned e-commerce websites, direct to consumer channel via our marketplaces and directly operated stores.

1. Includes GMV from Browns In-Store, Stadium Goods In-Store and New Guards brands' In-Store.
2. Historically, revenue realized from In-Store sales was equal to GMV of such sales, as third-party sales made in certain of our stores were accounted for within our Digital Platform segment. Starting in the first quarter of 2021, such sales are accounted for within our In-Store segment.
3. Non-IFRSfinancial measure, please refer to the Appendix for a reconciliation to the most directly comparable IFRS financial measure.