Farfetch Limited (FTCH) Tops Q1 EPS by 9c, Revenues Miss

Farfetch Limited (NYSE: FTCH) reported Q1 EPS of ($0.24), $0.09 better than the analyst estimate of ($0.33). Revenue for the quarter came in at $301.15 million versus the consensus estimate of $313.95 million.

• Results demonstrate strength of platform model within the luxury industry; continued market share gains
• Well-capitalized to continue on path to Adjusted EBITDA profitability – targeted for full year 2021
• Q1 2020 Gross Merchandise Value up 46% year-over-year; Digital Platform GMV up 19% year-over-year (20% on constant currency basis)
• $107 million Brand Platform GMV in Q1 2020 on continued strength of New Guards brand portfolio
• Q1 2020 Revenue increased 90% year-over-year to $331 million
• Q1 2020 Loss After Tax remained relatively unchanged and Adjusted EBITDA improved, year-over-year; Adjusted EBITDA Margin improved to (7)%
• Cash and cash equivalents of $422 million at quarter-end; $400 million Convertible Senior Notes issuance in April 2020 further strengthens liquidity position

José Neves, Farfetch Founder, CEO and Co-Chair said: “When I founded Farfetch 12 years ago, I never imagined that the global platform I was building for the luxury industry would be put to the test in such a devastating crisis. Our hearts go out to everyone who has been impacted by this global pandemic, and we are deeply grateful to the frontline and essential workers who are helping us all manage through this situation.

“Over the past few months, as we have responded to an ever-changing environment to serve the community of creators, curators, and consumers of this industry we so love, our teams have stretched beyond perceived limits, and demonstrated the resilience of our business model. I am extremely proud of them for rising to this unbelievable challenge. I can’t think of a better example of when our people have embodied our values, and I thank every Farfetcher for their resilience and dedication throughout this difficult period.

“The investments we have made to build the global platform for the luxury fashion industry have been paying off, with features such as our global logistics capabilities, geo-diversified supply network, and localized services for a global consumer base, enabling the continuity of our operations and delivery of our strong first quarter 2020 results. But one thing that has become evident over the past weeks, is that the world will not go back to the same ‘normal’ as we knew it pre-COVID-19. As we consider the structural changes that will likely impact the luxury industry, I am confident that our unique set of capabilities position Farfetch to be even stronger in the future.”

Elliot Jordan, CFO of Farfetch, said: “I am very pleased by our financial results in first quarter 2020, which highlight the strength of our business model. GMV growth across the quarter, stable unit economics and cost base leverage means we have significantly outperformed on Adjusted EBITDA, continuing on our path to profitability. Our strong balance sheet positions us well to navigate near-term uncertainties as we continue to build on our position as the leading global platform for the luxury fashion industry by focusing on delivering sustainable growth, while also improving cost efficiencies.”

Outlook

While the COVID-19 pandemic has not had a material impact on our first quarter 2020 performance, the uncertainties resulting from the evolving nature of the situation could have material impacts on our future performance. Factors involving COVID-19 that could potentially impact our future performance include, among others:

• extended disruptions to our operations, fulfilment network, shipments
• reduced supply from fewer sellers being able to sell on the marketplace and/or production shutdowns potentially delaying Fall-Winter 2020 collections
• weakened consumer sentiment and discretionary income potentially arising from a prolonged shutdown and declining macro-economic conditions

We cannot estimate the duration of the COVID-19 pandemic or the potential impacts we could ultimately see on our business and results of operations, however, depending on the duration and scope, it could be material.

In light of the heightened uncertainty surrounding the evolving COVID-19 global health pandemic, we are not providing forward-looking financial guidance at this time, but we remain focused on our path to profitability and continue to target Adjusted EBITDA profitability for full year 2021.

For earnings history and earnings-related data on Farfetch Limited (FTCH) click here.

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