ftch-ex991

LONDON, U.K. February 28, 2019 – 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, 2018.

“By all measures, 2018 was a blockbuster year for Farfetch,” said José Neves, Farfetch Founder, CEO and Co-Chair. "We continued to lead the online personal luxury goods market, growing GMV 55% for the year – more than twice as fast as the industry."

"We also exited our first decade as a company with an incredible foundation for realizing our platform vision globally, including in China, with the announced acquisition of Toplife solidifying Farfetch as the Premier Luxury Gateway to China."

"Over the next ten years, the luxury industry is expected to grow to an estimated $500 billion, and online sales will potentially grow to represent an incremental $100 billion opportunity. Farfetch is uniquely positioned to capture the lion's share of this opportunity."

Elliot Jordan, CFO of Farfetch said, "I am thrilled with our record GMV performance and the growth of Farfetch during 2018, which exceeded expectations. Our increasing scale has enabled us to leverage our efficiencies and lean into our customer proposition with new initiatives such as our Access loyalty program, to boost the lifetime value of our customers and enhance long-term shareholder value."

Consolidated Financial Summary and Key Operating Metrics (in thousands, except as otherwise noted):

	Three months ended December 31,						Twelve months ended December 31,
	2017			2018			2017			2018
Consolidated Group:
Gross Merchandise Value (“GMV”)	$	310,718		$	466,490		$	909,826		$	1,407,698
Revenue		126,482			195,533			385,966			602,384
Adjusted Revenue		102,486			170,089			311,784			504,590
Adjusted EBITDA		(23,409	)		(14,575	)		(58,079	)		(95,960	)
Adjusted EBITDA Margin	(22.8%)			(8.6%)			(18.6%)			(19.0%)
Loss After Tax		(54,816	)		(9,912	)		(112,275	)		(155,575	)
Platform:
Platform GMV	$	306,954		$	462,176		$	894,392		$	1,392,104
Platform Services Revenue		98,722			165,775			296,350			488,995
Platform Gross Profit		62,829			92,632			196,581			291,706
Platform Order Contribution		39,574			58,698			127,379			194,411
Platform Order Contribution Margin	40.1%			35.4%			43.0%			39.8%
Farfetch Marketplace:
Active Consumers		935.8			1,353.4			935.8			1,353.4
Number of Orders		600.1			945.2			1,881.0			2,913.0
Average Order Value (“AOV”) (actual)	$	670.4		$	637.3		$	620.0		$	618.6

GMV increased by $155.8 million from $310.7 million in fourth quarter 2017 to $466.5 million in fourth quarter 2018, representing year-over-year growth of 50.1%. Platform GMV increased by $155.2 million from $307.0 million to $462.2 million, representing year-over-year growth of 50.6%.

The increases in GMV and Platform GMV were primarily driven by a 57.5% increase in Number of Orders from 600,100 in fourth quarter 2017 to 945,200 in fourth quarter 2018, which primarily resulted from a 44.6% growth in Active Consumers to 1.4 million, and an increase in transactions per Active Consumer as we saw strong demand from consumers across our global markets. These factors were partially offset by the 4.9% decrease in AOV from $670.4 to $637.3, which mainly reflects the foreign currency translation impact of the U.S. dollar appreciation over the past year, as well as increased investments in our customers, which resulted in a lower level of fulfilment revenue relative to Platform GMV.

Revenue increased by $69.1 million year-over-year from $126.5 million in fourth quarter 2017 to $195.5 million in fourth quarter 2018, representing growth of 54.6%. The increase was primarily driven by higher platform services revenue. Platform services revenue increased by $67.1 million or 67.9% year-over-year, reflecting increased Platform GMV, with higher growth in first-party as compared to third-party GMV. Third-Party Take Rate remained relatively flat year-over-year.

Cost of revenue increased by $39.6 million, or 64.1% year-over-year from $61.8 million in fourth quarter 2017 to $101.3 million in fourth quarter 2018. The increase was primarily driven by the increases in cost of goods associated with first-party sales, as well as the delivery, packaging and

transaction processing expenditures incurred as a result of an increased Number of Orders in fourth quarter 2018 as compared to the prior year period.

Our gross profit margin decreased from 51.2% in fourth quarter 2017 to 48.2% in fourth quarter 2018 primarily due to lower fulfillment revenue per order, on average, as Marketplace cost efficiencies were offset by investments in customer initiatives, including our loyalty program. Additional factors impacting gross profit margin include an increased mix of first-party sales, which have a different gross margin profile than our third-party business; and the impact of retail pricing, particularly on first-party gross margin.

	Three months ended December 31,				Twelve months ended December 31,
	2017		2018		2017		2018
Demand generation expense	$	23,255	$	33,934	$	69,202	$	97,295
Technology expense		12,148		18,159		31,611		68,224
Depreciation and amortization		3,029		7,185		10,980		23,537
Share based payments		7,715		2,821		21,486		53,819
General and administrative		52,861		56,679		165,981		228,891
Selling, general and administrative expenses	$	99,008	$	118,778	$	299,260	$	471,766

Fourth quarter 2018 demand generation expense increased 45.9% year-over-year to $33.9 million in fourth quarter 2018, or 20.5% of platform services revenue, representing a year-over-year improvement of 309 bps, which primarily resulted from performance marketing efficiencies in driving Platform GMV growth. These efficiencies partially offset the gross profit margin impact on Platform Order Contribution Margin which decreased 468 bps from 40.1% in fourth quarter 2017 to 35.4% in fourth quarter 2018.

Technology expense, which is primarily related to research and development and operations of our Marketplace features and services, increased by $6.0 million, or 49.5%, in fourth quarter 2018 compared to the same period in 2017, which was primarily driven by a 54.7% increase in technology staff headcount and higher software and infrastructure expenses to support the continued growth of the business.

General and administrative expense increased by $3.8 million, or 7.2%, in fourth quarter of 2018 compared to the same period in 2017. General and administrative costs as a percentage of Adjusted Revenue decreased from 51.6% in fourth quarter 2017 to 33.3% in fourth quarter 2018, reflecting improved efficiency of corporate and platform service costs, as well as a reduction of accrued employee compensation expense.

Share based payments decreased by $4.9 million, or 63.4%, in fourth quarter 2018 compared to the same period in 2017, primarily due to the fair value re-measurement of our cash-settled share based payment awards and provision for employment related taxes on share based payment awards.

Adjusted EBITDA was ($14.6) million for fourth quarter 2018, improving by $8.8 million, or 37.7%, compared to the same period in 2017. Adjusted EBITDA margin improved from (22.8%) in fourth

quarter 2017 to (8.6%) in the same period of 2018, reflecting benefits from our prior period investments to support our growth as well as improved efficiencies in selling, general and administrative expenses, which have grown at a slower rate than Adjusted Revenue.

Loss after tax decreased by $44.9 million, or 81.9% year-over-year in fourth quarter 2018 to $9.9 million. This was driven by a year-over-year decrease in the operating loss from $34.3 million to $24.6 million combined with unrealized foreign exchange gains from the revaluation of our receivables and payables in fourth quarter 2018.

The following forward-looking statement reflects Farfetch’s expectations as of February 28, 2019

based on the performance of the Marketplace through the initial first quarter 2019 period:

For the first quarter of 2019, Platform GMV is expected to grow approximately 40% year over year, and Adjusted EBITDA margin is expected to be approximately (22%) - (24%), prior to any benefit from the adoption of IFRS 16 which became effective on January 1, 2019.

For full year 2019, Platform GMV is expected to grow approximately 40%. The company expects to continue to make investments to grow the business, including for its recent acquisitions, while also leveraging costs, and estimates full year 2019 Adjusted EBITDA margin of approximately
(18%) - (19%), prior to any benefit from the adoption of IFRS 16.

Farfetch will host a conference call today, February 28, 2019 at 4:30 p.m. Eastern Time to discuss the Company’s results as well as forward-looking information 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 statement of operations
for the three months ended December 31
(in $ thousands, except share and per share data)

	2017			2018
Revenue		126,482			195,533

Cost of revenue		(61,753	)		(101,336	)
Gross profit		64,729			94,197

Selling, general and administrative expenses		(99,008	)		(118,778	)
Share of profits of associates		8			15
Operating loss		(34,271	)		(24,566	)

Net finance (cost)/ income		(20,171	)		14,915
Loss before tax		(54,442	)		(9,651	)

Income tax expense		(374	)		(261	)
Loss after tax		(54,816	)		(9,912	)

Loss per share attributable to owners of the parent
Basic and diluted		(0.23	)		(0.03	)

Weighted-average ordinary shares outstanding
Basic and diluted		241,527,626			299,495,657

Unaudited interim condensed consolidated statement of comprehensive loss
for the three months ended December 31
(in $ thousands)

	2017			2018
Loss for the period		(54,816	)		(9,912	)

Other comprehensive income/(expense):
Items that may be subsequently reclassified to consolidated statement of operations (net of tax):
Exchange differences on translation of foreign operations		5,607			(7,305	)
Gains on cash flow hedges		-			436

Other comprehensive income/(expense) for the period, net of tax		5,607			(6,869	)
Total comprehensive loss for the period attributable to equity holders of the parent, net of tax		(49,209	)		(16,781	)

Unaudited interim condensed consolidated statement of operations
for the twelve months ended December 31
(in $ thousands, except share and per share data)

	2017			2018
Revenue		385,966			602,384

Cost of revenue		(181,200	)		(303,934	)
Gross profit		204,766			298,450

Selling, general and administrative expenses		(299,260	)		(471,766	)
Share of profits of associates		31			33
Operating loss		(94,463	)		(173,283	)

Net finance (cost)/ income		(17,642	)		19,866
Loss before tax		(112,105	)		(153,417	)

Income tax expense		(170	)		(2,158	)
Loss after tax		(112,275	)		(155,575	)

Loss per share attributable to owners of the parent
Basic and diluted		(0.50	)		(0.59	)

Weighted-average ordinary shares outstanding
Basic and diluted		223,465,734			264,432,214

Unaudited interim condensed consolidated statement of financial position
(in $ thousands)

	December 31, 2017			December 31, 2018
Non-current assets
Trade and other receivables		9,193			10,458
Intangible assets		74,041			103,345
Property, plant and equipment		26,696			37,528
Investments		278			566
Investments in associates		58			86
Total non-current assets		110,266			151,983
Current assets
Inventories		50,610			60,954
Trade and other receivables		18,180			93,670
Cash and cash equivalents		384,002			1,044,786
Total current assets		452,792			1,199,410
Total assets		563,058			1,351,393

Equity and liabilities
Equity
Share capital		9,298			11,994
Share premium		677,674			772,300
Merger reserve		-			783,529
Foreign exchange reserve		633			(23,509	)
Other reserves		38,475			67,474
Accumulated losses		(329,177	)		(483,357	)
Total equity		396,903			1,128,431

Non-current liabilities
Provisions		5,142			13,462
Other liabilities		5,123			15,342
Total non-current liabilities		10,265			28,804

Current liabilities
Trade and other payables		136,744			194,158
Other liabilities		19,146			-
Total current liabilities		155,890			194,158
Total liabilities		166,155			222,962
Total equity and liabilities		563,058			1,351,393

Unaudited interim condensed consolidated statement of cash flows
for the twelve months ended December 31
(in $ thousands)

	2017			2018
Cash flows from operating activities
Loss before tax		(112,105	)		(153,417	)
Adjustments for:
Depreciation		3,648			7,338
Amortization		7,332			16,199
Non-cash employee benefits expense – share based payments		16,578			53,819
Net loss on sale of non-current assets		42			1,028
Share of profits of associates		(35	)		(33	)
Net finance income		(1,261	)		(19,866	)
Net exchange differences		12,196			7,621
Changes in fair value of derivatives		44			(506	)
Changes in working capital
Increase in receivables		(598	)		(72,151	)
Increase in inventories		(35,163	)		(10,345	)
Increase in payables		47,406			57,432
Changes in other assets and liabilities
Increase in non-current receivables		(3,826	)		(1,265	)
Increase in other liabilities		7,365			-
Increase in provisions		-			(701	)
Interest paid		(591	)		(536	)
Income taxes paid		(352	)		(822	)
Net cash outflow from operating activities		(59,320	)		(116,205	)

Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired		195			-
Payments for property, plant and equipment		(12,616	)		(21,137	)
Payments for intangible assets		(18,997	)		(50,978	)
Interest received		2,833			8,865
Payment for equity investments		(278	)		(288	)
Net cash outflow from investing activities		(28,863	)		(63,538	)

Cash flows from financing activities
Proceeds from issue of shares, net of issue costs		322,097			859,526
Repayment of loan notes		(21,955	)		-
Net cash inflow from financing activities		300,142			859,526

Net increase in cash and cash equivalents		211,959			679,783
Cash and cash equivalents at the beginning of the period		150,032			384,002
Effects of exchange rate changes on cash and cash equivalents		22,011			(18,999	)
Cash and cash equivalents at end of period		384,002			1,044,786

Unaudited interim condensed consolidated statement 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, 2017		7,844		340,988			-		(32,871	)		19,857		(216,901	)		118,917			(1	)		118,916
Changes in equity
Issue of share capital, net of transaction costs		1,454		336,686			-		-			2,161		-			340,301			-			340,301
Total comprehensive income/ (loss)		-		-			-		33,504			-		(112,275	)		(78,771	)		-			(78,771	)
Share based payment – equity settled		-		-			-		-			16,457		-			16,457			-			16,457
Transactions with non-controlling interests		-		-			-		-			-		(1	)		(1	)		1			0
Balance at December 31, 2017		9,298		677,674			-		633			38,475		(329,177	)		396,903			-			396,903
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
Issue of share capital, net of transaction costs		2,044		772,300			-		-			-		-			774,344			-			774,344
Total comprehensive loss		-		-			-		(24,142	)		436		(155,575	)		(179,281	)		-			(179,281	)
Share based payment – equity settled		-		-			-		-			28,563		1,395			29,958			-			29,958
Balance at December 31, 2018		11,994		772,300			783,529		(23,509	)		67,474		(483,357	)		1,128,431			-			1,128,431

	2017												2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
	(in thousands, unless stated otherwise)
Consolidated Group:
Gross Merchandise Value (“GMV”)	$	176,701		$	217,806		$	204,601		$	310,718		$	909,826
Revenue		79,425			93,146			86,913			126,482			385,966
Fulfilment Revenue		16,128			17,632			16,426			23,996			74,182
Adjusted Revenue		63,297			75,514			70,487			102,486			311,784
In-Store Revenue		3,715			3,616			4,339			3,764			15,434
Demand Generation Expense		(12,429	)		(16,694	)		(16,824	)		(23,255	)		(69,202	)
Technology Expense		(5,078	)		(6,050	)		(8,335	)		(12,148	)		(31,611	)
Share Based Payments		(3,770	)		(4,752	)		(5,249	)		(7,715	)		(21,486	)
Depreciation and Amortization		(2,313	)		(2,706	)		(2,932	)		(3,029	)		(10,980	)
General and Administrative		(29,537	)		(42,433	)		(41,150	)		(52,861	)		(165,981	)
Adjusted EBITDA		(4,190	)		(9,860	)		(20,620	)		(23,409	)		(58,079	)
Adjusted EBITDA Margin	(6.6%)			(13.1%)			(29.3%)			(22.8%)			(18.6%)
Platform:
Platform GMV	$	172,985		$	214,190		$	200,263		$	306,954		$	894,392
Platform Services Revenue		59,582			71,898			66,148			98,722			296,350
Platform Gross Profit		40,759			49,735			43,258			62,829			196,581
Platform Order Contribution		28,330			33,041			26,434			39,574			127,379
Platform Order Contribution Margin	47.5%			46.0%			40.0%			40.1%			43.0%
Farfetch Marketplace:
Active Consumers		728.2			796.3			854.7			935.8			935.8
Number of Orders		385.0			468.2			427.7			600.1			1,881.0
Average Order Value (actual)	$	581.2		$	600.4		$	605.2		$	670.4		$	620.0

	2018												2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
	(in thousands, unless stated otherwise)
Consolidated Group:
Gross Merchandise Value (“GMV”)	$	292,692		$	338,543		$	309,973		$	466,490		$	1,407,698
Revenue¹		125,617			146,693			134,541			195,533			602,384
Fulfilment Revenue		22,535			28,016			21,799			25,444			97,794
Adjusted Revenue¹		103,082			118,677			112,742			170,089			504,590
In-Store Revenue		4,021			3,170			4,090			4,314			15,595
Demand Generation Expense		(19,363	)		(21,895	)		(22,103	)		(33,934	)		(97,295	)
Technology Expense		(13,896	)		(17,135	)		(19,034	)		(18,159	)		(68,224	)
Share Based Payments		(6,567	)		(5,956	)		(38,475	)		(2,821	)		(53,819	)
Depreciation and Amortization		(4,875	)		(5,463	)		(6,014	)		(7,185	)		(23,537	)
General and Administrative		(51,571	)		(62,080	)		(58,561	)		(56,679	)		(228,891	)
Adjusted EBITDA		(23,657	)		(25,417	)		(32,311	)		(14,575	)		(95,960	)
Adjusted EBITDA Margin	(22.9%)			(21.4%)			(28.7%)			(8.6%)			(19.0%)
Platform:
Platform GMV	$	288,671		$	335,373		$	305,884		$	462,176		$	1,392,104
Platform Services Revenue¹		99,061			115,507			108,652			165,775			488,995
Platform Gross Profit		59,365			74,222			65,487			92,632			291,706
Platform Order Contribution		40,002			52,327			43,384			58,698			194,411
Platform Order Contribution Margin¹	40.4%			45.3%			39.9%			35.4%			39.8%
Farfetch Marketplace:
Active Consumers		1,017.8			1,118.0			1,216.8			1,353.4			1,353.4
Number of Orders		578.3			727.0			662.5			945.2			2,913.0
Average Order Value (actual)	$	647.1		$	602.4		$	584.6		$	637.3		$	618.6

¹See “Consolidated statement of operations classification” below for an explanation regarding changes to the previously reported metrics the first three quarters of 2018.

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 the success of our expansion into the China Market and our expected financial performance and operational performance for the first quarter of 2019 and full year 2019, 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 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 final prospectus under Rule 424(b) filed with the U.S. Securities and Exchange Commission (“SEC”) on September 24, 2018 in connection with our initial public offering 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 its 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.

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. The Group has 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.

This release includes certain financial measures and metrics not based on IFRS, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Revenue, Platform Services Revenue, Platform Gross Profit, Platform Order Contribution, and Platform Order Contribution Margin, as well as operating metrics, including GMV, Platform GMV, Active Consumers, Number of Orders and Average Order Value.

Management uses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Revenue, Platform Services Revenue, Platform Gross Profit, Platform Order Contribution, and Platform Order Contribution Margin

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Revenue, Platform Services Revenue, Platform Gross Profit, Platform Order Contribution and Platform Order Contribution Margin 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 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Revenue, Platform Services Revenue, Platform Gross Profit, Platform Order Contribution and Platform Order Contribution Margin 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 these non-IFRS financial 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 these non-IFRS financial 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 these non-IFRS measures are significant components in understanding and assessing financial performance. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Revenue and Platform Services Revenue have limitations as analytical tools and should not be considered in

isolation, or as an alternative to, or a substitute for loss after tax, revenue or other financial statement data presented in our consolidated financial statements as indicators of financial performance. Some of the limitations are:

Due to these limitations, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Revenue and Platform Services Revenue should not be considered as measures of discretionary cash available to us to invest in the growth of our business and are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. In addition, the non-IFRS financial 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 compensative for these limitation by relying primarily on our IFRS results and using these non-IFRS measures only as supplemental measures.

Platform Gross Profit, Platform Order Contribution and 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 Platform Gross Profit, Platform Order Contribution and 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 platform for the periods presented. We also believe that Platform Gross Profit, Platform Order Contribution and Platform Order Contribution Margin are useful measures in evaluating our operating performance within our industry because they permit the evaluation of our platform productivity, efficiency and performance.

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												2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full year
Loss after tax	$	(9,333	)	$	(19,947	)	$	(28,179	)	$	(54,816	)	$	(112,275	)
Net finance costs/(income)		(1,085	)		(605	)		(839	)		20,171			17,642
Income tax expense/(credit)		152			(581	)		225			374			170
Depreciation and amortization		2,313			2,706			2,932			3,029			10,980
Share based payments(a)		3,770			4,752			5,249			7,715			21,486
Other items(b)		-			3,823			-			126			3,949
Share of results of associates		(7	)		(8	)		(8	)		(8	)		(31	)
Adjusted EBITDA	$	(4,190	)	$	(9,860	)	$	(20,620	)	$	(23,409	)	$	(58,079	)

(in $ thousands, except as otherwise noted)

	2018												2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full year
Loss after tax	$	(50,727	)	$	(17,681	)	$	(77,255	)	$	(9,912	)	$	(155,575	)
Net finance costs/(income)		15,101			(19,319	)		(733	)		(14,915	)		(19,866	)
Income tax expense/(credit)		527			187			1,183			261			2,158
Depreciation and amortization		4,875			5,463			6,014			7,185			23,537
Share based payments(a)		6,567			5,956			38,475			2,821			53,819
Other items		-			-			-			-			-
Share of results of associates		-			(23	)		5			(15	)		(33	)
Adjusted EBITDA	$	(23,657	)	$	(25,417	)	$	(32,311	)	$	(14,575	)	$	(95,960	)

The following table reconciles Adjusted Revenue and Platform Services Revenue to the most directly comparable IFRS financial performance measure, which is revenue:

(in $ thousands, except as otherwise noted)

	2017												2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full year
Revenue	$	79,425		$	93,146		$	86,913		$	126,482		$	385,966
Less: Platform Fulfilment Revenue		(16,128	)		(17,632	)		(16,426	)		(23,996	)		(74,182	)
Adjusted Revenue		63,297			75,514			70,487			102,486			311,784
Less: In-Store Revenue		(3,715	)		(3,616	)		(4,339	)		(3,764	)		(15,434	)
Platform Services Revenue	$	59,582		$	71,898		$	66,148		$	98,722		$	296,350

(in $ thousands, except as otherwise noted)

	2018												2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full year
Revenue	$	125,617		$	146,693		$	134,541		$	195,533		$	602,384
Less: Platform Fulfilment Revenue		(22,535	)		(28,016	)		(21,799	)		(25,444	)		(97,794	)
Adjusted Revenue		103,082			118,677			112,742			170,089			504,590
Less: In-Store Revenue		(4,021	)		(3,170	)		(4,090	)		(4,314	)		(15,595	)
Platform Services Revenue	$	99,061		$	115,507		$	108,652		$	165,775		$	488,995

The following table reconciles Platform Gross Profit and Platform Order Contribution to the most directly comparable IFRS financial performance measure, which is gross profit:

(in $ thousands, except as otherwise noted)

	2017												2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full year
Gross profit	$	42,854		$	51,494		$	45,689		$	64,729		$	204,766
Less: In-Store Gross Profit(a)		(2,095	)		(1,759	)		(2,431	)		(1,900	)		(8,185	)
Platform Gross Profit		40,759			49,735			43,258			62,829			196,581
Less: Demand generation expense		(12,429	)		(16,694	)		(16,824	)		(23,255	)		(69,202	)
Platform Order Contribution	$	28,330		$	33,041		$	26,434		$	39,574		$	127,379

(in $ thousands, except as otherwise noted)

	2018												2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full year
Gross profit	$	61,173		$	75,693		$	67,387		$	94,197		$	298,450
Less: In-Store Gross Profit(a)		(1,808	)		(1,471	)		(1,900	)		(1,565	)		(6,744	)
Platform Gross Profit		59,365			74,222			65,487			92,632			291,706
Less: Demand generation expense		(19,363	)		(21,895	)		(22,103	)		(33,934	)		(97,295	)
Platform Order Contribution	$	40,002		$	52,327		$	43,384		$	58,698		$	194,411

“Active Consumers” means active consumers on the Farfetch Marketplace. A consumer is deemed to be active if they made a purchase on the Farfetch Marketplace within the last 12-month period, irrespective of cancelations or returns. 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 costs/(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.

“Average Order Value” (“AOV”) means the average value of all orders placed on the Farfetch Marketplace excluding value added taxes.

“Gross Merchandise Value” (“GMV”) means the total dollar value of orders processed. GMV across our platform 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.

“Number of Orders” means the total number of consumer orders placed on the Farfetch Marketplace, gross of returns and net of cancellations, in a particular period. An order is counted on the day the consumer places the order. The Number of Orders represents an indicator of our ability to generate sales opportunities for luxury sellers through our Marketplace. Analyzed in the context of Active Consumers, the Number of Orders provides an indicator of our ability to attract recurring purchases on our platform and also, the effectiveness of our targeted advertising.

“Platform Fulfilment Revenue” means revenue from shipping and customs clearing services that we provide to our consumers, net of consumer promotional incentives, such as free shipping and promotional codes.

“Platform Order Contribution” means gross profit after deducting demand generation expense, which includes fees that we pay for our various marketing channels. Platform Order Contribution provides an indicator of our ability to extract consumer value from our demand generation expense, including the costs of retaining existing consumers and our ability to acquire new consumers.

“Platform Order Contribution Margin” means Platform Order Contribution calculated as a percentage of Platform Services Revenue.

“Platform Services Revenue” means Adjusted Revenue less In-Store Revenue. Platform Services Revenue is driven by our Platform GMV, including revenue from first-party sales, and commission 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. Platform Services Revenue was also referred to as Adjusted Platform Revenue in previous filings with the SEC.

“Third-Party Take Rate” means Platform Services Revenue excluding revenue from first-party sales, as a percentage of GMV excluding GMV from first-party sales and 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.

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.com Marketplace connects customers in over 190 countries with items from more than 50 countries and over 1,000 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. Through its business units, which also include Store of The Future, Farfetch Black & White Solutions, Browns, and Stadium Goods, Farfetch continues to invest in innovation and develop key technologies, business solutions, and services for the luxury fashion industry.