- Earnings call transcript Q3 2022

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Operator

Good afternoon, and welcome to Farfetch Q3 2022 Results Conference Call. My name is Olivia, and I’ll be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. turn Relations. over to VP Alice like Investor of now the to call Ryder, I'd Ms. may begin you Ryder, now your conference.

Alice Ryder

Hello, quarter and XXXX third conference call. welcome to Farfetch's

Joining our Chief José Officer; and results and discuss our Executive Financial me Group Phair, Founder, President. Chief Jordan, our Chairman are Elliot Officer; Stephanie today to Neves, our

statements, include made those would results could Actual or speak we begin, you indicated we our of statements. the to remind expectations statements publicly them. that revise today. no materially forward-looking from and our only to Before We like update discussions today obligation in forward-looking today forward-looking will as differ to undertake

of For on cause a to the differ, X, the important of section filed of see XXXX. actual Form the with risk our factors March XX-F SEC results some that please could Factors discussion Risk

we addition, financial reported in will with measures not certain refer this accordance In call. on IFRS to

these financial slide earnings measures at You financial to call I'd reconciliations find farfetchinvestors.com. both And of IFRS presentation, release of press on which José. turn are now, the our can over the to available our website non-IFRS and in like measures to the

José Neves

organization advancing more platform we the has pleased expected basis transformational our which is ambition will environment. other and you that report in that today. resiliency we've incredible XXXX sharpened remaining benefits headcount Luxury of our luxury, some in demonstrates profitability. opportunity the unprecedented doing share, period, on the three growth our achieved the revenue we years marketplace this costs focused our we're strong And and restrictions Russia with the us performance both grow of more in Since this luxury cost the restructure impacts allocation margins. to in events improved while build industry GMV of revenue. seeing joining its with as This from the and over X% relevant our partnerships new year-on-year vein, mission everyone. In than this XX% of of a profitability I'm navigated and double continue in the for market an for cemented this reorganization title from incredible platform. we to for challenging on NGG track Along continued all than parallel placing also And significant is becoming fundamentally time, on COVID order and team enabling of the demonstrated our becomes is largest in and investments way, growth of ever. and over were our attractive XXXX, our our constant captured come. to to strategic are ahead on is stoppage a that for spite to FPS by to macro three-year cost on Hello, scalability is world to last with of XXXX. our was us headwinds, ever initiatives, global broadly Thank with and growth I'm focus business us QX, in to circa to of the quarter-over-quarter already our ongoing, platform initial the opportunity pleased built whilst global under enterprise deliver fact The navigate that Farfetch we this us in continued in base. QX. believe declining SG&A new contribution markets terms taken and this $XXX decades and to a efficiency we've our this over we sees delivered in unique galvanized operations as GMV currency Farfetch pursuit billion has XXXX. impact of rationalization $XXX of the a in of industry, year billion entire in of energized focus furthering in framework. with a In two sizable initial macro seize base. milestones This the been And China, which the of results redesign and has leadership

expanding of focus area has been on in current environment Another the on through disciplined greater emphasis further margins growth.

we of year-on-year QX. continued reports to indicating of and period media margins XX% margin XXXX we're macro of expansion basis In extend achievements emerge guidance. the year-on-year strategic profit global this a Overall, delivering profitability expanded decision as we're environment, We've markets, XXX fixed QX growth our reduction XX.X%, very XXX to which plan contribution underlying As going gross inventories as cost result well the through cost increased US digital the stronger reflected even revised made in in a to initiative, to in current platform for margin an to prioritizing this full-year especially and growth, to our in business. promotional order environment. this is from this of trading base promotional margin seeing the higher digital basis position inflation and as points strategy FARFETCH points be over disciplined of heading luxury,

profitability the these XXXX, positive flow. supporting And regulatory we to while signed such, approvals, Neiman continue that top in and in partnerships Marcus will YNAP. and years. XXXX return Richemont next subject two launch As strategic on priorities while focus also Ferragamo, growth to to also to free over Reebok expect the delivering Group, EBITDA we for solid and we adjusted cash

tremendously XXXX December let value we to on plans are to upcoming Day now, the and audience our details strategic about to the We bringing Markets Capital And on I'd our future brands. our you update like long-term X. and planning Stephanie are in are excited share more and about

Stephanie Phair

you, Today, through would some our Thank areas take key José, two of everyone. you developments and I like recent hello, across to focus.

addressing provide on the of the our luxury to customer; we by like elevate luxury value outlook the group. further the across our health them partnerships strategic consumer. our and I'd secondly, to First, brand to begin opportunity the

as than inflation an pressures macro overall the global rates, luxury sentiment. affluent we While less less consumer to can rising retail consumer pressures. interest grow is reacted who cater of to we impacted these be to In sector practice, tends and

that continued more customers customers, consumer with as in efficient exhibit in the a year-on-year particularly the by number historically which growth basket, single-digit growth generation is this double-digit luxury growth new quarter high even like driven items well of Both demand in these. active QX, investments our by is them. and also as engaged also in have interest to behavior existing evidenced has been over a as are is of encouraging beneficial customers correlated leverage in higher we per This in time become our highly brand, more strong customers. interacting existing which as Our of increased in repurchase during new the and the our times indicates rates. Overall, with building reflection delivered customers

Emerald's private recent maintained to continued items, cohorts private average Burberry sale $XXX,XXX In XX% who price Our demand of industry. and over quarter, retention high order line ring. of for on last customer of strong continue outshine clients our point resiliency a circa we of other with including a exemplify the $X,XXX the clients, values delivered

Fashion via which also Concierge, well types to all of service Farfetch with September, a the and House, Concierge clients. which QX GMV hosted proprietary in-person service Demand, guests private similar app. a directly During targeted transactions event media In event. of clients reemphasis and we Week, our influencers an to our the incremental private Paris press, expanded as focus quarter, visit facilitate saw On as social linked over Fashion reach on our drove the million, launch of we the on to events, Fashion at via XX sourcing hundreds with differentiated services extending marked of the a

Just where at private art, with Ferragamo overall last part event with partnership, private later new to London this the saw from see top non-NGG efforts and clients a CEOs in we'll store. visited Ferragamo brands. of Street potential. to strong And Recently, week, increases to the top the our to targeted Miami, we our brands who supply our our have making with of strong Bond US cohosted as month, offering brands Art double-digit Basel continue while affinity partners, growth the On our José partner industry regions clients maintain we XX with I relationships are QX. marketing the in and we in in leveraging engaging introduce specific an we

in are of FPS which offering. Our the away conversations that from are our we a and confirm facilitating as-a-service model moving luxury wholesale with e-concessions them marketplace via and in they pioneered multi-brand believe and e-concessions, our power

which but years. platforms While partnerships on luxury that brands are choosing also the standpoint, past This also is partner. we few direct-to-consumer, over something from have a owned add they a marketing are growing and value, invested in as not only focused distribution

one This the is are As multiple by the a is Farfetch result, provide services USPs. brands to ability to of our through value leaning destinations we group, they across because our into has believe Farfetch prioritizing.

the First, partner marrying fashion as in the and tech. innovation industry,

to part we broader we specifically capabilities we new available make As of them brands or features, new develop as launch partnerships.

example, out improve our brands which handbags will platform, accessories experience. across This top are XD benefit our quarter, rolling the and we for customer a for viewer

of strong access And in the to brand's work And the to the Second, strategic broader Z and in known as the DXC leading making brands a luxury aesthetics the and variety platform investment customers, perspective appeal growth believe standpoint, opportunity. choose positions who partner we've with are particularly we an macro overall as outlook. discussions demographics aligns base a personalization. of west us that the this they they to may distribution. over role environment, market. they is their brands markets, and can discuss and further offer in results valuable regions can, and our become structure brands goals means strategic would our And where further call audience. to player access broad well of case most now, and to a such to localization with a audience encouraged We the despite This is more emerging marketplace, business. This our and Farfetch introductory of cementing brands how this media from solutions the our said around financial therefore, where how and it and luxury hand in where where global overall Brazil by were as a understands supply our commercial, a commercial believe Farfetch millennials, as and confirm who long-term as our parts offers one the the our We third, by have from East Middle for with their can curation to in collections, I'll a range collection overindexes as we and for recent partners of is continued their Elliot their our partner technology China, industry. reach, attractive strategic as technology highlight Mexico, support target presence. as want a we to ongoing Though to not Gen

Elliot Jordan

our given and you Thank wanted our which underlying results. I'm a impact results, pleased am with a constant numbers hello all on, you, environment. addressing third all. a of the to backdrop start economic with materially challenging dollar I basis. distorts quarter which to currency are to four focus by the XXXX Stephanie, very year-on-year, of There stronger on pleased share you to US I

our year-on-year. grew XX% revenue First, QX

platform digital Russia. excluding GMV XX%, Our grew

business the successfully year-on-year. financial These deliver indicate revenue our rationalize the same revenue growth. our and At benefits expanded whilst year-on-year. adapting to platform gross current continuing to underlying of the environment, to segments And brand business margins crystallize results a started grew three the Our stores XX% time, year-on-year actions to base. our grew we cost XX%

starting circa in the reported with numbers year due profitable coupled these our growth restrictions GMV, were year-on-year also XXX,XXX gross growth we on operating customer technology this with active value to costs, year-on-year adds you share a China. of $XXX across across basis on order margin higher and were ongoing key and of to Russia $XXX,XXX, as EBITDA two profitability China. year-on-year GMV, as the marketplace, a parallel, am efficiencies consumers. demand EMEA, end both US which Americas to continued I'd the underlying market. significant reported Platform underlying billion. quarters, strong XX.X%, Russia. order of headline through active and GMV to which increase of GMV year-on-year, basis. flat at margin XX% is the with our profitability, XXX financial year-on-year, was And predominantly decrease year-on-year continuing revenue translation from will spend platform than equally Russia strength declined Pacific digital like segments, but contribution in boutiques increased of have X% $X.X the report stronger to performance record a impact overall consumers results over X% stock In to ex-Russia our ongoing to drivers XX% this to by the overheads XX% from dollars. closing fewer walk operations reported US to of means Digital COVID drive I'd to down the are figures, impact growth XX% in decision the Despite respect Supply US of lion's behind which in growth well we market year-on-year next I'm deviate US these of consumers offset declined us I was profitability lower challenge the up to brands constant from the X% our also closure average in million, to three represents This due circa dollar up Our order on earlier the focus the quarter-on-quarter. and in continue the to Asia and three highlight across Farfetch dollar remains Active and as $XXX, XXXX with a down, QX return restrictions up XXXX. currency acquisition to XX% in in largely Whilst year-on-year currency stronger these quarter-on-quarter US to marketplace, cost at Platform. improvements, With efforts ongoing the which that in reflecting GMV of factors achieved pleased confident will dollar we expected. points with due to COVID Digital was due due is closure. and by GMV lower quarter GMV reduce previously to our year-on-year our lower to margin year-on-year was value year-on-year. generation the deliberate business

take public partners This Third-party commissions, as efforts a in higher to was continued of from increase our our high-margin year-on-year, product. growth is attributable higher basis recent Media direct XXX points revenue company. highest to XX.X%, negotiate and rate the Solutions particularly brand

of predominantly GMV. points was XX.X%, was QX and digital First-party basis represented XX% GMV points by; achieved digital strong costs. grew XXX contribution $XXX year-on-year, driven returns to platform margin basis by efficiencies of increase year-on-year. duties and third-party first, X% order million in year-on-year XXXX margin our platform which of This an being XXX is increase gross XX%, up shipping

by efficiencies This this basis and activity a positive XX% first-party partially demand QX, including gross as in digital offset Secondly, costs, clearance profitable restrictions. to a were lowest customer business, reduction generation a year-on-year transactions the margins markets, the result. XXX IDFA initiatives achieved revenue the reflects of with producing quarters. impacts of towards annualization lower engagement we reallocation of five more year-on-year expense and point These improvement platform spend impacts lower-cost services to our level acquisition of lower in within

in million generated net brand the commenced XXX March an at we which brand addition of which million. between by Reebok, platform, benefit Reebok Moving platform million, decrease an a with partnership revenue X% year-on-year, of X% $XXX additional platform decreased to GMV an constant economic our year-on-year, partnership. GMV a currency of margin, of profit basis gross where of increase difference the $XXX driven of basis. being to XX% but from revenue and from was points $XX revenue Brand the XXXX. The XX.X% on The increase a saw

$XX to margin. XX% million achieved a in-store GMV grew gross $XX and million of at profit gross year-on-year Finally, XX%

cost I'm In reduction terms pleased we our are taking that effect. of starting our to efforts initiatives, see that report are to

and the across savings costs. in new opportunities and retail $X cost embed During corporate the third operating we structure million. people leverage leaner expect operating simpler network, marketing achieve Overall, platform, XXXX. quarter, to cost spend, delivered our was EBITDA will operations minus as and these crystallize adjusted we Further our saving

EBITDA as XXXX constant started partnership March, as year-on-year following on Reebok to amortization to of the in agreement of payments FX circa environment. equity higher losses, grants amortize costs million. to an would on we an in business currency depreciation unrealized $XXX after increase an and due in items: after impairment have macro Loss tax financing been charge increase $X due licensing was Browns share-based a result and the a non-cash the adjusted million, basis, However, year-on-year our impacts

the This XX a repaid valuable convertible whom relationship. our instrument. Tencent, part outlook like taken with also issuing million be transaction, after capital we Note by have can strong this near-term. reinforce instrument our for position five-year have a which XXXX February working of our Finally, remaining to at loan rest instrument now million that we continue measures settled provides the to year. of $XXX we over with the term $XX cover liquidity of I'd months, as the to par

step the year-on-year And cash of XXXX. minus XX, $XXX to as our million deliver as efficiencies will expense X%, contribution XXXX decision drive prospects to expect our full Digital remain $X.X what ahead across Our as a will $X.X significant our $XXX broadly previously operating stronger of promotional of maintain to for X% GMV well US dollar on contribution actions are: updated billion, the of XXXX. view a margin X% minus be cost focus has This year. Adjusted billion above expectations of environment operating will heightened the year markets hand accelerate decision reflects year-on-year, growth platform return to this, growth flat during from QX. strategy stated Digital from be the EBITDA in of FX GMV growth. full million progress XX% also GMV away we again, XX% the platform Brand GMV with Once and of Despite a decline brand of December to short-term to follows higher in figures. on to order place, year-on-year. believe year-on-year This a XX% meaning a growth impact the a price mix This Platform as XXXX. margin see margin the X% of at range key a Platform to reported order translation to reported on impact in on expected basis our we throughout to we deliberate a entity.

we adjusted single-digit achieve addition, flow In cash in expect low to XXXX. free margins EBITDA positive and

We platforms: the Day. three over expectations building remarks. December Markets will X each platform I'll as that, provide turn this some blocks And medium-term marketplaces, brand it back José for well to our for of guidance FPS inaugural and with our Capital of as on and closing

José Neves

environment Thank fundamentally we three SG&A mission redesign to reorganization whilst. a cost Four, platform the much and solutions confident you. enterprise an business, become to its capitalizing the platform like opportunity on the five, more Neiman ongoing complete Group, emerge navigating fact, as after we strategic with and intact which our even global to of the up And continuing online this build way structure open on the are and global will our And investments I'd these transform profitable been you, marketplaces, and XXXX by become and reallocating exit remains lead our this in scalability to Reebok, for received. Richemont, XXXX fixed mission expect XXXX we and Marcus opportunity. seizing Elliot. business organization, furthering demonstrating to luxury, in Farfetch am which in XXXX macro YNAP, which am entire readiness. and an a powerful, strategic allocate efficient platform restructure continues I to the luxury and industry on platform our your for Three, with Two, pleased more make base. headcount pillars, very unprecedented creating regulatory in following brand I responses: platform. tremendous around Ferragamo a our accountability efficient stronger that successfully one, on measures to preeminent as deliver have headcount such questions. with as Thank and that, initiatives to approvals extremely reinforced Farfetch to

Operator

unmute session. your move now Our question. Gardner first Q&A from into Please Fargo. We is our [Operator Instructions] Will will ask audio your Wells from and question

Will Gardner

Good guys. afternoon,

of just into is Just just heading out headwinds could macro a Maybe you There's the performing as some Maybe you underlying discuss business impacting currently. Thanks. couple well? underlying for business business the how me. for breadcrumbs a the frame XXXX gave now? bunch And XXXX.

José Neves

Hi. question. This is I'll that take José.

broadly back I very of successfully. cetera. have the revenue. very inflation, We to than terms business higher Ukraine, really And COVID, in several of peers, And three it's the times dollar, these our and events, or have war three last This in luxury step in been volatile first here. in brands. the volatile be luxury both of strength a years, is very these doubled important of our GMV all, years take with online terms we been the think, even world significantly navigating et it

to So still comps just this stoppage And a most different. underlying highlight growing. COVID your macro want to FX are were three there to Russia, performance. impacting uncontrollables in business, our and China is powerful name question, that. policies; year. The restrictive I the Russia; factors few the the

very So macro data we here. excluding if grow will FX, -- China other strong this And the exclude the look points factors, all underlying we business, you we Russia, and we just even year. you have if if have at Russia, leave

the retention, would to clients, the the And in valuable you our impact we higher. quarter. of value. So private add XXX,XXX the orders, impact we we've on above our in most lower customers, can That's XX% impact. generation terms keep with as pointed of good the is with of FX Russia, including up others FX to demand last platform be value. metric abstract because, even obviously, a customers, FX terms another out, to We order last Elliott want added average average $X,XXX excluding This Without others XX% continue -- order went customers quarter costs. so new

that in which And the feel solid we every underlying very the be action adverse. general of very, on controllables, macro taken So business here. we to taking absolutely spite then is needs environment, are

are us this and us opportunities allowed to redesign of done we've shrink the prune as more then the reducing in certain that year rebalanced areas to opportunity XXXX launch to And Farfetch outlined in the complete signed company. unveil a in the taking that detail allowing headcount and an Farfetch of leadership XXXX. We reorganization that headcount August, business We've that and reorganize that strategic volatility costs, initiatives, May rebalance macro and to in of we've going to of headcount, in and to the new initiatives we're company.

shrinking see that is in quarter-on-quarter. is You which SG&A the ongoing. This already line,

you continue see of discipline. to cost will results the this So

The terms on full our spend. and margins. demand we absolutely higher price, higher and quality other in our to are generation focus of increased strategy We've quality controllable customers We've reduced is continuing sales. the

the five record on since the were a highest XXX on the margin year-on-year. basis last rate company, public in highest We stake quarters, we contribution the have points

really Northstar. global believe The for the a luxury platform us very intact. of have So protect we on this huge action was this to building sets our of our up firmly to And opportunity all our profitability. eyes well margin need that XXXX. deliberate remains for We

of car equation. is the lapse plans. growth be mathematical macro back as that growth. we we business expect Russia continuing underpin We strength To a That's to XXXX, in to question XXXX have factors, driven by your our initiatives these the key

year. March by lapse it's quarter-on-quarter. it We China, next improving will

have and China forecasting obviously, moderate of historical from budgets, expectations improvement. into eventually how to constant And a flat we dollar double-digit in Of out, will do be XXXX. it tailwind, will the don't we the at to basis need on next course, Again, goes exactly territory there, but we Even lapse pan -- it if into that our but know a we're a QX year, already But will FX year. decline is this we obviously, situation it's saw as levels, we well. an course. impact QX, FX,

and million all a ahead we are with the And back when Group to and with where generates have believe grows, XXXX. we track Richemont To lapsing looking can which this will about normalize YNAP scenario. with we exiting these in signed we These factors to energized the we through go deal to to And $XXX and case last signed strong positive new have first Ferragamo, at half, and XP track impact And deals will the profitability, XP the we're points that we look, we're Marcus of very year. end that XXXX, on deals. And positive very we in confident by see we're Neiman not this regulatory of XXXX deliver pending will from completing this that -- air. we go that So and business, the These course, are new Thank after deliver and this obviously, And data as volatility, it's that positive team confident second historically, and been we confident business we you go very where this XXXX. you. of very had bank, that we macro normalize have XP, are that well basis and all us. a and into on a these go has macro And cash very, cash. car on to Reebok on year castles flow in year, funded. the very, cost back opportunities. and EBITDA those doing in will that that we half approval, of rationalization business, in And prepared well. the that are will achieved we the the we these org think cash when

Operator

your Our ask will your Anmuth Please next question. Doug from JPMorgan. question audio be unmute and

Doug Anmuth

guess so spending rate first, And the your the hopefully Can Operator, as to further just take further then time efficiency costs on to China, like what up on sequentially in to open about about XXX kind about period of Media expectations much thanks offering thinking the well and marketing talk any customer get up points you more contribution, will gains basis more? Platform due and the this strengthen look from order – acquisition Solutions? as just potential then more things up I gains secondly, Thanks. questions. for taking given Digital year-over-year. platform? And you on TLP just has and

Elliot Jordan

Elliot the as sort good opportunities you. speaking times, with to broadly Doug, we think spoken order move a see of order contribution expand. on number we here, I Hey, contribution. five as investors forward see There's of Look, to significant levers I've

touched on obviously, sit running two below And to a but we Solutions this ourselves of level of You again, at overall GMV. still our levers, of X% their other revenue X% own sort marketplaces of improving benchmark GMV. Media very that X%, quarter, big income, record

to US. through significant levels less with we industry. in than to GMV well level a and opportunity, there. income, was they contribution see that fantastic that The front with is we of impact falls of accretive very targets generation, In of our over That down were would in order see $X.X relationships it's media year-on-year. to higher areas spot savings and of, done that X.X see grow. margin million will significantly again, XX% in significantly the longer demand active job XX% and continue term in higher of to consumers desirable strong order towards has be terms The efficiencies. the very that. than strong the contribution. the the the with We take us as record because across on drive We've got billion. the brands plans So great of long-term upside our team And to and spend Clearly, to relationships terms are stock

improving in able market seeing good customers but you efficiencies We've higher end US, -- we're top margin is we up for customer gold, whether currency, that And don't obviously, the platinum, group great that in online, that focus over retention were spending LTV others from that planned, private of that done on. to come -- more you in margin promotional at that And focused as of adjust client we base. target on XX% the drive the sort client spend rather well we broadly, into adjust within in our We're that's the really to So that need silver, that will to The very, which in strong lowest ahead. at you in for Again, in valuable. AOV not currency, that you mean as it see order high-end level base. the of decrease. quarter and access well-above seen bracket, than at our and isn't customer seeing be Good previously the customer. XX% have the is XX% to retention. going when we're that revenues, when year-on-year, do we'd is quarter. The bringing XX% very down when removing level of quarters customer weaker promotions a customers your that not incremental lots generation next five remove margins And will participate marginal effectively by demand the those our to but invest contribution activity. high of plan hold you're

just business, touch levers to clearance other the the on, obviously, very again, at activity moment. in heavy first-party The

That's where about XX% sales in of unexpected. clear to XX% gross and inventory up So to range. in long-term. margin of because as be the gross low Russia in be we gross This to want levels excess of we would We through to China, industry this not margin slowdown able to levels which that XX% inventory. were the expect return margin came

we touch growth and move plan over at have We bit this the as Day margin, margin from efficiencies. towards move is on clear was shipping GMV see that on The on gross to Xst. on a XXX our I December forward. but should year-on-year, forward, GMV that and to and third-party, more The we'll would stock say, basis moving more first-party the XX% Markets to through points Capital then quarter, away strong Then sales driving seasons, improve. thanks very that third-party stock the this very, up

higher centers order improving third-party efficiency in fulfillment shift gross the localized XXX broader more in Markets breaking a on routing, our I'll percentage through see. down mix returns this to to So margin, business. and And a relationships a double drive margin we returns touch Capital our be deliver party of FPS the duties, team basis where whammy model points to helping of shipping were or big to which unpacking quarter. carriers Platform where FPS. our there shipping our Then Again, revenue feature outbound will contribution can Digital consolidation first as savings a on supply, economics terms we in of the with of with away our Day, out with delivering efficiencies, investors of for the of improving more from

longer see the incremental commissions. of will flowing the underlying near over course, margins expand we and part order lastly, longer-term. to As of this of contribution to contribution we add order GMV through very the accretive then medium And margins platform, --

the the again seen number see boost maybe We're mix, lots take take move to You've That's and commissions José? XX.X%. partners. the up to up help with China, help on lower overall to brand rate opportunities renegotiations of continue to blended rates improve to that near-term. On the so commissions our bringing underlying level over

José Neves

question. the an China XX% second to luxury Yes. in industry It's as around market expected I years opportunity. Look, largest I'll China half think much goods as be come. of luxury take is to the world, the in is amazing

a in Luxury then Pavilion. consumer ground, the domestic. our that's partnership on a We're a is opportunity the landscape. And as that the which proposition, team very cross-border presence business unique of years only majority invested with an we competitive local the incredible we and game very have incredible the has Here, really other in fully advantage. apps both Alibaba's driving a player Western there, unique tremendous and market, the has Western localized in many town, And have

We luxury story the Alibaba So online with growing our had platforms are when marketplace the venture. and reason and situation Richemont, joint happy milestones we the to We're bullish very really Pavilion. Very but think in hitting that at and ahead overall, the Consumer Luxury the monitoring, a China. this two the is the It's temporary. market. we vigilant sentiment with set of that that all we're is driving goals and from on the long-term. about this situation. did a retreat current And is not

incredibly an our market. unique We competitive in capitalize to on localized in that customers will position for our experience and invest continue

Operator

question. Our your unmute Stanley. is question from and Please next Schenk Morgan Lauren your ask from audio

Lauren Schenk

there? Great. I that effects any any quantification discipline. behind around it's are gross and or taken, When expect wanted of is expecting full you. reorganization the you now the the about that And changes expense savings you're actions to to then and Thanks. about the do ask you be And there the can just there through P&L? flowing think us them be are sort of that further all are Thank seen?

Elliot Jordan

done said -- of I new as is a the the structure And bottom of review of effectively the output José the Lauren, the Hi, aspects various Yes. first reporting on, we've the new to the mean earlier of platform. business. overall of ownership structure, that top we've

ownership of So terms what platform. we the around business ownerships. of to significant again with around streamlining have the globally. operations, opportunities cost all the platforms ourselves have savings, particularly those services, is And various arranged delivered in clear And aspects then marketplaces the clear over that's technology and those our business brand and for against we growing FPAs, and supporting units, the the deliver profitable

of work seen aligning the continue already those ourselves million. quarters we Some the of $X a through next business quarter-on-quarter of those in flow few and changes around over are decline as Risks the continued spend terms in through you've structures. to across

XXXX. you if quarter. year, And our look business be again leverage are driving we areas as will in is some across areas a at important all next leverage we move into driving through of we this of what's spend think our the I numbers,

year-on-year down the only driving capitalized operating at So year-on-year. X.X% operating leverage Platform if including technology terms for leverage. was spend, driving at quarter-on-quarter element, you look up QX, in of operations, spend

course, down touched -- order of driving customer our Our driving -- down from XX% operating down contribution and the efficiencies on quarter-on-quarter sorry logistics leverage driving significant again, on warehousing and leverage savings generation and year-on-year it as operating year-on-year. the I And, driven well. came year-on-year, quarter-on-quarter, there acquisition Spend brand spend of year-on-year. demand because up down leverage team driving spend came

move ongoing flow live are across heavily fantastic So on off seeing savings There be clients obviously, as trade be next year very year. has starting to And because those want to through. HX reinvest as and next more near-term across we're of to Reebok see flow and using quarters. we QX HX into the through some new with growth. seeing that actions quantify we're through come There started the Clearly, we and are start with few step FPS exact that I to the don't the through. effects we're number well, savings partnership relationship are that will to that see that next will from up going focused will also, we well.

leverage very So to the there through There is is pleasing of and reinvestment savings. is -- now some but there coming see.

Lauren Schenk

Thank you.

Operator

and Sinha Our Generale. next question ask question. audio from your your from Abhinav unmute is Please Societe

Abhinav Sinha

Thanks. question. for are categories please? How the customers, and the seeing the on geographies? in of comment Any terms Thanks you trading, current my taking

Elliot Jordan

Yeah, take I'll that.

GMV we translation course, So to investors Africa. Middle as decline headwind US we closure year-on-year, the significant dollars that market. in of and a everyone Europe, was to largely about Russia the so of said East the three Important the back That XXXX. that on the that present GMV and from of removal remind earlier on, QX. end in note groupings of due We'll geographical to for is X% across the main marketplace XXXX, Russian negative of was and, annualize

restrictions So COVID. from driving Again, terms year-on-year. main be decline of is in across actually, factor due around East will there like-for-like, Asia the March of China, we the Europe, onwards, this again, On Pacific, to and Middle ongoing Africa. sort

decline though, results in it was QX. slightly less are was We QX better than seeing in severe the year-on-year as in

terms of would So model to our in terms promising pickup. of we of demand trade, good green in frees clearly of that's cross-border there. level business a And growth when of up shoots the expect packages see

significant touched what little As us being had level competitive not overall, flat, a heightened a been of gross would negative near-term. the Farfetch. I was QX started in In seeing a of we to year-on-year. margins, in around see broadly flat we're note the space the They've by activity What Americas, being one José It's earlier from China brought for other reporting market promotional the the our number down set. players US, is gross a across impacted. the bit market. on margins the have grouping opportunity number

we're And out there would margin year-on-year of participants will Our maintaining Farfetch to the won't and would will expect price decision next quarter. the at There's promotions moment value not we're that this QX and a product. stock that of value, the and on across on be inventory platform for in deliberate those following promotions to has customer cleared that because the promotional of GMV up terms of significantly and our our at expense and be drive ahead. US be of get We worse. own across focus come following is What in maintain margin to quarter lots heavy only It's a the margins. that going full be is is of seeing expect activity. gross to now the

other we're is media The seeing thing very year-on-year. high inflation

in on So acquisition We've with reduction margin in third-party as competitive up XX%, again XXX XX% the that successfully I costs. is reduction as, there's by as led contribution navigated this of That's generation touched driving to which before. points well order custom of gross obviously, environment. the costs. basis an growth Again, year-on-year because strength year-on-year the demand the of significant margins,

with, moving we're The better is faring Farfetch, lots than global deal lots but most. there's to navigating business, out think, parts there. So of I up

I is with course, get the a think other that here very of in of why growth in well number That with year-on-year. space dollar. the matches reporting currency who, XX% say constant I benefit of euros players stronger revenue the key the

numbers, number whereas are underlying inflated ours reported versus the is obviously impacted. So

growth three-year as that couple in a business because of José strong of And doubled again, So to doing on basically QX the basis, well. touched years. the pre-pandemic before, a on overall, we're and of the accelerating last now

to So very, industry. moving navigate tied well we're the across the very doing here

Abhinav Sinha

you. Thank

Operator

question. question Madhukar and ask unmute Please audio your Kunal UBS. next your Our from is from

Kunal Madhukar

Q-o-Q add of see the you expense, One reduction. on expense the in accounting comp taking basis. I downward and terms for on part, G&A When don't Hi. I a especially Thank the questions. stock-based my trend cost a the

missing one. second And That's FPS be thing on Neiman in especially must timing. you the FPS, Marcus half. second I expect mentioned José, And So is then the something?

the close transition was a you. you mean a to When of think transition was Thank after that time would after how YNAP, signed, time we maybe deal do take? of completed. think could or year deal the that So long

Elliot Jordan

lower savings the Hi. something quite speaking savings The share-based the is I'll those the a contributed terms our price. and costs take in comp business, the are by most widespread that XXXX seeing are leverage same these is, key also companies we that's you terms reason first why shares comp we've I one. how quarter-on-quarter two Good And in results it's years, tech of you, as of you're non-cash. with together. the obviously, quarter-on-quarter, not terms Kunal. share $X for issues organization. and The below that in Last and add shares other the with as our when had the the circa the key happening what them towards units a lower focus in IFRS overall means efficiencies, share-based because Share-based charge talent of XXXX the we've in is bit to terms target, where year-to-date. of as terms players very to the changes spoken within in burn comparable of meant X% clear that at volatility in and down organization increase key we're year-on-year the as I issued of is been has over across X% options volatile in investors market, drive the those in would deliverable share-based of issuing obviously But the have a the of with couple industry, well. there's seen increase of dilution price. that of conversations That is line like others Again, over well-understood accountability about see EBITDA, control. the investors year-on-year the million. of that with adjusted stock burn for facing near-term effect players the into compensation around XX%. We, And as terms The in with my technology reduction. price platforms most underlying get are to the of i.e., back that can our of move we other seen we've we other to said, across expect grants the valued number share

Kunal Madhukar

Elliot. for timing Thanks FPS… on the And maybe

José Neves

Thank question. that take I'll Yeah, you.

of this a largest Marcus about Neiman as client. So therefore, in is compatible imagine. dollar operation, company, I for and with timing the sizable we're size a of the players mean, multibillion operations, Group complex I talking one luxury the very online think would you with

actually is with very, also other offerings would engaging compared So large very that we similar we time good expect enterprise enterprise size YNAP. with companies. grade think case that the line We're And to be from the with regulators.

and we restrictions keep of will in we at As said, several timings. would we terms the pace in announcement, you upon

Kunal Madhukar

Thank you so much, José.

José Neves

you. welcome. You're Thank

Operator

question. is Our Singlehurst Goldman ask next Instructions] Please from Louise from unmute your Sachs. question audio and [Operator your

Louise Singlehurst

entry afternoon, ask year-on-year. And to could one It a good that Hi, the just give impact on I it's having If hear the on I I there's I back can I guess, demand big you're obviously acquisition. was generation. a everyone. diligently. cut, my But cutting of customer question quite that that ways question realize efficiency us will stick no line. assurance cost more risk and that at finding in there straight that the point cost that we the you think, much there across highest the clients. talked efficiently the actually base? inflow miss many guess entry I the Thank risk Stephanie, how customers entry-level or at private on tiers? XX% Is to does retention about the obviously some level, I out the to something of the of tell But new reducing you. of you more the the that it's customers at about retention, go -- data another

Stephanie Phair

of some take I'll that. Louise, Hi,

to thanks look, a really lot where investments really period. in think, in acquire leaned marketing customers, said, strategy. did tech We I of So lot and us our couple of we the and COVID acquired have the and a we taking That capabilities, discussed quarters over back look, our stopped. always of a to we've hasn't customers. We've

this the see those most we're valuable US. also targets really tune We new a And We've is to of a terms lean that. customers valuable customers. the particularly think retain deliberate XXX,XXX. acquire We of continue those. seen strategy to I in number of customers starting it our into solid and But to to in

media that You our sales, stated saw in spend we’re drop doesn't Elliot the really correlate exact efficiencies so to there. in drop seeing

And see we're been curation, we've app, really and but so, we've been what those year I that really our from or really you leaning we really sales increasing retention into focusing It's from our is on retention last retention over do, the So efforts. leaning everything driving talking think efforts. just and personalization, the strong higher where about where in cohorts.

really private then on focusing It's about into general and something that up them are our we doing. talked cohorts, does, levels, you up, move speeding in speeding industry which and So doing the client. we're that higher access the

large a private work to with. business We have very client

actually In the business is fact, business our a of some entirety our competitors. of private as client as big

particular events that Atlanta. focused And doing events. events Basel. it talked a live -- the launch huge markets base beauty seeing was We've in-store have work we So doing or really whether back, Miami, on clients. about US with. Houston, Art where in with we're that, private done to are we're really now We've our targeted LA we're We with

the see in think So but focus value drop-off yes, will the you I value. what on is lower real a with long-term a

Louise Singlehurst

we are Is I XX%, there ask, rates have historical with rates? and know terms on just us can of silver, exclude those that the And anything you you if seeing bronze share the in I a reference but point we retention can increasing numerically above? retention levels. don't just

Stephanie Phair

Yes.

those given customers, volatility, Again, facts. some tiers, as of So seeing encouraging love acquired the huge to we're you the look, by we brought number broadly higher. all mostly we retention but of a them see rates, expect. might the down factors, given They're flat, macro lower would

basket and So from That's more indicator good loyalty of tiers. future a very those lower per future repurchase. items

with lower we're tiers, it's on not them. focusing So even that not those

But, driving that. higher we're from are efforts ROI course, We seeing better the on of tiers. our

Operator

question. We question your time Credit Stephen The will unmute be one question. final audio for from from Suisse. Ju and your have more Please ask

Stephen Ju

much. Okay. Thank so you

North generation like very the belabor maybe higher, does to here, sound of on and CAC US media and but ratcheted ever the the sorry rarely in down. demand America does the the costs come So point it has cost

US slower we pace will be be your of customer thinking about overall? customers may prevailing also currently those should look as a for So that to the regions thinking environment be the what also, we as And should growth spread well? lower your Thanks. in cost competitors

Elliot Jordan

Hi, it's this. media competitive on we're yeah, the is Stephen, in of worth inflation What environment. because obviously, the US, seeing, the is very high focusing

our per or are, year-on-year. acquisition spend, of per customer down though, able We dollar bring been customer to is acquired customer the unit XX% acquired so

the to despite and media engine to We're order terms more using to in channels overall social marketing spend away spend. dollars inflation able of obviously, and channels. CAC. expanding that move as from paid overall drive lot helping and influencer of we've down that's been So media us some other mix per absolute brought our inflation search And, bring efficiencies And alleviate by increased or generation search well. effectively this actual down a of that's demand

of XXX,XXX acquisition. we're on over the of this in new So impact. far, Again, quarter. terms customers the impacted negative had Russia customers has fact in in us despite XXX,XXX quarter We up in X% about customer terms consumers that impacted by that's active not new year-on-year

is a to chase those feel achieve the acquiring. team we QX, we want to value the not the and we overall, ultimately cohorts marginal that customer in So, going last that like from doing that deliver had great we're customers the aren't job, right lifetime to balance

drive, margins and we're LTV given I seeing we're level seeing the that are customers for three-month rate is up up, quarter-on-quarter. in the think are importantly, the that stronger gross bringing the take particularly we of

for QX. CAC very as good, I say, the that's So and down

So see retention as half. we I on, retention. to three-month LTV as touched the and these think significant driving expect versus customers, have, would I there's we're an good upside first again Whilst on in as improvement Stephanie adding

terms If terms significant able of you cohort through go frequency shop of we look numbers, and more there Markets customers our on at as Xst December at the bit in Capital move will forward. in information and upside a Day, being to we of retain

out retailers deep and have been about see of said and am will dollar return environment wave weak maybe the There's The that could gaze QX. as there's US, for because promotional QX. US I we been this highly euro the this little the other reverse crystal very chance ball that bit of of cause that bit promotion. But a here. we got it tourism to into probably now going into move of of store. strong It's forward, I Europe think that right. would across the starting into really reference to Look, competitive we've think I clearly, it's there's Europe. me elsewhere? some a the Will highlights it slight I So one spread maybe

on So numbers into these move we've decline hard it. we to to grow. be Clearly, up able QX set XXXX, that think prove have at the we put through. trade to we'll But underlying numbers as will I year-on-year. in with numbers just But be

headwinds. go US we annualize At will marketplace dollar that onto growth. will As us. move too the forward, opportunity some that of the future. some will we'll these through number, point of year, reported we the add again exciting as and -- point, growth the strength a less like-for-like negative really we back next the and live into FPS FPS clients We'll trade some through growth be strong underlying profitability much ahead of see this and year But to return at headwind, the

we on to do XXXX. now marketplaces, through and building eyes And platform that up broken FPS forward out we expectations we little take original ourselves business. right out first-party all X, platforms broken more a on our of you can to around set of from guidance also to yes, December the from want the brand bit medium-term for So each blocks of look through taking what you

sure wait I'm to investors and as can't that, will be well. forward So to looking that

on couple forward weeks. you good we'll and think over that, I probably the to look of say night next to speaking

José Neves

Thank everyone. Day, Markets Capital on you. you See

Farfetch (FTCHQ) 17 Nov 222022 Q3 Earnings call transcript