Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to Farfetch Q1 2023 Results Conference Call. My name is Leila and I will be your conference operator today. [Operator Instructions].

Thank you. I'd now like to turn the call over to Alice Ryder, VP of Investor Relations. Ms. your begin may you conference. Ryder,

Alice Ryder

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

Joining are comparisons basis. our our Founder, discuss this a Group me to today year-over-year that note results call and Phair, Chief in will Officer; President. on Please Officer; stated Chairman Executive José this Elliot Financial Jordan, all Chief otherwise Stephanie our on and our Neves, be

displaying as a which During of slide throughout also today's call, at remarks, accessed we our webcast can live be be part will the prepared presentation farfetchinvestors.com.

site. also Following the presentation slide call, the be will uploaded to the

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

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

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

can financial the financial release, measures in these of IFRS at press find on which our to earnings our available reconciliations measures is website You non-IFRS farfetchinvestors.com.

turn And José. now over call to I'd like to the

José Neves

Thank everyone. you Hello, for joining us today.

quarters. first U.S. currency five is I'm time Farfetch the basis, stronger back QX continued with EBITDA the despite margin This on from adjusted pleased a headwinds or that improving China revenue growth. and XX% constant report the dollar to to up in XXXX Russia, and is for adjusted X%

milestone well of results are that reflected delivering had in our recent set absolutely year as execution. I'm And delighted XXXX launches. we We be to as QX as our

Neiman or schedule remain Our key the of delivered case launch and this year, either XXXX have for as Group. on Marcus later including Reebok been Ferragamo in launches

working process, on Additionally, reduction and free to flow our well achieving our XXXX review profitability, regulatory and through advance and our track. capital continues announced initiatives Richemont cost cash the are transaction towards objectives with

is performance highlights I'd QX our marketplaces, share solutions business. our execution recent pillars three some platform with platform. business strong and our across across brand to Underlying like you

progress growth marketplaces, Russia as demonstrated growth and compared notable China Farfetch x marketplace by XX% in as other underlying accelerating measured with with QX in Within to the QX, XXXX. XX%

With QX Mainland GMV. respect marked in to we saw China, improvement a China

back to in ramp continued to still was pleased has it a date. than QX performance we share decline, extent in up While to to XXXX. quarter And to that growth with GMV as lesser expected, I'm

of and strong. me the positive market. I week for more spent of in I it seem makes Mainland have very Not to back energy, a Farfetch in light what normal by with clear the enthusiastic China country be a This just only is witnessed. that I does appetite am Hong is excited to lot Kong, very what built luxury also has even in this and

million luxury are we in in multi succeeding believe China. companies scale $XXX a the I western online at only

product strong internet China. very dynamics been to unique Fit market able Yet industry. the luxury a fact, the to few Western thanks have find Farfetch, In companies in of

platform Our and on created years, brands eight reach team over the Chinese continued localized for amazing digitally. very ground the customers in investment an a operations has to differentiated past their luxury

industry this recovery we accretes by growth Mainland means This in our less overall China to as XXXX. expected than of And XX% significant potential with XX% at more of to represent our market is XXXX our positively China for than overall luxury the plans. have further business.

America, markets, double and in grew East off QX. digits including Latin also internationalization We our see other strong in in where to are luxury delighted Middle pay the efforts key GMV

U.S. expected, by our increased online for as U.S. the and high GMV the extent Turning QX single more the environment, to to XX% count last in promotional and we reduction three pleased than declines as of in customer optimizing in digits, of marketing quarters heightened in at But result light the investment our GMV by to a focused over lesser on declined see profitability. we're QX a XXXX. that have U.S. others increased than QX and actually active of

expect comp the positions. start over retailers moderate XXXX the and their We of declines we as through inventory promotional in course to as dynamic the will And year QX sell QX.

of Brazilian a in the truly deliver growth and to to And We region, back be platform. global scale positive wider shows of to growth businesses. U.S. growth, half which power the Mexican our the in XXXX. the expect thanks We second significant Americas operating and of

will Stephanie discuss further Something today.

focused to Harrods With the while expanded laser partner FPS the on localized solutions, clients launches. channel supporting consumers. on To strategic our end, teams we QX, to relationship in our I'm key also our platform luxury cater iconic second our report delighted existing Chinese business delivering of this been pivotal that a have XXXX harrods.cn the to with with audience ecommerce launch retailer with of pillar providing

also and planned teams XXXX launches. delivered solutions have platform platform The brand on

thrilled Europe, with XXX-degree initial and Ferragamo the were international partner to launch U.S. months. in key We in the ecommerce for coming markets channel launching

and to channel his European wholesale of Additionally, the brand brand license our live ecommerce kickoff platform thanks launch this Reebok went new the platforms FPS operations. month of

broader also remains to Goodman Later part with launching for partnership as Group, track forward on of our look Marcus this we Neiman HX. year, which Bergdorf

review closely. other With with continue the Richemont announced through to whom the process. number from to we finally, subject and And including markets, to a authorities in U.K. China. with of world work transaction The regulatory the transaction remains now progress continues around received approvals approval our regulatory

our our XXXX reflect on longer-term luxury. on remain today. plan, step the to XXX on global disciplined is platform to Based towards for more performance, we track than This results deliver focus. mission first opportunity our medium-term QX our our and Our the which targets leading represents be billion achieving

consistently innovation like the such companies innovation have business, Richemont, of Chanel, Neiman others. With as in and Marcus we luxury Kering, chosen be been our having led technology partners at long-term Harrods, space, the to core

language of teams. already the is field with One are we that leading luxury the significant in to we have in excited to the this developments for And We're years industry, AI models space large science, bringing machine and many recent active in-house most AI. learning the areas now. respect with position are about of data AI the been in

been Our of of concrete advanced opened teams access space. longstanding with ChatGPT several our has applications most for developing tech the ChatGPT, to Microsoft the the partnership up version have opportunity luxury and

I could this significant believe development for Farfetch. be a

and areas the provide choose brand is customers and why Our But models like to productivity also large of use language our customer luxury hyper quality to applications discoverability potential personalized much storytelling augment easier our creating the customers. our search and models rival Farfetch. service language product interface a providing for catalog of range to and open reason up added example. descriptions, for Large offer

exciting experience. in in an history exceptional in along of field. the in the Farfetch's way, a truly we a learning. And need have is This the to always machine luxury be will AI development to long discovered and still this successes lot provide mind and There's customer

platform own to And channels. digital the facing applications I near-term I consumer Farfetch prospects AI with solutions these developments. applications rolling collaborate in opportunities out for am brands AI new look of excited enhance of their developing to forward very by to

it that, With turn over Stephanie. to will I

Stephanie Phair

everyone. hello and José, you, Thank

customers. audiences online XXX,XXX off one In X% we XXXX, and Farfetch new largest, sequentially valuable of X has Russia by to customers' the in luxury. after our QX remaining nearly broadest consumers of roll active most even growing added million the

targets. on and focus to and profitability a continue We achieving engaging in existing retaining fundamental lever our growth customers

we is marketplace of in customer value. a As a strong the indicator new versus XXXX long-term saw existing customers result, which on three-month the shopping and double-digit growth period, during rates QX increased repurchase Farfetch

variety from and across taste. to range multiple allows a pricing as profiles this their we also, broad As But into extensive trends to customer customer varying market preferences they lean which base to a brands uniquely customer Farfetch in with to to cater of and of represents marketplace work a an and we respond turn with emerge means positioned personas aesthetics, that looks products, are collections. in

our across we we Not double-digit and We of the us are tap global allows well of and global markets, scalable to demonstrated in larger uniquely these markets our of nature into significant by diversified, in global serve. the capabilities than top territories positioned QX, demand to a luxury truly broad we are more base player luxury demand of are presence is strong. countries where the our model, industry. platform key by half countries because spend. only order growth XXX a The into but geographically and lean as XX we serve In saw

and customers and single the some I Brazil, have and firsthand brands only to heard the been historically luxury were relative invested luxury this where brand but how of regions outsized clearly like Brazil to evident. that marketplace. during also for witnessing in Mexico favorite recent their our deliver allow appreciate which of Mexico, we a And engagement markets not regions our not fact much them for We global to the players, I have Farfetch continued had that in also other destination. on my they a growth enthusiasm including travels local brands, focus shop to have pleasure

Farfetch instills appeals being on that global stronger to also fact marketplace brands local to pride national the they even a brand. an and audience affinity showcased Farfetch The see the their to

we global carried with high-quality approach, I starts have believe aspects result the provided being and presence as which developed success supply is strong with through and example. the and is our have customer through all personalized players, behind our a our years local of an of a localized services is great This for strategic a and several experience. approach relationships invested China key

remain we demand. very from a and valuable another very customer adapting personalized importantly nimble broad service a we enables private customer way. client where which shift global also in to base, But region investments base, Our to changes in a consumer have to footprint in us we and one have

our Within our global customer base, private on and continue we client. to hone-in diverse

on customer segment, our of XXXX. generated a entire more base XX% cultural as Farfetch in demand in of to curated experiences. X% stylists deliver marketplace the approach of regions, whose which competitors’ customers helped top of our them represents larger many clients, understanding highly values nuances and has grow customers’ many Farfetch ground of the businesses, This attractive than enables key this private of have We GMV than our our

We also of gold tier the XX% a year. the proportion consumer remains consumer next tiers customers expand to platinum program our overall of ahead continued access upgrading and base. loyalty PC to and retention above are valuable higher of in this our

spending And private broad our private reach reasons, clients, diversity Additionally, and above given AOV high and is boutiques see order regional to continue which luxury highly trends. Farfetch encouraging brands it customer of our overall as valuable is $X,XXX, the our to these partner and that a client all remained engaged particularly average values our for and base, key consumers.

compelling and new to customer XX our for strength are boutiques to result, base existing And The offering XX%. allocate available our brands, channel, Farfetch and of further the a excluding extremely NGG have to as industry. supply by are improving the is stock brands continuing brands depth we and top their consumers grew

discuss hand now And over to results our financial and I'll call the outlook. to Elliot

Elliot Jordan

Stephanie, and hello all. you, to Thank you

to with quarter. the for key financial like I'd the start highlights

And marketplace which Farfetch XX% excluding from order our and QX is growth reflected up underlying growth. qX. in in China, XX% Russia to First, 'XX accelerated in back was growth,

adjusted currency. GMV increased at XX% platform revenue and grew brand XX% Additionally, constant both

robust in unprecedented by digital in XXXX, GMV impacted platform these last year, COVID be and macro the forces dollar. than to higher continued namely order strong Despite started U.S. the at and Russia, contribution that restrictions was closure reported factors, GMV slightly China reported XX.X%. remained of margin Our

support FPS with line initiatives underlying expectations signed reduction a investment in spend and platform as to QX the incremental cost with base our new decrease versus and cost deals brand was SG&A in in XX, XXXX, through a guided. in year-on-year previously rationalization the

our was both was working typical is capital to QX 'XX as period, for and and quarter, on but focus favorable position. overall it QX a reflecting cash 'XX year our use of the there a Finally, improving QX compared this cash in

basis. currency reflect shows P&L on a was a XX basis. three across solid Group quarter. on currency This reported segments a results, growth $XXX Slide and which a all constant constant X.X% up by basis was million, a driven X.X% our increase GMV on

profit Adjusted up revenue strong basis, performance XX% a to first platform. $XXX currency by technology driven was Gross the and GA platform growth and brand on constant party million, across X.X% $XXX to digital and grew position revenue minus costs $XX slightly were lines very incremental in line million, adjusted cost the new XXXX $XXX savings underlying much investment with on and improved expected million. EBITDA year-on-year and reflecting million.

plus China, impact constant XX%. XX circa discuss GMV resulted the was year impact segments. reported slide growth, I'd digital back shows was dollar growth digital of GMV Russia now at performance started the in our platform excluding well, a million, the strong Russia, like X% Adding to that of $XXX FX year-on-year. platform a The of of and of X% China U.S. currency, a the reduction and

in platform customer performance excluding underpinned and This robust order acquisition our makes QX acceleration reflecting overall underlying an quarters, was strongest quarter across four XX%. across consumer 'XX, and growth strong The retention initiatives by sequential active highest and growth successful our for growth the the Russia growth with China marketplace, digital quarters. continued four in to

U.S. headwinds the value, plus order due to demand markdown in for as we seen shift with consumer lower items of to a underlying higher in value report lower have levels and a order average currency terms by driven In XX% points. dollars we reduction $XXX. price part in incurred of average

On for environment. the low- a U.S. result offset continued promotional tailored quarter-on-quarter, as highlight, the demand generation specifically expense the single-digit partially marketplace, We to market regional by our Americas in efficiencies. Farfetch level improved year-on-year. the a drive in and Mexico the Brazil growth delivering in this softness of With growth

EMEA year-on-year. supported and markets, core such in Middle quarter-on-quarter Russia albeit in China, Asia double-digit with by with And Pacific strength in improved growth, Italy East. lower still improved low- continued France, European Spain, as improvement growth excluding double-digit an and the quarter-on-quarter, year-on-year

the back QX in in to-date, is to for year. that ramp the this growth José As up with expected line important full market we mentioned,

first Turning to by revenue. revenue grew GMV driven digital to party X% revenue services with million. the and increase growth This platform was $XXX in XX%

GMV digital party First-party first platform inventory we of XX% GMV holding. through continue as trade our represented to

by marketplace reduction [board XX.X% XX third-party third-party rate higher partially the points revenue quarter X%. by a [ph]. take to services during were and GMV offset third-party addition, reducing rates In X%, of we These factors take increased with FPS fees] basis two platform digital in by

margins, in contribution basis XXX platform a generation as points 'XX. margin generating position versus of XX.X%. achieved XX% robust was QX order This we our In digital order of flat demand saw contribution terms spend at margin broadly was reduction incremental

with First-party order higher cost of gross and values an as inventory well XX.X% holdings, the from third-party through additional duties of of we through impact costs, and our shipping than traded order margin logistics margin average as QX. as gross XX% lower per

a the on reflecting million, to the of quarter. within 'XX our where we brand Moving summer basis collections platform, GMV for delivered XX% stronger reported a $XXX an currency basis, increase on XX% deliveries and constant spring of

platform provisioning 'XX, of a margin, as increased basis gross year, increase Brand at last delays. an warehousing million QX to XXX inventory $XX was our gross XX% points due versus we profit

and million. underlying XXXX, 'XX. associated versus with for last seen the Our operating new we QX G&A and spend, Spain versus cost launch credit a incremental This the base one-time consisting tech $XXX ruble of have in expenses in reduction clients an of QX an reduction And was QX accounting for overall 'XX. hedging was spin

We $XXX remain whole, which by cost XXXX. a headcount savings spend Driven reductions includes underlying XXXX for and on cost initiatives XX% of to cutting million track across as base. entire the versus

with line a On million with operations. $XXX QX cash cash, during the usual QX net quarter, equivalents group the closed expectations, cash of million, of $XXX decrease in seasonality of we and given

million earlier, the of million, said respectively. in and QX XXXX I cash saw favorable which compared outflow As was of XXXX, the and an $XXX to movement QX equivalent movement QX $XXX

tightening inventory and XXXX, result investment to a working in QX Compared position, our a to actions our capital taken was balances. improve including of this spend, improvement reduction

we This currently from closing return governments, to with and 'XX than due which each in XXXX line post-Brexit our expect first-party be position XXXX the of as the equivalent of of inventory terms our to in position. of growth. expect reducing stronger stronger marketplace cash over use in European quarter QX the EBITDA, We at expanding buildup XXXX, stands to receivables, to close million we creditor due $XXX VAT adjusted of reversing means QX our balances,

full set unchanged. the And That which leads nicely everyone XXXX, for to to remains I remind of we guidance wanted year guidance.

includes are platform circa billion GMV and which $X.X We billion, of GMV billion. of on of GMV digital $X.X circa $X.X track brand for circa platform

revenue margins up expect XX%. We year-on-year of Stable including order billion circa margin of $X.X XX% platform gross XX%. and profit XX% brand digital XX% to margin to platform of contribution

and continue $XXX means adjusted to cost we circa focusing target million, SG&A continue of EBITDA to Now of on expect margin X% we X%. to

that we will XXXX. which level. no the see slightly GMV result of expect expectations, reported better also stronger With the We delivered towards we quarters to QX delivered remaining growth be QX, deliver across will how change look at than

analyzing be the will away. and We macro impact, so factors fall these Russia China

to also will growth. GMV start and driving launches of Reebok contributions recent We Ferragamo from see the both and revenue

QX, currency start and Moving largely further headwinds again, GMV and the neutralize double-digit to improve shining to once position revenue XXXX the our allowing through growth expected strong underlying into from related are growth. reported

We also during Group second the QX. half of expect in Neiman with year our new most impact the incremental launch Marcus partnership expected to with the of

navigate positive expect we track EBITDA as line this year. top to performance Finally, through we the stronger adjusted

working strong QX dynamics, in of will with terms expect we QX. outflow working that capital reverse In cash, particularly capital the in

over back his José remarks. to I'll now pass for closing

José Neves

you, Thank Elliot.

focused is clear macro the Farfetch uncertain backdrop we've growth on objectives to articulated. continuous by back despite remaining a

year towards QX of plan our first on delivering for execution. Our results step are our XXXX, the

on and launches deals and driving XXXX, recent continue in Ferragamo of we be focused pillars, on our with Reebok. signed the We to three the business delivering

targets, our to term be global the medium- on Richemont, also our including leading look of we As luxury. for the transaction with completion our mission platform announced further we're out, longer-term focused achieving successful

opportunity. than billion uniquely this after is more positioned go to $XXX Farfetch

a track the We growth of record have over years. strong

Farfetch or and As a between XX% industry as at Xx grew XXXX. as fast CAGR XXXX the

I our industry, this continue for cash delivering resilient the and luxury am our extremely across also reach coming years. to sustained confident ability in our flow profitability, and prospects over expanding on free

like that, to Thank with And up you. questions. I'd your for open

Operator

will to move now like Doug from session. We into question. Instructions] we Q&A Anmuth [Operator first would take JPM. our our start, To

Doug Anmuth

you're as some you. then you and Gap] comment new roughly the more partnerships. if And of seeing. generation just leverage could demand also [Audio broadly, halfway sustainability Gap] in the that of Thank on [Audio are we

José Neves

our your cover the let And generation as cover roll execution that. and and of of I'll quarter started were first methods we here. also Stephanie back then XXXX acceleration both and benefits. a really José, question. happy we customer demand U.S. A against part broader top delivering on in with then and touch quarter our I'll question but the to U.S., China where other growth We

was on we key launches, of half second as quarter it And the launches, is Reebok well. budget Richemont launches on of we're schedule. track with and and year. the And this with continue landmark progress for make Group Marcus Neiman to same Ferragamo, with a on live And

make back us these very, on rest about growth to of track flow. cash to the guidance XXXX and achieve we're our very So and positive confident EBITDA profit

also We've number the in fixed the and disciplined cost side very cost. we're and implemented initiatives of of of the a business terms

a the QX last with we a as deals on actions what cash business year Elliot number the the of track new much started. cash fixed to not and outlined improvement of year significant that cost about XX% on with As QX if base more was end than the reduction with very new over we and a well disciplined partnerships, and in saw underlying excluding actually,

we dynamics. very, all know, very So, positive

see, prioritize therefore, starting every were we high tune quarter, terms shared more we had the And elaborate demand U.S. inventory retailers, reduce a profitability promotional U.S., and becoming the to just XX%, and circa took we the quarter. our the bit when spend very retailers, built we Look little since in levels. that a with And promotional to activity market to you then luxury of was QX, to decision in generation in noticed of

growing in expected, we saw And qX. a an customers although the decline U.S. from we And as in and in QX, fact, others, terms in acceleration we of are saw sequential

real decrease the And trading are more digits the high single So those slightly down, are active digits. therefore, taking is and and single high advantage as AOVs, customers, promotional the of slightly real in customers have environment GMV lower result elsewhere, price become a sensitive. of

that see of dynamics. remained $X,XXX. has we of a private our very private the XX% almost It's by a hasn't client, AOV By And client, our affected part with way, that much business third we that our retention, don't at business large is clients been really business. see these so private our

second half, we the by industry, for the do environment. probability more a now across lower managed think inventories, And promotional less inventories and of there's retailers being

business in and know we're much And for supported one comps also growth QX. And QX by positive go very our that the investment I in And broad that the to geographies. demonstrating our be we've us quarter-to-date to as confidence China exposure will expected, year-on-year internationalization that we're we paying global that to for get going in actually were thing the sure recovering gives back think And is done in QX. off. is will is easier that and other us U.S. also,

are a to growth to growing Middle Brazil the year-on-year. now in be So continues spite at and year-on-year of and Southern very Mexico. be example, Europe double-digit strong very strong that continues double at decline, of that's grew U.S. actually businesses strong, scale QX, East in result digits the in with Americas And for

now disciplined the and confident leveraging to the the quarters strengths will to we've we've very, we very on a FX, business we terms in that platform of for still all And actually continue to customer comped will incredible cost and have we three strength Russia, of the numbers So competing, execution, our XXXX cost as we this go. the China be as start on base focused us comp built. underlying focused and approach continuing to very have continue makes

if you want generation cover please. to demand Stephanie, the question, And

Stephanie Phair

We be demand generation to on pleased our much to leverage are about lean the very here. intentional decision and that, nimble choice I'm made as drop Stephanie, Hi, generation and as José efficiencies efficiencies. Yes. with invest to really demand because drive you to the those glad we mentioned. where spend an we it's asked Doug. in

didn't in dropped XX%. But So the case we in see point commensurate U.S. that by a drop is sales. we

give to of value. product a little talked drilling a sort building, I've this. an long-term brand a the investment This marketing channel is it's investment bit audience result in really years efficiencies, really hone-in talked And strong find able background profit about the new over diversification I've lot that it tech to sort very the being over been of at It's level. targeting of you at result a strategy. of a multipliers, around to of profitability to profitability up continue the in channels I which has we looking about ways through a think, of down well. in also at It's of past to time, be long-term of XX on customers, driving as sort of acquire years. channel expensive whilst shows app to investment looking more

we've [CAG] pleased mentioned engagement. acquired is, Day, Markets before long-term is and that are and think really say this I Capital one about base the that effort, this large, the very a both broad So But a down. very story here is and CPRO customer. to at valuable I we've luxury mentioned I'm retention [ph]

quarter, we of we one-on-one, AI some as accelerate personalized strong conversion really some for customer and marketplace, showing this very which that. you, to José that this already developments year-on-year. results and for that customers those engage We But on will Farfetch in talked in keep the really the of we're a promising driving terms have only higher and XX% communications, a continuing we around example, is base, we continue really, up large base and strategy but retention, about, XXX,XXX grow about launched quarter have retaining personalization, that curating broad talked to rate

on And And the that really invest expanding customer actually becoming we're drive retention. about we're the all we factors it of surgical more more of the that end-to-end side really experience. to as so business, and

expect leverage? is what we a retention we've are that of end Through we of the your generation back we framework demand manage under to six should month always this of And payback. about, question sort said year, a strategy. around think that our to to the I part So terms big in payback, of and the

that way, terms good it markets lean where spent. seeing manage but to around X.X% continue expect where GMV I demand into we're and we're markets, see think payback X% out really in pull will to generation should We of of not, to you of

Operator

next Our to free Lauren, feel Lauren comes Stanley. Schenk from Morgan from question unmute.

Lauren Schenk

dig sounds you're I bit Russia, outlook in in just some little the anniversary wanted partnerships the to sequential deliver a will into pieces geographies more expecting Reebok, And guide, that you're quarter. moving about improvement it new given full but second all quarter wanted GMV together. just in all second reconfirm Ferragamo, like on deals given just then year the much. from all just expecting XXX Thanks about improvement million of think so still year to the of the the sort new to the magnitude anyway, on the of

Elliot Jordan

good It's here. to to Hi, you. Elliot Lauren, speak

yes, the full saw year, the to on of we GMV the you needs the ahead X.X GMV slightly predicted, expectation key what of of be. on back the sort because year for of million execution very think we absolutely has slide, that's to delivering continuing the where with from the the gone launch is is $XXX the $X.X now out, QX confident year. And goal sort absolutely the billion FPS, deliver clients land I in year to see from clients, which we this that when that here through would place terms remain the incremental in live. will We environment. we number of we focused for as value seeing Reebok obviously, of and billion shape that Look, guidance. of will that provide come pan very Obviously, on a current this the -- right customer us And is thought the new

is with remain billion sort part underlying underlying, full the the for XX% numbers we're key year single-digit, you're of obviously very growth like-for-like going a X.X obviously, of confident the be achieve across of high- profile. achieving perhaps new the So to clients. is and But that the to business the growth that

exactly trade terms that drawn we will to land. QX, too obviously, want QX. much QX, in back don't In see to But expand we on as we will I of where growth into be

think GMV will a I single-digit still year-on-year number growth. the be

new gone as single that have So at focusing we get to on live. think Obviously, too probably excited But I the I QX. stage. the the thing be don't right digit growth for on much focus want will clients people as just to with year-on-year is can, we

Operator

Our De comes from Merrill Geoff next from of America Lynch. Bank Mendez question

Geoff De Mendez

back year. I just guidance wanted this on to come for the

of basis, would in initially, China year, On mentioned only would growth the really X% the was Elliot XXXX. think numbers, back just mind come the the you and that I this view for half year XX%. you had the in these guidance second to where on in I a between clear guided U.S. when didn't think be But you have and that underlying you for

be saying date. And China to And of that to then back today, in half positive already the correctly, in should if year. up you're the I understood is U.S. second that the you're also now QX saying

thinking the what offsetting you're than that not here? is underlying if -- mean factor guidance? faster could that does it the the not, growth then So that Or be initial

Elliot Jordan

focus that I'll we of slightly set delivering what GMV say you. terms improvement much Look, we've obviously maintain well achieved of year-on-year. back in in the very sort Great growth. expected than QX, as get achieve, cost, performance think, cash to And on as position, out Hi, the I healthy track on business delivering, suppose exactly on our Geoff. margins I better an we been speaking again, with

a fantastic for got a We've plan from year, rest party really we've good of the on clients. the third got position inventory

we of have terms inventory will their QX levels year-on-year, You'll from there which reduce, to headwinds through to move numbers in comp and is and noticed positive reported beyond. other very start also as up start report significantly the

to I think plenty navigate. there's But

seeing plan, of I right think or plan still versus may get be are terms year want terms sorry, plan, don't the we underlying the the numbers ahead where year, ourselves eight growth, be So of geography, rest expecting the to for of back pick the will will up XXXX. by for still back not are a absolutely than China in we China is numbers XX% lower original of moderate up obviously that QX, the this to in to of that we may Q, across ramp

So back full we expectations move the year seeing obviously our of in we But are we XXXX the rest levels aren't growth forward. China. for as now seeing to a from recovery

better a seeing were QX. are through to we obviously, we to will where from U.S., yet territory will as position is I think be positive U.S. in trade the whether we seen. in that the And improve get On that QX,

So numbers. will have should I think what U.S. probably allow in second And half to you your X% growth that XX% for deliver this obviously, is us to underlying.

terms too of stage. of for ahead broadly, as think want us. ourselves markets right we numbers to that's in get can. the We'll the trade all focus I don't at But we best

Operator

next Boruchow Wells comes Irwin from Our question Fargo. from

Irwin Boruchow

I maybe should specific through But we quality When point, that be gross your the move the talk penetration that give about on then in as business, in as we now, we at you maybe on numbers And year. inventory can inventory year. there? we get what that as improving the the for the can we line of and more XP balance behind Elliott, the you directionally about expecting should to XP margin, the the context sheet some XP what are assume more through you're be those inventory look expectations you. sitting

Elliot Jordan

actually, the the Hi, superb underlying balance job of inventory excess carrying, year on we've inventory inventory end and between we've to levels sort the $XX balances million by the have come sheet a that QX Reebok the through of now, Like down. churning $XX about in done It's of been was added inventory. of quarter. million in Reebok onto come sort That's questions. an now somewhat offset basis, been actually, Yes, great Irwin.

seen the has the in through able caused underlying, manage promotions we've our current sort a is moving been reduction share. environment to of the much levels, shift inventory the So stock through and up balance through that old-dated that terms across use industry focus stock, very inventory that on of in of we've to clearing

be a been more is of offset has is margins able continue is stock, were we Obviously, below pressure, on which stock, the margins why position margins we stock as up first-party to of the on business, older utilize on earlier, we've to we'd the the good Because able the GMV we've team which have I numbers. of of clearing that have much the provisions. dated aggressive some XP, suppressed to be to sort XP XXs, been the those to XX%. some as year-on-year. And historical fact of So, against said therefore released provisions it's XX%. on Obviously, margin our rather the gross that in seen some better the older

in And of than to QX also sort to-date, through better expecting. inventory margins were to we're seeing slightly continue the ability at we move

My to So below for back nicely. quite have target get overall up inventory $XXX year million. everything's plenty is of holding the work But through. end of to the

So back will XP this above the as GMV is year for And that intention stay through as we've inventory we're inventory the will the into get that of terms But higher the we that year. and probably XX% that we to result sort next that like million the few to GMV additions inventory net XX% of much our below have end levels And through continued XX% will it so by back of XP few mix a below million and margins we clear, go as XXXX. of see That control then, got taking something for in will XP below quarters. focus a the gross underlying exit of $XX year. net moderate. mix than under $XXX for level mean number as come quarters grow includes year, of this a again in next number at of rest million, $XX any to will the Reebok

to seeing into below a million of of we by as year our through aspect it. from we're to key picture across really the get paints where where the good inventory cash, today's I back bring XXX number working balance this we which cash. improve And turns us Obviously, of XXX. back that that helps opportunity the back down this think the XXX hopefully is, the working balances capital that to So of And million is plus are year. turning end obviously very pleased to other position to inventory by the be

Operator

from from Jones Our Securities. Nick JMP comes next question

Nick Jones

personalized these versus generation about rates, stuff kind of kind that to communications, through personalized you're made? think improving should a that of some generative working And the pullback pullback? on -- kind conversion efforts press how can release, comments off the demand maybe In Thanks. of there's communications, we more in of generate these about you've whether AI efforts the

José Neves

Hi, Nick.

laser and of in We for This opportunities focused a personalization. of years marketplace. algorithms is one we intelligence now have few growth artificial terms the the of in been see machine vectors learning the deploying to and

USP the absolutely this key offer each really that us. We And is but world. around is offer more personalizing that opportunity for brands Many customer from all for vast range. to single have an major unrivaled a and a products Farfetch,

that the very So we're effort. happy with results of very,

communications industry things therefore, The engine XX% And in-house of conversion every then is And these communications. higher we've better have we tested get rankings go AV other the now in full than changing. along. better rate is recommendations single testing. obviously, algorithm, we and Our beaten algorithms in-house double on personalized almost have as

AI see, we're the very from of of that can models comes about seen the recent [ph]. launch And the the you leaps that excited language we've ChatGPT. quantum large and to extent, in since [return] that benefit So terms

We applications capture with we spirit that. And to of we've the versions these course, access positioned else anyone of powerful than think we're have able and there it's to in to have in the those better them ChatGPT. about we're partnership So agree because, that deepening and We are partnership and Microsoft. very that excited really with opportunities about in of their think the models industry. to latest a been long-term of partnership, luxury

user important more knowledge dataset rich your with the elements, models course, those luxury terms how experience think base two space. win in is, we a your in it's fantastic of for But for I the customer In even of applying industry. this and these and

in is the much richness of billion quite a scale of transactions the in active and across set industry. offline the -- very, both X brands, have -- set, transaction per this is terms We This very year, over online with and data XXXX visits in global countries, data data X transactions, visibility which of rich unrivaled a million XXX set customers.

successful I further. really the we ChatGPT that could best effort to the And these working luxury that the knowledge of further, with also of concept for could when in AI and good even on applications think the we And a industry, personalization even we're position very think in what accelerate I has past. believe our we're drive have of which this apply been in now advancements leap industry, three actively in very proofs quantum

there's service the think quality retention impact our that opportunity has think and descriptions, of of And terms customer think I on operations, that, satisfaction. just not and I the and And I customer also speed augmenting customer of efficiency. the in the increasing the product on service,

leveraging quality. been [indiscernible], [indiscernible] already apply with has be space, models, think is what And in successful. producing acquired In terms generation cannot efficiency to new differentiate And very in a is advancements these AI. proving our digital the of that of of to our in will terms that which but quality between also we human we what images generation, image of a without really technologies real with and the to boost have already terms those that's using we've advanced eye I able seen

personalization to elevate very, we're the excited customer yes, very about luxury continuing So experience. and

Operator

free Our unmute. next from Blake, question to from Anderson Jefferies. comes feel Blake

Blake Anderson

that could an you. customer of question. in aspirational lower discounting in in terms of you a do U.S., one customer weren't you taking our in wondering the versus for higher And Thank was normalized high-single end than peers? on digits. thanks was growth What more guys, growth the that income customer be more I Hi, you if of then wanted feel to terms environment. level? the like that I maybe of said mix a ask up

Stephanie Phair

Hi, Blake. Stephanie, here.

pleased And we've that in, to part see other customer a think large our has that economic is And do acceleration more with sales is And environment. yes, an order about And uncertain seen we've reports, and growth, growth, quarter-on-quarter. that are specifically. talked certainly of where well, I yes, to growth. we've it into So we've coming we those seen customer calls, translating active from seen the an AOV. U.S. is not

strategy we continue we've in have. the our the There earlier, in around is a about efforts grow long-term had around are quite of efficiency large retain the to brand to it building to right lot. we've invested really U.S., talked efforts base really it So I the customer customers and acquire kinds customers.

navigate us very positions this is you to to unique very and around cater of and what think client, to between those. positioned questions marketplace actually I think take and both need we to I think how we the of well markets I that really and private think And aspirational customer. a back Farfetch kind a of in business difference also step are terms as the these about extremely as to a have

in range a very the range means has we of can industry, of broadest cater which to that customers. supply broad Farfetch the

what we So build start in, a But we access call to clients. acceleration over customer actually private our of and share very wallet client And up. are through client gold we can that them seen to our also move to tiers at program. efforts the from aspirational customer. wants level up time, we've is high-end private customer them catered to cater of and who to customer, bronze the into private moving platinum come in we a And

in the what So actively is very industry operates. way the way Farfetch a reflect think I does

client, their the their product. broad talk from sales but some a come largest high-end. of If you talk world, at the very private businesses. the in base They the run brands way look about They the of about

markets. are So that's shoes, where this high at they end. cater bags, accessories, but within of positioned And to the aspirational navigate very, with the to very small catered smaller we very course, well time they both customer geographically and to then,

to and customer we both cater So different can price trends and different preferences. points,

Operator

for one have time more We question.

BTIG. final Marvin will Our question Fong from come from

Marvin Fong

to of like Europe. on I just kind guess focus I

pullback of it. We function double But think maybe quarter? housekeeping haven't there the up Was you. in expected? is gross is compares? curious. just you it in that a performing to quick you or I Elliot. it expense? talked lower Or or some seems digits easy question, said we about the been Could you there, the better in demand Thank a quarters, adds XXX,XXX line low better it to speak of be as past the was quarter And than just much more see with it has generation geography Is in your

José Neves

Yes.

key terms I think that really the the luxury over invested luxury believe last global. around We imperative values this is needs years, is global the customer one absolute of appeal we world. the we base. in a our markets to this a to having is truly think XX global of lot believe a footprint have company industry, global is a capabilities, And brands and

the operations last logistics over robust XX years platform. and a we've in So invested very

combined service, the developed we've we're collect providing XX in customer jurisdictions, over payments different with and capability logistics technology So XX were that from able different countries. deliver languages, to to countries different product providing XXX, in

that's and from a it's what's growth localized the Europe So Southern growth predominantly the truly in coming driving And experience. is Europe.

Spain. Italy, in results good So very in we're seeing in France,

made a we and we've few operate generation And the more this an for systems, languages, we've they is and also this had where dollars have really to tech, demand move global our are efficient. languages the scale investment these to in marketing payment at ability logistics because is years, these

a over Middle including on stack, the fact, three-year In XXX% grown markets East. we've this

It's we very think that So yes, into in advantage strong investment competitive already that a materializing made. in an investment strong other really platform we've mode. is building happy a our growth global and a geographies, and is this

reason ready why That we're tell platform. on much And added our to now to this this they us. very investments. be brands our is when want strong something is, leverage So

year-on-year. we these top And XX value very geographies. in bring Farfetch this saw in XX% available them made our high incremental, the an the to platform supply because is luxury of growth at all You customer brands in staggering is terms

Elliot Jordan

Marvin, finish on adds. up And just the I'll gross

seen around we've XXX,XXX before, in think I it's customers the acquired. quarter new of terms in

Operator

we today. on We to us. forward that, you call for all quarter. joining will our next conclude With progress look updating our you Thank

Farfetch (FTCHQ) 18 May 232023 Q1 Earnings call transcript