Online luxury marketplace Farfetch (NYSE: FTCH) reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue down 5.48% year on year to $629.2 million. Farfetch made a GAAP loss of $176.7 million, down on its profit of $96.9 million, in the same quarter last year.
Is now the time to buy Farfetch? Access our full analysis of the earnings results here, it's free.
Farfetch (FTCH) Q4 FY2022 Highlights:
- Revenue: $629.2 million vs analyst estimates of $627 million (small beat)
- EPS (non-GAAP): -$0.25 vs analyst estimates of -$0.25
- Free cash flow was negative $19.4 million, compared to negative free cash flow of $130.7 million in previous quarter
- Trailing 12 Months Active Consumers: 3.92 million, up 231 thousand year on year
José Neves, Farfetch Founder, Chairman and CEO, said: “I am proud to report Farfetch adeptly navigated unprecedented macro headwinds throughout 2022 to deliver growth on a constant currency basis, with full year GMV of $4.1 billion. Our performance also means we captured market share on a 3-year stack basis, with GMV nearly doubling since the onset of the COVID-19 pandemic - a truly remarkable accomplishment.
Inspired by the idea of allowing anyone to buy clothes from landmark boutiques of cities like Paris or Milan without having to leave their couch, Farfetch (NYSE: FTCH) is a global marketplace for luxury fashion, connecting boutiques, brands and consumers.
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition.
Sales Growth
Farfetch's revenue growth over the last three years has been very strong, averaging 36.4% annually.
This quarter, Farfetch reported a rather lacklustre 5.48% year on year revenue decline, in line with analyst estimates.
In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.
Usage Growth
As a online marketplace, Farfetch generates revenue growth both by growing the number of buyers using the platform and how much each of those buyers spends.
Over the last two years the number of Farfetch's active buyers, a key usage metric for the company, grew 23.1% annually to 3.92 million users. This is a strong growth for a consumer internet company.
In Q4 the company added 231 thousand active buyers, translating to a 6.27% growth year on year.
Key Takeaways from Farfetch's Q4 Results
Since it has still been burning cash over the last twelve months it is worth keeping an eye on Farfetch’s balance sheet, but we note that with a market capitalization of $1.9 billion and more than $734.2 million in cash, the company has the capacity to continue to prioritise growth over profitability.
It was good to see Farfetch outperform analyst revenue estimates even if just slightly, and also show some user growth. On the other hand, it was less good to see that revenue declined in absolute terms. The company is up 7.89% on the results and currently trades at $5.33 per share.
Farfetch may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.
One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.
The author has no position in any of the stocks mentioned.