Analysing a Farfetch results report was always a complicated process but since its acquisition by South Korean e-tail giant Coupang, it has become even more so.
The company last week released its latest results and it seems that Farfetch both boosted the numbers as far as revenue was concerned but dented them in terms of profit.
In Q4, Coupang’s net revenues were up 21% on a reported basis or 28% in constant currency (CC) at $8 billion, with gross profit up 48% to $2.5 billion. Farfetch made a big contribution to revenues and if it was excluded, the firm’s revenue growth would have been ‘only’ 14% reported and 21% CC.
Digging deeper, the Developing Offerings segment of which Farfetch is a big part (the unit actually includes International, Coupang Eats, Play, and Fintech as well as Farfetch) net revenues were $1.1 billion, up 296% on a reported basis and 308% CC. Excluding Farfetch, the growth was only 124% on a reported basis and 136% YCC.
As mentioned, gross profit jumped 48%, but excluding Farfetch and a Coupang fulfilment centre (FC) fire insurance gain recorded in Q4, gross profit was $2.2 billion, growing 29%.
The Developing Offerings segment adjusted EBITDA was a loss of $118 million, albeit an improvement of $32 million, which includes a $30 million benefit from the consolidation of Farfetch.
When it comes to Q4 net income, Farfetch also had a negative impact — as did some other issues. Net income was $131 million and net income attributable to Coupang stockholders was $156 million, a decrease of $876 million from last year. There were one-off impacts linked to tax issues from the prior year, but net income attributable to Coupang stockholders excluding Farfetch and the FC fire insurance gain was approximately $77 million for the quarter.
And for the full year, Coupang’s total net revenues were $30.3 billion, increasing 24% on a reported basis and 29% CC. Excluding Farfetch, the growth was 17% reported and 23% CC.
The Developing Offerings segment net revenues were $3.6 billion, up 352% reported and 363% CC. Excluding Farfetch, the growth was only 142% reported and 153% CC.
Farfetch’s impact could also be seen in Developing Offerings segment adjusted EBITDA that was a loss $631 million, compared to a lesser loss of $466 million in the prior year.
Coupang’s total gross profit improved 43% to $8.8 billion with a gross profit margin of 29.2%, an expansion of 380 bps. Excluding Farfetch and the FC fire insurance gain, adjusted gross profit was $8 billion, growing 29%, and the adjusted gross profit margin was 28.%.
Net income was $66 million, and net income attributable to Coupang stockholders was $154 million, a decrease of $1.2 billion from last year.
Again, tax one-offs (to the tune of $895 million) had a negative impact. Also, net income attributable to Coupang stockholders excluding the FC fire insurance gain was $22 million, and adjusted net income attributable to Coupang stockholders excluding the FC fire insurance gain, a one-off fine recorded in Q2 and Farfetch losses, was $407 million.
These are a lot of numbers to digest but it seems clear that Farfetch remains a work-in-progress in its new home. It will be interesting to see how it develops through 2025.
