Welcome to the Farfetch call. My name is Layla, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you. I'd now like to turn the call over to Alice Ryder, VP of Investor Relations. Ms. Ryder, you may begin your conference. Thank you. Hello, and welcome to Farfetch's call today. Joining me are José Neves, our Founder, Chairman, and Chief Executive Officer. Elliot Jordan, our Chief Financial Officer, is also available for the question and answer session. Before we begin, we would like to remind you that our discussions today will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements, and forward-looking statements made today speak only to our expectations as of today. We undertake no obligation to publicly update or revise them. For a discussion of some of the important risk factors that could cause actual results to differ, please see the Risk Factors section of our Form 20-F filed with the SEC on March 4, 2022. I also want to remind everyone that we will be speaking to you again tomorrow, August 25, when we publish our Q2 results, and as such, will not be discussing our Q2 performance on this call. Now, I'd like to turn the call over to José. Good morning, everyone. I am delighted to be here today to walk you through the transformational long-term partnership we've signed with Richemont, which significantly advances our Luxury New Retail vision. At Farfetch, our mission is to be the global platform for luxury. Our vision for the evolution of luxury is one where the boundaries between the different modes of shopping have been completely dissolved, revolutionizing the shopping experience for consumers globally, elevating the human connection between the creators, the curators, and the consumers of luxury. We call this vision Luxury New Retail. Historically, luxury companies thought about distribution channels by applying a two-by-two matrix, online and offline, mono brand and multi-brand. These channels used to be treated by most companies independently without a single view of the inventory, customers, or their journeys. We know consumers do not think like this and have not done so for a long time. They shop online, offline, mono brand, multi-brand, sometimes all in a single day. They want to be inspired, serviced, and delighted with the overall experience from discovery to delivery. The luxury industry has acknowledged this for many years. Brands and boutiques increased their online presence, but the technology lagged behind, creating a disjointed experience. Farfetch has, since 2015, been investing in its development of a best-in-class seamless technology solution for luxury shopping, which allows for a completely seamless journey across these various ways of shopping, so that the ways customers shop are matched by brands and suppliers, providing an experience where online, offline, multi-brand, and mono brand at a global scale are merged into one connected experience. In 2015, we acquired Browns, an iconic 50-year-old London boutique, and outlined our vision for relaunching Browns as the luxury store of the future. Back then, Browns was a $25 million business. In 2022, we expect its revenue to have multiplied twentyfold. We launched the new Browns location in Mayfair, which showcases our innovative connected retail technology to create a new and exciting shopping experience for our consumers. In 2015, we also launched Farfetch Platform Solutions or FPS, our platform technology business. In 2017, we outlined our LNR vision, then called Augmented Retail, at FarfetchOS, and unveiled our LNR partnership with Gucci, which delivered Gucci products straight from flagship stores to customers in 10 global cities in less than 90 minutes. Straight after that, we received an investment from Chanel and found a long-term collaboration with Chanel to develop LNR technology for their stores and launched it simultaneously with the grand reopening of Chanel's newly renovated number one flagship on Rue Cambon in Paris. Not long after signing Chanel, Harrods signed on to be replatformed by FPS. Then in 2020, in collaboration with Richemont, Alibaba, and Kering, we extended this LNR vision to the China market. This year, we further extended our LNR vision to the U.S. market with another long-term partnership to bring this vision to the U.S. with Neiman Marcus Group. Just last week, we announced a global strategic partnership with Salvatore Ferragamo, bringing our total number of FPS clients to well over 20. All along, we have been building solutions that service the entire industry, such as the Farfetch Marketplace, which now has more than 600 direct luxury concessions and serves over 3 million active customers. FPS, which powers e-commerce channels for brands such as LVMH's JW Anderson and in-store connected retail technology at Browns and Chanel, among others. Since all of these share one common platform, the Farfetch platform, we're well-positioned to deliver a much more elevated customer experience across multiple channels. For example, we have launched a pilot integrating the Farfetch marketplace app with multi-brand and mono-brand boutiques, so we can help customers that have our Farfetch app to find specific physical stores and products in their vicinity. This is an example of how the online and offline worlds have converged to offer hyper-personalized experiences to the luxury customer. While our vision is big and it does require significant investments and a long-term unwavering effort, we are delighted that we have continually progressed towards our mission for Farfetch to be the global platform for luxury that is unique in its ambition to deliver a revolution in luxury shopping. Today, we significantly expand this Luxury New Retail vision with a new multi-billion-dollar long-term partnership with Richemont, which we believe is transformational for Farfetch, for Richemont, and for the entire industry, and is expected to offer a much better experience for the luxury customer. I'll now walk you through the specific elements of this transformational partnership. This deal encompasses all the Farfetch digital platform has to offer. This landmark partnership with Richemont step-changes their online distribution capabilities across the Richemont group, utilizing Farfetch's highly sophisticated platform. There are three components to this partnership, which we'll cover through this presentation. One, FPS's re-platforming of Richemont Maisons and YNAP. Two, Richemont Maisons joining the Farfetch Marketplace. Three, YNAP transformation through the use of our technology and investment into YNAP. This transformational partnership marks an inflection point, advancing the Farfetch mission. We believe some of the key benefits are it significantly advances our Luxury New Retail vision, bringing iconic brands to the Farfetch Marketplace and increasing customer choice, adds curation and VIP expertise to enhance consumer experience, unlocks hard luxury on our platform, which has historically been significantly under-penetrated online. Based on their latest reported numbers, it will drive a significant expansion of our FPS GMV by more than $3 billion, driving leverage in our operating costs by further scaling our platform to better serve partners and customers, and unlocks participation in the potential upside following the transformation of YNAP through the use of our technology. Let me take you through the different elements of this partnership, starting with the FPS and marketplace elements. This partnership marks the largest client so far for FPS and based on Richemont's fiscal year 2022 performance, an incremental $3 billion plus in GMV. FPS, having been built on our platform with a tailored approach for luxury, has many unique features that create a strong USP. I'd like to highlight FPS' three major USPs for luxury. One, our technology provides global reach from day one, servicing customers everywhere in the world with strong capabilities in China, APAC, Middle East, and Latin America. This not only includes providing a localized e-commerce presence, but also enables global payments and logistics. Two, marketplace architecture. The Farfetch platform, unlike most SaaS e-com platform providers we compete with, is a marketplace platform from the first line of code. This means brands can launch e-concessions on various other websites, leverage any e-concession they may already have with Farfetch, and e-tailers such as YNAP can be converted into marketplaces with minimal effort once re-platformed by FPS. Three, connected retail. We have developed proven solutions that operate in the luxury physical store and connect the entire experience. Again, all with a single integration. The 18 Richemont Maisons and YNAP have relatively limited international capabilities. Most have not developed sophisticated e-concession solutions, and there's incredible potential in connecting the network of over 1,250 retail locations operated by the Richemont Group. These unique capabilities are what attracted Richemont to Farfetch, and in these platform USPs, you will find the secret sauce that made this deal happen. We believe that joining our platform will enable further growth for Richemont's Maisons and YNAP, and can unlock significant value beyond the onboarding of the current $3 billion+ of GMV. The addition of Richemont to our marketplace adds highly differentiated supply. Because both parties truly believe in the vision of LNR, and that includes multi-brand channels, this partnership also includes the onboarding of Richemont's iconic Maisons as e-concession partners on the Farfetch Marketplace, which we expect will drive strong incremental growth for both Richemont and Farfetch. Our marketplace connects curators and creators with consumers in over 190 countries. By joining the marketplace, Richemont's Maisons will have access to our unique base of over 3 million global active consumers. For Farfetch, it is a great opportunity to add highly desirable supply from Richemont's heritage luxury brands for our luxury customers to shop via Farfetch. In addition to the fact that most of the Richemont high luxury brands are only available through their own mono-brand e-commerce channels, so we expect this supply to be a differentiator for Farfetch. This means we expect the addition of Richemont's Maisons to boost our watches and jewelry selection, which has been an area of focus for the marketplace over the past couple of years. This deal is also an opportunity for a breakthrough in high luxury. Watches and jewelry represent over 20% of the industry globally, but have been significantly under-penetrated online. This is due to a lack of participation from fine watches and jewelry brands in online channels. We believe the addition of Richemont's heritage high luxury brands unlocks potential expansion of watches and jewelry on the marketplace, which was 3% of its GMV in 2021 and less than 1% of its total stock units. There is strong appetite from consumers for these products, particularly our private clients. All record sales from our fashion concierge team have been fine watches and jewelry, including the most recent sale of a $2.4 million Richard Mille watch to a private client earlier this year. We also believe that this could represent an inflection point whereby other high luxury Maisons will also decide to join our marketplace on the heels of Richemont. This is especially powerful, since many of the world's leading watch and jewelry brands have avoided online wholesale distribution and so far have not even engaged in e-concessions. Richemont has always been a pioneer, and we believe they are once again leading the way, which could prove to be a pivotal moment for our luxury relationships in watches and jewelry. Now I'd like to cover the transformation and investment into YNAP. As a pioneer retailer, YNAP has been able to build great luxury and fashion businesses with over 4 million active consumers, delivering $2.6 billion in GMV, this is in dollars, in their most recent fiscal year. Its luxury business, which is comprised of NET-A-PORTER and MR PORTER, and represents 52% of its sales, has developed very strong curation and brand recognition over the years, with a strong focus on high-net-worth individuals. On the other side, the fashion business, which is comprised of The Outnet and YOOX, and represents 48% of its sales, provides a great destination for consumers looking for end-of-cycle and circular fashion. We also view these brands as complementary to our business model and believe there is opportunity to further develop and grow YNAP's businesses by leveraging our technology capabilities. The potential addition of YNAP's brands is highly complementary to our marketplace business. Fashion is all about individuality, and this is the reason why the industry has a long tail of brands. Whereas we see the Farfetch brand as being in its infancy and with incredible growth potential as online luxury penetration increases, we also recognize that this is an industry where there will be different destinations catering to different modes of shopping and customer profiles. Crucially, however, we believe the winners will not ultimately be wholesale-oriented businesses, but rather direct-to-consumer marketplace destinations. Herein lies the benefit of our strength as a sophisticated provider of direct-to-consumer e-concessions in the luxury space. After the closing of the initial stage of this transaction, and once the replatforming of YNAP into a portfolio of hybrid marketplace businesses creates a fast-growing, cash efficient, and profitable business, we intend to purchase the remaining shares in YNAP that Farfetch does not already own. We expect this to be circa 4-5 years from now, including the time needed for any relevant regulatory approvals. We believe this acquisition has a strong strategic rationale because it creates a compelling portfolio of online destination brands that appeals to different customers and for the various benefits described earlier. The Farfetch brand is about bringing together a more comprehensive collection of brands, designers, and boutiques with powerful search and personalization tools that allow us to serve a global set of luxury customers from China and Japan to the Middle East, Europe, and North and South America. The Farfetch customer is digitally native, having grown up with two-sided marketplaces as an integral part of their lives. They like the choice, they love the hunt, and do not want to be told what to wear. The NET-A-PORTER and MR PORTER customer is different. They are older, having started their luxury shopping habits when the glossy magazine and the department store still formed a symbiotic relationship that organized the world of luxury. This customer then slowly discovered and migrated to an online mode of shopping, but maintained a need for guidance and depends on an authoritative voice of an editor who facilitates their discovery. They require choice, but what they love most is feeling that they are being serviced by an expert curator. This customer is more prevalent in the Western world, where the luxury customer is on average older than in China. The potential addition of YOOX and The Outnet brands brings a new and unique selling point to this portfolio. The off-season customer, which many times overlaps with the pre-owned and resale customer, behaves quite differently. This customer wants a lower price point. AOVs are roughly half of the in-season customer, and for that, they are willing to compromise on newness, but not on quality of design and craftsmanship. This is a very interesting part of the industry, which is a material portion of the $300 billion TAM, which until now has been largely untapped by Farfetch. We see an evolution of this part of the industry where the worlds of outlet and unfashionable world for brands and even for some consumers, and the worlds of pre-owned and resale are converging. More on that later. As a conclusion, we are very excited with the transformation we are going to enable at YNAP, allowing these iconic brands to re-emerge as leading brands and paving the way to a potential acquisition complementing the Farfetch portfolio. Let me now walk you through the initial stage of this transaction, which refers to the 47.5% investment into YNAP, as well as our vision for its governance. We believe that the adoption of our technology has the potential to unlock significant value and will steer YNAP back to growth and the strong profitability it enjoyed historically. This transformation paves the way to a potential consolidation into the Farfetch group. As such, subject to a number of conditions, including the receipt of certain regulatory approvals, we'll initially be acquiring 47.5% of YNAP through a 100% equity consideration equivalent to between 53 million-58.5 million Farfetch shares, which we expect would represent 10%-11% of our fully diluted share count. We also believe it is key that YNAP is led by a CEO that has had experience running multi-brand luxury e-commerce operations. After the conditions precedent are met and the initial stage of this deal is completed, a new CEO will be appointed. As such, after completion of the initial stage, a new CEO will be in place and a new board will be formed, constituted of three board seats appointed by Farfetch, three board seats appointed by Richemont, and one board seat appointed by Alabbar. We'll now cover the key strategic focus for the luxury and fashion businesses of YNAP. We believe NET-A-PORTER and MR PORTER have incredible potential as brands, and we have a strong vision for their evolution. NET-A-PORTER is a pioneer of online luxury. I was always inspired by Natalie Massenet's vision and admire the fact that she and her team were unwavering in their belief that luxury could be sold online, and that in fact, online would become a major mode of shopping. Our due diligence confirmed that the brands, NET-A-PORTER and MR PORTER, continue to enjoy strong recognition by the luxury consumer. It is the technology that has for many years been materially impacting the company performance. A 20-year-old tech stack not built to be future-proof, then abandoned in favor of an IBM implementation that failed. Meanwhile, the luxury industry moved on. The large brands now are adamant that they want to sell directly to consumers and reduce their online wholesale. Therefore, e-concessions are highly attractive, which we see as a major opportunity for Farfetch. With all of this at play, we see significant opportunity in the transformation of YNAP's luxury businesses. The strategic vision for NET-A-PORTER and MR PORTER will involve leveraging our platform and expertise to advance its shift towards a hybrid 1P 3P business model. This is easier to achieve than most would think, because Farfetch already has full integration with more than 600 luxury brands. By migrating to FPS, YNAP immediately inherits the ability to sell this inventory with one single integration. Strengthen its proposition to younger consumers while continuing to focus on high- net- worth individuals. Accelerate presence in emerging markets such as China, APAC, and the Middle East. Focus on customer retention, loyalty, and personalization. Expanding its sustainable and private labels. Launching its own media solutions business to offer advertising solutions to a wider base of brands, and joining the Farfetch marketplace as e-concession partners. The YOOX and The Outnet brands occupy a complementary and attractive space in luxury. Outside the in-season offering, there is a huge opportunity for off-season, as well as pre-owned and resale, and appealing to the price-conscious, yet style-savvy consumer. YOOX is a pioneer here, and Federico Marchetti was also one of those notable founders and entrepreneurs who saw the incredible potential of e-commerce back in 2000. We believe that there is an incredible opportunity to reinvent the YOOX brand, changing its perception from an outlet brand to an end-of-cycle and circular fashion destination. In other words, adding pre-owned and resale to the offering, and crucially to the brand positioning, effectively relaunching the brand with a new logo, aesthetics, and ethos. The strategic plan for this division includes rebranding of YOOX, enhanced pre-owned offering for our consumers, injecting the pre-owned catalog we have at Farfetch, supercharged by our recent LUXCLUSIF acquisition, as well as our Stadium Goods resale business. Growing its presence in North America, China, and other key regions. Adding end-of-cycle supply from the Farfetch Marketplace and The Outnet into YOOX. Here we see a major opportunity as Farfetch is seeing a lower markdown mix while we still see billions of dollars of inventory on our platform at the end of each season. Without YOOX, our sellers will sell this inventory to outlet physical stores and shoppers. But with YOOX, they could opt to dual list at the start of markdown all the way to clearance, and then move to single listing at YOOX after clearance. This would be a tremendous win-win, enhancing liquidity for sellers and choice for our customers. We will also leverage our e-concessions to expand YOOX's 3P model, and we will take major steps to significantly improve profitability. Once YNAP's transformation is completed and evidenced by defined KPIs, namely sustained adjusted EBITDA profitability, but likely no earlier than 3 years after completion of the initial stage, our partnership will enter the final stage. The most probable scenario is the acquisition of the remaining stake in YNAP via a put call option. For this purpose, we've built into the deal a Farfetch call option at the discretion of Farfetch at any time 5 years after initial stage closing, which means we could accelerate our full acquisition if we deemed the transaction accretive to the Farfetch group. A Richemont put option exercisable by Richemont only after the third anniversary of completion of the initial stage, and only if YNAP achieves adjusted EBITDA profitability for 3 out of 4 consecutive quarters over a 12-month period. While this provides a more certain outcome for Richemont, it also guarantees Farfetch won't be left with an unprofitable asset. The total shares we will transfer to Richemont cumulatively in both stages are subject to a dilution cap of circa 15%-16% of fully diluted Farfetch shares. This means that if the full acquisition represents more than total 15% dilution, including the expected 10%-11% we will pay at completion of the initial stage, Farfetch could finance the purchase in cash. We've also built provisions to control the concentration of our cap table in a single investor, and as such, Richemont is subject to a 20% standstill. To achieve shareholder stability, there is also an 18-month lockup post-completion of the final stage. Built into the deal, there is finally a payment waterfall providing Richemont with potentially a larger share consideration vis-a-vis other investors in the event of an exit above certain valuation thresholds. If YNAP's transformation doesn't meet the required KPIs, we have agreed mechanics to enable a potential sale to a third party or IPO. In terms of timing, the next step is for us to apply for regulatory approvals in the relevant jurisdictions. We expect that process as well as other closing conditions to be complete during 2023. Upon receipt of regulatory clearance and satisfaction of the other conditions precedent, we'll complete the initial stage of the transaction and continue to develop the FPS and marketplace launches. In addition, a new CEO will be then appointed to lead YNAP's business transformation. In the following years, depending on YNAP's achievement of the EBITDA objective, we will proceed to the final stage of the partnership to acquire the remaining stake of YNAP via the protocol mechanism I have described. Should we acquire the remaining stake in YNAP, we expect certain regulatory approvals will be required in order to be able to complete such acquisition. In summary, this deal is a landmark partnership which advances our Luxury New Retail vision. It strengthens our relationship with a key luxury group, potentially unlocking higher luxury for Farfetch. It adds significant scale to the Farfetch platform, almost doubling our digital platform GMV. Onboards Richemont Maisons on the Farfetch Marketplace, elevating and differentiating our luxury selection for consumers. Drives strong GMV and revenue impact expected from 2024 onwards, and opens the door for participation in the upside potential of YNAP's transformation. I would be remiss if I did not mention Johann Rupert and Anton Rupert's vision and crucial role in the development of this long-term strategic partnership. Johann was right when in 2015, in a conference in Monaco that I had the pleasure to attend, he declared that the industry needed a technology platform solution tailored to its needs and at the service of all luxury brands, and with the consumer at the center of its vision. Richemont has really invested behind the vision that digital platforms would shape the future of luxury. Starting with the early backing of NET-A-PORTER and then the merger with YOOX. I believe Johann's vision was right then and is right now, and his long-term investment is going to ultimately pay off in a very significant way. I would like to thank Anton, not just for his vision and trust in Farfetch, but also for his impeccable execution of what is a transformational transaction. It has been a pleasure to work with Johann and Anton on this deal, and I'm sure this is only the beginning of a fantastic long-term collaboration between us. Thank you, and I will now open the floor for questions. We will now move to our Q&A session. For those of you who are joining us via Zoom, if you would like to ask a question at this time, please raise your hand by clicking the Raise Hand button under Reactions at the bottom of your Zoom window. Once called upon, please unmute your audio to ask your question. Please be mindful that only one question per analyst will be allowed. Thank you. To start, we'll take our first question from Geoffroy de Mendez from Bank of America. Geoffroy, your line is now open. Feel free to unmute. Hi, good morning, everyone. Thank you for taking my question. I just have one in this case. José, I think you mentioned you're gonna get about or more than EUR 3 billion of GMV from that deal. Any detail that you can give on potentially the take rate or at least if you think that as soon as the deal starts, you're gonna be profitable on the partnership with Richemont. I think you said in the past that FPS was a profitable business. Just wondering if there is any reason why that wouldn't be the case with this one, if you need to do investments up front or anything like this, that would be helpful. Thank you. Hi, Geoffrey. Thank you for your question. I think, you know, first of all, this is an absolutely transformational deal for Farfetch, for Richemont, and for the industry. The deal comprises three parts. All of them are GMV and revenue generating, in fact. Starting with FPS, which you mentioned. Yes, it's over $3 billion of the most recently reported digital GMV of Richemont. That means we see upside there, of course, 'cause we see this naturally growing. After completion of the deal, with the replatforming, expanding the Maisons' reach to new geographies, improving the conversion rate, vastly improving YNAP's capabilities, really will expand that GMV. This also includes the addition of practically all of the Maisons to the marketplace. If you think, you know, all of those Maisons and their ranges, which are very hard to find online, in fact. These are not normally easy to find in, certainly not in online wholesale. That in itself is a significant GMV opportunity for us. And finally, in terms of YNAP, adding the NET-A-PORTER supply to the Farfetch Marketplace, this is an incredible addition of supply. By far, it will be the largest seller, I think, just off the top of my head, on our marketplace. And conversely, providing extra liquidity of injecting our resale and pre-owned inventory and end of season inventory into YOOX. All of this is highly revenue generating and very accretive from a profitability perspective. You are correct, FPS is profitable as we stand, and will continue to be profitable. We cannot comment, obviously on the commercial rates, of the deals. That is commercially sensitive. What I can say is that, in 2023, this is estimated to have a positive EBITDA and cash impact even as we build the platforms, because the commercial conditions were built in a way that as we build, there is build fees and incoming revenue, to offset the investments that Farfetch is going to have to make. Of course, you know, this means that we need to get ready. We're onboarding very large customers, very large enterprise customers. This is not just this deal, it's Salvatore Ferragamo, it's Neiman Marcus Group, it's Reebok. Therefore, we this year sees an increase in head count in FPS, we will cover that, you know, later this week when we speak about you. All in all, very accretive, profitable on the FPS side of things, from day one, and cash generative from day one. Our next question is from Doug Anmuth from JP Morgan. Thanks for taking the questions and congratulations, José. I did just wanna circle up and I understand maybe you need to wait a bit until tomorrow, but I was curious about at least, you know, higher level, some of those investments that you need, you know, just to support the larger scale on FPS and the marketplace. Then just curious on feedback from some of the other luxury groups like LVMH and Kering, you know, just as you've been going through the process here. Thank you, Doug. Yes, it will be a chance tomorrow to update you. Overall, you know, we've been anticipating this. You will remember me saying that this was going to be a transformational year for FPS. Well, here it is, right? We have been gearing up as we saw the progression of these deals, really making sure that the roadmap and the strength of our engineering team really was there to absolutely develop the capabilities at scale. A lot of that investment has been made. Of course, a little acceleration in terms of depending on how fast the solution design, et cetera, on the other side. Because obviously, this deal is still pending regulatory approval. The other deals such as Salvatore Ferragamo and Neiman Marcus, et cetera, we have obtained or do not need such approval. Those will move faster. We'll update you on Thursday, but really, it's largely built into the business plan that we shared with investors back in May. On the other groups, I think this is a fantastic day for the entire industry. Let's not forget that over 1,000 luxury brands sell via YNAP. These brands want to move to e-concessions, many of the larger players from Kering and from LVMH. Some have already moved to e-concessions on YNAP, but not with the capabilities and the efficiencies of our architecture. This is absolutely fantastic news for them, but for many other large, medium and small brands that will have more audience, bigger sales, but also different modes of selling. Not only the wholesale mode of selling, which for smaller brands probably will continue to be important, but the combination of wholesale plus direct e-concessions, like we have at Farfetch, right? We have the brands business, which is our 1P business, but we also have the direct e-concessions. Many brands are present in both. We see the same model being extended to YNAP, which allows YNAP to keep the curation that differentiates it, while being much more capital efficient, cash generative, and profitable. This is really a transformational day for everyone in the industry. Our next question comes from Stephen Ju from Credit Suisse. Stephen, feel free to unmute and ask your question. Hey, thank you so much. José, congratulations on the partnership. I'm interested in following up on the demographic slide, in which you called out the differences between the audience on Farfetch. versus NET-A-PORTER and also YOOX. Maybe this is too early to tell, but should we be thinking that there is actually very little overlap between the users on these destinations? Thank you. It's a great question. I think it's very important to highlight how complementary these destinations are, these banners. This is a very vast, very large industry. We see different customer profiles and different modes of shopping and this really complements the Farfetch Marketplace destination. You know, I won't repeat myself, but we do believe that these are different customer profiles, different demographics, different geographies, AOVs, as you can see on the data that we provided. I'd also like to say that even if you combine the GMV from both businesses, we're still talking about 3% of the entire industry, right? There's incredible growth to go far. We still see the Farfetch Marketplace continuing to grow at the 30% CAGR that we've always indicated. That won't change. If anything, we have more supply and more curated supply, so that will accelerate the growth of our marketplace. More channels for our markdown mix, which, as you know, we've been deliberately reducing the markdown mix. With YOOX, there's a potential future listing there. If anything, this is an acceleration of our marketplace growth. There is, you know, such a vast, you know, greenfield ahead of us for all of these banners, and they're very complementary to your point. We're very excited about the possibility in a few years' time of creating this portfolio of highly complementary brands. Our next question comes from Louise Singlehurst from Goldman Sachs. Louise, please unmute and ask your question. Hi, everyone. Hi, José. Thank you very much for taking my question. I suppose that the key question, José, to you is how you envisage, like, the end game for the consumer. I guess in the past, you've talked about the consolidation of apps and the number of apps that the consumer will download. I guess here there's an opportunity for a customer to have, you know, five apps from just one group on their telephone. Or put another way, is this really answering the question of the big problem with online and luxury, i.e. you're trying to segregate the offer between the full price and then the off-price or markdown selection. Hopefully a little bit more full price offer for Farfetch as well as NET-A-PORTER and MR PORTER. Thank you. Thank you, Louise. I think, you know, the strategy doesn't change. On the Farfetch side, the ethos of Farfetch is that of a two-sided marketplace. And the Farfetch brand is about choice. It's about the most comprehensive selection of brands and boutiques. And it is appealing to a very young international customer, right? We have deliberately been reducing the markdown proportion of our sales, which was always low. You know, I think we've updated you in Q1 was 75% full price, 25% markdown, so it's already very low. We were always a majority full price business as our AOV indicates, but we will continue to reduce the markdown mix. The strategy hasn't changed. What changes here is the obviously potential boost, significant boost to the supply by adding the NET-A-PORTER inventory, which benefits both parties because obviously expands vastly the addressable market for NET-A-PORTER, and also creating a channel for that markdown supply to be sold via YOOX. You know, and that vastly expands YOOX's potential in terms of growth as well. I think you know the strategy of the three businesses, the three. I won't say three brands because they're five in reality, but the strategy of Farfetch, the strategy of NET-A-PORTER and MR PORTER, which is called the luxury division of YNAP, and stays essentially the same. With YOOX, we believe in a rebranding and repositioning because we think that outlet is not necessarily a very relevant online outlet positioning for brands. Even for our customers. I think customers are much more keen on thinking about end-of-cycle circularity of a mix of new but end of season with new resale like Stadium Goods and pre-owned resale. This really appeals to the same customer very often. To me, you know, that is where you will see a strategic repositioning of that brand. I think that can be very powerful. Our next question comes from Lauren Schenk from Morgan Stanley. Lauren, please unmute and ask your question. Great. Thank you. Just wondering if you could elaborate a little bit more on the scale and cost advantages as a result of the initial deal. Then, should you end up acquiring the entirety of YNAP, what some of the cost synergies and margin benefits there could be in terms of taking on the entire entity. Thank you. It's a great question. I think in terms of the initial part of the deal, and that is a good 4, potentially 5 years before a full acquisition of YNAP. In terms of the initial part of the deal, I think this clearly scales our platform in a very powerful way. It essentially doubles our digital platform GMV. You have seen us adding large enterprise clients, for example, Harrods and other 20 luxury brands that use FPS. In spite of that, our tech spend as a percentage of revenue has been coming down and is coming down consistently. We've proven time after time that this is incredibly scalable. We can add very large multi-billion dollar turnover companies to FPS, with continuing at the same time to drive leverage of our tech and infrastructure spend. In terms of operations, of course, as we scale, everything gets more efficient, from, you know, our ability to have DHL, UPS, FedEx, you know, advantageous rates, to the ability to drive scalability in operations, customer service, et cetera. We see the FPS deal and the onboarding of the portfolio to the marketplace as very, very scalable. Of course, we're fully aligned with Richemont here in terms of making YNAP incredibly lean, efficient and profitable by leveraging as much as we can the Farfetch platform. As you know, we have built into the deal conditionality that YNAP has to be EBITDA positive for the put call to be exercised and for a full acquisition to happen, which means that shareholders are fully aligned in driving very strong operational efficiencies. Of course, that's by leveraging the Farfetch platform capabilities. Our next question comes from Oliver Chen from Cowen & Company. Oliver, feel free to unmute. Hi. Congratulations. José, regarding profitability, what's the vision for the key drivers of profitability at YNAP? How does it alter your path to profitability? YNAP also has a very great last-mile service. We use it a lot. Could you comment on any thoughts around their DCs and that aspect of the business and how it may synergize with your current offering? Thank you. Thanks, Oliver. I think, you know, first of all, YNAP historically delivered strong profitability and strong growth. It's been in recent years where the tech legacy has really weighed in the business as the industry became so much more competitive with obviously brand.com coming into the equation and a number of very good, you know, online retailers coming into the luxury space. The lack of cutting-edge digital capabilities, obviously if you're an e-commerce business, that's all you do, right? It's very impactful to their performance. In spite of that, actually the business is almost profitable, right? In the last reporting period, I believe it was -EUR 20 million in adjusted EBITDA. Richemont talked about most of that being actually relative or attributable to the Feng Mao JV in China where they're still investing heavily. In spite of the operational inefficiencies and tech inefficiencies, the business is almost breaking even. What we see is our technology coming in and delivering leverage and a lot of, you know, expansion of margins through not just the technology but also operations. Better conversion rates with better localization of the offering. More channels with the addition of Farfetch Marketplace as an incremental channel. More supply with the addition of our supply onto YOOX. We see, you know, very significant levels of profitability, and this absolutely will not be at the expense of the user experience. On the contrary, the idea is to continue to leverage, you know, the great things that YNAP is already offering to customers and continue to evolve them and actually improve on those services. We have time for one more question. This final question today comes from Edward Yruma from Piper Sandler. Edward, your line is open. Hey, guys. Thanks for taking the question. I guess just real quickly, you know, YNAP seems to have been one of the more egregious offenders from a promotional perspective. I know that you're gonna have a sub-majority ownership, but I guess how quickly do you think they or you can stabilize their inventory position? Just as a quick follow-up, you know, Richemont also throttles back the inventory on the hard luxury Maisons to what they offer online. Do you have any kind of commitments from them in terms of the product offering that they'll allow to be retailed online versus in store? Thanks. Hi. I'd like to start by disagreeing with you. I actually do not think that NET-A-PORTER, MR PORTER, are big promoters or discounters online at all. We actually obviously, as you would expect, absolutely monitor the competition on a daily basis. We scrape all those websites out there. There's a lot of competition in the market. What we see is sometimes people who you wouldn't expect actually are the ones that are promoting more. It really depends sometimes from quarter to quarter whether they have a little bit more inventory or less inventory. I think it's in line. It's certainly not out of line with the rest of the luxury online landscape. Having said that, I think there's It's clear the large brands want e-concessions. This is a tremendous advantage for Farfetch, because we are pioneers in the e-concession technology. It's true e-concessions, it's not what I call e-consignments. It's not like we require the brands to ship the inventory to our warehouses, which is very inefficient and actually doesn't increase the depth or the choice of inventory. Actually decreases it for customers. This is a true dropshipping e-concession model. This will be incredibly attractive for the brand. Today marks a transformational deal for Richemont, for Farfetch, but also for all the other brands that want to advance the 3P model. They want to advance e-concessions, the dropshipping model, but haven't been able to do that with YNAP. By the way, with other online players where they've been trying, but not getting very far, because of the technology limitations that they have. What we see is full price mix increasing as a result of that migration to 3P at YNAP, and profitability as a result increasing as well as a lot of release of working capital. Because when you move a business that is 100% 1P to a significant percentage, material percentage of 3P, you do release a lot of cash on working capital, and you become much more profitable and efficient at the margin level. That's what we see. I didn't catch the second part of your question. Okay. My team just updated me. In terms of the high luxury on the marketplace. Look, you know, Richemont is incredibly excited, as you probably had the chance to listen to Johann and their team today. They have had a very good experience with Alibaba in terms of e-concessions on Tmall. Very powerful channel for Cartier, which is one of the most demanding Maisons in their portfolio. This has clearly demonstrated that the e-concession model works for them and is very beneficial both in terms of brand image representation and access to customers. This deal obviously opens the Farfetch channel as a channel, and this is, you actually... I was listening to the Richemont call, and Burkhart was very clear to say, this deal is not really about the consolidation, but really about us leveraging the Farfetch platform for our maisons, and this is the driver of our decisions here. They're very excited, and they have seen the success of e-concessions. To your point, this opens the right model at NET-A-PORTER and MR PORTER, because before, the company until now has not been equipped with the e-concession capabilities that the maisons want. Even internally in the group, the technology was not equipped to service the needs of the maisons. All of that will change and will change very quickly as soon as we complete this deal. I wanna thank you all for joining us. I know it was a bit of short notice, so thank you for making the time to join us for our call today. We look forward to speaking to you tomorrow to talk about our Q2 results.