Coupang Q2 Earnings Call Highlights

Key Points

• Revenue growth accelerated: Coupang’s Q2 revenue rose 4% year over year to $8.9 billion, or 10% in constant currency, while product-commerce active customers increased 3% to 24.7 million as customers returned after the data incident.
• Profitability remained pressured: Adjusted EBITDA was $163 million excluding $410 million in Korean regulatory fines, while product-commerce EBITDA margins declined due to supply-chain costs, reacquisition marketing and excess capacity. Management expects margins to return to approximately pre-incident levels by mid-2027.
• Expansion businesses improved but remain costly: Developing offerings revenue grew 20% to $1.4 billion and losses narrowed, supported by progress in Taiwan’s logistics network. Coupang expects third-quarter constant-currency revenue growth of 8% to 9% but warned of a 300-to-400-basis-point adjusted EBITDA margin contraction.

Coupang NYSE: CPNG reported second-quarter revenue growth that accelerated from the prior quarter on a constant-currency basis, while management said the company continued to recover from a prior data incident that disrupted product-commerce customer activity and pressured margins.

Consolidated net revenue reached $8.9 billion, up 4% year over year on a reported basis and 10% in constant currency. CFO Gaurav Anand said the Korean won’s weakness against the U.S. dollar materially reduced reported dollar-denominated growth rates during the quarter.

The company generated $163 million in consolidated adjusted EBITDA, excluding $410 million of administrative fines imposed by Korean regulatory authorities. Coupang said it plans to appeal the fines, which were recorded in operating, general and administrative expense during the quarter.

Product Commerce Growth Improves as Customers Return

Product commerce revenue totaled $7.4 billion, increasing 1% on a reported basis and 8% in constant currency, improving from 5% constant-currency growth in the first quarter. Product commerce active customers rose 3% year over year to 24.7 million, compared with 23.9 million in the prior quarter.

Founder and CEO Bom Kim said the reported growth rate included differing customer trends following the data incident. He said most customer spending was unaffected and that customers who returned after leaving during the incident were spending at record levels. However, a smaller group of customers has not returned, weighing on year-over-year comparisons.

“The vast majority of the spend the incident disrupted is back and growing the way it did before,” Kim said. He added that customer spend excluding those who left during the incident and had not returned was growing about 16% year over year.

Kim said WOW membership has surpassed its level before the incident. He noted that newer members begin at an earlier point in their spending curve, meaning the benefit of membership growth is expected to show up in revenue over time.

Management expects the impact of the remaining absent customer cohort to diminish after the company laps the affected comparison periods next year. Kim said the company will continue efforts to regain those customers, citing potential sentiment and trust considerations rather than a structural deterioration in its value proposition.

Margins Pressured by Costs, Reacquisition Spending

Product commerce gross profit was $2.3 billion, producing a 30.5% gross margin. The margin contracted about 210 basis points from a year earlier but improved 25 basis points sequentially.

Product commerce adjusted EBITDA was $382 million, excluding the Korean regulatory fines, for a 5.1% margin. That represented a year-over-year contraction of roughly 390 basis points. Anand attributed the pressure to supply-chain headwinds, temporarily elevated promotional activity aimed at customer reacquisition, and capacity and fixed costs built for demand expectations that preceded the incident.

Kim said the company has chosen not to reduce capacity substantially because it wants to preserve the customer experience and grow into its existing infrastructure. He also said Coupang expects volume-related supply-chain savings to recover next year and plans to reduce reacquisition-focused marketing spending after it laps the affected period.

Anand said product-commerce adjusted EBITDA margins are expected to return to approximately pre-incident levels by mid-2027. Management characterized the margin pressure as temporary and said it does not view the issue as a structural change in the business.

At the consolidated level, Coupang reported an operating loss of $556 million and a net loss attributable to stockholders of $570 million, or $0.32 per diluted share. Excluding the fines, the adjusted operating loss was approximately $146 million and net loss was approximately $160 million, or about $0.09 per diluted share.

Developing Offerings Show Revenue Growth, Narrower Losses

Developing offerings, which include Taiwan, Eats, Farfetch and other initiatives, generated $1.4 billion in revenue, up 20% reported and 24% in constant currency. Segment gross profit was $226 million, for a gross margin of 15.8%, which improved both year over year and sequentially.

The segment’s adjusted EBITDA loss was $219 million, narrowing by $110 million from the first quarter and improving by more than 440 basis points from a year earlier. Coupang maintained its outlook for full-year developing-offerings adjusted EBITDA losses of $950 million to $1 billion, with Taiwan remaining the largest contributor to those investment losses.

Kim said Taiwan is expanding its fulfillment and logistics network, with the majority of shipments now delivered next day, seven days a week. The company has also started rolling out dawn delivery in initial Taiwan neighborhoods. He said Taiwan reached that service milestone after about one year of logistics development, compared with four years in Korea.

Management said Taiwan’s selection remains a fraction of Rocket Delivery’s assortment in Korea, but early customer cohorts are retaining customers and increasing spending. Kim said local supplier adoption in Taiwan is following a trajectory similar to Coupang’s early years in Korea, though the company remains at an early stage of building local selection.

Outlook Includes Holiday Effects and Fire Assessment

For the third quarter, Coupang expects consolidated constant-currency revenue growth of 8% to 9%. Anand said the year-over-year comparison will be affected by the timing of Korea’s Chuseok holiday and weather-related seasonal costs.

The company expects third-quarter consolidated adjusted EBITDA margin to contract 300 to 400 basis points year over year, despite anticipated improvement in underlying product-commerce margin drivers. Management said reported improvement should become more evident after the third quarter, though it did not provide a quarterly recovery cadence.

Anand also addressed a July fire at a Korean fulfillment center. He said the incident has not significantly affected revenue generation or the company’s ability to meet customer demand because Coupang has used the flexibility of its wider logistics network. The company estimated that the carrying value of owned inventory and fixed assets at the facility, along with obligations to sellers for stored inventory, was about $246 million before the fire. Coupang said it maintains fire insurance and that any losses and related insurance recoveries would be recognized in future quarters beginning in the third quarter.

On capital allocation, Coupang repurchased 23 million Class A shares for approximately $459 million during the quarter. On a trailing 12-month basis, the company generated $1.4 billion in operating cash flow and $105 million in free cash flow.

About Coupang (NYSE:CPNG)

Coupang, listed on the New York Stock Exchange under the ticker CPNG, is a South Korean e-commerce company headquartered in Seoul. Founded in 2010 by Bom Kim, the company grew rapidly by combining an online marketplace with a large direct-retail business model. Coupang completed a primary listing in the United States in 2021, and it has become one of South Korea's leading online retailers by focusing on convenience, speed and a wide product assortment across consumer categories.

The company operates a vertically integrated e-commerce platform that includes a customer-facing marketplace and an extensive logistics and fulfillment network.

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