Thanks to logistics automation investment... Coupang achieves first quarterly profit over 100 billion KRW in Q3

Q3 Sales 6.8 Trillion KRW... Record High in Won Conversion
Operating Profit 103.7 Billion KRW... First Surplus in 10 Years
"Investment Results" Fresh Product Delivery, Inventory Reduction

Kim Beom-seok, founder of Coupang. Photo by Asia Economy DB

[Asia Economy Reporter Kim Bo-kyung] Coupang posted an operating profit of over 100 billion KRW in the third quarter of this year, achieving a quarterly profit for the first time in 10 years. Coupang has continued to invest extensively in logistics despite accumulating losses amounting to 6 trillion KRW.

According to the data disclosed by Coupang to the U.S. Securities and Exchange Commission (SEC) on the 10th (Korean time), Coupang recorded sales of $5.10133 billion in the third quarter of this year. This represents a 10% increase compared to the same period last year ($4.6447 billion). Based on the average KRW-USD exchange rate of 1,340.5 won in the third quarter, sales reached 6.8383 trillion KRW, a 27% increase compared to 5.385 trillion KRW in the same period last year. This is the highest sales figure ever recorded in KRW terms.

The significant improvement in profitability stands out. Coupang posted an operating profit of 103.7 billion KRW ($77.42 million) and a net profit of 121.5 billion KRW ($90.67 million) in the third quarter. This is the first quarterly profit since launching Rocket Delivery in 2014 and transitioning from social commerce to e-commerce. It is also the first time since Coupang announced a business profit of 1.6 billion KRW in 2012.

Since its listing in March last year, Coupang had been labeled a perennial loss-making company, posting losses of 250 billion to 500 billion KRW each quarter. In the third quarter of last year alone, it recorded an operating loss of $315.11 million (365.3 billion KRW) and a net loss of $323.97 million (375.6 billion KRW). However, after significantly reducing the operating loss to 84.7 billion KRW in the second quarter of this year, it succeeded in turning a profit in the third quarter.

Coupang's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the third quarter was $194.91 million (3.8% of sales, 261.3 billion KRW), turning profitable within a year compared to a loss of $207.43 million in the same period last year.

Kim Beom-seok, founder and Chairman of Coupang Inc., cited the logistics network based on automation technology as the driving force behind this performance during the post-earnings conference call.

He stated, "Expanding fresh food distribution to multiple regions naturally increases inventory losses, but Coupang reduced fresh food inventory losses by 50% compared to last year through demand forecasting based on 'machine learning' technology." He added, "By integrating the entire logistics process, there was no longer a need to build a separate cold chain delivery network, and trucks used for delivering general consumer goods could also be used to deliver fresh products."

He commented, "Although the post-COVID era has begun, Coupang's growth momentum has continued," and "Strong consumer demand growth was confirmed across all categories."

Garav Anand, Coupang CFO, said, "We achieved a record net profit of $91 million across all businesses," and "Recent efforts to improve profitability are the result of investments in technology, infrastructure, supply chain optimization, and innovation."

Coupang's active customers (those who purchased at least once) increased by 7% to 17.992 million compared to last year, and revenue per customer rose 3% to $284 (380,000 KRW).

Sales in Coupang's core business of product commerce (Rocket Delivery, Fresh, Marketplace) reached $4.9 billion (6.5684 trillion KRW), a 10% increase compared to last year (28% increase in KRW terms). Adjusted EBITDA in new business sectors such as Coupang Play, Coupang Eats, overseas business, and fintech recorded a loss of $44.3 million (59.3 billion KRW), a 50% reduction compared to the same period last year.

Chairman Kim emphasized that Coupang's recent achievements can be shared with the small and medium-sized merchants on its platform. He said, "More than 70% of our partner merchants are small and medium-sized businesses with annual sales below $2.5 million, and we believe we have provided the best growth foundation for these companies," adding, "We are pleased to share benefits with tens of thousands of small and medium enterprises that have been excluded from offline sales channels."