Coupang Surpasses 10 Trillion KRW in Quarterly Sales for the First Time... Kim Beom-seok Says "Growth Opportunities Are Limitless" (Comprehensive)

Operating Loss Recorded After 8 Quarters
Reflecting 163 Billion KRW Fine by Fair Trade Commission
Active Customers Up 12%, Sales Exceed 10 Trillion KRW

Coupang's sales in the second quarter of this year exceeded 10 trillion won. This is the first time Coupang's quarterly sales have surpassed 10 trillion won, showing continued external growth. However, operating profit turned to a loss for the first time in eight quarters due to the operating loss of the luxury platform Farfetch and the preemptive reflection of estimated fines for the Fair Trade Commission's manipulation of search rankings for private brand (PB) products.

Coupang Inc., the parent company of Coupang listed on the New York Stock Exchange, announced on the 7th that Coupang's sales in the second quarter reached 10.0357 trillion won (7.323 billion USD, based on 1,370.44 KRW/USD), a 30% increase compared to the previous year. Excluding Farfetch (630 billion won), Coupang's sales were 9.4053 trillion won, growing 23% year-on-year.

However, operating loss during this period was 34.2 billion won (25 million USD), marking a return to deficit. This is the first operating loss since the third quarter of 2022, after seven consecutive quarters of operating profit from Q3 2022 to Q1 2024. In the second quarter of last year, operating profit was 194 billion won (147.64 million USD). Operating profit in the first quarter of this year was 53.1 billion won (40 million USD). Operating profit for the first half of this year was 20.5 billion won (15 million USD). Coupang's operating profit in the first half of last year was estimated at 254.4 million USD, indicating a 94% sharp decline in operating profit this year.

This operating loss is attributed to the operating loss of Farfetch, acquired earlier this year, amounting to 42.4 billion won (31 million USD), and the Fair Trade Commission's estimated fine of 163 billion won (121 million USD). The estimated fine was included in selling and administrative expenses in this earnings report. Net loss was 105 million USD (143.8 billion won), turning to a deficit.

Chairman Kim Beom-seok: "Outstanding Customer Experience... Strengthening Growth and Profitability"

Chairman Kim said during the Q2 earnings conference call, "Thanks to years of investment and innovation to provide the world's best retail customer experience, we continue to achieve good results," adding, "We offer excellent customer experience at the lowest prices, thereby strengthening growth and profitability."

He emphasized that Coupang's active customer base increased by about 21.7 million, a 12% rise compared to the previous year. Chairman Kim stated, "Customers, including the oldest cohort, continue to increase their consumption," and added, "There are vast untapped opportunities for future growth." He further noted, "In the highly segmented commerce market worth 560 billion USD, Coupang's market share is very small and still in the early stages of its journey."

In fact, Coupang's business segments are divided into Product Commerce (Rocket Delivery, Rocket Fresh, Rocket Growth, Marketplace) and Growth Businesses (Farfetch, Taiwan, Coupang Eats). Among these, the core Product Commerce business showed solid growth, while sales from growth businesses including Farfetch surged nearly sixfold, driving overall sales growth.

Coupang CFO Gaurav Anand explained, "Selling and administrative expenses increased by 6 percentage points compared to the same period last year," adding, "Excluding Farfetch's restructuring costs and the Fair Trade Commission's estimated fines, the controlling shareholder net income in Q2 could have been approximately 124 million USD (169.9 billion won)."

"No Impact from Paid Membership Price Increase"

Sales in the Product Commerce segment for Q2 were 8.31 trillion won (6.431 billion USD), an 18% increase year-on-year. Chairman Kim highlighted that the Marketplace business, including Rocket Growth, is growing faster than the overall domestic distribution market. He said, "Marketplace has grown faster than Rocket Delivery (direct purchase) for 13 consecutive quarters, indicating that small business owners (annual sales under 3 billion won) have expanded their businesses," and added, "The number of sellers who started Rocket Growth business grew 150% compared to the same period last year."

Despite Coupang's price increase for its paid membership Wow Membership, the number of active customers increased further. Coupang announced in April that the monthly fee for the Wow paid membership service would increase from 4,990 won to 7,890 won starting in August. Coupang's active customers in Q2 reached 21.7 million, a 12% increase year-on-year, and customer sales rose 5% to 309 USD (423,400 won) during the same period.

This contrasts with the monthly active users (MAU) of C-commerce apps such as AliExpress and Temu, which have been declining. AliExpress recorded 6.94 million MAU in March but dropped to 6.25 million in June, losing 700,000 users. Temu showed a similar trend, with 6.93 million MAU in April decreasing by 300,000 to 6.61 million in June. Although large-scale coupons and discount marketing temporarily boosted user numbers, concerns over product quality and trendiness caused a sharp decline in users.

Chairman Kim said, "Although the unprecedented scale of investment in the Product Commerce business was not recognized, it is now helping generate cash flow every quarter," adding, "We will also work on reducing packaging costs and improving profitability."