Coupang Announces Q2 Earnings Today (7th)
Quarterly Revenue Surpasses 10 Trillion Won for the First Time... Operating Losses for 8 Consecutive Quarters
Attention on Coupang Marketplace Growth Amid Tmep Incident
Coupang's Q2 earnings announced on the 7th show that while profitability slightly deteriorated, the company performed well operationally. Despite recording an operating loss in the 300 billion KRW range and returning to a deficit for the first time in eight quarters due to operating losses from its subsidiary Farfetch and estimated fines related to the Fair Trade Commission's manipulation of search rankings for private brand (PB) products, Coupang continued its sales growth thanks to loyal customers who still use the platform even after the April increase in fees for new Wow Membership subscribers.
Gaurav Anand, Coupang's Chief Financial Officer (CFO), stated, "The key indicator reflecting the fundamental growth of the business is gross profit." He added, "In Q2, we achieved record quarterly results with gross profit exceeding $2.1 billion, a growth of over 40% year-over-year, and a margin of 29.3%." According to Anand, the results included restructuring costs for Farfetch and an estimated fine from the Fair Trade Commission ($121 million, approximately 163 billion KRW). Excluding these, the Q2 net income attributable to controlling shareholders reached 169.9 billion KRW ($124 million).
Amid signs of restructuring in the e-commerce market following large-scale settlement and refund delays by Qoo10-affiliated TMON and WEMAKEPRICE, Coupang's marketplace growth is also drawing attention. Kim Beom-seok, Chairman and Founder of Coupang Inc., emphasized during the earnings conference call that the marketplace (3P) business, including Rocket Growth (FLC), is significantly outpacing the overall business growth. The marketplace, an open market mediating transactions between sellers and consumers, has outperformed the growth of Rocket Delivery's direct purchase for 13 consecutive quarters, Kim said.
He proudly stated, "Since 2020, we have helped over 9,000 small businesses (with annual sales under 3 billion KRW) grow significantly beyond their small business status." He also highlighted that the number of sellers who started the Rocket Growth (seller Rocket Delivery) business increased by 150% year-over-year and 25% quarter-over-quarter.
The rapid growth of business segments such as the Taiwan business, Coupang Eats, and Farfetch also played a significant role. Sales in the growth business segment reached 1.2224 trillion KRW in Q2, showing a steep growth of 483% compared to the same period last year. Even excluding Farfetch, the growth rate was 188%. Kim said, "Since implementing the free delivery program for Wow Membership, customer inflow has been steadily on the rise." Regarding the Taiwan business, he expressed, "We are more confident than ever in Taiwan's potential," adding, "Sales of Korean companies in Taiwan tripled compared to the previous year."
The current earnings do not reflect the impact of the TMON and WEMAKEPRICE (TMEP) incident. Industry insiders are closely watching which platform will absorb the over 1 trillion KRW transaction volume from TMEP following the incident. Some believe that since TMEP's strengths were in gift certificates, gift cards, e-coupons, and travel products, the likelihood of a shift to Coupang, which focuses on daily necessities, is low. However, given that the TMEP incident has highlighted platform trustworthiness more than ever, there is also analysis that users may move to Coupang, considered a relatively safe platform as the industry leader.
Kim stated, "Customers, including the oldest cohort, continue to increase their spending." Coupang raised its existing paid membership monthly fee from 4,990 KRW to 7,890 KRW on the same day. The industry is keenly watching whether this will trigger a domino effect of 'membership switching.' Regarding this, Kim drew a clear line, saying that changes in total membership numbers or monthly active users (MAU) will be minimal.
In fact, since Coupang announced the membership fee increase in April, no significant changes have been detected in Coupang's MAU. According to mobile big data company IGAWorks Mobile Index, Coupang's MAU last month was 30,916,564, a 1.5% increase from April's 30,615,586. Based on app retail analysis services WiseApp, Retail, and Goods, Coupang's MAU also rose by 2.4%, from 30,908,366 to 31,662,174 during the same period.
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