Record Broken Just One Quarter Later
Operating Profit and Net Profit Turn Positive
Product Commerce Sees Increased Repurchase Rates Among Existing Customers
Rapid Growth of Rocket Delivery in Taiwan Drives Performance
Coupang set a new record for its highest-ever quarterly revenue in the second quarter of this year, posting nearly 12 trillion won in sales. The company returned to profitability compared to the same period last year, when it posted an operating loss due to a fine imposed by the Fair Trade Commission. Despite sluggish domestic demand, Coupang’s solid existing customer base drove up repurchase rates, especially for fresh food, and the company saw rapid growth in Taiwan, where it replicated its domestic business model. Looking ahead, Coupang plans to leverage artificial intelligence (AI) to revolutionize the customer experience and drive growth by building more efficient services.
Coupang Inc., listed on the New York Stock Exchange and the parent company of Coupang, announced on the 6th that its consolidated operating profit for the second quarter of this year reached 209.3 billion won ($149 million, based on an average quarterly exchange rate of 1,405.02 won per dollar), turning a profit compared to an operating loss of 34.2 billion won in the same period last year. Previously, Coupang had reflected the estimated fine (approximately 168.2 billion won) imposed by the Fair Trade Commission in its second-quarter 2023 results, which led to a loss for the first time in eight quarters since Q3 2022. Operating profit for the second quarter of this year was slightly down from the previous quarter’s 233.7 billion won ($154 million), and the operating margin declined to 1.7%, down 0.3 percentage points from 2% in the first quarter.
Second-quarter revenue was 11.9763 trillion won ($8.524 billion), up 19% from 10.0357 trillion won in the same period last year, marking the highest quarterly revenue in the company’s history. This is the first time Coupang’s quarterly revenue has exceeded $8 billion. The previous record was 11.4876 trillion won ($7.908 billion) in the first quarter of this year. Net profit for the period was 43.5 billion won ($31 million), a turnaround from a net loss of 143.8 billion won in the same period last year.
Expansion of Rocket Delivery Options, Same-day and Dawn Delivery Orders Up 40%
More than 86% of Coupang Inc.’s second-quarter revenue came from its Product Commerce segment (Rocket Delivery, Rocket Fresh, Rocket Gross, Marketplace). Product Commerce revenue for the quarter was 10.3044 trillion won ($7.334 billion), up 17% year-on-year. The number of “active customers,” defined as those who have made at least one purchase on Coupang, reached 23.9 million, an increase of about 10% from 21.7 million in the second quarter of last year. Revenue per active customer rose 6% to 431,340 won ($307).
During a conference call, Coupang Inc. Chairman Kim Bom Suk noted, “Second-quarter revenue growth was driven by existing customers, with all customer cohorts showing double-digit growth in spending.” He attributed this to the expansion of product choices tailored to customer preferences. Kim added, “We added 500,000 new products to Rocket Delivery in the second quarter alone, and same-day and dawn delivery orders increased by more than 40% compared to the same period last year.” He emphasized that “investment in customer experience continues to drive higher customer engagement, enabling Coupang to maintain higher revenue growth rates than the relatively stagnant Korean retail market.”
He also highlighted the strong growth in the fresh food category, which Coupang is focusing on through both online and offline channels. By expanding its selection of produce, meat, and seafood, Coupang’s fresh food sales in the second quarter grew by about 25% year-on-year.
Taiwan’s Rocket Growth, High-Flying Growth Businesses
The Growth Businesses segment, which includes Taiwan, Farfetch, and Coupang Eats, also posted record quarterly revenue of 1.6719 trillion won ($1.19 billion), up 33% from the same period last year. Compared to the previous quarter (1.5078 trillion won, $1.038 billion), this represents an increase of 15% in dollars and 11% in won.
Among these, Taiwan’s Rocket Delivery, which operates under the same business model as in Korea, showed particularly strong growth. Chairman Kim stated, “In Taiwan, fourth-quarter revenue last year grew 23% over the third quarter, and second-quarter revenue this year increased 54% over the first quarter, more than doubling the growth rate.” He added, “We expect the growth rate in the third quarter to be even higher.” He further commented, “Taiwan is growing faster and stronger than even our most optimistic projections set at the beginning of the year. The trajectory is similar to the early years when we first expanded retail services in Korea, which increases our confidence in the long-term growth potential.”
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss for the Growth Businesses segment in the second quarter was 330.1 billion won, a 20% increase from 274 billion won in the same period last year. Coupang explained that this was due to increased initial investment to build infrastructure. Gaurav Anand, Coupang’s Chief Financial Officer (CFO), said, “In the short term, this is due to the accelerated growth of the Growth Businesses, especially in Taiwan, and it will normalize over time.” He also raised the annual adjusted EBITDA loss forecast for the Growth Businesses segment from the previous $650 million to $750 million to a new range of $900 million to $950 million, stating, “It is very encouraging that increased customer spending in Taiwan is driving further investment.”
Coupang also expressed its intention to target untapped markets in other growth businesses such as Coupang Eats and Coupang Play by offering a diverse product lineup, lowest prices, and new content expansion. The company also expressed confidence in AI and automation technologies that will revolutionize the customer experience and improve business efficiency. Chairman Kim emphasized, “For years, Coupang has used AI technology to improve all aspects of the customer experience, including personalized recommendations, inventory forecasting, and route optimization. Up to 50% of new development code in the early implementation stage of software development is now written by AI. We expect AI, automation, and humanoid robots to have a transformative impact on Coupang’s operations.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
