Profitability deteriorates in Q4 amid fallout from data leak
Chairman Kim: "We will undoubtedly do better"
Coupang continued its growth momentum last year, posting a record revenue of over 49 trillion won. However, it failed to reach the much-anticipated 50 trillion won mark, largely due to the aftermath of a massive personal data breach that occurred near the end of the year. Beomseok Kim, Chairman of the Board at Coupang Inc. and founder of Coupang, issued his first public apology in person since the incident, stating, "We failed to meet our customers' expectations."
On February 27 (Korea Standard Time), Chairman Kim conveyed his position during a conference call following Coupang Inc.'s full-year earnings announcement, saying, "Once again, I sincerely apologize for the concern and inconvenience this has caused." Although Kim had previously issued a written apology through the company last December, this was the first time he made a verbal statement on the matter.
He emphasized, "Coupang has always focused on a single goal: customer satisfaction," adding, "Customers are the only reason we exist, and we strive every day to earn their trust." He went on to say, "There is nothing more serious at Coupang than failing to meet customer expectations. We are well aware that we must do better, and we are committed to making that happen."
On this day, Coupang Inc. disclosed that its revenue for the previous year amounted to $34.534 billion (about 49.12 trillion won), a 14% increase from $30.268 billion (about 41.29 trillion won) the year before. This marks the highest annual revenue in Coupang Inc.'s history. The figure surpasses the combined revenue of major offline retailers Emart (28.9704 trillion won) and Shinsegae Group (6.9295 trillion won), which totaled 35.8999 trillion won last year, and is roughly 3 to 4 times higher than Lotte Shopping (13.7384 trillion won) or the leading food company CJ CheilJedang (17.7549 trillion won).
During the same period, operating profit rose by 12.7% to $473 million (about 679 billion won), but the annual operating margin edged down from 1.46% in the previous year to 1.38%. This decrease is attributed to the impact of the personal data breach affecting Korean users, which was announced in November and December last year, thereby weighing on fourth-quarter results. In the fourth quarter, Coupang Inc.'s revenue increased by 11% year-on-year to $8.835 billion (about 12.81 trillion won), but operating profit plummeted by 97% to $8 million (about 1.15 billion won) compared to $312 million (about 43.53 billion won) during the same period the previous year. Net loss for the quarter also reached $26 million (about 3.77 billion won), reversing from a net profit of $131 million (about 18.27 billion won) in the same period the previous year. The operating margin for this quarter was 0.09%.
Notably, fourth-quarter revenue fell by 5% from the preceding third quarter, which recorded $9.267 billion (about 12.85 trillion won). While Coupang Inc. has seen quarter-on-quarter revenue declines in dollar terms since its 2021 listing, this is the first time revenue has declined on a won basis. Coupang Inc. stated, "We estimate that the personal data breach negatively impacted fourth-quarter revenue growth, active customer numbers, WOW membership, and profitability starting from December last year." In fact, the number of active customers in the Product Commerce segment (those who made at least one purchase during the quarter) fell by 100,000 to 24.6 million in the fourth quarter of last year, down from 24.7 million in the previous quarter. However, Coupang noted, "The recent impact on growth rates has stabilized," adding, "We are seeing signs of recovery beginning in the first quarter of this year."
Breaking it down, annual revenue for Product Commerce-including Rocket Delivery, Rocket Fresh, Rocket Growth, and Marketplace-rose by 11% to $29.592 billion (about 42.09 trillion won). Revenue from growth businesses such as operations in Taiwan and Farfetch jumped by 38% to $4.942 billion (about 7.03 trillion won). However, annual adjusted EBITDA losses for the growth businesses increased by 58% year-on-year to $995 million (about 1.41 trillion won), reflecting continued aggressive investment.
Chairman Kim stated, "We are introducing a higher level of innovation and automation across operations with the goal of improving customer experience and reducing service costs," and added, "We will continue to invest aggressively in Rocket Delivery and other areas to meet demand, as long as it does not compromise customer experience or long-term scalability." He further pledged, "Coupang promises to work closely and constructively with government authorities as a partner."
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