Coupang eyes first profit turnaround after record Q2 results

Coupang Inc. headquarters in Seoul. [Photo by Han Joo-hyung]

Coupang Inc., a South Korean-based e-commerce company, has reported record-breaking revenue and operating profit for the second quarter of this year, despite challenges posed by rising inflation and economic slowdown affecting consumer spending.

The company has managed to stay in the black for the past four consecutive quarters since the third quarter of the previous year, inching closer to its first annual profit since its founding in 2010.

The New York Stock Exchange-listed company revealed on Wednesday that its second quarter revenue came to $5.84 billion, up 16 percent from a year earlier. When converted at the average exchange rate of 1,314.68 won per dollar, the revenue amounts to approximately 7.67 trillion won, setting a new historical high.

Operating profit also surged to $147.64 million, surpassing the $100 million mark for the second quarter in a row after crossing that threshold for the first time in Q1.

Last year, Coupang was unable to break out of its annual losses despite profits in the third and fourth quarters of last year, but this year it has been in the black since the first quarter. During the same period, net income also turned positive at $145 million.

In the second quarter of last year, Coupang reported $5.03 billion in sales, but had an operating loss of $67.14 million.

During a post-earnings conference call, Coupang emphasized its substantial growth despite the challenging economic environment. The company highlighted its expansion by saying its growth rate in the second quarter was 21 percent, while the retail market in South Korea grew by 3.1 percent during the same period.

The company underscored its success in various areas including its fast delivery business, as well as strong sales from fashion, beauty, open-market marketplace, and following day delivery business.

The active customer base also demonstrated strong growth, with the number of customers making at least one purchase in the second quarter reaching 19.71 million, up 10 percent from the same period last year. The revenue per customer also rose by 5 percent to $296.

Coupang’s free cash flow has also shown improvement. The cumulative 12-month free cash flow increased from the first quarter’s $451 million to $1.1 billion in the second quarter, accompanied by a margin rate of 5.1 percent, showcasing rapid profitability enhancement.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also exceeded $300 million for the first time, reaching $302 million.

Revenue from new businesses, including Coupang Play and Coupang Eats, international business, and fintech, was $156.3 million, down 2 percent from last year.

Coupang’s founder, Bom Kim, particularly emphasized the company’s commitment to small and medium-sized businesses during the conference call, saying “The growth rate of our Rocket Growth service is more than twice that of our overall business growth.” He also noted that Coupang’s logistics network is actively supporting the growth of SMEs.

Coupang’s Rocket Growth service provides small business owners on the platform with storage, packaging, inventory management, and rocket-speed delivery services.

Kim also highlighted the success of Coupang’s services in Taiwan, where the company is rapidly expanding its customer base. “We are delivering more than a million Korean products to Taiwanese customers, 70 percent of which are from Korean SMEs.”

Coupang’s recent initiatives such as the linkage between Coupang Eats and the Wow Membership discount program have also yielded significant results. The company expanded its Coupang Eats 10 percent discount benefit for Wow Membership members, leading to a more than 5 percent increase in market share for Coupang Eats in the covered regions.

“Membership-linked discounts are contributing to an increase in paid members,” Kim added.

Kim’s outlook for the company’s future growth was optimistic. “The domestic logistics market is expected to grow to $550 billion within three years, and Coupang’s market share is still in the single digits. Our journey has just begun.”

According to market tracker Euromonitor, Coupang’s market share in the logistics sector stood at 4.4 percent last year.