Coupang on smooth ride for first profitable year

New services such as Coupang Eats, Coupang Play drive upbeat earnings; Taiwan emerges as strategic market

Bom Kim, founder and CEO of Coupang (Coupang)

South Korean e-commerce giant Coupang posted record second-quarter earnings amid the thriving performance of its new business initiatives -- extending its dominant run for four consecutive quarters since turning a profit for the first time in 2022.

During its earnings call Wednesday, the New York-listed company said it posted record quarterly sales for the April-June period at $5.8 billion, for on-year growth of 16 percent.

Operating profits were tallied at $147.6 million, showing a 42 percent on-year growth. Coupang's gross profit, or the financial gain of a company after subtracting the costs needed to manufacture and distribute its goods, increased 32 percent to $1.5 billion from a year ago.

Net income was logged at $145 million, logging an improvement of $221 million over last year.

Coupang added its adjusted earnings before interest, tax, depreciation and amortization, or EBITDA -- a financial metric to reflect a company's operating cash flow -- stood at $300 million, a 3.8 percent on-year increase.

The number of its active customers, or users who bought at least one product from Coupang in the second quarter, increased by 10 percent from the same period last year, to 19.7 million. Total net revenues per active customer also increased on-year by 5 percent, to $296 per person.

According to Bom Kim, founder and CEO of Coupang, its new business initiatives such as Coupang Eats, Coupang Play, advertising services and overseas businesses, or what Coupang dubs "developing offerings," reaping fruitful results majorly contributed to ramping up the company's financial results.

"Our emerging merchant services like advertising and fulfillment and logistics by Coupang, or FLC, are growing more than twice as fast as our overall business," Kim said on the conference call.

He added in the regions where Coupang newly launched its Coupang Eats service, the company has seen an 80 percent increase in the number of its members of Wow -- Coupang's paid membership -- availing themselves of the Coupang Eats service. He added the company also saw a 20 percent increase in average spending per Wow member in the Coupang Eats service following the launch of Coupang Eats in new regions.

According to Kim, Coupang Eats is generating value across the company's ecosystem, with customers who purchase products from Coupang Eats having statistically significantly higher spending in e-commerce and higher retention of the Wow membership.

"Coupang Eats has the potential to accelerate the flywheel for our business as a whole," he said.

Kim said the Taiwanese business is another investment reaping profitable results.

He said during the second quarter, in the 10 months since Coupang launched Rocket Delivery, Coupang's financial results in Taiwan have scaled up faster than Rocket Delivery in Korea did during its first 10 months of operation.

He further stated that the company has future plans to invest at a higher level in Taiwan this year. Coupang stated that no concrete numbers regarding the investment can be given as of now.

"Our bar for new initiatives is high. We’ve exited investments that didn’t meet our internal thresholds and deferred countless others that rank below our most attractive opportunities. So far, Taiwan is leaping over that bar. In view of that progress, we will invest at a higher level in Taiwan this year," Kim said via the conference call.

"Our updated estimate of investment in developing offerings, including (our business in) Taiwan, Coupang Play and Coupang Eats, will be around $400 million in 2023. We expect our investment in developing offerings to remain generally at these levels," he said.

By Lee Yoon-seo(yoonseo.3348@heraldcorp.com)