Coupang Profitability Improvement 'Green Light'... Signal Fired for Stock Price Rebound (Comprehensive)

Q1 Revenue Hits Record 6.5 Trillion Won... Losses Also Down 29%

[Asia Economy Reporter Kim Cheol-hyun] Coupang has achieved a record-breaking quarterly revenue exceeding 6.5 trillion KRW. Most notably, it significantly reduced its loss scale. In the core product commerce sectors such as Rocket Delivery and Rocket Fresh, it recorded a positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the first time. Coupang has pursued an 'Amazon strategy' prioritizing economies of scale and ecosystem building despite losses, and doubts about profitability had been a cause of its stock price decline. Based on the recent results showing improved profitability, Coupang is expected to accelerate its growth pace.

On the 12th, Coupang announced that its Q1 revenue this year reached $5,116,686,000, which is 6.5212 trillion KRW. This represents a 22% increase compared to the previous year. When compared at a fixed exchange rate, sales increased by 32% compared to Q1 of last year. This surpassed the record of the largest revenue in Q4 of last year. Total gross profit was $1,043,406,000, up 42% year-over-year and 4.5% quarter-over-quarter.

◆Significant Reduction in Losses=Since its listing on the New York Stock Exchange last year, Coupang has continuously set new revenue records. Last year, it achieved annual revenue exceeding 22 trillion KRW. The problem was the scale of losses. Last year, net losses alone exceeded 1.8 trillion KRW.

This year’s Q1 results are meaningful in that they significantly reduced the net loss that had been a burden. Coupang’s net loss in Q1 this year was $209,294,000, equivalent to 266.745 billion KRW. This is a 29% decrease compared to the same period last year. Compared to the previous quarter’s net loss of $404,980,000 in Q4 last year, it is about half. Adjusted EBITDA loss improved by $42 million year-over-year, recording approximately $91 million.

Garab Anand, Coupang’s Chief Financial Officer (CFO), said, "Thanks to Coupang’s customer experience and service, which are unmatched by other companies, we have continuously recorded growth rates several times that of the overall e-commerce market, achieving 32% revenue growth year-over-year at a fixed exchange rate. We achieved the highest gross profit and gross profit margin since our establishment. We will continue to focus on operational excellence and customer base innovation to keep reaping results in the future."

◆Ongoing Challenge of Profitability Improvement=Coupang’s recent results are interpreted as the outcome of its efforts to improve profitability. Coupang could not afford to let losses accumulate any longer, especially to enhance shareholder value. On the 11th, Coupang’s stock closed at $9.67, down 8.6% from the previous day. Coupang’s IPO price was $35 per share, and it reached an intraday high of $69 on its first day of listing last year but has since been on a downward trend. The dominant opinion was that this was due to failure to prove profitability. This is why Coupang raised its Wow Membership fees and took other steps to improve profitability. Industry experts view the Q1 results showing profitability improvement as a critical turning point for future stock price trends.

Coupang’s performance is due to simultaneous increases in the number of users and the amount spent per user. The number of active customers who have made at least one purchase on Coupang reached 18.11 million, a 13% increase year-over-year. The average purchase amount per active customer also rose 8% year-over-year to $283.

Through this, Coupang recorded a positive adjusted EBITDA for the first time in its core product commerce sectors such as Rocket Delivery and Rocket Fresh. Product commerce net sales were $4.9 billion, up 20% year-over-year and 30% at a fixed exchange rate, achieving a growth rate three times that of the Korean product e-commerce market, according to Coupang. This sector improved by $72 million year-over-year and $128 million quarter-over-quarter, achieving adjusted EBITDA profitability in Q1. Growth business net sales also rose 65% year-over-year and 79% at a fixed exchange rate to $181 million. Adjusted EBITDA margin showed significant improvement, increasing 6 percentage points year-over-year and 54 percentage points quarter-over-quarter.

Kim Beom-seok, Chairman of Coupang, said, "We were able to increase profit margins through various process improvements, automation, and supply chain optimization. We expect to continue recording profits in the product commerce sector and the company will continue to grow rapidly."

This content was produced with the assistance of AI translation services.