'Coupang's Kim Beom-seok Achieves First Annual Profit: "Delivering 'Wow' Moments to Customers... Foundation for Growth"'

Founder Kim Beom-seok Leads Conference Call
"Rocket Delivery, Invested for Years, Bears Fruit"
"Taiwan Local Customers and Sales Doubled in Second Half of Last Year"
"Farfetch Acquisition to Transform Luxury Customer Experience"

Coupang founder Kim Beom-seok said on the 28th, "Providing customers with 'wow' moments across products, prices, and services has become the foundation for long-term growth and profitability."

On the morning of the 28th, during Coupang's 2023 Q4 earnings conference call held online, Kim emphasized, "We will persistently dedicate ourselves to efforts for the 'customer wow experience' and create a world where people ask, 'How did we live without Coupang?'"

On the same day, Coupang released its 2023 Q4 earnings report, announcing that its annual operating profit for last year reached $473 million (approximately 617.4 billion KRW). This marked Coupang's first-ever annual profit since its founding in 2010. During the same period, revenue was recorded at $24.383 billion (approximately 31.8298 trillion KRW), a 20% increase compared to the previous year. This was also the first time Coupang achieved annual revenue in the 30 trillion KRW range.

Beom-seok Kim, founder of Coupang.
[Photo by Coupang]

Bom Kim, Chairman of the Board at Coupang.
[Photo by Coupang]

As of the end of last year, Coupang's active customers totaled 21 million, a 16% increase from 18.115 million in the same period the previous year. Active customers refer to the number of customers who purchased at least one product in a quarter. The number of members in Coupang's paid membership program, 'Wow Membership,' was about 14 million at the end of last year, up 27% from 11 million at the end of 2022.

Coupang attributed last year's strong performance to an increase in customers using services such as Rocket Delivery, Rocket Fresh, and Rocket Growth despite a slowdown in the distribution market and economic recession. The doubling of sales in growth businesses such as the Taiwan market, Coupang Eats, and Coupang Play compared to the previous year was also positive. Founder Kim explained, "Coupang's market share in the retail markets of Korea and Taiwan is very low, and capturing the enormous potential in these regions is our greatest future opportunity and priority."

He also emphasized that these results were achieved through large-scale investments in Coupang's proprietary logistics network, represented by 'Rocket Delivery.' Kim said, "Since its inception, Coupang has challenged initiatives to fundamentally create new capabilities. Rocket Delivery is a bold attempt requiring years of investment, persistence, and patience to generate meaningful free cash flow for the business. As success followed, the business gradually expanded, breaking the trade-off structure and creating a customer 'wow' experience."

With the increase in customers, cash flow is also positive. Kim stated, "Providing customers with 'wow' moments across products, prices, and services has become the foundation for long-term growth and profitability," adding, "We have generated free cash flow that forms the basis of long-term shareholder value." He emphasized, "Coupang's active customer count in Q1 started with a 5% year-over-year growth, while Q4 growth was 16%." Coupang explained that a 16% year-over-year customer growth in a single quarter is the highest in the past two years.

Kim also explained, "All annual cohorts, including the oldest cohort, have increased spending by more than 15%." This means that each year's customer group increases their spending by an average of 15% the following year. Coupang CFO Gaurav Anand said, "There is still a tremendous opportunity to continuously provide customers with the lowest prices on new product categories and a wow delivery experience," adding, "The perception that Wow Membership provides tremendous value to members is expanding."

Regarding the reason for generating high levels of cash flow, Kim explained, "It is because we have challenged initiatives for fundamentally new capabilities." He said, "Before the launch of Rocket Delivery, we had never managed inventory, opened fulfillment centers, or built a nationwide logistics delivery network with customized technology for same-day delivery. We are now enjoying the benefits of the success of Rocket Delivery, a new capability initiative, and have been able to expand influence through incremental initiatives such as dawn delivery by leveraging vast technology, processes, and knowledge."

Taiwan Rocket Customers Doubled in the Second Half of Last Year... Expanding Wow Membership Benefits

Coupang supports entry into the Taiwan market.
[Photo by Coupang]

Regarding the Taiwan market, which Coupang entered in 2022, Kim evaluated it as "demonstrating potential in terms of growth, scale, and influence." Coupang provides Rocket Delivery and direct purchase services in the Taiwan market. He emphasized, "Since the launch of Rocket in Taiwan in October 2022, local customers and sales doubled over two quarters (Q3?Q4) last year, showing an astonishing growth rate. This exceeds the growth rate experienced in Korea during the same period after Rocket's launch." He expressed confidence that based on Korea's technology and know-how, faster profitability can be achieved in Taiwan.

Kim also emphasized that Coupang's customers are expanding their spending through various services. For example, after launching a discount program for Wow members on the delivery app 'Coupang Eats,' order volume doubled. He said, "We have continuously secured new customers every month and maintained a high customer retention rate," and predicted, "As one-time investments expire, Coupang Eats will lead to future cash generation."

One of the Wow Membership benefits, the online video service (OTT) Coupang Play, is also showing growth. He said, "Coupang Play was the most downloaded app across all categories on iOS and Android in Korea from 2022 to 2023," adding, "It provides customers with enjoyment by producing unprecedented live sports broadcasts directly in Korea, not just simple relay broadcasts." He emphasized, "Some of the most streamed sports live broadcasts in Korea over the past two years were all produced and exclusively streamed by Coupang Play."

"Farfetch Acquisition, the Best Opportunity... Will Transform Luxury Fashion 'Customer Experience'"

The homepage of Farfetch, the world's largest luxury fashion platform, whose acquisition was announced by Coupang Inc., Coupang's parent company, on the 19th.
[Photo by Coupang]

Kim also shared his stance on the recent acquisition of the global luxury e-commerce platform 'Farfetch.' He said, "We found a rare opportunity to acquire the industry's top service with a $4 billion Gross Merchandise Value (GMV) by investing $500 million," adding, "Farfetch has opened a path to self-finance without additional investment beyond the already announced funds."

He added, "I hope to share stories in a few years about how Coupang transformed the customer experience in luxury fashion through Farfetch and embedded Coupang's strategic value. However, it is too early to have such conversations today, and it will be a prudent financial decision presenting multiple options to shareholders as an attractive investment."

Last year, sales from growth businesses such as Coupang Eats, Taiwan, and Coupang Play exceeded $789 million (1.029 trillion KRW), surpassing 1 trillion KRW. However, due to increased investments, the EBITDA loss of growth businesses was $466 million (608.3 billion KRW), a 107% increase compared to the previous year. Regarding this, CFO Anand said, "Excluding losses related to Farfetch, we expect an adjusted EBITDA loss of about $650 million in the growth business segment in 2024," adding, "We do not plan additional investments beyond those already announced."

Anand also forecasted that Coupang's future growth rate would be similar. He said, "2023 ended with high growth, and future growth rates are expected to be similar to the range of growth over the past one to two years."

Meanwhile, Kim said, "Last year was a year of significant expansion in free cash flow per share," adding, "The number of shares increased by only 1.3%, and the dilution rate has been maintained at about 1% annually for three years since becoming a listed company, including the year of listing." This implies that the per-share value did not decline due to the small number of newly issued shares.

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