Coupang's Kim Beomseok: "80% of Wow Members Recovered... Fundamental Recovery Will Take Time"

First-Quarter Earnings Conference Call
Ongoing Impact of Personal Information Breach
Expansion of Rocket Product Line and Enhanced AI Adoption

Coupang recorded an operating loss of 350 billion won in the first quarter due to the aftermath of a personal information breach, projecting that it will take time to normalize its performance. The company announced plans to improve both service quality and profitability by expanding its Rocket Delivery product offerings and adopting automation and artificial intelligence (AI) across its logistics and delivery networks.

On May 6, Korea Standard Time, Beomseok Kim, Chairman of Coupang Inc., said during the first-quarter earnings conference call, "While we are seeing a recovery in customer activity, such as the rejoining of Wow members, the impact of the personal information incident persists, and fundamental recovery will require time."

Beomseok Kim, Chairman of Coupang Inc. Photo by Yonhap News Agency

Regarding the trajectory of business recovery, Kim explained, "After hitting a low point in Product Commerce sales growth in January, we have seen monthly improvements year-on-year, with the recovery accelerating in February and March. This recovery is the result of our consistent focus, over the past decade since launching Rocket Delivery, on delighting customers through a wide selection of products, competitive prices, and best-in-class service."

Kim emphasized, "Despite the personal information incident, the majority of our existing customers and Wow members did not leave, and during this period, they increased their spending at a double-digit growth rate. As of the end of April, we have recovered about 80% of the previously lost Wow members through both returning and new sign-ups, and both joining and churn rates have returned to historically stable levels."

However, he noted, "Even though customer behavior is normalizing, it will take time for the year-over-year growth rate of the Rocket Delivery and other Product Commerce businesses to fully reflect a fundamental recovery. The temporary halt in growth caused by the incident continues to affect our comparative performance." He added, "The sales growth trend from January through March is ahead of previous years and is expected to continue improving throughout the year."

As for the factors behind declining profitability, Kim pointed to the issuance of compensation vouchers and network inefficiencies. He stated, "The impact of the compensation vouchers issued in response to the personal information incident was mostly reflected in the first quarter, with some effects carrying into the early part of the second quarter." Coupang provided vouchers worth approximately 1.685 trillion won (50,000 won per person) to 33.7 million customers. He continued, "As external factors led to lower-than-planned demand, idle facilities and inventory costs were incurred," and said, "Margin expansion on an annual basis is expected to resume starting next year."

The company is also maintaining its growth strategy. Kim noted, "There are still many products not yet available through Rocket Delivery," emphasizing the expansion of product selection through a combination of direct purchasing catalogs and the Rocket Growth (FLC) program. He further stated, "By introducing automation and AI across our logistics and delivery network, we are simultaneously enhancing service levels and reducing costs."

Coupang. Yonhap News

The company will continue investing in overseas and new businesses. Regarding operations in Taiwan, Kim explained, "Our proprietary last-mile delivery network, which guarantees next-day delivery, currently covers the majority of volume in Taiwan and is continuously expanding its reach." He added, "While we are still in the early stages of offering the full suite of Rocket Delivery services, customer response has been extremely positive, and cohort retention trends are similar to when we first launched Product Commerce in Korea." He emphasized, "This year, we will focus on establishing a world-class customer experience and growth foundation through long-term investments in network design, last-mile logistics, and supply chain improvements. Although this process will take time, it will be a key factor in determining our business competitiveness over the next several years." Kim also mentioned that Coupang Eats is showing a recovery trend similar to that of Product Commerce.

Meanwhile, regarding first-quarter results, CFO Gaurav Anand stated, "First-quarter revenue was $8.5 billion, up 8% on a constant-currency basis and in line with our guidance (5–10%)." Product Commerce revenue was $7.2 billion, up 5%, with the number of active customers at 23.9 million, a 2% increase year-on-year but a 3% decrease from the previous quarter.

Gross profit was $2.2 billion with a margin of 30.3%, down 1 percentage point year-on-year and 1.6 percentage points from the previous quarter. Adjusted EBITDA margin was 5%, down about 3 percentage points year-on-year. These results reflect short-term factors such as compensation vouchers and network inefficiencies. Revenue from growth businesses was $1.3 billion, a 25% increase, while adjusted EBITDA loss was $329 million. Selling, general, and administrative expenses were $2.5 billion, accounting for 29.9% of revenue, up 2.5 percentage points from the previous year.

Anand added, "We expect consolidated revenue to grow 9–10% in the second quarter, with a continued improvement trend throughout the year. However, due to the impact of the personal information incident, adjusted EBITDA margin is projected to decrease by 3–4 percentage points year-on-year."

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