Coupang Inc. Posts $354.5 Billion Q1 Loss in “Earnings Shock”... 700,000 More Leave Coupang (Comprehensive Report 2)

Coupang Inc., the parent company of Korea's largest e-commerce platform Coupang, reported an earnings shock in the first quarter of this year. The company reflected compensation costs of over 1 trillion won due to a large-scale personal information leak in Korea at the end of last year, resulting in its largest quarterly operating loss in more than four years. As government authorities tighten their investigations and regulatory scrutiny focused on Coupang, Beomseok Kim, Chairman of Coupang Inc., stated, "The aftermath of the personal information incident continues to have an impact, so it will take time for a fundamental recovery."

A Coupang logistics center in downtown Seoul. Photo by Yonhap News

원본보기 아이콘

On May 6 (Korean time), Coupang Inc., which is listed on the New York Stock Exchange, announced that its consolidated operating loss for the first quarter was $242 million (approximately 354.5 billion won, based on an average exchange rate of 1,465.16 KRW), turning to a loss from an operating profit of $154 million (233.7 billion won) in the same period last year. This was the first quarterly loss in seven quarters since Q2 2024, and the largest quarterly loss in four years and three months since the operating loss of about 480 billion won in Q4 2021. The loss for this quarter alone exceeds half of Coupang Inc.’s annual operating profit last year (about 679 billion won).

During the same period, revenue grew 8% year-on-year to $8.504 billion (about 12.4597 trillion won). However, for the second consecutive quarter, revenue declined compared to the previous quarter, following Q4 last year (about 12.8103 trillion won). The first-quarter revenue growth rate was the lowest since Coupang's listing on the New York Stock Exchange in 2021, marking the first time it failed to achieve double-digit quarterly growth. The previous lowest quarterly revenue growth rate was 14%, recorded in Q4 last year.

These results fell far short of Wall Street analysts' expectations. Previously, Bloomberg had projected Coupang Inc.'s first-quarter revenue at $8.511 billion and operating loss at $39.27 million; actual revenue was slightly lower, and operating loss was more than five times higher than expected. Chairman Kim explained during the earnings conference call that "the impact of the one-time customer vouchers issued in response to the personal data breach was mostly reflected in the first-quarter results, and we also incurred costs for idle facilities and inventory maintenance." From January 15, Coupang provided customer vouchers worth about 50,000 won per person to 33.7 million customers affected by the data leak, totaling about 1.685 trillion won ($1.2 billion) over three months.

Profitability by business segment also declined. Revenue from the product commerce division-which includes Rocket Delivery, Rocket Fresh, Rocket Growth, and Marketplace-was $7.176 billion (about 10.5139 trillion won), up 4% year-on-year (5% at constant currency) but down from a 12% growth rate in Q4 last year. Adjusted EBITDA for product commerce ($358 million) decreased by 35% over the same period. Active customers for product commerce reached 23.9 million, a 2% increase year-on-year but a drop of about 700,000 from Q4 last year (24.6 million). Revenue per product commerce customer rose 3% to $300 (about 439,540 won) compared to last year ($294, about 427,080 won).

원본보기 아이콘

Revenue from growth businesses such as Taiwan Rocket Delivery, Farfetch, and Coupang Eats was $1.328 billion (about 1.9457 trillion won), up 28% from $1.038 billion (1.5078 trillion won) a year earlier (25% at constant currency). However, the adjusted EBITDA loss for growth businesses soared 96% to $329 million (about 482 billion won), compared with $168 million (about 244 billion won) last year.

Chairman Kim noted, "As of the end of April, we have recovered about 80% of lost Wow membership numbers, thanks to increased re-enrollment and new member sign-ups," but added, "It will take time for a full and fundamental recovery." He continued, "Efforts to build the business continue beyond recovery. We will expand the Rocket Delivery product range and introduce automation and artificial intelligence (AI) into logistics and delivery networks to enhance service quality and customer experience."

Beomseok Kim, Chairman of Coupang Inc. Photo by Coupang

원본보기 아이콘

Even if some "Talpang" members return and the one-time cost burden is offset, Coupang still faces significant challenges. After the personal information leak, more than ten government agencies-including the Ministry of Science and ICT, the police, the Fair Trade Commission, Seoul Main Customs, and the National Tax Service-have launched investigations into Coupang's overall business operations, and additional sanctions may follow depending on their findings.

Previously, Coupang turned profitable in Q3 2022 with 103.7 billion won in operating profit, but later received a fine from the Fair Trade Commission over algorithm manipulation, which was reflected in its results, leading to an operating loss of 34.2 billion won in Q2 2024.

Political circles and civil society groups are also urging for stronger regulatory oversight of Coupang. On April 29, the Fair Trade Commission announced the results of the 2026 designation of publicly disclosed business groups (large business groups), changing Coupang’s "same person" (controlling shareholder) designation from the Coupang corporate entity to individual Beomseok Kim.

Now that Chairman Kim is designated as the controlling shareholder, the government will be able to scrutinize the entire governance structure, including disclosures of transactions by himself, relatives, executives, and other related parties, as well as regulations on private interests and internal transactions. If Coupang fails to disclose the status of its affiliates or shareholder registers, this could lead to additional legal risks. An industry source remarked, "The government can now look into Coupang's governance, operations, and logistics-essentially all aspects of management-with a microscope. As a result, company management and business operations may become constrained."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.