[BizHanKook] In just nine months this year, Coupang has incurred losses nearly equivalent to the total operating profit it generated over the past three years. While revenue and the number of customers have continued to grow, profitability has deteriorated rapidly due to a series of setbacks, including follow-up costs from a personal data breach, government fines, and a fire at a logistics center.
According to the third-quarter earnings report released on the 4th by Coupang Inc., the U.S.-listed parent company of the Korean subsidiary Coupang, revenue reached $9.962 billion, a 7% increase compared to the same period last year. In Korean won, this translates to 14.2209 trillion won, marking the first time quarterly revenue has exceeded 14 trillion won. However, the company posted an operating loss of $450 million, or approximately 642.3 billion won. In the same period last year, the company had recorded an operating profit of $162 million. The net loss for the period was $501 million, or approximately 715.1 billion won.
Coupang has reported operating losses for three consecutive quarters, following a loss of 354.5 billion won in the first quarter and 835 billion won in the second. The cumulative operating loss for the first three quarters stands at 1.8318 trillion won, which is approximately 96.5% of the total 1.8987 trillion won in operating profit generated by Coupang Inc. over the three-year period from 2023 to 2025.
Large-scale one-time factors heavily influenced the increased losses this year. In the first quarter, the company posted an operating loss of 354.5 billion won, attributed to customer compensation vouchers following a personal data breach and subsequent customer churn. The second-quarter operating loss of 835 billion won was largely driven by the impact of fines imposed by the Personal Information Protection Commission. In its SEC filing, Coupang Inc. stated that excluding the $410 million in administrative fines, the operating loss would have been $146 million. In the third quarter, a fire at the Incheon logistics center weighed on performance. Coupang reflected $248 million, or approximately 354 billion won, in fire-related losses, including damages to inventory, facilities, and seller stock.
However, even excluding the fire-related costs, the third-quarter operating loss was $202 million, or approximately 288.2 billion won. Given that the company remained in the red in the second quarter even after excluding the fines, it is difficult to attribute the recent losses solely to one-time expenses.
Profitability in the core business has also weakened. The cost of revenue in the third quarter was $7.401 billion, accounting for 74.3% of total revenue, up 3.7 percentage points from 70.6% in the same period last year. Selling, general, and administrative expenses also rose 17.7% year-on-year to $3.011 billion. Revenue from the flagship product commerce business was $8.374 billion, a 5% increase from the previous year, or 8% when excluding foreign exchange impacts.
On the other hand, the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for product commerce was $385 million, a 45% decrease from $705 million the previous year. The margin also fell from 8.8% to 4.6%. Even excluding fire-related costs, the gross profit for product commerce decreased compared to the same period last year, indicating that while revenue grew, profitability moved in the opposite direction.
The scale of the business has not shrunk. In the third quarter, active customers in product commerce reached 25.2 million, a 2% increase from the same period last year. Revenue per customer rose 3% to $332 (or 6% based on constant currency). During the third-quarter earnings conference call, Coupang Inc. Chairman Bom Kim cited supply chain disruptions, fixed cost burdens due to lower-than-expected volume, and marketing investments to win back lost customers as factors for the worsened profitability. Kim emphasized that these factors are "not structural."
Kim stated, "We expect product commerce EBITDA margins to return to pre-incident levels by the middle of next year," adding that "the third quarter was the bottom for margins." He also noted, "We have already begun to scale back the marketing expenses that were increased to re-acquire customers."
Despite the burden on profitability, Coupang is continuing to invest in growth businesses. Revenue from growth businesses—including Taiwan, Coupang Eats, and Farfetch—reached $1.588 billion in the third quarter, a 23% increase year-on-year, or 27% at constant currency. The adjusted EBITDA loss for growth businesses was $269 million, a slight reduction from the $292 million loss recorded the previous year.
In Taiwan, in particular, the number of WOW membership subscribers more than doubled compared to the same period last year. Coupang has decided to further expand local logistics centers and supply chain investments. Consequently, the company has raised its annual loss forecast for growth businesses. While the previous outlook was between $950 million and $1 billion, Coupang indicated that it could raise the upper end of that range by an additional $50 million to $100 million due to investments in Taiwan.