Coupang loses less money in first quarter as costs drop

Coupang office in Songpa District, southern Seoul [NEWS1]

Coupang reported a net loss of $209.3 million in the first quarter, compared to a $295 million net loss in the year-earlier period.

On a per share basis, the loss was $0.12, beating the Wall Street consensus estimate of $0.28.

Coupang, founded in 2010, has never reported a profit as it spends and invests to achieve growth in a highly competitive market. As of the end of the first quarter, it had lost $5.9 billion on a cumulative basis.

Revenue in the first quarter was a record $5.1 billion, up 22 percent on year but lower than the consensus of $5.25 billion. Compared to the previous quarter, the figure grew 0.98 percent, indicating a flattening of sales growth.

The company's operating loss was $205.7 million, compared to a loss of $267.3 million in the first quarter of 2021.

Coupang reported an adjusted Ebitda — which factors out interest, income tax, depreciation, amortization and other expenses — of $2.88 million in the product commerce segment — e-commerce and grocery deliveries.

The company expects this number to remain positive.

Coupang says the figure was positive due to improvements in capacity utilization and supply chain optimization in its e-commerce business. It said the effects are seen clearly now due to greater economies of scale.

"Covid-19 costs and additional labor costs paid to acquire workers during the global labor shortage made the company struggle with profitability in the second half of 2021," said Park Eun-kyung, an analyst at Samsung Securities. "Considering it was able to solve the labor problem with technology automation and because Covid-19 costs will completely be lifted in the future, the company will easily be able to continue to improve adjusted Ebita."

Coupang increased the monthly subscription fee for Wow membership — which provides free Coupang deliveries and access to videos on Coupang Play — from the previous 2,990 won to 4,990 won for new users starting Dec. 30 last year. Existing users can still enjoy the service for 2,990 won a month, but will also have to pay 4,990 won starting June.

"There continues to be lots of unpredictable variables related to the reopening in the short term, but the long term trajectory is very clear to us," CEO Kim Bom said. "In any scenario, we will continue to grow significantly faster than the e-commerce segment and continue to gain share across all of our categories."

CFO Gaurav Anand said innovations and operational shifts will to protect profit margins and keep the company on a path toward overall profitability.

Adjusted Ebitda in the developing offerings segment — Coupang Eats, Coupang Play, fintech and investments in international expansion — was a negative $93.7 million.

The number of active customers rose 13 percent on year to 18 million. On a quarterly basis, the figure grew 0.98 percent.

Net revenue per active customer was $283, up 8 percent on year.

The company said during the earnings call that it will continue to invest in infrastructure, saying the first quarter results were helped by large investments in the business.

Coupang shares were sold in an initial public offering last year at $35.00 and opened on Mar. 11 at $63.50. Results were released on Thursday after the market close. Shares closed Wednesday at $9.67, down 8.6 percent from the previous day and down 84.8 percent from the debut price.

In after hours trading after the release of results, the shares rose more than 18 percent.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]