Coupang delivers first-ever annual operating profit of $473 million

Industry

Published: 28 Feb. 2024, 08:54 Updated: 28 Feb. 2024, 20:56

Coupang delivers first-ever annual operating profit of $473 million

A Coupang delivery truck [YONHAP]

Coupang, the U.S.-listed Korean e-commerce giant, reported its first-ever annual operating profit of $473 million in 2023, according to its earnings release published Wednesday.

Coupang's expansion of its product range, leveraging its customer base gained through offerings such as its superfast Rocket Delivery service and paid membership, has helped increase customer spending — and this, in turn, played a key role in Coupang's shift to profitability.

Following an operating loss of $1.5 billion in 2021, the company reduced its losses by 92 percent to $112 million in the following year. Since returning to black in the third quarter of 2022, Coupang has achieved six consecutive quarters of operating in the black.

Annual revenues reached $24.4 billion, a 20 percent increase compared to the previous year, surpassing market expectations of $24.2 billion.

Coupang's financial performance [YOO YOUNG-RAE]

Coupang's adjusted annual net profit mirrored its operating profit, reaching $465 million. This also marked the first time the company reported an annual net profit in the black.

Breaking down its quarterly performance, Coupang saw a 20 percent increase in fourth-quarter revenues, reaching $6.6 billion. Its operating profit surged by 51 percent to $130 million compared to the same period the previous year.

Market analysts had forecast earnings per share of $0.06 for the quarter, while Coupang exceeded expectations, reporting $0.58 per share.

The company's favorable financial performance was further underscored by an increase in consumer engagement and spending on its platform.

"The spend of every annual customer cohort is growing over 15 percent, even our oldest cohorts," said Bom Kim, founder and CEO of Coupang, during a conference call on Wednesday. Looking at Coupang's customer groups who began using the platform each year as "cohorts," the comment suggests that on average, each cohort spends 15 percent more on platform the following year.

The number of active customers, or the customers who have made at least one purchase during a specific period, grew by 16 percent on-year to 21 million in 2023. Each active customer spent an average of $312, a 3 percent increase from the previous year.

Coupang's WOW membership, its paid subscription service, reached 14 million members at the end of last year, marking a 27 percent increase from the previous year's 11 million.

Coupang spend per customer cohort [COUPANG]

"Our accelerating growth in revenues, active customers, and WOW members reflect our unrelenting focus on creating ‘wow’ for our customers across selection, price and service," said the Coupang founder and CEO. "This year we provided a record $3 billion in benefits and savings to our WOW members, providing relief amid high inflation."

"Customers are increasingly turning to WOW membership for its unparalleled value, from exclusive discounts on retail products and [Coupang] Eats, to free Dawn Delivery, to unlimited Play content streaming, and so much more," Kim added. "We’re committed to investing in even more savings and benefits for customers to make our WOW membership program indisputably the best deal on the planet."

"While we are pleased with the progress we made this quarter, we see even greater opportunity in front of us, as we represent just a single-digit share of the vast retail spend in Korea, and even smaller in Taiwan," said Coupang’s CFO, Gaurav Anand. "As we look toward 2024, we are more excited than ever about the opportunity to continue delighting our customers and driving long-term shareholder value."

While Coupang enjoyed success, domestic retail firms faced tough times last year due to sluggish consumer spending. Emart, despite achieving annual sales of 29.4 trillion won ($22 billion), fell short of Coupang's figures as the chain even experienced its first-ever loss. Likewise, Lotte Shopping trailed behind Coupang with sales of 14 trillion won and an operating profit of 508.4 billion won.

Challenges still await Coupang, however, such as competition with Chinese platforms such as AliExpress and Temu, along with ongoing disputes over supply prices with local manufacturers.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]