Coupang Inc posted a record operating loss in the second quarter, weighed down by a massive regulatory fine tied to a data breach, but the e-commerce giant said sales and customer numbers have recovered to pre-incident levels — a sign, its chairman said, that the worst may be over. Bom Kim, chairman of Coupang Inc, said customer spending had reached an all-time high and expressed confidence in a revenue and profit rebound. New business ventures, including dawn delivery in Taiwan and an expansion of Coupang Eats into non-food categories, are adding to that optimism.
Returning customers lift sales; active users near all-time high
Kim spoke Wednesday on a second-quarter earnings conference call, saying customers who had left following a data breach late last year were returning and driving sales growth. Second-quarter consolidated revenue rose 4 percent year-on-year to $8.86 billion, closing in on the all-time quarterly high of $9.27 billion set in the third quarter of last year. In won terms, revenue reached 13.3 trillion won — a record on a won basis. The result also ended three consecutive quarters of declining sales stemming from the breach.
Kim said revenue grew 10 percent year-on-year on a constant-currency basis, describing the result as in line with the company's outlook. Revenue from the core Product Commerce segment — which covers Rocket Delivery, Rocket Fresh, Rocket Growth and the marketplace — came in at $7.42 billion, up 8 percent year-on-year on a constant-currency basis.
Revenue per active customer in Product Commerce was approximately $301, down 2 percent in dollar terms year-on-year but up 5 percent on a constant-currency basis. The number of active Product Commerce customers reached about 24.7 million, up 3 percent both year-on-year and quarter-on-quarter.
Kim said the vast majority of customers had not changed their spending habits and that their outlays were at record highs. "The customers who reduced spending are a small group, and most customers have returned," he said. Customers who churned following the incident have come back and fully restored their prior spending levels, the company said. Notably, the number of Wow membership subscribers — the paid loyalty tier that represents Coupang's core customer base — has surpassed pre-incident levels, and new customer additions have pushed total membership to near-record highs.
Kim said total customer spending, excluding those who left during the incident and have not yet returned, grew 16 percent year-on-year — close to the 17 percent Product Commerce growth rate recorded in the second quarter of last year, before the incident. "The gap between the 16 percent growth rate and the reported Product Commerce growth rate of 8 percent is primarily due to the spending shortfall from customers who have not yet returned," he said, adding that the company would continue working to win them back.
Record loss, but 'we did not waver'
A 624.6 billion won fine levied by the Personal Information Protection Commission in June over the data breach translated into a second-quarter operating loss of $556 million, or about 835 billion won — the largest since Coupang's 2021 listing and a swing to a loss from a profit in the same period last year. The loss also exceeded the previous quarterly record of $515 million set in the second quarter of 2021. Excluding the fine, Coupang Inc said the operating loss would have been $146 million, or about 219.2 billion won.
The fine, combined with elevated marketing costs to stem customer attrition, pushed second-quarter selling, general and administrative expenses up 26 percent year-on-year to $3.05 billion. Total operating expenses for the quarter came to $9.41 billion, exceeding revenue. Adjusted EBITDA fell 62 percent year-on-year to $163 million, from $428 million a year earlier.
Chief Financial Officer Gaurav Anand attributed the results to a temporary spike in marketing spending, investment in growth businesses, and a cost structure calibrated to a demand curve set before the data incident. "The increased marketing and promotional spending is not a structural change — it is a short-term strategic investment to accelerate growth," he said.
Kim said the company was working through the margin setback. "Last year was a test, and we did not waver," he said. He cited three trends as the basis for his confidence: the oldest customer cohort, acquired 15 years ago, continues to spend at roughly 10 times its first-year level; cohorts acquired since then spend at even higher rates; and new customers keep joining.
Kim cautioned that the recovery in the second half of the year may be uneven due to seasonal factors such as holidays, and said he expected the company to return to pre-incident growth rates and margin structures from next year onward. In a regulatory filing with the US Securities and Exchange Commission on Wednesday, Coupang Inc said it would recognize a $246 million loss in the third quarter related to a fire at its Incheon Seoknam-dong logistics center. A $208 million additional tax assessment received from the National Tax Service in June will also be reflected in future results.
Anand guided for third-quarter consolidated revenue growth of 8 to 9 percent on a constant-currency basis. He projected that the third-quarter adjusted EBITDA margin would narrow by 3 to 4 percentage points year-on-year. For Product Commerce, he said the adjusted EBITDA margin was expected to approach pre-incident levels by mid-next year. For the growth segment, he forecast an adjusted EBITDA loss of between $950 million and $1 billion for the full year, reflecting investment in the Taiwan retail business.
Kim said Coupang's wallet share — its penetration of total Korean retail spending — remains low compared with global peers in markets such as the United States, and pledged to attract new demand and customers by expanding Rocket Delivery. On AI, he said the technology was delivering a multiplier effect, and that the company would apply it to the customer experience to improve service quality, boost productivity and reduce service costs.
Dawn delivery comes to Taiwan; Coupang Eats moves into non-food
Coupang is stepping up its logistics capabilities in Taiwan, a market it is developing as a second home market and key growth engine. Having already established the only seven-days-a-week, next-day delivery service on the island, the company recently launched dawn delivery there as well, drawing on expertise built in Korea. It plans to expand the range of products eligible for Rocket Delivery in Taiwan to maximize profitability in the market.
Kim said it took four years after Coupang began building its logistics network in Korea to launch dawn delivery there, but Taiwan achieved the same milestone in just one year. "We inherited the technology and process innovations, design, systems, operating manuals and delivery playbook built over more than a decade in Korea," he said. He added that as early supply chain inefficiencies are resolved and transaction volumes grow, economies of scale will kick in and Taiwan's profit-and-loss trajectory will follow the path Coupang pioneered in Korea.
Coupang Eats, facing saturation in a food delivery market that has grown more than fourfold since the service launched, has begun delivering non-food items. In Japan, the company is in an early investment phase to build out Rocket Now, its on-demand delivery service. The growth segment — which encompasses Taiwan's Rocket Delivery, Farfetch and Coupang Eats — posted second-quarter revenue of $1.43 billion, up 20 percent year-on-year, or 24 percent on a constant-currency basis.
The growth segment's adjusted EBITDA loss narrowed 7 percent year-on-year to $219 million. Anand noted that the segment's gross margin stood at 15.8 percent and said the business "continues to demonstrate a path toward sustainable profitability," with gross margins expanding both year-on-year and quarter-on-quarter.
Kim said the company's goal from the outset has been to create an experience so compelling that customers ask themselves, "How did I ever live without Coupang?" "We have the opportunity to meet that standard with every product and service we add, and every market we enter," he said.
Operating cash flow for the trailing 12 months totaled $1.4 billion, down $484 million year-on-year. Free cash flow came in at $105 million, a decline of $679 million over the same period. Second-quarter free cash flow was $51 million, down 79 percent year-on-year, reflecting reduced profitability from the data breach and higher investment in growth businesses.
Coupang Inc said it repurchased approximately 23.2 million Class A common shares for about $459 million during the second quarter. The company had announced a $1 billion share buyback program as part of its capital allocation strategy when it reported first-quarter results. Coupang Inc said it would "continue to flexibly allocate capital whenever we identify opportunities to generate long-term returns for shareholders."
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