Coupang posts third straight quarterly loss; founder targets mid-2027 recovery

Coupang Inc, the US-listed parent of South Korean e-commerce giant Coupang, swung to an operating loss in the third quarter as sales climbed past 14 trillion won but a fire at its Incheon logistics center and lingering fallout from a data breach weighed heavily on results. The quarter's loss was the second-largest in the company's history, and cumulative losses for the first three quarters of this year have now approached 2 trillion won.

In a quarterly earnings report filed with the US Securities and Exchange Commission on Tuesday (local time), Coupang Inc said it recorded an operating loss of $450 million (642.3 billion won) for the third quarter. The won figure is based on the average won-dollar exchange rate of 1,427.52 won for the quarter. The company had posted an operating profit of $162 million in the same period last year.

Third-quarter sales rose 7 percent year-on-year to $9.96 billion, from $9.27 billion a year earlier. The net loss for the quarter came to $501 million, compared with a net profit of $95 million in the same period last year.

Coupang Inc had already recorded operating losses of 354.5 billion won in the first quarter and 835 billion won in the second quarter this year, following a personal data breach late last year. The first-quarter loss reflected the company's own compensation program for affected customers, while the second-quarter figure included a fine imposed by the Personal Information Protection Commission. Although the third-quarter loss was smaller than the second quarter's, it was still the second-largest quarterly loss on record — roughly equal to the company's full-year operating profit of 679 billion won last year.

The cumulative operating loss for the first three quarters of this year stands at 1.83 trillion won, approaching the combined operating profit of 1.9 trillion won the company generated over the three years from 2023 to 2025 — the period when Coupang first turned consistently profitable after more than a decade of investment. The figure also surpasses the 1.71 trillion won operating loss the company posted in 2021, its worst annual result ever.

The cumulative net loss for the year has reached roughly 1.96 trillion won, with net losses of 389.7 billion won in the first quarter and 856 billion won in the second. Both the third-quarter operating loss and net loss include $248 million (about 354 billion won) in costs related to the Incheon logistics center fire that broke out in July. Even stripping out that one-time charge, the company recorded an operating loss of 288.3 billion won — the largest underlying quarterly loss since the fourth quarter of 2021, when the reported operating loss that quarter was 469.2 billion won.

One key driver of the widening losses is a deterioration in profitability at Coupang's core product commerce segment, which covers Rocket Delivery, Rocket Fresh, Rocket Growth and its marketplace. Third-quarter product commerce sales rose 5 percent year-on-year in dollar terms — or 8 percent in won terms — to $8.37 billion. However, adjusted EBITDA for the segment fell 45 percent over the same period to 549.5 billion won, with the margin dropping 4.24 percentage points to 4.6 percent.

Coupang Inc Chairman Bom Kim said on the third-quarter earnings conference call that the company is targeting a recovery in product commerce profitability by mid-next year. "We are on track as planned, and the underlying customer behavior patterns remain solid," Kim said. "Once we move past the period reflecting these impacts, both growth rates and margins will recover to past levels."

Kim attributed the margin compression to fixed-cost pressure from supply chain disruptions and a delayed demand recovery, as well as higher marketing spending to win back churned customers. "None of these items represent structural issues," Kim said. "Some are short-term investments the company has chosen to make, and the rest are temporary headwinds."

Active customers in the product commerce segment grew 2 percent year-on-year to about 25.2 million, from about 24.7 million a year earlier. Revenue per customer rose 6 percent to 473,930 won ($332), up from 447,730 won ($323) in the same period last year.

Kim said most customers who stopped using Coupang following the data breach returned during the second quarter, though not all have fully come back. Returning members have restored their spending to prior levels and are on an upward trend compared with a year ago, Kim said. "Members who never left are also spending at record levels," Kim said. "New member inflows are more than enough to fill the membership gap, but it takes some time for their spending to ramp up."

Wow membership subscribers hit an all-time high in the quarter, driven by returning members and new sign-ups, Kim said. "We continue to invest in expanding the value proposition for Wow members," Kim said. "Our goal is to make Wow membership the highest-value membership program across all of retail."

Kim said the number of Rocket Delivery product items grew at a solid double-digit pace in the quarter, and that Rocket Fresh volume in the third quarter expanded at more than twice the overall growth rate of the product commerce segment. Kim also highlighted the importance of investment in driving sales growth, pointing to AI cameras and automated bagging systems recently introduced in the company's packaging operations.

Coupang Inc plans to step up investment in its growth businesses, which include Rocket Delivery in Taiwan, Farfetch and Coupang Eats. The segment posted third-quarter sales of $1.59 billion, up 23 percent from $1.29 billion a year earlier — a 27 percent increase in won terms.

Chief Financial Officer Gaurav Anand said the company had previously guided for a full-year loss of $905 million to $1 billion, and is now raising the upper end of that range by $50 million to $100 million. "This is primarily driven by infrastructure buildout in Taiwan, where we are accelerating investment to support a differentiated delivery experience and expand the supply chain," Anand said. Wow membership subscribers in Taiwan more than doubled year-on-year.

Meanwhile, Coupang Inc said it repurchased 12.7 million Class A common shares for $201 million in the third quarter.