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Coupang Q3 FY2023: Revenue Up 21%, Profitability Improves

Source: Coupang

Seoul, South Korea - Coupang (NYSE: CPNG) announced its third quarter 2023 results yesterday, showing continued revenue growth and improved profitability metrics. 

Total net revenue increased 21% year over year to $6.2 billion, or 18% growth on a constant currency basis, excluding the impact of foreign exchange. 

Why It Matters

Coupang, which has found traction in the last-mile delivery and e-commerce market in South Korea, has extreme critics and supporters. 

Their earnings call is an opportunity to look at South Korea, the fifth-largest eCommerce market in the world in terms of market size. 

The Key Points

  • Revenue growth was driven by a 14% increase in active customers to over 20 million, coupled with a 7% increase in total net revenue per active customer. Accounting changes related to the recognition of fulfillment and logistics center (FLC) revenue positively impacted growth by an estimated 635 basis points.
  • Gross profit increased 27% to $1.6 billion, with gross margin expanding 113 basis points year-over-year to 25.3%. Coupang said 140 basis points of the margin improvement was due to the FLC, as mentioned earlier, accounting changes.
  • Net income increased slightly by 1% to $91 million, while earnings per share were flat at $0.05. 

In Coupang's core Product Commerce segment, which includes its domestic eCommerce business, net revenue increased by 21% to $6 billion. 

Adjusted EBITDA for this segment more than doubled to $399 million, with the margin increasing 190 basis points to 6.7%. 

The Developing Offerings segment, which includes international expansion, food delivery, video streaming, and financial services, grew net revenues 40% year over year to $218 million. 

As the company expected, this segment remained unprofitable, with a negative adjusted EBITDA of $161 million due to ongoing investments.

What They Say:

CEO Bom Kim said a

"relentless focus on customer experience and operational excellence" for the solid quarterly results marks the third consecutive quarter of accelerating revenue and customer growth.

What Comes Next?

Coupang is aggressively expanding its delivery infrastructure and product selection in 2023. 

Its active fulfillment and logistics centers surpassed 100 in the third quarter, while it also launched Rocket Fresh, a same-day grocery delivery service, in major South Korean cities.

Looking ahead, Coupang appears well-positioned to capitalize further on Korea's trillion-dollar e-commerce market, especially as it enters the key holiday season. 

With increasing profitability and $5.3 billion in cash reserves, the company has the financial flexibility to continue gaining market share against competitors such as Naver and Shinsegae.