Coupang extends winning streak with record earnings

South Korea’s e-commerce giant Coupang said Wednesday it clocked in record quarterly earnings despite a general slowdown in the retail market, continuing its winning streak for three consecutive quarters since turning to black for the first time in 2022.

In its first-quarter earnings call, the US-listed company said it logged record quarterly sales of $5.8 billion in the first three months of this year, seeing on-year growth of 13 percent.

Operating profits and net income were tallied at $106 million and $90 million, respectively, reporting a surplus for the third consecutive quarter after logging $187 million in operating losses and $190 million in net loss during the same period last year.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) -- which functions as a proxy for the company’s financial health -- stood at $241 million with a margin of 4.2 percent, a 6 percent on-year increase.

Coupang added that the number of its active customers -- or the number of customers who had bought a product at least once during the quarter -- exceeded 19 million, up 5 percent on-year. Per-capita customer sales also rose by 8 percent to $305 during the first quarter.

Bom Kim, founder and CEO of Coupang said that Coupang's continued growth is mainly attributed to the company's tactic to target the structure of Korea's retail market and its strategy to aggressively expand its Rocket Delivery service with its newly launched "Rocket Growth."

"(I found that) according to one study, Korean consumers had access to less than 10 percent of the offline retail space per capita enjoyed by their US counterparts," said Kim.

"We continue to defy the broader slowdown in the retail market because we offer customers something very different from the limited assortment and high prices (Korean consumers) see in offline retail," he added.

Kim further said that Coupang's introduction of "Rocket Growth" -- a one-stop service for storage, packaging and delivery for Coupang's small and medium-sized business vendors -- contributed greatly to the company's performance, with the service cutting costs for sellers and attracting more transactions by widening the range of goods sold.

During the first quarter, sales generated by Rocket Growth increased by some 90 percent from a year ago and took up 7 percent of Coupang's total revenue and 4 percent of total units sold.

For its plans going forward, Kim stressed that Coupang would attempt to incrementally expand investments in its Taiwan business and scale up discount benefits for its Wow members that use Coupang Eats in order to facilitate consumer transactions.

“We like what we’ve been seeing in Taiwan, which is showing the same signs of transformative potential that we saw in Korea when we launched Rocket Delivery," said Kim.

However, he added that since the company's Taiwanese business is still in its early stages, Coupang will remain a disciplined capital allocator, investing more only if the underlying metrics validate Coupang's convictions.

"Despite our rapid growth, our penetration in all categories, including consumables, remains low," said Kim.

"We are still at a single-digit market share of a massive retail market, (which is) projected to approach $550 billion in the next three years. It’s hard to overemphasize how staggering the opportunity is before us, and how early we are on this journey," he added.

"We are also confident that we can expand margins to our target of 10 percent or higher adjusted EBITDA, thanks to the long runway we see for operational improvements."