Coupang (CPNG) 3 Mar 222021 Q4 Earnings call transcript

Good afternoon, and thank you for holding. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coupang Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

like Vice the President would Mr. over Michael Senno, of to I call turn to Now Investor Relations.

your begin may conference. You

Thanks, questions, Founder year Anand. Inc.'s the undertake operator. joined following CFO, on I'm Coupang, Gaurav conference today only. reflects be obligation Bom responses discussion, your management's date revise not to Welcome for of Certain statements by or Kim; as We as update call call call made our our pleased do quarterly except to fourth CEO, on required December The ended any earnings statements. law. full views to today's the information today's XX, including this forward-looking and XXXX. are quarter to and by

XX-Q our SEC reliance the uncertainties statements. differ forward-looking SEC with Form most materially with not about which factors, in You report the information earnings Actual statements. refer undue and statements. results made should XX, from cause recent to forward-looking materially could as to place on XXXX, then from risks described may release, the differ filings Please today's for forward-looking these on filed our quarterly actual as results and other these well on November

During measures. both today's call, GAAP we will financial present and non-GAAP

unaudited As may a be these numbers and reminder, are subject to change.

our earnings and measures most comparable Company's ir.aboutcoupon.com. the release to GAAP the Relations filings, regarding disclosures non-GAAP posted website included including non-GAAP at these in are of Additional Investor which on our reconciliations measures, measures, is SEC

also IR can in have today's we release with website. be that on addition, a found presentation our conjunction In posted earnings

Bom. to Now I’ll turn the over call

Thanks, everyone, us for joining today.

XX%. the year XX% for of and results two-year highlights are QX a revenue increased year-over-year our discuss currency Constant some outlook CAGR ahead, robust the quarter. here for we Before for

more leadership extending twice as We e-commerce grow continue position. as the our Korean to fast than segment,

and we costly base. the able limited in efforts We the second its strategy. Fresh shortages COVID QX, scale or last-minute half, improving was in unmatched X% and a for previous tripled customer XX% and our straight was capacity Labor over In quarter-over-quarter returns. operating year. quarter footprint Revenues a base with that supply grew XXth in constraints blistering leverage. to proved higher our QX, that year-over-year hit complicated demand of secure labor efficiency rates were secure scaling customer underutilization prioritizing in the In were capacity logistics at driving to the of active two from faced Nearly leverage additional a Coupang deeper of increase of over facilities. the surges. growth a from engagement. experience and doubled worsened our high use and offerings Fixed in as largely on took tale to QX, business on some and to the benefits XX% projects Our more three increased fivefold that is of basis, for two support from the the XXXX new volatility also sudden in we be led to half a sizable first to cost XXXX, year, halves. saw nearly inability years, even by customers

efforts those underlying investments. are QX much The As of of profit fruit. second spent was, We of leverage. would result, Those our by to timing question resources just not capacity strengthening, and and half XXXX, disruptions improving short-term a the bearing strong redirecting short-term were in disruptions operating be? drivers adding obscured how

some now highest since seeing QX developments. on our to XX% over the grow retail billion CAGR that deliver off and segment QX, billion. a investments costs commerce retail next project So of expected and market margin excited to We're player to We're We're far less $XXX COVID-related the X% a to same in while that is initiatives. also by capacity, we've COVID latest and over years exceed XXXX The the that year-over-year, $XXX the gross excluding grew margin gross record XX% period macro that being market, the total that includes market, e-commerce positive at in single-digits. XXXX. in four the in the increase grow good e-commerce remains of than We're track driving today, an despite overall new of over XXX forecast largest secured in point autos, basis Korea's share will and in to total quarter-over-quarter. And began, still is start. market

ahead runway is us. our long a have And strengthened. flywheel We of

the share every over We're largest increased growing segment in fast even as QX. quarter growth twice Our of e-commerce scale, product as in XXXX. in the e-commerce

million membership Our from X end the of X the by WOW of to grew million end at XXXX nearly XXXX.

approximately Our ultimately, year-over-year oldest our even spend don't In XX% at from customer for our words, in entitlement higher are impressive even cohorts still rate. how annual other customer we an still or be grew will single know Every oldest cohort the XXXX, XXXX. high compounding cohorts.

free alone, than with square driven over million all have Our the the WOW by other of We our e-commerce XX No our our not it's lead feet. we and in player infrastructure the spanning at selection superior our our and customer And the enabled experience infrastructure. believe by That widening We the XX offers scale offering. footprint added hours returns products XXX deliver convenience prices possible e-commerce larger And players for past market. square a low year just of speed unmatched in days made our by combined. rest feet of XP growth of a nationwide, million now shipping services. the within members. e-commerce year everyday with millions is we the is

clip. on EBITDA Retail a X% product an XX% has journey also grew of to of will Advertising a year seven our rapid or this spend consecutive grow long-term e-commerce XXXX the increased and higher. important continued adjusted share profit gain merchant-driven multiple year. to segment to Our at for significant quarters. towards past be continues margins at

started on QX. projects focus these in margins to improvements line have fixed us our to evident EBITDA already operating and efficiency become the renewed should leverage as throughout and drivers our in on long-term The have long-delayed X% gives year. of share Our we XX% more we of confidence in this sight cost higher, drive or progress

quarter-over-quarter mentioned, core margin seeing QX, in offerings over gross are XXX point in far the I basis whole for improvement business. So like Mature we're as profitable. an

time, of to fast position initiatives significant where built mobile the invest to continued has same XXXX. in On just of long-term dollars all generating intend Eats, new nationally we the to As app it hyper the in in in leader double-digit capacity, We most expect Fresh delivery trajectory. in of opportunity. the of two in it's in increases of see share XXXX. just quickly It its volume was full some In follow become we regions. key newly the downloaded category, years, and its utilization Eats a same scaled billions At growth second lead operation. Korea year believe segment achieved we

explore in we’re leverage will Now synergies investing operating that commerce on growth, offerings. initiatives digesting with and focusing our product that increase

profitability, phase profitability believe meaningfully with a off our we're excited progress report our more XXXX in a employees, for these earnings QX to XXXX about and that We're to of a areas business. visibility is of to start. and will customers, To underlying to lot on opportunity other plan segment, the to for stakeholders. as strength execution capitalize product more we release. provide determined create efficient XXXX, shareholders what us and be position in We highlight generational our we expansion. be the commerce improve to There's separate on a expect to in next We in hope starting value strong

financials over Now detail. to I'll go more the through turn the Gaurav call in to

Thanks, Bom.

our for XX% revenue and year-over-year XX as robust CAGR exceeded billion scale remain revenue nearly growth, Eats the reached Net QX currency year-over-year. currency even $XX constant customers XX%. against first XX% run of We of and increasing a XX% Our drive XX% annualized the at Quarterly offerings COVID. to to active rate grew demand robust million, reported heightened two-year continues other constant rapidly. time. continue from comps in year-over-year, advertising had revenue outsized increasing trends

new revenues active customers million value have reach expand our basis active our Our continues that per across customer customer Internet in record to three XX a on offerings in the still are history, and QX reported on categories proposition constant currency drive and levels added attract best customers ahead and Net significant XX% offerings. Korea. XX% to superior basis year-over-year, more retention. We customer we increased opportunity across spending as and a of to base customers a buyers the million

offerings. expect to we better funnel, our into plan in per strong drive QX, deeper go customers wallet more Starting and provide in on increases growth to our engagement report revenue to As share two of segments include profitability customer. increasing core we visibility sustained in associated nascent other which advertising along like Commerce offering, fintech offerings. investment with mature Fresh and mode. XP international Initiatives Product Eats and XP and will will The expansion, and initiatives segment include Growth our video, are

invested obscured As sales underlying operating, approximately headwinds profitability. and evenly which in costs. expenses of timing million our in of Bom spread improving approximately and investments QX, and COVID-related across We incremental general cost noted, administrative short-term is $XXX

QX, Commerce to in declined expanded incremental primarily increased labor it disciplined in to optimizing to increased to managing underutilized constraints then to any with incremental growth our margin few currently remain million to to capacity. costs, $XXX We expansion costs related planned progress investments $XXX QX, operations Fresh investments costs. capacity year-over-year expect and within margin Gross EBITDA months, in We related decline XX% losses in QX due expect even $XX of million, short-term $XX QX. capacity initiatives, in and costs. the up reduce past due while For Adjusted gross forward initiatives. the significant we operate to higher to these and COVID-related COVID-related made our have and going to Product further expect higher growth ramping increased in quarter-over-quarter and million plan segment the approximately million profit

We to on iterate and continue Eats offering initiatives and like in Coupang fintech. on and our growth the in drive investments nascent to offering, video increased international Play, invest

over for COVID-related XX%, XXX profitability expanded growth revenue to throughout improved and The in improvements positioned are costs, meaningful well improved driven QX. the whole have high-margin in seeing declining business in and already to XXXX are early been margin product thus make basis We efficiencies about retail ad operational year. points far, profit. by has continued Gross the progress and

has EBITDA in revenue we has growth that and remained momentum XXXX. continue will Demand On expect show a into and in points higher February, have QX. strong it to margin we stay Constant to chosen limited few XX% proved that for our adjusted been in low and above be but the have investments growth, to XXXX. we currency margin revenue gross carried avoid XX% range meaningful disciplined costly XXXX. than We returns that, improvement percentage early expect capacity last-minute through late with

consumer in the are forecast beyond We formal remains current on COVID not growth to QX, behavior giving guidance challenging as environment.

as superior customer execution, experience every However, grown more e-commerce we to e-commerce we years. years faster than to for several last continue that for have come. And twice and fast segment strong quarter segment will as our are confident we the grow the significantly the than with

turn promise. a guidance we we loss new negative Eats million. video, XXXX. nascent growth in international around it to additional adjusted full an EBITDA increase as Initiatives, margin increase million XXXX in expansion product plan provide to QX fintech for have we year across improves commerce $XXX On initiatives Turning parallel, profit early a In Investments expect million of QX, to XXXX. will from To expect to profitable that shown the to XXXX, investments in X.X% segment, improvement approximately on $XXX it in significant we Growth invest in context, by from below $XX continue and our profitability.

Q&A. trends closing, continue get and on drivers a more are will with off to to We profile believe start we can growth we to better XXXX. progresses. beyond to ready iterate investing Operator, as the an meaningful now In we expect solid are improved offerings and year that we profitability these great are further begin be the demand build what

[Operator the from of Instructions] Cha Your with question Sachs. line Eric first comes Goldman

Your is open. line now

this Yes. you opportunity. for Thank Hi.

two questions. So I have

Eats. is First on

other ultimate the the for number market, motive to I the share player company Eats, some the is And think, it about the guidance. become is the or what business? market question in second the one is there is, around So for goal

the you be take And mentioned So, currency. in through are revenue with assumptions help could the due some and revenue seeing that range margin, growth you. in EBITDA deceleration $XXX the So obviously, as constant obviously, Would idiosyncratic steps? guidance you less us to also low mentioned you you XX% profit year what think us Do mentioned that would beyond probably first associated trend reopening, you of for than industry million other quarter the also, adjusted that? be gross for comps be loss. Coupang's the you factors than growth as the about the quarter. helpful will OpEx And support that, some positive well. beyond as there Thank throughout it but well trajectory then first the

thanks Eric, for the Hi, questions.

the take been has on part I'll first in history. the Eats So our service Eats. fastest-growing

is we potential billions record we also the growth. about there. and XX% second dollars delivery And mentioned, excellence scaled The our last we But the help will culture of and studied. build the our right that first, we'll has leader in what active a grown in place fast we markets and believe it's efficient on didn't become we believe still Eats. model fast the delivery profitable foundation has category. digesting what the now We're will of quarter. to excited ultimately believe of it just the operational of our of win space, orders, growth growth remains year order is As single in for full on focus other customers the operations, to that

proposition couldn't believe company. we for to product potential a at drive stand-alone Additionally, believe is Eats that a additional we there very that opportunity. what value expand in where long-term we our way of a tap, site still and to are the -- with leverage stage we synergies customers the there has commerce that operating a get It's early

with On the right was low seeing QX, hard are in later reason Demand the in at now given as We guidance of predict play. XXs so for stick don’t the the a year, revenue There to growth policy. far. several we question you in our mentioned. haven’t DBA points higher. Historically, around and we're variables very many see we but on it's guidance will growth so actually EBITDA,

expect have we’ve every segment, only grow in opportunity market least the any getting year, we appears than significantly last in Now we fast overall scenario, e-commerce at faster single segment as the to bigger. twice be e-commerce grown and as to as several quarter

overall at by that four projected latest a I think the we mentioned to quickly approach auto over the excluding -- and briefly X% billion CAGR $XXX expand fuel now years forecast of to have commerce XXXX. segment next and nearly e-commerce

confident we So to to time come. grow we’ll e-commerce continue significantly faster than long be for that segment

term and you remains our around asked The initiatives in to more felt guidance over giving as were guidance. you hard predict. confidence comfortable, we about, EBITDA But what the that's the mentioned, do efficiency we Now, near revenue investments. assumptions comfortable EBITDA. why And more lost have extremely

with question next line from of Your Yang Stanley comes the JPMorgan.

open. now line is Your

the for opportunity for your thanks questions. Hi,

is about question First your EBITDA guidance.

adjusted $X negative international investment XXXX and guided FinTech. million adjusted EBITDA million $XXX mentioned from and you you in also So video EBITDA,

growth So we in in after is issue Do was margin, fulfillment is, drivers? the And supply e-commerce persistent full course market businesses, for my question. million EBITDA you labor is all $X investment you and viewing? a also will my EBITDA XP the question. these would question assume That’s key second from negative year some second my the how be tightening, much and think service first a negative And $X Korean even included our meaningful That And also, labor should in in of second take issue structural assume EBITDA the million Aspen? the this for margin the what come the are your up issue Eat Fresh. do in kind sellers half?

Stanley. Thanks, Thanks.

Let me of part first. the second that take

seem to constraint On the a from where labor capacity we issue, doesn't there stand. structural be

while focus and and part mentioned, you so managing we down we processes. in in basis fear short and as record capacity mentioned COVID some due internal that's costs our margin on to actually disruptions points, had far, subsiding term QX, As by the over QX, gross strengthening secured in improving XXX we

Now QX to still constraint from do short to we've but now in some we on time, today. in the we see don't market based may term able disruptions structural a time what see been

relatively we to this our also certain growth happen. to as even the these -- $XXX some their we'll efforts – year, efficiency growth progress, have we and remain in avoid investment. make juncture. that that earned XXXX. that Now the we're to we're on in We disruptions in past, We've investing continue at way year. initiatives additional investments beyond plan have past from wasteful ultimately appropriate to growth to the million These -- to rebalanced disciplined for limited learned for proved we’ll share last and And Yes, budget guidance. the last-minute of new have are more be as believe and

we but remain the think of I infrastructure long contribute or problem XXXX to year. potential. overtime. our Fresh, the is to scale as underutilization its to also by we're QX. And tremendous for infrastructure term will as that We merchants into lead our technology its therefore we segment to a of time Fresh product towards segment the business end commerce FLC, we a results about and is very quarter, And meaningfully finally, on about QX. expect as logistics And driver had will build seen facilities capacity on we've more underutilization grow I mentioned customers. a product commerce FLC based There for asked FLC, FLC Fresh is we doubled a to commerce profitability it segment, to you share Fresh. its confident which product intend QX, value this in capacity drive that early think and last in intend that peak improve will issue and scales, be that excited and in expectation

[Operator Instructions].

the comes James question of Mizuho. from next line Your Lee with

now Your line is open.

for taking questions. question my Thanks is capacity growth. Great. My about

mile? are I and XX%. at maybe this to the do efficiency in growth guys year How think You investment have fulfillment planning extent and last of ’XX, Thanks. FY about out fact guys becoming ’XX, capacity more initiative you you we this growing ’XX you the that were looking FY break thinking versus to think for should can FY

Thank question. you the for

XX added going we future ’XX, infrastructure more in and to for anyone increasing in this adding we XP. addition, So market. square more invest the much We logistics market into than believe our year. lead for add And are millions we and to million the feet else fulfillment the to in are the continue going in by

fine continue to I think the continue but plans and exact capacity tune be capacity go -- are on to plan. build to build we along, pretty we going we as aggressive a

I here, And one want on commentary Gaurav, statement. reconcile follow-up to just just your your

You're excess you the the facility XQ. saying two that you to fulfill talk about guys statements reconcile peak rent same talk demand trying at able that the before I'm underutilized facility Thanks. in cost. time, that by in past, to here. you're up And ramp the about

Sure.

the much I that facilities. lead normal on primarily have than core think the longer was facilities, Fresh can Fresh are much more as mentioned imagine, And sophisticated you underutilization time. Bom remark facilities. the

Fresh in an QX challenges which build-out utilize of because not and were able we at that to labor capacity mentioned able So on we And to customer the plan had constraints. demand QX, last not looking aggressive of we year. other because on mid-term fulfill

much are normal is more as the what underutilized continue That's the expensive still out But side, referring we year Fresh than goes. capacity we more it more, capacity. it's much the overall, why capacity. to that's as build That on think calling is I to. capacity, So Bom separately

you. Thank Okay.

of Ro Your the with next question line comes from CLSA. Seung

Your line now open. is

you Thank have very Hi. I much. two questions.

is the second the -- is First think you to what revenue? we on do of And much scale here Any the much And how color any advertising potential? get the one related revenue, do terms in current question how can to? actually the is investments. of

surface, was from $XX And located overseas just actually On that is to sound are year? this $XXX wondering, much is expansion? million much. mentioned doesn't that You million this market going how of really the increase to year. which this the for it you I targeting

that to So we in expansion overseas you. the going be of should controlled? kind is interpret Thank

didn't word the Hi. Seung, catch I last there.

the -- You sorry? overseas that I'm was said assume we should

How process rather and your moderated in overseas very than expansion should XXXX? aggressive more be expansion a controlled

investments Yeah, or be I'll investments our confidence. investments we start to with our we very and investment, -- that learn, to earn strategy is that sure way that always their the more iterate, increase test, to disciplined make in

selection, that's certainly a believe apply we principle excited So market trade-offs between beyond price. there We strategy Korean to remain opportunities, all investments. great to general and about are our the and We that. service

we're relatively on it's And excited But -- to still the that appropriate as about we making -- to we'll the are advertising XXXX gap in about opportunity have very We at to progress, we making. days. the But progress. our with growth updates it's opportunity. there we beyond great early ecosystem. potential the generate and think full will more progress where that provide big remain And grow course, is, Of revenue, advertising a still we're still We're early. time. meaningful front WOW on make drive excited customer

Yes. just experience know ecosystem the note, to customer is So on ultimately and the we of advertising we video, of and remain our focused international growth. that across the $XXX that million driver is And FinTech.

line Your Peter Milliken next of comes question the Scotiabank. with from

now open. is Your line

for guys. morning, Thanks Good Yes. call. the

increase terms granular all And in rapidly? pure, quarter, cost we get that's through been a that's improvement, COVID or Is some charging? in is else? it the how in decreasing, about of, that kind you've something more that about first if the so markup been declines? Just changed Can cost just all bit that has in margin or increase the of coming been is there

to a been the long-delayed advertising providing far, to QX seen where so give -- customers. primarily gains for segment, operating not We make EBITDA driven the We by have in the change and QX. Peter. product contributed on gross The efficiency our the engaging progress Thanks long we've XX%-plus. best same optimization be margin, for service most projects that remain of your continue in did in These our And significant question, committed price pricing our selection area confidence us to are leverage, and factors. in particular, evident. other to is We'll long-term start in will sourcing among X% in drivers margins that commerce build policy. an

the take expect by that We to unfolds. progress as our profitability you'll year to see and QX,

Right.

Okay. was management incremental more I was And driving sort What of, three? look to to Was then Was combination at all a of Was million or sign-on the paying meant delivery if the the COVID increase. that? a process, of there bonuses? that be money it, costs from XQ, $XXX out cleanliness it people?

go Yes, ahead, Gaurav.

you're mute. think on I

sorry. I'm

what -- primarily onetime we attribute assume costs those additional are you related rewards COVID-related And they labor. assuming add driven are it's to So reversible. labor hopefully, primarily to

like long-term balance It the became occurring versus cleaning were growth, Bom distancing, that. year. continue that And perspective, fine-tune were there spikes But we minute it to primarily we et we cetera. the other cost last And from inefficient the including primarily were growth. and And addition, chasing to short-term to trying were As incremental COVID-related last really but costs, capacity social in invest. continue labor-related. was mentioned, our seasonal

Okay.

those. of three all is answer the So

I think pretty much…

the that is have don't you really That's that or is good that agent, think something don't forward, And delivery going you or just have just clarity -- it on? to delivery look, permanently, -- increased do van Okay. you fees know.

fear time course, we Yes. were deal -- of Again, the what be that. of some seen the processes as the We've strengthen there short-term to of internal we're COVID we QX. mentioned, appears from temporary could future. to that time we've improvements. did But by some some And in encouraged also disruptions seen in disruptions as subsided. It with

capacity we proved is mentioned, We permanent Gaurav efficiency other we're were permanent those to that last-minute we some efforts structural. that limited this this was avoid constraint. be this moment we disruptions proved the the we've efforts And saw stay that as So or costly. to at that, last don't thing returns think The and from extremely intend some and in QX of chasing minute, very and also a year. structural growth of disciplined -- encouraged. have learned and was to balance And that

That’s Okay. to hear. great guys. very Thank you much,

Thank you.

At Instructions] today's further attending. you concludes are this time, there [Operator call. no This conference Thank for questions.

disconnect. now may You