Coupang (CPNG) 28 Feb 232022 Q4 Earnings call transcript

Good afternoon. My name is Ashlee, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coupang Earnings Conference Call. [Operator Instructions]

Now I'd like to turn the call over to Mike Parker, Vice President of Investor Relations.

conference your begin may You

and Thanks, operator. conference the quarter earnings Bom Coupang’s today Anand. everyone, I'm pleased to Kim, CEO, call. and on our fourth CFO, to Gaurav by XXXX Founder Welcome, our be call joined

forward-looking to including law. today's do as information, We questions, reflects undertake except Actual revise Certain this any on obligation statements. as The of responses management's include differ date by today's statements may following made materially. call your discussion, or required only. not views results to update

Additional our our information our in release potentially filings. report about filings factors that XX-K recent in most financial today's could impact Form and including included results subsequent on is SEC, annual with the and press

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

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

turn to call I’ll And over Bom. now, the

Thanks, compounding challenging period of today. everyone, ability towards targets a outlook disruptions. demonstrate shared We an year emerging COVID-related overall that still multiple to long-term A we our were market. march important for while our year would of at from be ago, a to joining XXXX the profitability us retail

Product loss million. progress. ended a profit was XX%, segments, also gross that two And and our COVID We adjusted winding and around Developing increased with of report was XXXX that results Offerings, we focus renew QX margin of our $XXX provide under down. on on EBITDA We to visibility would of it continued an we shared clear operational improvements increasingly as our Commerce would

adjusted in million of of million results growing improvement on improvement X%, for concluded the over an And later, in while points profit prior of EBITDA gross over QX basis $XXX XX%, improvement a quarter, revenues million of net margin the XX% year-over-year. over of XXXX million XXX these $XXX over year-over-year. year over basis a with XXX We recorded delivered points. Adjusted increase versus year-over-year nearly was represents basis. by A an EBITDA $XXX income an $XXX of QX an We FX-neutral margin an year.

of outcome the oldest, and cohorts. execution Commerce are as fast Commerce. and innovation automation. gains of our process The coming including Product the levels in spend most continued Active are teams, including growing faster cohort, year-over-year, operational infrastructure, such results underlying of higher of our improvement, of with the than are supply also many compound strength Customers earlier flywheel focused from in at optimization, to our chain at by The their reflection and journey newer improvements every technology, of Product and a a starting increased cohorts X% results spend And the rate.

three Over loyalty by of between more are WOW as Enduring price, selection. of past breaking counterparts. delivering and members, added customer we that non-WOW whose frequency all their than commerce: paid the year, customers and levers and times higher is also nearly many tradeoffs two on the driven spend million service,

price, we significant our efficient been on has behavior cohort building on experience and best legs: over investment of Much so hardest begun service the the the and the devoted see two to operations delivering first in the superior the our that and to best two deliver years at We’ve most the can levers, the of to price membership adoption. WOW power our customers. experience best delivering

that is differentiation in continue experience the the to momentum amplify customers. years strive we’ll ahead that third our price service Expanding XXXX for expect and will lever and day. every to customer improve in as selection We our

we have customers Currently, over Customers of more purchased turn in times more of levels of be selection profitability that categories XX XX% will the over forward average loyalty, going of Active believe customer purchased a or of higher driver These which even the more growth term. customer. amount the offer. long nine unlock we the will only engagement than and critical Consequently, two-and-a-half and

We expect will Rocket. within wider that categories engagement accelerate and with across on selection

categories Our the while growing new amount spending oldest they spend are in of ones, selection nearly each our cohorts, twice newer still experience as year Rocket. and on

to million yet added in every third program’s value customers join also where Customers WOW, will to to become customers but resist we item than will More online with in assortment. of proposition were new invest a enriching Active Fresh, have Rocket. of Just the QX XX harder

millions that has the Rocket available by larger target vast Rocket. included. number have to in much of products yet infrastructure invested products of that Logistics of it on of with the are yet Fulfillment in popular FLC, comparison or shares our be pales be items, the technology. will we’ve our catalog Coupang, XP and benefits billions While grown to and sellers selection to the to

customers year, XP. are than helped our sales last small-and seller SMEs. of our of medium $X.X a of driving FLC exceeded that to SMEs, FLC sales In their including generate increase two-thirds expand over for that potential inventory expectations combined with seller Marketplace of QX, already million wields merchants on parallel in selection saw growth. adoption Early results by drive show higher growth enterprises XX% and unprecedented outpaced FLC FLC moved merchants, is revenues. and and our the annual exponentially in share less to growth Over This to and significant merchants the who average. that for

our in selection single about the We’re we’re on excited but overall Accordingly, still digits, the in significant market opportunity ahead. retail penetration the low remains in days the early expanding of Rocket.

efficiency, and there selection, that numerous customers. across efforts profitability, for us improve increase better will price the Now to company are and service on in profitability allow to invest

network is we As of automation will in the have continuous and continue We’ll the network. efficiency the our where of to twice demonstrated of efficiency levels rest fulfillment come. automated we an drive that of increase the form as the FCs network most more automation. our savings to example, more the of software hardware of target yield both in see years One improvement the than higher

While will improvement remain drive and variable, be profit excellence by continuously to the meaningful operational improve we potential rate growth. encouraged our of

also that major value for for excited way We’re where of the generate more the International and We like our confident the developing each shareholders potential externalities challenge our start initiatives produce in Only customers potential see other and future their continue has XXXX excited that significant the We’ll to initiatives. part demonstrate customers test of meaningful to offerings, will we potential Fintech granted. in to cash continue to we’ll invest among alike. flows by outsized for in for more tradeoffs the and opportunities Eats, initiatives will ahead. Play, investment. earn the of take ecosystem And initiatives each about significant even as and

we’ll for a and striving without biggest and wonders disciplined trade-offs the view world where build “How value make and for investments, always, the long did decisions to customers attack bold As Coupang?” customers, I and live create everyone shareholders, take sustainable, long-term ever

more call the Now, financials I'll in detail. the over Gaurav to to review turn

Bom. Thanks,

macro-economic remain to pressure. demand amidst even Our continued strong

XX% of the We revenue total quarter-over-quarter. continued X% of year-over-year of net with currency and to multiple growth market, at year-over-year, X% growth grow and constant a dollar

per be This by offering, grew Total active X% was X% and revenue Commerce continues active Eats increase active Product customer. customers growth as our year-over-year. in year-over-year. to by our negatively impacted the in grew Our driven customers revenue at our active customers

from deeper customer Our net engagement continue as basis, per X% see and even a active revenue to year-over-year on quarter-over-quarter increased our we XX% currency constant customers.

membership Our investments membership and WOW value the in million drive with ending WOW into record members. compounding the WOW, our year growth helped program, XX QX, of

We program. profit generated a $X.X in continue see nearly the fourth of year-over-year gross to billion are our encouraged we WOW adoption by membership XX% improvement. over the We with quarter,

profit consistent year-over-year. gross margin saw this offerings, at chain The technology, of Our XX because mix year-over-year, margin year: margin-accretive quarter-over-quarter over bps Commerce have optimization, This drivers bps bps quarter process those benefits for highlighted from XXX XXX an throughout supply we expansion year-over-year ending XX%, over lower the infrastructure, increase automation. change. profit and Product including is improvement in primarily scaling remain with XX.X%. product improvement, investments of gross of was this

the of of improvements by operational ads. outside gains were XXXX majority vast The generated in

in We are ongoing most which been initiatives, have time. of many some for result process of seeing the

future, We improvement of expect these we may further each the always margin though not rate quarters. efforts quarter see meaningful improvement to past in expansion continue few same driving the as or the

bps this quarters bps EBITDA XXX We saw the improved X.X% over we spite XX $XX quarter-over-quarter, continued our of adjusted year, of record of EBITDA recorded margin $XXX over improvement. Offerings improvements quarter continuing adjusted for growth. EBITDA, through trend Developing a Product our for year-over-year of OG&A this of Continuing revenues of million a of or $XXX delivered million and we each last a investments the X%. again in generated million while year-over-year minus million, Commerce adjusted $XXX in

We nascent International. more for was Coupang amount million forecasted in the investments focus offerings the foundation year Fintech, like the of with results into consistent our our at $XXX Developing year. Eats amount that The these the on Included continue the offering. profitability we our to are improving the of investments Play, and Offerings start of full

assets procurement This of improvement $XXX in prior cash year includes of minus from For year. $XXX an over the free full XXXX, million. $XXX land investments million of and of strategic flow, reported the building we million the opportunistic

Our is free flow basis. next on milestone achieving cash a cumulative trailing positive twelve-month

flows of profitability. We meaningful to generate the cash adjusted are by as the confident free in business EBITDA our potential indicated

million business of As in are record business milestones: income positive This consolidated we QX. adjusted a for achieved year net Commerce profit, each for and adjusted delivered look for adjusted we proud we gross EBITDA, the of $XX XXXX, quarter. way teams EBITDA on EBITDA a back positive delivered our and positive hit the Product of QX, was QX, net the executed many in income in QX, in consolidated

confident at have the Retail are that grown We market, multiples of and in trend we ability our to XXXX. continue in consistently

long-term progress updating we light past to our year, or past higher. the In XX% XX% long-term guidance In to we demonstrated higher. have the the our are or guidance adjusted of over EBITDA X% now shared we have of

in march consistent each the expect quarter. long-term be EBITDA though gains Commerce Product its XXXX We won’t to target, towards adjusted continue this

in about in opportunities. TAM the For the and these invest Developing opportunistic Offerings, meaningful over and nascent, disciplined potential long these opportunities investments cash we're continue term. long-term We expand because the additional to will in generate excited flows we be our to

with losses for consistent these the XXXX expect XXXX. amounts be We saw in we to

Operator, we are Q&A. now ready to begin the

[Operator Instructions].

with first comes question Sachs. Goldman Eric Cha from line Your of the

Your open. is line

Thank Hi. have this questions. two you I for opportunity.

and full because of is assume this uncertainty, noticed January to us, guidance given your would in share or you are there of your months would that as Any could importantly, that, be trends. helpful. is first I XXXX really February this. hear the year process now around more guidance, helpful also like color any if And First thoughts we your would be weren't thought the really macro around that disclosure. behind but quarter

this the mostly on leverage you EBITDA or just margin? gross could do of operating bit you Second if great you now led target? question raised is, Or that walk profit us you. key appreciated. to were Was guys this Thank term Any mentioned, your would margin. the as raise drivers a Would SG&A be color it long you what be around side both? target you've see just through more

Thanks Eric. questions. for the Hi,

a continue about grow hard it scenario, confident quarter-after-quarter, is we rate guidance. predict, any we of historically market. our of have that the at QX. at while we the In first a given QX, over will to not really long-term. to at months to the demonstrated a confident to rate the as And But similar have seen two growth we saw compound we've top grow we and in We to in short-term, ability line continue what are faster are multiple

are share in opportunity. is high of single-digit prices overwhelming market overall the the The still We and offline, majority retail selection. of market limited

excited exceptional wider continue growth customers service capture lower prices about with selection, and to the to are allow opportunity to We significant

quarter. year opportunity, services expansion improvements efficiency programs right we're optimization, the the and future improvement second progress years margin continually though including question we're we And your see the drivers investment improvement, and confident every new as to realized are encouraged which the drivers future. profit of that we're margin in about and continuous believe infrastructure, contribute the making our dramatic also I by and investing will gains improvement about last of Process chain mentioned, supply be others. gains the on long-term increasingly get drivers as in the potential, automation, the leverage will that us -- we're will technology, among efforts not may as in guidance be On there, we and

Park next with from our Seyon Stanley. question take We'll Morgan

I two questions. have

The how term the is a helpful Whether in maybe bit the get overall first can or guess distribution a And how, actively from that increase on utilize is is coming I concerns the being is already you of maybe talk what we something of FLC? about given, color on your about much be FLC being FLC. your is or bit capacity? to can little little would that Can near utilization now of considered very utilized to there some overall GMV of us. Coupang percentage market growth are then

you've think since is it's you're done where when reached? second Can in some color about the and of is a kind us I you could maybe the stage three of I options kind that. two, reassessing be how The some question progressing Eats. quarters on on that and been give conclusion your on management is stance know, Coupang

On of mentioned topic your call, exceeded FLC already FLC, in first XXXX is scale. our and as to in starting expectations the we

strong Helps efficiency rates customers integrated end access ultimately gains that of on course, speed XX selection allows gain well. even to wider the the growth as capture unlock and we and to believe efficiency and help course, alike savings. customers And economies We them the to better mentioned FLC. the considerable over us merchants adoption network term. of are to there with leverages even merchants Of parallel, our us experience growth with scale Rocket long allows for of gain will share

infrastructure here. results any new average. to saw tools we're there But the early far potential. very on and their the technology its over long and So who about FLC show XX% to FLC that a moved to merchants scale lead increase opportunity initiative, processes inventory Like sales perfect excited is by to full time term

working the future, benefits excited profitable lot made gross many building aspects and foundation which is $XXX we customer to about among next offerings progress significant other at customer also in improvements the the primarily There Eats Eats and the more But many Eats. profit have important relentlessly in to Fresh we've engagement in experience do, deepen a offering but is initiatives now a and Eats. offering, Eats, growth the excited Eats developing across our in driving phase on On are time. of our Eats. million driven for are efforts help for like strategically by are improvement improve about the strong We're year-over-year on many services. foundation we we of that stronger us right

ahead. from go with And James our next take we Lee Securities. question will Please Mizuho

Great. for taking Two Thanks please. question. here my

we you segments U.S. need $XXX shift second, you a some right puts more get for takes to segment regarding pressure, down Korea First any what losses inflationary feel similar we about how XXXX, this on and year, can facing that very trade consumer the demand, be double services, and look developing incurred seeing you. some maybe like do maybe South what with to you million maybe consumers? to Thank should the you Any that? rational? on do XXXX think offering commentary are of mix now you And by on and or maybe downs to maybe sense,

question. Okay. James. Hi, Thanks for your

there to a I in affect are us. market, all demand, economic your robust to much as uncertainties you have think the consumer continue that pace. grow we grow But first of that on at was seen, continue question, globally faster

we acquisition every in category. of the selection selection We for across categories, are early stages acquisition are nearly but at different

The even compound oldest customer our behaviour. our cohort rate. spend to a cohorts, continues of our customer You see at that fast in

at across We are is all the of seeing at category even acquisition. strong perhaps isolate maybe level. impact the growth because are macroeconomic stage categories, our largest, It hard we that to a selection

low fast categories compound, customers clear know spend focus of still in to is for continue our in But all potential continue we our And on. three of Seeing selection our customers the continue full levers those that delivery to are very our grow, all we want category. cohorts prices, any to categories. that, what and it's all our will don't

We these the believe And our in an truth. by simple yet have be three this we levers. that, not to future seen growth driven exception will

On amplified ecosystem. broader Developing by to Offerings, these the we remain potential excited gains be new the about growth. which will unlock areas in of significant of believe benefits our We

mentioned consistent of disciplined be Offering Developing XXXX. in XXXX be the in you continue amount and And have We intelligent for see way that we will developing Gaurav as will will losses to with made approached offerings. our that investment we the

we'll ahead. Shao from with take Jiong our And Barclays. next question Please go

questions. much two very you my well. taking I Thank for have as

are the the first business additional your able some that helpful. wondering, you just a bit is GMV be would when kind little point a outlook Anything Any to provide of be are provide where profitability? in at can near was I may Fresh. The about profitable question about terms you of somewhat in you very a color contribution, future.

Second question Developing as the about is well. Offering

of have every banking not good different fintech Some Southeast they to peers very whether Asia, had backdrop, success your offline that, the system. as global it’s a peers, Brazil area, have a or With growth in financial of but or country, are the industry offline seem the area? the banking for services, to specific business fintech could the the your a bit launched on system already or additional or you you products Korea, contemplating in financial services elaborate sort in get

question Fresh. on the for Jiong Thanks,

enables us, Fresh has customers the we Fresh merchandise the to positive structural same have economics. at unit in us experience lowest the of allows general that and and best mentioned combining before, we've with network cost. advantage As logistics a provide

improve with continue continued and to operations. technology and economies scale expect our to We improve of efforts profitability to

We opportunity significant still Fresh. also a have in growth

third quality -- on a low or quality will prices high active prices Fresh to and QX focus continue of low and expand to customers high there. Just and of in customers customers providing assortment products

and lots think On and opportunistic of in some in those Developing We areas. of fintech, phase learning be here. do Offerings see continue We're we'll again, to generally I disciplined still opportunities. the

test, approach continue I discipline see that think there. take Our approach there. to and iterate, opportunistic to been you'll us always learn, has And

are the think time the information, many share of we'll in very journey we're I we more right still the on on at that Developing but initiatives early Offerings. pursuing

And for Thank today's this conclude you your Instructions] conference will participation. call. [Operator

at time. may any disconnect You