Coupang (CPNG) 6 Aug 242024 Q2 Earnings call transcript

Hello, everyone. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coupang 2024 Second Quarter 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

to and Thanks, operator. Conference the including law. Quarter do Earnings as information Bom We questions, reflects undertake Coupang's today except Anand. revise this any everyone, I'm pleased to Kim; CEO, Call. and obligation on our as The of responses Second management's CFO, date to Gaurav by XXXX Founder by today's Welcome, following your discussion, our or required be only. call not views to joined update

made on may statements today's Certain statements. call Actual differ include results forward-looking materially.

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

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

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

And to now Bom. call turn I'll over the

joining today. everyone, us Thanks, for

we for are another takeaways from QX, quarter. results dive into X strong here Before the

the First, retail the driven continue to is of experience years and customer to results provide we planet. believe by innovation on what our investment be best

not one turn, all of majority cost at at customer within the Second, free the of the provide that other. ecobags of growth profitably. us allows packaging that how delivered so in fresh we lowest us profitability, packaging. and so large expense almost one operational and while superior environment the experience we provide our example the to just can profitability. do and us and expanding growth our lowest disposable That saves example vast customer That's hours the generate the excellence on delivery cost, helps best to strengthen the and break orders focus and replaced cost provide innovation One gives traditional trade-offs of experience delivery-related using at

are generating offerings momentum developing the our future. and exciting for strong Third, growth

generate Our offerings growth We historical cash at offerings and you misunderstood our helped next flows are the strong commerce compound flow developing but in today investments further cash the quarter. generation the will future. building product investments of in set in each in that were growth believe our the time, see

numbers Now a few performance. from second to our highlight quarter

This year, quarter, we have we revenues growth which over accounting been of than in XX% acquired this by would Farfetch, XXX FLC or Farfetch. XX% constant been grew year. logistics in the QX constant for excluding growth adjust XX% year rate, last change currency And fulfillment we've of bps last excluding higher and coupon QX currency the or the

primarily XX% contribute customers customers note, Our retail opportunity existing the powered of of product today increase their can't percentage in and for to of largely how however, the our year-over-year. small in cohorts. we and highly cohorts. active best by oldest are market how journey. even growth cohorts of tomorrow, of commerce that spending to small important we is it's spend share all customer future customer even massive why believe spend spend massive grew increasing we fragmented We our account to billion and early overall still continue and that our and a customers, while enough growth we commerce oldest a our future highest and untapped. opportunity growth, Because $XXX It's are new our That's our stress the and

which third-party marketplace, saw growth in This both growth FLC, outpaced the includes significantly and our overall quarter, the of our we business.

Coupang. sellers Marketplace market. growing growing than since enjoyed or XXXX. SMEs, are sellers status they're our growth that who who graduate from consecutive than retail exponentially large enjoyed tremendous once to X,XXX these have were SME overall on our are helped not first-party the SMEs marketplace only quarter, include and the proud also growth the have businesses, faster marketplace they've sellers first sales thanks Korean but faster For our that than XXth now We're faster sales. doesn't SMEs grown we've Many this party, of over

to services continue XX% XXX% FLC growth power of that that trajectory growth We marketplace year-over-year. invest and is number sellers In QX, joining over and worth highlighting. in grew FLC's the quarter-over-quarter

Now, a offerings. words on few developing

adoption benefiting residents strong to WOW free seen the from since seeing progress we on and trajectory XX% Eats, nearly growth months, launched program continues just continue where In growth. be with volumes. delivery Coupang that last and its on X merchants pleased we're customer have are a We in momentum our on in quarter average

same for In the trade-offs and did the Taiwanese focused for Taiwan, loyalty on we that win customer Korean their the customer breaking trust. to we're

conviction as the in Our potential of is as Taiwan strong ever.

thousands last part side our just the to enabling of Taiwanese are a On while products note, to over has of sales year. triple customers products their to companies this we consumers, their we're Korean volumes of Korean get tens helped assortment in Taiwan, and year growth that offer total

is very we these for quarter, journey. the to of track we're Though year year. run on execute to EBITDA the is basis On of a early so on goals last goal adjusted our stated the rate We're in our Farfetch, the stages calendar by far. positive as close achieve to plan still to end generate and

excited our service our we to capture strategy that largely our core the is the our about happiness in customers investment progress that of We're and still selection, And our has the for WOW, for employees that potential merchants, opportunities highlight key customer potential. potential to is that the long operational see markets Disciplined suppliers, maximizing been to shareholders. term savings massive to excellence and untapped. deliver serve, customers. Farfetch's believe to we important best and We the unwavering. in and It's

to Now I'll detail. over our Gaurav to in turn greater the call review results

Thanks, Bom.

in we that business momentum our revenue, and adjusted QX, commerce we profit This of EBITDA. product gross across reported active quarter, customers, growth QX. the continuation in In a robust we delivered saw strong again

at we want end full the numbers, reserves remind operating of to through year. As financials January dividend prior and was months business X will Farfetch go quarter in year this acquisition first that Wherever Farfetch results the impact of of to Farfetch highlight the consolidating the our the and completed without of existing I quarter everyone acquisition. I QX for the no the performance with our included provide comp. Farfetch with possible, the from Farfetch of

total XX% or or year-over-year total XX% Our excluding the revenue grew impact Farfetch. revenues the of currency grew Adjusting effects QX XX% excluding foreign of in changes net XX% in Farfetch. for net

in certain accounting. revenue would made accounting Changing been the on Adjusting changes to Farfetch. bps to QX a higher change, net impact As growth have basis. from a the year, of we reminder, the FLC currency this excluding than for XX% the growth constant beginning gross XXX last rate prospective

currency. commerce revenues would higher in or year-over-year FLC accounting growth for constant This segment, QX been Within XX% have XXX bps change. XX% grew product our rate after existing the

total Korea. for source suppliers in at consumers just growing sellers Coupon be the spend of and growth the growing a in to and X%, continues primary consistent value With Korea retail destination for

of quarter product the well as change. the active the impact year short-term customers Net over the number grew added active new constant includes as over of X% commerce we the ] large revenues customers This FLC currency. dilutive in product last [ X accounting have of impact for commerce the

of customers. is we new majority important dilutive grow that spend the spent vast new have older note the of of is by their spend The impact in our It's cohorts because with existing seen less over powered customers to our increasing levels customers of initially, line but trajectory time. growth

to given our for levels runway their small that there We we account believe see oldest a retail highest percentage of all continue growth, of the is our cohorts spending. increase spend and overall spend. for We a long still even

of to we shared small selection, have As for levels overall a customers. that and opportunity higher our significant much believe retail by we to improving we have grow savings service spend percentage previously,

a we As to segment. constant by revenue Bob On progress our offerings offerings encouraged over excluding seeing Farfetch. XXX% revenue basis, developing currency grew or continue XXX% within or offerings profit. year-over-year excluding Developing we grew segment over are XXX% XXX%, developing noted, the be

our offerings, profit. indicator in channels primary gross of mix Given within a believe the is we the the business our growth evolving various underlying business, of services and

profit of XX.X%. margin we a quarter $X.X quarter, delivered again gross year-over-year record gross over billion, reaching growing of This a over with XX%

than Excluding of delivered margin gross a $X.X for Farfetch, XX.X%. This we we faster of last growth XXX a in saw improvement the growth billion profit year-over-year, rate even and accelerating XX% an basis points quarter. represents of

XXX billion over commerce XXX year-over-year of basis XX% represents the gross last last to and and billion. point year over improvement a gross profit Product points over a This margin increased quarter. basis profit $XX.X $X.X record

including efficiencies AI. automation strong growth by as this Our utilization with from benefits was margin of greater as in margin driven operations, composition including technology, well higher improvement quarter rates categories across and

benefit in continue of to We from optimization scaling chain and margin-accretive also offerings. the our further supply

We these drivers over margin to to and quarters the continue further to expect expansion contributing come. years

this was Commission. the million For inclusion revenue we before XXX income well basis Farfetch as loss Korea quarter. to points share loss attributable million, of announced fine of $X increased taxes $XX of accrued as of resulted diluted estimated We and this versus a net administrative Fair quarter This generated stockholders restructuring Trade $XXX $X.XX. a coupon by per due the year. of related income G&A expense million costs This primarily as in percentage to and last as sale the that its

diluted net estimated $XXX the quarter, and million income was attributable was earnings for and stockholders coupon fine, per share the Farfetch approximately $X.XX. approved Excluding to

EBITDA as $XXX EBITDA X.X%. This of an restructuring EBITDA $X.X adjusted in reported was business as this relating trailing resulted with fine. margin accrued activities consolidated a the million Our X.X%. to Farfetch in million quarter excludes of costs margin of The the adjusted which adjusted well plan onetime

quarter over trailing in recorded a adjusted billion expanding our EBITDA confident million X.X%. of ability margins With this remain on forward. annual trailing We and adjusted Excluding EBITDA Farfetch, months. $X.X basis consolidated margin going XX continue XX-month we $XXX to an of the

represents delivered EBITDA benefits of the further the basis by was well in X.X%. points over a of driven over expansion $XXX million in as segment XXX adjusted operational from margin in commerce margin expansion year. improvements as margin margin with last This of Product record efficiencies. This profit gross growth a the

relatively progress impact increasing Far was flat Our quarter the as consolidation increase by these $XX segment for million we opportunities quarter, remain to as million last the loss making in and $XXX of early-stage additional developing are We the a $XX year-over-year. investment in by encouraged the was offerings driven adjusted fit. well from This in EBITDA million a Farfetch.

EBITDA best improvement. We process things and of run through Farfetch Our rate on at is this ability discipline year. coupon driving doing end of adjusted to the remain focused to team for the of by we one get operational close convinced positive efficiencies do the

free Our flow in $X.X at $X.X was end the XX% last year, QX ending flow the months. operating balance over $X.X and cash XX billion we cash of of cash the roughly billion, billion generated over trailing increasing

last by consolidation As effective to an we increase in of quarter, nondeductible Farfetch pretax QX, income driven guided and we expenses. the rate, in in tax saw losses

reminder, cash this accounting tax a to excluding as year obligation this Operator, tax XX% losses. our an just expect Q&A. is are As to begin Farfetch closer we now rate ready the to be we XX%, to

Instructions]. [Operator

first Yang. of line comes Your question the from Stanley

expense quarter. you in telecommerce please increasing XXXX, to rapidly on and also margin product line margin growing quarter? first what major FSC, strong on margin in And the on provide drivers results commerce My ask tailwind trend have question, margin, the Thanks second opportunity about overall headwind strong your second current for items. congratulations are margin is color in I which is metrics expansion the more Can accuracies? saw for question the major the the

about My the Eats second question side. is

improving growth forward? and -- Eats question. for share share it second even That's strategy you the prioritize Or second stronger seems balanced the question scale? forward, of the this going the look to Is margin economy strategy momentum gain quarter. with margin focused gain my profitability? line going note. So between question, market And on more do first Subquestion top be in market stand-alone the first the will on you

On profit that drivers product supply to improvement we several commerce, generated -- significant you of years. bps be represents of of improvements margin-accretive are we an gross year-over-year. utilization chain, improvements recorded XX%, over same generating as which XXX last These technology, improvements, nearly billion of and of margin mentioned, of the our over margin that offerings, The seen in continue we've expansion quarters operations continuous QX, AI. automation and $X the including greater scaling

on continue this improve margins these of our And past, time a but that That's still opportunity of target. variables. over pointed we adjusted to one uneven margin upwards long-term and quarter-to-quarter, we march may XX% we its out in lot why be the EBITDA have provided expect towards the to reason profit over we guidance

cost point see we're each On as that because while our strong that improve scale. also improve that doing free That's we scale, currently excellence. important increasing continued delivery there focus out, each by members momentum economics to from WW Eats, to great frequency benefits aided and are you structure. benefit. unlimited and on at unit our is we've continuing operational discovering It's to of to see note positive, the Eats only our continuing adoption of who

other. one savings, with continue case between selection best growth the experience the out commerce, to restaurant the delivery in And providing we're focus over provide trade-offs of to of savings and economics breaking on not is and with as obsessed commerce We'll expense with customers and more service selection, at broadly. between the

you on FLC question one more Stanley, had margins. between

just I'll in So jump here.

So year-over-year. we as FLC there in quarter-over-quarter note, XXX% FLC is Bom accretive improvement. grew need were overall but areas margin QX, are many The sellers FLC excited is In making. from the a XX% progress the mentioned joining of number about and still are perspective. that his

and are and improve tech suboptimal to merchants, We processes investments systems continue to we'll making onboard there. our

the Choi. next line of comes Your question Eric from

The on developing first question offering. is

quarter. increased noticed million has I've $XX the So in offering developing to second

key, to parts the a go for helpful the go And million you for for offerings. just loss guidance million elaborate there's loss So potential a this bigger on would first little quarter? bit $X over Coupang the it the if simply $XX say the meaningfully for developing to would you compared extrapolating be moving could to year, more

driver It we don't the increase And seems EBITDA margin is really adjusted been around have for improvement insight And much commerce commerce gross profit Product for the my key forward. for for product going commerce. margin question cadence G&A of second G&A into like the lately. product

for and So could some the G&A are when you coming explain on this slide. drivers leverage from operating expect what the we could increase

Yes, your questions. Eric, for thanks

year, losses year, of updated of So this EBITDA year our $XXX developing on last offerings, Farfetch. full adjusted roughly guidance including we million

the full may that we be while these believe provided. the So year actual of offerings, the results will quarter-to-quarter, within various components line of still in timing previously our fluctuate expenses guidance with developing we have

this costs. On to related expenses mentioned. quarter administered inclusion by million a estimated as as to and year. it's as This expenses, $XXX increased primarily offerings our of versus increased revenue we overhead was percentage last that restructuring investments in the due The previously developing it's of Farfetch, well related

stronger investing a and Within in we are operations, our foundation technology to future for also core build infrastructure scalability.

our the customers and believe term, better operating leverage create the they us future these near while years on costs long-term So support serve we and growth. may investments they decrease value in margins as these temporarily couple we of will our in help will next

The Seyon is from Park Stanley. next Morgan from question

also the have opportunity. I X questions. you Thank for

follow all, up asked. to had what of First Dan on just

quarter profit evident. within think as and commerce just maybe product you the this I little know margin color the quarter, improvement and to, this impressive was operational those bit so was the the faster the that efficiencies for I particularly gross what share Could maybe of particularly growth, of a higher-margin mix drivers, products drivers. is more for more

least coverage Taiwan, a question But can My we would as to looking give into like you kind rolled what at very Taiwan. is I what second out some forward-looking, least Is cognizant not been guidance delivery? management morning on have available, get what can to on is any sense in how have next please? and residents, to of in available that, guess, back, that is not with available, regards that I'm most services Coupang's Taiwan you Taiwan, far at sense get

these are improvement room. variables it's we lot that There's early highlight a really of our on on on still these think I important our that margin expansion, variables. -- on to

a reason the basis. you And years over continue last continuous on margin see these why few happen so to the improvements

fluctuations these not time long-term in variables to XX% our achieve to of improvement we're are The improve line. to trajectory continue a adjusted believe over guidance over there long-term quarter-to-quarter. a on of But we straight is Now always EBITDA. all

but we too it that by Taiwan, share progress is to continue we're On early can be share I very seeing encouraged details, there. and momentum to the

that we to Korea Our And fact a able a we've start of is now yet, place. at customer none were we've the Taiwan, different quite Korea. much built part experience, in the lot to that selection levels what start very but in service are start to strong of better And in a we're savings, built leverage that in able place. due in we them in

stack, lot decade. selection refined optimization, of technology be our we've and fulfillment We're in invested that these a able things, to of management, chain supply Our logistics processes, a leverage Taiwan. to all over fortunate

while the be experience like able generate. only momentum customer increased investments level excited investing and and we're progress in the that already we're with to very on yet, the in and where to to of the we areas continue make the the current We're is pleased market. about experience many any we'd to disciplined of not returns we very are same spend, We're investments kind we've both can be have won't also journey convinced and excellence. leverage early made making, So because when the we in the about we'll operational we're

Taiwan the and our potential very we customer see returns opportunity about differentiation in we're and generally, Just shareholders, meaningful high, think extremely excited is for and to create experience we meaningful the

the from from of line Barclays. comes question next Your Shao Jiong

question follow-up margin. the a have I about First,

EBITDA about, wondering, that's you quarter just particularly to new more. And to grow you ] those this sort categories. XX% more at business, strong. categories go, Could peers XP about Bom I in you you're of categories? highlighted margin there's Are do Do I or to categories? for could also feel [ achievable? was talk have just are the margin in further target you talk Mike of there room what those margin the your about your talked guide, the of gross that going expect think higher you long-term feel was margin think think

I in about the higher I the kicked will be question wondering the if if is wondering, new few I the appreciated. second the think fee ago. the days I for -- a the up membership signing in ago. My you any? comments increase. as X fee of Any in existing members. members, of terms fee But kicked the fee was higher August WOW know months member talk was churn, could existing members about or beginning

thanks for lot We see opportunity. a the Jiong, questions. of Hi,

potential that Gaurav represent both earlier spend. we think I that see expansion lot in of retail spend very a category. There's mentioned every we almost of percentage overall still a small in

small $XXX categories, And selection our go just across general commerce that represent a improve customers. increase all is spend expand opportunity. to I as billion We those up fragmented of that trend our think. a the will and we So a massive for percentage continue very savings service

generally on our we an annual disclose basis. numbers WOW, On membership WOW

added creating focus more the our massive surplus year-end. we Maybe years continues and a [indiscernible]. a create will our is little And we've XX be through the are us So surplus expand built share there. value benefits to at there's different to over for for value members. for We chance our There value on bit good surplus what on WOW. customers to that

X let parents of example, children. one young As savings and just benefits, an those with delivery me take

market. resource the most some As the of and customers in time constrained

shoppers deliveries from more hours pay. X to focused, on including customers. trips streaming fee best continue the really deliveries, month. video they store to a free with benefits skipping WOW. equivalent And the on WOW existing they customers these XXx our who from join get that's on deal millions roughly discounts, planet the exclusive not For they and on And of attract tens retail That's monthly a of strive and to a just spend the we're saving of And children. say delivery. than have yet amount to where XX make savings customers better to savings that's serve and free returns, to their mention free that's free save the focus to to our laser-focused for these our Not to cost is increasing to

next of Lee The Instructions]. line James question comes the [Operator with from Mizuho.

Two here.

of of delivery you've free can share responses market seen gains, market. some in given One the your you competitive about talk

plan make conditions #X In in terms M&A, maybe in general, wondering maybe us the you of acquisition just would terms market? potential And help in also peer restaurant in with under the of do parity reach to understand kind your selections what what of space. I'm sense

James, second you clarify could you So the you question, when parity mentioned? on a said what parity,

In terms of selection. restaurant

generally speaking, some making -- selection has still our probably some areas places, that in to say are place of add We are, continuing have we I we're selection we is, better, improvement just to would is go. selection

on all most think unlock I program. to pillars savings, we X important been that thing for to winning those continuing to pillars. The the key selection, of to that on service, customer of growth a focus all of loyalty has long-term lot the continue X delivering is

M&A. our that plans are for There I So is think no focus. generally

space. we just that in the think on execute are I focused

There and are disconnect. may you, Thank further you call. no today's questions. now This concludes conference