Coupang (CPNG) 5 Nov 242024 Q3 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 Third 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

and Thanks, operator. Conference the Quarter Earnings Bom Coupang's today Anand. everyone, I'm pleased to Kim; CEO, Call. and on our Third CFO, to Gaurav by XXXX Founder Welcome, our be call joined

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

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

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

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

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

joining for everyone, us today. Thanks,

the review quarter results for takeaways. to third X we Before like in detail, start with our I'd key

not a and at trade-offs that years expanding result and consistent of ever-improving one of strong experience to an other. to deliver and drive margins the excellence, investment the customers are our First, do operational growth the things and relentless break of hard our the for expense

like Commerce Fulfillment is established selection cohorts, Logistics both in Fresh primarily expansion Product customer by offerings driven FLC. Coupang from or and and our Second, part existing newer and categories by deeper large growth fueled by engagement in our in

cohorts. spend active from supplemented will growth be by cohorts customer the of converging Over the long term, new existing

journey. for year. to Eats, Third, of the Taiwan, Farfetch, the continue we've important potential step, become with with stages each offerings attractive still the our like Moments very deliver to we by ads we're forward of seen and the that on positive in And in these even throughout wow with that It's more note FLC, Play march customers trajectory early along of meaningful nascent offerings, their create returns. encouraged each to and

for Now a the highlights our from results quarter. few

And currency we revenues excluding quarters growth, able which earlier This year to marks this quarter, last currency another opportunity been or XX at constant in still the constant XX% XX% small XX to just do Farfetch, grew We still, least our massive over believe to reported serve. out since of it of acquired This realized. continue commerce yet the we in the in represent be quarter growth of markets which XX% we've we've year. yet much untapped, we with come a IPO. of opportunity largely to is the percentage years the

Active Customers year-over-year. primarily the grew in note of important to continues Product increasing that It's XX% again, our be growth our driven by up customers. Commerce existing spend to

levels, strong currently, We of at services. continue the including X/X our add purchase We're our Rocket all cohorts categories quarter, process as spending more offer. still all the in more customers on we or for of more discovering and XX of only than higher cohorts. cohorts, our X and of provide oldest of more our out highest categories what the spend customer in increased even their we to oldest. potential is Again, selection And our engagement see this spend

membership cohort the compounding One spend program. our of driver savings of value is the expanding WOW

free delivery, our of and deliveries. WOW content WOW many that our Fresh reflected WOW levels see value over increasingly Eats shipping, We members of on free free dawn free the on delivery free benefits members. Xx they free higher of members play, Our our our and including average non-WOW of access WOW same-day mature Coupang, receive the customers. most in members, to and X.Xx And the order of returns, the frequency which newest engagement spend that see WOW is on Rocket

to offering yet best service. and by the opportunity overall is selection, trade-off experience there between savings break delivery. available a and of the in provide mission become on that lot selection best believe is still there's to the customer And Our as service Rocket significant selection we is a to

example. Just one small

the our beauty This luxury new gives brands. launched to access luxury of R.Lux, offering, we quarter, which most customers some in-demand

elevated directly a kind and via exclusive of and delivery in partnered rich most It's brands interact products we've sophisticated white the R.Lux's the custom-designed much shopping for delight, service to service. with customers' come. latest and environment We've new added our provide to selection brands another next or of and with receive there's exclusively luxury just R.Lux. blood to Customers same-day and packaging example Rockets more

enjoy see We Rocket to that with continue can FLC which impressive also our selection Delivery. momentum customers offering, expands free the in

volumes XXX% FLC to and its and of the seen growth year. growth quarter FLC overall come. it significant believe in continued we've early the year-over-year. in be sellers over at Our growing also the for our growth we a pace them will units, this strong story trajectory, of part throughout years is each in of stages

on Now developing offerings. words a few

throughout we on is we've making team seen our continue previously the through the progress With noted, driving our to advancing execution. Farfetch, see positive disciplined initiatives efficiency operational trajectory year. significant that As I in

near profitability We year, earlier goal was stated As that to quarter. year. the of milestone hit we the breakeven this end this achieve by our

Taiwan, embraced and more and inventory through customers, providing food We're directly the the we're delivery about offering. selection our customers. with more our also exceptional we're brands to and excited service seeing Eats partnering what many to from In strong expand added the growth times dramatic We're and have we're for can response customers demonstrated we've from meaningful retail And that past. where of redefine value with we've the in supply, brands seen we Taiwan whom partner in growth. as expect the excited online alter to trajectory who we've

of that context untapped and potential just we're the getting the massive started. lies ahead, In

relentless focused capture of operational Our ability customer pursuit depend WOW that the to on our to opportunity and ability will on excellence. stay

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

In Bom. we throughout continued this year. strong that delivered trend QX, have of results the we Thanks,

Coupang Active to this with momentum, continue results growth engage demonstrated customers in adjusted and reporting EBITDA. gross Our is sustained which with quarter, Commerce profit are expanding by revenues, the Product we Customers,

I go the through need comparative quarter for in items Before highlight are context we I provide to to numbers more reporting. detail, to few a the the numbers

results. with I'll acquisition last change of the QX quarterly you without remind longer Farfetch earlier this provide in And second, accounting and began Farfetch. in no year of results completed QX year-over-year I our that FLC First, our Where year. possible, impacts comparative of

adjustments a As growth rates year-over-year to are longer FLC revenue needed. no result, quarterly

This Farfetch. quarter, of our net the total impact XX% revenues grew or XX%, year-over-year excluding

currency currencies effects in Farfetch. foreign changes the XX% constant adjusting for XX% of or Our was excluding growth

QX, Product spend constant XX% compares During in year-over-year Commerce in of Commerce This to volumes. at or flat Product which growth currency total the is with revenues This XX% retail grew XX% relatively revenue in our overall Korea segment, Product Commerce was our the growth consistent currency. year-over-year. constant

portion a runway As of we continue see total growth massive the for of in Korea, a ahead small we be very commerce spend us. to

QX to our This Active spending levels Commerce the historically of short-term from revenues X% newer in Net spend continue customers per Customers we cohorts. this noted average Bom Product X% quarter. strong customers in in to impacted dilution our by We see levels year-over-year levels see highest constant growth quarters. that grew active continue the spend early was the or spend cohorts in their even our have of earlier, lower increase, as and And oldest currency. all

this QX nearly have that XXX% XXX% Developing Offerings the similar Our or in throughout segment constant Developing year-over-year year. grew segment seen Offerings continued currency. over momentum we revenues

currency. Farfetch, XXX% over Developing initiatives Offerings we customer remain year. consistent for about revenues or momentum seen as potential by the Offerings' the response constant each have grew strong throughout XXX% of Developing confident the We the within Excluding and segment demonstrated in

profit growth and billion of a gross representing We XX.X%. reported quarter gross profit, in $X.X another XX% with record margin year-over-year

Farfetch, the billion would points versus margin also I gross over XX.X%. XXX of represents at we in overall a given emphasize services improvement primary margin profit year-over-year of and in Excluding last within channels as year. business. growing indicator growth of basis evolving profit of to underlying our a gross with delivered our various $X.X This offerings XX% a like importance of growth the mix

gross Within margin profit of factors year. points we to primarily year, XXX This over expansion gross a have represents of our more driving of Product the profit margin saw billion than Commerce segment, that XX%. similar by seen an XX% and $X.X improvement basis driven growth throughout we last year-over-year

of utilization continue benefits increased efficiencies of We further the and see automation chain technology, offerings. including greater from optimization supply across scaling from and operations, margin-accretive benefits to

QX. a largely is gross quarterly some basis, decreased profit This due Commerce including impacts. versus margin our to quarter-over-quarter seasonal fluctuations business, On Product in basis XX points

have we pointed to to profit expanding continue over may we past, quarter-over-quarter, uneven be in margins time. margins out As continue the expect our but

related in expense of was and as we This the basis a increase restructuring points of year. versus inclusion OG&A to its revenue due acquisition quarter, saw primarily XXX Farfetch a increase percentage costs. and last This

change and of stronger investing by investment in operating our technology scalability. reflect revenues and infrastructure costs. and into also infrastructure a The future are in tech not for does driven higher structural percentage a a We timing build to foundation as is

As a over before, revenue. expect as time we OG&A we scale have will many investments we and to generate percentage of decline these on demonstrated times leverage as

taxes net share Coupang to We attributable resulted of income generated in earnings $XX income $XXX diluted a $X.XX. before of stockholders. of income QX million million This and per in

income $X.XX. nonrecurring and net was and reported Farfetch. to this diluted Among other quarter $XXX Coupang of adjusted per EBITDA $XXX acquisition approximately restructuring earnings the costs things, share consolidated the this a excludes million million related Farfetch, shareholders was Excluding attributable quarter. we for On basis, to

generated for was margin EBITDA a adjusted trailing margin On we $X.X quarter basis, X.X%. with X.X%. adjusted a billion of Our of EBITDA the XX-month

EBITDA XX-month million with over $XXX trailing XX X.X%. in the reported adjusted margin trailing EBITDA months, $X.X adjusted we Farfetch, Excluding of and billion QX of a

expanding be ability going confident to consistently deliver to annual margins consolidated on continue forward. basis in We an our

XXX delivered EBITDA margin expansion This Product of with basis quarter. year-over-year and of points margin X.X%. represents decrease a versus segment Commerce adjusted last $XXX Our a million of this a of points basis XX quarter

to spend operational technology-related in time our related in we to over in generate levels, represents as quarter. due leverage This against as costs is scale. and these increase fulfillment in part an decrease to costs quarter-over-quarter costs increases this the historical well expect spend This as adjustment we fluctuations operating technology

our $XX quarter-over-quarter. for in improving million $XX $XXX million segment Offerings, was and Developing quarter, QX adjusted million the loss EBITDA For year-over-year

driven notably to level some most in Eats continue improvements the saw from see quarter-to-quarter, in to expect both unevenness improvements quarter Farfetch. from we this the While and losses of we are

are is free cash and were operating the our working flow this as timing to capital no million period we a months. to variance regards generation, achieving capital cash driven nonrecurring that certain prior flow We trailing profitability. as of well in previously Farfetch, cash With excited communicated near billion versus flow prior change significant XX-month $XXX by we payments. benefits represents and of the expenditure generated quarter. cash free free There $XXX flow report in our the trailing primarily XX-month breakeven structural is we hit that in goal in the This over of million trailing XX decrease $X.X of

creates are increase making CapEx infrastructure that and we unevenness majority in spend. some of the the of The which relates in in timing Korea, to levels investments

We capital intensity maintaining these the of strategies our over real to also assets. strategic operations estate reduce control while exploring are operational

pretax nondeductible effective of losses tax This an rate consolidation quarter, in and expenses. income of driven XX% Farfetch reported we by

As we to a an to Farfetch tax is this reminder, excluding this rate obligations closer accounting be XX%, to losses. cash as our tax just year expect XX%

QX, quarter driving and teams that value and Our to shareholders. to commitment long-term growth deliver both delivered in our investing one demonstrates another durable customers strong to

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

comes Instructions] Goldman Cha from from first Eric Sachs. [Operator question The

result questions Developing a great I quarter. in a on Offerings. X have tough Congrats on

come the has on elaborate quarter down some you of the hint some is provide would Could you help. X you year, a also compared in pieces? And And bit get into could could what a into that this the previous quarter. really the moving quite fourth Developing loss trend First trend if of that Offering next terms color to quarter might be on the loss.

the Farfetch fourth we see Farfetch question Can second the nice close be breakeven this on The synergy for some to next is Farfetch? specifically. to be It's and already Coupang quarter profits And maybe would and between expecting year? into quarter. what reached the

On nature expenses past. components to of timing fourth have and they with question. the there's update for of as there, your I for fluctuate may that in Developing Offerings, investments on to the thanks it's think the Eric, due quarter-to-quarter, various that quarter. anything enough worth the highlighting don't our certainly front material the

and so On and I far work through the has at achieved has earlier, near the team team of Farfetch, Farfetch more We're very especially in is goal the and to as scale Gaurav this shared of finish executed there's the which job the do year. breakeven of to adjusted that discipline shared goal with there, of EBITDA stabilization and the the we're year, happy QX. our speed end-of-year the remainder proud still

time. with look Next Coupang. year, And to we updates appropriate at sharing including we'll opportunities, begin the forward to assess synergies other

Park with Stanley. from comes question next The Morgan Seyon

about up $XXX Difficulty] maybe million. like [Technical it looks was

don't of please? the would question. I think most that you mind caught repeating Seyon, sorry, I'm I question,

me Can right now? you hear

Yes.

Okay.

some question that increase. maybe the the there Is So much my technology guess, especially cost, seasonal in wanted saw which OG&A? sequential on kind structural, been had I Gaurav and sense I of technology Usually, as influencing kind automation. get what higher on to spend for to I of of the how as million first is spend. on spend? there as compared factors has about capital just is is spending technology question. accounted that of are a explained know for That's a temporary OG&A $XXX amortization the that well

the growth to But we available. if be I'm sense question, a a do have FLC take of year-on-year sure been readily going would growth not and were for on to if we third it's the basis, second what have it quarter? The have

the particularly OG&A, infrastructure the and and automation on or spend. Seyon, technology technology

or really and reflect towards not numbers. change. unevenness of this build quarter scalability. don't As to made timing business see to future we've some The a to that Gaurav investment and foundation with It's infrastructure schedule there our for tech you does -- make percentage investment we eye quarterly because continue and structural of mentioned just earlier, for revenues, may an in our matter we investments always quarter-to-quarter we're the higher manage accounted

of one. as we've FLC, So momentum to revenue. in on And it's to the again, timing issue, year percentage a in investments, units, think share -- our QX. expect FLC's of leverage I OG&A and and significant it structural of to this years stages, its is decline expect this not growth overall will in over in over them early come. continued past we we have sellers we And these a FLC volumes far throughout is so to time a as strong generate that's part On grew year-over-year. quarter and we can sorry, seen be this continue for a what that year, growth each still XXX%

The is Yang JPMorgan. Stanley with next question from

X questions. have Okay. I

for strong has First years a quarter. on question perspective, bit consistent and this of margin some quite is side. Commerce Product trajectory expansion trailing The like although uneven the margin been on

year, expect margin margin or speed the or among Commerce you will expansion year? next driver meaningful margin FLC the accelerate similar do level remain more to to to be on drivers, XXXX next And decelerate? Product Moving also

second is question the My Offering on Developing side.

but curious Offering achieved of it margin trend about margin. the Any the already a third your XXXX? mix during older, Farfetch Is your in You loss color guidance bit guidance of quarter? on Developing

Commerce about versus Product generated an basis margin which points but year-over-year, adjusted out, is XXX point basis you points as Stanley, dec in improvement million XX $XXX EBITDA, of QX.

seasonal consistent due XX%. And in quarterly it We that's EBITDA, past. QX And margin often business. our performance there. over versus the And weather-related this adjusted QX. in fluctuation provided fluctuations our that's see quarter, impact quarterly some see to we expenses. included for been We which with something there's some these in guidance So long-term is

We business. upside of of continue our every see to in part lot a almost

potential among offerings, quarter-to-quarter both I many And margin waste. some technology, experience you'll improve leverage we're reduce opportunity accretive And unevenness, to there. see enhance including but processes and about the think confident are there opportunities AI expand and long-term automation, customer other things to

still about upcoming share the or I have But Farfetch. the pleased second on Farfetch done. XXXX your remainder to focus is There's Developing work remains -- we throughout as stabilization our making mentioned, still thoughts with not the job on of on XXXX On the question in quarter. of still -- finishing the so But progress guidance Offerings, think more and we'll to the our we're do, far, more I it's job on on we're year.

with question Shao next Jiong The from Instructions] [Operator Barclays. comes

I I first if may. X have a questions, follow-up quick and

go investments going anything to a of be QX So down more margins to this just as And will of Was out earlier, to this investments then -- I have forward given I was if going just base lot questions. I a in I because grow to extra you like is just which a know. that then mentioned and intensive we that, technology, I intense get again? you're color seems think, onetime? amortize we amortized course, investment Or quarter. expand quarter-to-quarter. there the tend that be just the and the try from wondering was Bom, And bit little there, you X may, of understand of up in investments of wondering, sort

Sure. Gaurav our we -- but capitalizing more Look, I not think investments. comment on are can tech don't this, we

expect have we demonstrated it you OG&A look generate on and -- of broadly and technology performance think bit we quarterly surprising onetime So that depreciation our us. at -- in question and these continued this no historical on -- little investment are time. can to continue a leverage that this more infrastructure. part are our to We've and over I for amortization on There is certainly is

because or unevenness just see manage business don't we to will some hit like quarterly expectations our on investments quarter-to-quarter You this.

the I investments. some capitalize you're unevenness that's tech think don't seeing. again, we our So of And

not amortization, issue talking about depreciation any of big investments onetime here. So is an reflecting this here. we're not And

Okay. helpful. This super is

I Okay, know questions terms share driver, little insight talk you that's the and a are, your explain you growth can one, there can to? My That's things. take think has you margin. currently of if high a are bit hoping could I helped that been great. in you you was get some ad range about where rate.

sort noticed to if deliver have the something you things guys cross-border products some help Or to we that is of that our by you do of hey, get campaign of Coupang many, day, we of is do question do that? of want second too sort or sort much you the Is that offering? some are day to doing My we pay shouldn't to fulfilled a cross-border. to many attention just meaningful? one Just

to Jiong, and second your initiatives. initiatives think small. there's a I point, of number big They're

more trying to bring to We're the initiatives trying So think there. our of number and to always customers. improve selection a always to We're fronts increase we're on across I services, savings. trying see always company you'll

to and important investment an On ads, innovation for area to well. question, of think it's continues first be specifically, I your it us, going and

before, we both need building experience consumers with to that developing the in we transaction than the of services We're best we've and the lower out range volume advertisers. the it's our and see believe we provide levels As global our of said tools overall stages peers. percentage small innovative full a of for still and still

of with Lee the We Mizuho. line take last question from our James now will

Two here. over

you're and which food the increased also business? on And you bit, the seeing Eats, progress you you maybe for supply that delivery the losses a efficiency? of comment the can share on little your can of out quarter. market guys First business unpack on Maybe improvement called aspect expanding this

you and in update facing us progress of you're on that positioning Taiwan, some secondly, of made can the efforts issue service And in you on give an region on kind your Taiwan resolving of currently market quality e-commerce your maybe industry? the and

on we've or that segment shared the Offerings shared improvement, Developing we've our we is business have what think losses. Farfetch the I improved that offering James,

-- I Farfetch which achieved we're of again was also breakeven, which it's team achieve the proud for job year, the for we've is that, the having target worth end think of Specifically, noting near not really but that our finished. it's

that from to providing a -- are continue to the we're the see we customers Eats, response value and levels service strong our that providing. we're we

selection and with Our goal there choice there customers future share more when very on savings. milestones with are service and updates early, It's service meaningful or in front. is to provide offers still we'll developments a the that that

what it lot Taiwan, operational be we That's built of I progress. early. And in about us we mentioned, broadly. generate fortunate are -- opportunity in will we us did the able scale. think, more to we We've years. there in leverage over believe quickly help we're still There's we a helping It's Korea have there many to also momentum Korea. excited certainly efficiencies than as

future. any only always, more we very be the providing more look As we'll with we appropriate returns in when we are convinced increased levels forward to of updates disciplined can there spend, time the And generate. at investing about the

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