• Constant Currency Revenue Growth: 32% year over year, or 25% excluding Farfetch.
• Total Net Revenues Growth: 27% year over year, or 20% excluding Farfetch.
• Product Commerce Revenue Growth: 16% year over year, or 20% in constant currency.
• Gross Profit: $2.3 billion, representing 45% year-over-year growth.
• Gross Profit Margin: 28.8%, or 28.1% excluding Farfetch.
• Net Income Attributable to Coupang Stockholders: $70 million, with diluted earnings per share of $0.04.
• Adjusted EBITDA: $343 million, with a margin of 4.4%.
• Product Commerce Adjusted EBITDA: $470 million, with a margin of 6.8%.
• Developing Offerings Revenue Growth: Nearly 350% year over year, or over 145% excluding Farfetch.
• Operating Cash Flow: $1.8 billion over the trailing 12 months.
• Free Cash Flow: $935 million over the trailing 12 months.

• Warning! GuruFocus has detected 7 Warning Signs with CPNG.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Coupang Inc (NYSE:CPNG) reported a 32% year-over-year growth in constant currency revenues, marking another quarter of at least 20% growth since their IPO.
• Active customers in product commerce increased by 11% year over year, driven by higher engagement and increased spending from existing customers.
• The company's WOW membership program has significantly boosted customer engagement, with WOW members ordering nine times more frequently than non-members.
• Coupang Inc (NYSE:CPNG) achieved near break-even profitability for its Farfetch acquisition, ahead of the year-end target.
• The company's gross profit grew by 45% year over year, with a gross profit margin of 28.8%, indicating improved operational efficiencies.

Negative Points

• The company experienced a 355 basis points increase in OG&A expenses as a percentage of revenue, primarily due to Farfetch acquisition costs.
• Product commerce gross profit margin decreased by 30 basis points quarter over quarter, indicating some seasonal and operational cost fluctuations.
• Developing offerings segment reported a $127 million loss, although this was an improvement from previous quarters.
• The effective income tax rate was 52%, driven by consolidation of pretax losses in Farfetch and nondeductible expenses.
• Free cash flow decreased by $578 million over the trailing 12 months, attributed to non-recurring working capital benefits and timing of capital expenditure payments.

Q & A Highlights

Q: Could you elaborate on the reduction in developing offering losses this quarter and provide some insight into the fourth quarter trend and next year? Also, can you discuss Farfetch's progress towards profitability and potential synergies with Coupang? A: The reduction in developing offering losses is due to the timing of expenses, which may fluctuate quarter-to-quarter. For Farfetch, we achieved near breakeven adjusted EBITDA in Q3, ahead of our year-end goal. We will focus on stabilization for the rest of the year and explore synergies with Coupang next year.

Q: Can you explain the $180 million increase in OG&A costs and whether this is temporary or structural, especially regarding technology spend? Also, what is the year-on-year growth for FLC in Q3? A: The increase in OG&A, particularly in technology and infrastructure, is due to timing and not a structural change. We expect OG&A to decline as a percentage of revenue over time. FLC saw over 130% year-over-year growth in units, sellers, and volumes, and it remains a significant growth driver.

Q: What is the outlook for product commerce margin expansion next year, and will FLC be a more significant margin driver? Also, can you provide guidance on developing offering losses in 2025? A: We expect some quarterly fluctuations in product commerce margins but are confident in long-term potential. FLC will continue to be a significant growth driver. We will provide more guidance on developing offering losses in 2025 in the upcoming quarter.

Q: Can you provide more details on the technology investments in Q3 and whether they are one-time or ongoing? Also, what is the current ad take rate, and how do you see it evolving? A: Our technology investments are ongoing and not capitalized, so there are no one-time expenses. The ad business is still developing and remains a small percentage of our transaction volume, with potential for growth as we build out more tools and services.

Q: Can you discuss the improvements in the Eats business and your market share in food delivery? Also, provide an update on your progress in Taiwan and efforts to resolve service quality issues. A: We continue to see strong customer response in Eats, focusing on providing more choice and value. In Taiwan, we leverage our experience from Korea to scale efficiently and are disciplined in our investments, with updates to follow as we achieve milestones.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.