2026 Third Quarter Earnings Call - COUPANG INC

Financial Performance:

• Consolidated revenue grew 7% reported and 11% in constant currency to $10 billion, exceeding the 8-9% guidance range.
• Product Commerce revenue was $8.4 billion (5% reported, 8% constant currency; 9% adjusted for Chuseok timing), with Active Customers at 25.2 million.
• Developing Offerings revenue reached $1.6 billion, growing 23% reported and 27% constant currency.
• Consolidated gross profit was $2.6 billion (25.7% margin); excluding ~$95M fire-related costs, margin was 26.7%.
• Product Commerce adjusted EBITDA was $385 million (4.6% margin), down 420 bps year-over-year due to temporary headwinds; excluding fire costs, margin was 4.6%.
• Developed offerings reported segment-adjusted EBITDA loss of $269 million (up $50M QoQ) due to infrastructure investments.
• Consolidated operating loss was $450 million ($202M excluding fire costs); net loss attributable to shareholders was $501 million ($321M excluding fire costs).
• Diluted loss per share was $0.28 ($0.18 excluding fire costs).
• Operating cash flow for the trailing 12 months was $845 million; Free Cash Flow was negative $409 million.
• The company repurchased 13 million shares for approximately $201 million during the quarter.
• Record expenses of $248 million were incurred due to a July fire at a fulfillment center ($95M Cost of Sales, $153M SG&A).

Guidance and Future Outlook:

• Q4 consolidated constant currency revenue growth is guided at 13-14%.
• Q4 consolidated adjusted EBITDA margin is expected to improve 50-150 basis points sequentially.
• Product Commerce adjusted EBITDA margins are expected to return to pre-incident levels by mid-2027.
• Full-year Developing Offerings loss guidance was raised to $950M–$1.1B (up $50M–$100M from prior $1B top end) due to accelerated Taiwan infrastructure investments.
• Management expects the cadence of margin improvement to be continuous rather than a cliff, with Q3 representing the low point for PC margins.

Business Segments and Product Lines:

• Product Commerce: Core growth drivers remain low prices, broad selection, and service; Rocket Fresh volumes grew more than twice the pace of overall PC.
• WOW Membership: Reached record high levels in Korea with accelerating net additions; new "Try Now, Pay Later" fashion benefit launched.
• Taiwan: WOW membership grew >100% YoY and 14% QoQ; Dawn delivery now covers 50% of the population; own last-mile network delivers next-day service.
• Developing Offerings (Eats/Rocket Now): Expanding on-demand food delivery into non-food categories in Korea; Korea and Japan Eats operations are currently break-even.
• Technology: Deploying AI cameras and autobaggers in packing stations to reduce manual scanning and optimize packaging.

Market and Competitive Landscape:

• Strong customer retention and spend compounding among returning members (who left during the data incident) and core members, validating competitive moat.
• Taiwan market performance mirrors early-stage Korea trajectory, with strong adoption signals and accelerating growth.
• Management views the temporary drop in reported growth as non-structural, driven by fixed cost imbalance relative to current demand rather than loss of market share.

Risks and Challenges:

• Supply chain dislocations and fixed cost base imbalances relative to pre-incident demand curves continue to pressure margins in the near term.
• Weather-related seasonality and the timing shift of the Chuseok holiday impacted Q3 growth rates.
• Elevated marketing spend is required to reacquire departed members, impacting near-term profitability before tapering.
• Taiwan and Japan operations continue to generate losses as they scale infrastructure ahead of demand.

Management Commentary and Tone:

• Tone was confident and forward-looking, emphasizing that underlying customer behavior remains strong and recovery is on track.
• Management dismissed structural margin concerns, characterizing headwinds (fire, supply chain, marketing) as temporary.
• Emphasis placed on "wowing" customers through selection and service rather than short-term competitive price wars.
• Management reiterated a long-term discipline in capital allocation, particularly in Taiwan infrastructure build-out.

Analyst Questions and Answers:

• Margin Cadence: Management clarified that Q3 PC margins were the low point and improvement will be continuous through Q4, targeting pre-incident levels by mid-2027.
• Taiwan Investments: Increased guidance reflects a strategic decision to build infrastructure (logistics, supply chain) ahead of demand to accelerate growth; no specific marketing events drove Taiwan member growth.
• Marketing Spend: Elevated spending was specifically targeted at reacquiring core WOW members lost during the data incident, not a broad competitive response or drive for transient members; spend is expected to taper.
• Eats Non-Food: Launching non-food on-demand delivery focuses on convenience and speed (e.g., convenience stores) rather than broader selection, which Rocket Delivery already covers.
• Try Now, Pay Later: New benefits are tested small with strict validation across customer value, unit economics, scalability, and long-term ROI before scaling.

Other Key Points:

• The data incident's impact on reported growth is phasing out as non-returning cohorts drop out of the year-over-year comparison.
• Developing offerings in Taiwan are expected to be a meaningful contributor to consolidated cash flow in the years to come.
• Management is focusing on building operational culture and discipline in Taiwan to match the success seen in Korea.