2026 Third Quarter Earnings Call - COUPANG INC

Explicit Guidance:

• Q4 2026 Revenue: Consolidated constant currency revenue growth expected to accelerate to 13–14%, driven by continued recovery in Product Commerce.
• Q4 2026 Margins: Consolidated adjusted EBITDA margin expected to improve 50–150 basis points sequentially in Q4, supported by reduced marketing spend and Product Commerce progress.
• FY2026 Developing Offerings: Full-year losses guidance increased to $1 billion–$1.05 billion (previously $950M–$1B); top-end raised by $50M–$100M due to accelerated infrastructure investment in Taiwan.
• Product Commerce Margins: Expectation unchanged for adjusted EBITDA margins to return to pre-incident levels by mid-2027 (approx. Q2 2027).

Business-Segment Outlook:

• Product Commerce: Underlying customer spend is growing at normalized rates; non-returning customer cohorts will drop out of year-over-year comparisons in 2027, causing reported growth to converge with underlying base growth. Margins are projected to normalize as supply chain dislocations resolve and fixed cost leverage improves against demand.
• Developing Offerings (Taiwan): Revenue growth accelerating; WOW membership grew 100% YoY and 14% QoQ. Expect Taiwan to become a meaningful contributor to consolidated cash flow in the years to come. Full-year 2027 guidance for Developing Offerings losses will be provided in the Q4 earnings release.
• Developing Offerings (Eats): Korea and Japan offerings (Eats and Rocket Now) continue to operate at a break-even basis with no expected changes in the foreseeable future.
• New Initiatives: "Try Now, Pay Later" (fashion) is being rolled out in Korea with validation required on unit economics and scalability before broader expansion. Non-food on-demand delivery (extending Eats) is being piloted in Korea to leverage the on-demand network for faster delivery of non-food items.

Market and Competitive Outlook:

• Competitive Positioning: Core drivers remain "lowest prices, broadest selection, and unbeatable service." Recent data incident impact is viewed as temporary; returning customers are spending at record levels and compounding at normalized rates.
• Customer Behavior: New member cohorts are filling gaps, though initial spend is lower than established cohorts; spend growth is expected to accelerate as these cohorts mature.
• Infrastructure Strategy: In Taiwan, the company is intentionally building infrastructure and supply chain capacity ahead of demand to support future growth and service differentiation, accepting temporary capacity inefficiencies to secure long-term operational excellence.

Macro / Industry Outlook:

• Pricing and Costs: No specific macro headwinds (rates, FX, tariffs) highlighted as structural barriers; management views current margin compression drivers (supply chain, fixed cost imbalance, marketing) as temporary.
• Seasonality: Q4 benefits from a positive seasonality swing regarding the Chuseok holiday timing shift that negatively impacted Q3.

Strategic Initiatives:

• Taiwan Expansion: Accelerating infrastructure and supply chain investments in Taiwan to support next-day delivery to 50%+ of the population via Dawn Delivery and to scale the fulfillment network.
• Automation & Efficiency: Deploying AI cameras and autobaggers in packing stations to reduce manual scanning, cut time, and minimize packaging waste.
• Membership Value: Expanding WOW benefits (e.g., "Try Now, Pay Later") to increase retention and wallet share.
• Capital Allocation: Continued share repurchases; Q3 saw $201 million spent repurchasing 13 million shares.

Risks and Headwinds to Outlook:

• One-time Events: The July fulfillment center fire caused $248M in expenses ($95M COGS, $153M SG&A); excluding this, financial metrics show stronger underlying performance.
• Temporary Headwinds: Margin compression driven by the imbalance between fixed cost structure (pre-incident sizing) and current demand volumes; elevated marketing spend to reacquire customers; and supply chain dislocations normalizing as volumes rebuild.
• Investment Uncertainty: Increased losses in Developing Offerings due to front-loaded infrastructure spend; potential unevenness in the pace of spend returns.
• Seasonality: Weather-related seasonality from Q2 to Q3 can impact margins.

Management Tone on the Future:

• Confidence Level: High confidence in the durability of underlying customer spend growth and the trajectory of the Taiwan market. Management emphasizes that Q3 represented the low point for Product Commerce adjusted EBITDA margins.
• Guidance Stance: Guidance for margin recovery remains unchanged despite near-term volatility; management views the path to mid-2027 margin normalization as clear, driven by the resolution of temporary factors rather than structural changes.
• Discipline: Reiterated commitment to long-term value creation, testing new initiatives (like non-food on-demand) on a small scale with rigorous validation before scaling.

Miscellaneous:

• Tax Dynamics: Continued losses in early-stage operations in Taiwan and Japan result in no offsetting tax benefits at the consolidated level.
• Cash Flow: Trailing 12-month operating cash flow is $845M; Free Cash Flow is negative $409M, impacted by lower profitability, higher capex, fire-related costs, and elevated tax payments.