2026 Third Quarter Earnings Call - COUPANG INC

Financial Performance:

• Consolidated revenue grew 7% year-over-year (YoY) and 11% in constant currency (CC), beating the 8-9% guidance range; Product Commerce revenue was $8.4B (5% reported, 8% CC), while Developing Offerings revenue was $1.6B (23% reported, 27% CC).
• Total net revenues reached $10 billion; Gross profit margin was 25.7% (26.7% excluding $248M fire-related expenses), down 270 bps YoY and 150 bps quarter-over-quarter (QoQ).
• Operating loss was $450M ($202M excluding fire); Net loss attributable to stockholders was $501M ($321M excluding fire), translating to $0.28 and $0.18 diluted loss per share respectively.
• Adjusted EBITDA was $116M (1.2% margin), a 330 bps contraction YoY, driven by marketing spend, fixed cost imbalances, and supply chain dislocations.
• Operating cash flow for the trailing 12 months was $845M; Free cash flow was negative $409M due to lower profitability, increased CapEx, fire costs, and higher tax payments.
• Coupang repurchased 13 million shares of Class A common stock for approximately $201 million during the quarter.

Guidance and Future Outlook:

• Q4 2026 consolidated CC revenue growth is guided at 13-14%, reflecting continued recovery in Product Commerce and holiday seasonality.
• Q4 Adjusted EBITDA margin is expected to improve 50-150 bps QoQ, driven by reduced marketing spend and Product Commerce margin recovery.
• Product Commerce Adjusted EBITDA margins are expected to return to pre-incident levels by mid-2027, with Q3 identified as the low point for margins.
• Full-year Developing Offerings losses are now projected at $950M to $1.1B (increased from the previous upper bound of $1B) due to accelerated infrastructure investments in Taiwan.
• Management anticipates Taiwan becoming a meaningful contributor to consolidated cash flow in the near-to-mid term, following the trajectory seen in Korea.
• Eats (Korea and Japan) are expected to remain at break-even; no immediate change in funding dynamics for these segments is expected through 2027.

Business Segments and Product Lines:

• Product Commerce: Active customers reached 25.2M (+2% YoY); WOW membership is at an all-time high with accelerating net additions. "Try Now, Pay Later" launched for fashion. Rocket Fresh volumes grew >2x the pace of overall Product Commerce.
• Developing Offerings: Taiwan WOW membership grew >100% YoY and 14% QoQ; Dawn delivery now covers 50% of the population. Non-food on-demand delivery launched in Korea via Eats; Taiwan focuses on deepening local marketplace and global selections.
• Logistics & Innovation: Deployment of AI cameras and autobaggers in packing stations to automate and reduce waste. Next-day delivery covers vast majority of Taiwan orders.

Market and Competitive Landscape:

• Competitive position remains strong; returning customers have resumed spend at record levels and are compounding, validating the value proposition despite a prior data incident.
• Market share drivers include low prices, broad selection (assortment growing at strong double-digit rates), and differentiated delivery experience (free next-day/dawn delivery).
• Taiwan market signals mirror Korea's early-stage growth, with strong adoption and retention driving confidence in long-term value creation.

Risks and Challenges:

• Data Incident Aftermath: A small cohort of members has not returned, temporarily impacting growth and creating a fixed cost structure imbalance against pre-incident demand.
• Fire Costs: A July fulfillment center fire incurred $248M in expenses ($95M COGS, $153M OpEx), negatively impacting current margins.
• Margin Headwinds: Temporary factors include supply chain dislocations, elevated marketing spend for customer reacquisition, and seasonality (Chuseok holiday timing shift reduced CC growth by ~1% point).
• Investment Discipline: Accelerated investments in Taiwan infrastructure and supply chain increase near-term losses before profitability is achieved.

Management Commentary and Tone:

• Tone is confident and forward-looking, emphasizing that margin compressions are temporary and non-structural.
• Management highlighted the resilience of the core business, noting that returning and retained customers are spending at normalized or record rates.
• Commitment remains to long-term value creation through operational excellence, automation, and expanding the WOW membership value proposition.
• Acknowledged that Q3 represents the trough for Product Commerce margins, with a clear path to recovery.

Analyst Questions and Answers:

• Margin Cadence (Goldman Sachs): Management confirmed Q3 is the low point; improvements will occur progressively rather than as a sudden step, targeting pre-incident margins by mid-2027.
• Taiwan Investment Specifics (Goldman Sachs): Increased loss guidance is driven by accelerated infrastructure and supply chain investments ahead of demand to scale service differentiation.
• Eats Funding & User Spend (JPMorgan): Eats (Korea/Japan) remains at break-even; underlying user spend growth is durable and driven by customer experience, not just marketing.
• Marketing & WOW Members (Morgan Stanley): Elevated marketing was specifically targeted at reacquiring lost WOW members, not stimulating transient members; marketing spend is already tapering. No specific marketing events drove Taiwan's membership growth; organic value proposition did.
• Non-Food Eats & Seasonality (Barclays): Non-food Eats focus on convenience and speed (e.g., convenience stores) rather than selection breadth; Q4 margin guidance includes conservative adjustments for seasonal and holiday impacts.
• Taiwan Selection & Validation (Mizuho): Selection strategy balances local and global based on customer value; "Try Now, Pay Later" and other innovations require validation on unit economics and customer ROI before scaling.

Other Key Points:

• The Chuseok holiday timing shift negatively impacted YoY CC growth by approximately 1 percentage point due to the holiday occurring earlier this year compared to the prior year.
• Management emphasized that the "experience gap" (price, selection, service) remains the compounding engine for long-term growth.
• Fixed costs are currently sized for pre-incident demand, contributing to near-term margin pressure, but will align with demand as volumes rebuild.
• The company continues to iterate on small-scale innovations (e.g., packaging automation, new benefits) before full rollout.