2026 Third Quarter Earnings Call - COUPANG INC

Explicit Guidance:

• Q4 2026 Revenue Growth: Consolidated constant currency revenue growth expected to be 13–14%.
• Q4 2026 Adjusted EBITDA Margins: Expected to increase by 50 to 150 basis points sequentially compared to Q3, driven by reduced marketing spend and continued product commerce recovery.
• Full-Year 2026 Developing Offerings Loss: Adjusted range updated to $950 million to $1.1 billion (previously $950 million to $1.05 billion), with the top end increased by $50–$100 million.
• Product Commerce Margin Recovery: Targeting return to pre-incident adjusted EBITDA margin levels by the midpoint of 2027.
• 2027 Outlook: Full-year financial guidance for developing offerings and consolidated metrics to be provided in the Q4 2026 earnings release.

Business-Segment Outlook:

• Product Commerce: Recovery trajectory remains intact; reported growth and margins expected to approximate historical levels as the data-incident affected periods lapse in 2027. Active customer spend by returning and existing cohorts is compounding at normalized, record levels.
• WOW Membership (Korea): Membership levels at historical highs with net additions exceeding historical rates; new benefit "Try Now, Pay Later" (7-day trial for fashion) currently being rolled out to enhance value and retention.
• Product Commerce Margins: Q3 identified as the low point; margins expected to recover sequentially through Q4 2026 and normalize by mid-2027 as supply chain dislocations resolve, fixed cost leverage improves with volume, and marketing spend tapers.
• Taiwan Operations: Revenue growth accelerating (27% constant currency in Korea's developing offerings includes Taiwan); Rocket delivery now delivering next-day 7 days a week to the vast majority of orders; Dawn delivery accessible to >50% of the population; WOW membership growth accelerated to >100% YoY and 14% QoQ in Q3.
• Developing Offerings (Eats/Rocket Now): Eats in Korea and Japan operating at break-even with expectations to remain there; non-food on-demand delivery expanding in Korea (leveraging Eats network for faster, small-batch non-food delivery); Taiwan expansion is the primary driver of increased full-year loss guidance due to accelerated infrastructure investments.
• Fresh (Korea): Volume growth tracking at more than twice the pace of overall Product Commerce; expected to remain a high-frequency, margin-accretive category.

Market and Competitive Outlook:

• Selection & Differentiation: Focus on widening the "experience gap" via deep selection (Rocket assortment growing at strong double-digit rates), lowest prices, and differentiated service (free next-day/dawn delivery).
• Competitive Response: Elevated marketing spend identified as a reaction to the data incident aimed at reacquiring departed core WOW members, not a response to broader competitive landscape shifts; spend expected to taper as customer retention stabilizes.
• Taiwan Value Proposition: Building a "Korea-style" flywheel in Taiwan through direct sourcing, owned logistics, and supply chain depth to offer everyday low prices and superior delivery, rather than relying on temporary marketing events for member growth.
• On-Demand Expansion: Testing non-food delivery via Eats/Rocket Now in Korea to offer minutes-long delivery for non-food items via partnerships with convenience stores and local merchants.

Macro / Industry Outlook:

• Economic/Customer Behavior: Underlying customer behavior remains strong; spend growth of existing and returning cohorts is "normalized" and durable, indicating resilience in consumer sentiment post-incident.
• Supply Chain: Headwinds (dislocation, fixed cost imbalance vs. pre-incident demand curve) are temporary and expected to normalize as volumes rebuild and capacity utilization aligns with the cost base.
• Seasonality: Q3 margins impacted by weather-related seasonality and Chuseok holiday timing (approx. -1% point drag on revenue growth); Q4 expected to benefit from timing shifts, though margins may remain uneven quarter-to-quarter.

Strategic Initiatives:

• Taiwan Infrastructure Build-out: Accelerating capital allocation to infrastructure and supply chain to support differentiated service and long-term profitability; investments made "ahead of demand" to ensure capacity meets future growth trajectory.
• Automation & Technology: Deploying AI cameras at packing stations and autobaggers to reduce manual scanning, cut packaging waste, and lower cost-to-serve; continued process improvements expected to drive long-term margin expansion.
• New Benefit Launch: Rolling out "Try Now, Pay Later" in fashion (Korea) as a pilot; scaling decision contingent on validation of customer value, unit economics, scalability, and shareholder ROI.
• Dawn Delivery Expansion: Extending Dawn delivery service in Taiwan to cover over 50% of the population following a one-quarter rollout.
• Non-Food On-Demand: Extending Eats in Korea to include non-food categories via partnerships to increase delivery frequency and convenience.

Risks and Headwinds to Outlook:

• One-Time Charges: $248 million in expenses related to the July fulfillment center fire (recorded in Q3) impact current results but are not recurring.
• Fixed Cost Base Imbalance: Current demand levels remain below the pre-incident capacity, causing near-term margin pressure that is expected to resolve as volume recovers.
• Investment Volatility: Developing offerings (specifically Taiwan) may see uneven investment pacing and continued losses as infrastructure is built ahead of demand.
• Seasonality: Weather patterns and holiday timing (e.g., Chuseok shift) can cause quarterly volatility in revenue growth and margins.
• Unreturned Customers: A small cohort of members has not returned from the data incident; while new member additions are filling the gap, the full recovery of the customer base is a function of time as the old cohort drops out of the year-over-year comp.

Management Tone on the Future:

• Confidence: High confidence in the durability of the customer spend recovery and the strength of the value proposition; views Q3 as the "low point" for margins with a clear path to normalization.
• Long-Term View: Emphasis on "wowing customers" and operational excellence as the primary compounding engines; willing to accept short-term margin erosion to build long-term scale (particularly in Taiwan).
• Discipline: Reiterated commitment to rigorous investment analysis; no intention to change the 2027 margin recovery timeline despite increased Taiwan spending.
• Trend: Marketing spend is explicitly stated to be tapering, marking a shift from reacquisition-focused spending to organic growth.

Miscellaneous:

• Stock Repurchases: Company repurchased 13 million Class A shares for approximately $201 million during the quarter.
• Fire Impact: Specific financial breakdown of the $248 million fire-related expense provided ($95M in Cost of Sales, $153M in O&G&A).
• Tax Dynamics: Consolidated tax rates remain influenced by losses in early-stage Taiwan and Japan operations which do not generate offsetting tax benefits.