November 28, 2024

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Coupang CEO Bom Kim (Coupang)

South Korean e-commerce giant Coupang is extending its winning streak in earnings, posting a profit for the second consecutive quarter in the fourth quarter 2022, according to its earnings report on Wednesday.

The US-listed company said it posted quarterly operating profits of $83.4 million in the September-December period, an almost 10 percent growth from $77 million in the third quarter when the company first turned a profit since launching its ultrafast Rocket Delivery service in 2014.

The company also reported record quarterly sales of $5.3 million, up 21 percent from the year before. For the whole fiscal year, its sales also hit an all-time high of $20 billion, which is also a 26 percent increase from 2021.

Coupang's adjusted earnings before interest, tax, depreciation and amortization (EBITDA), which monetize the company's ability to generate cash, rose to $300 million, compared to last year’s deficit of $207.4 million.

Coupang mainly attributed its record earnings to technological advances in its logistics facilities and optimization of supply chains.

The company added that sales from ventures separate from its core e-commerce business such as its food delivery platform Coupang Eats, financial service Coupang Pay, video streaming service Coupang Play along with other overseas businesses also helped drive up sales overall. Their combined sales were $628 million, up 25 percent from a year ago.

Coupang said the profitability of such businesses also increased drastically, with their combined annual EBITDA margin loss standing at $224 million, down 42 percent from 2021.

The e-commerce giant had long remained in the red despite being backed by Japan’s SoftBank Group and its highly-publicized stock debut in New York in 2021 as the largest foreign initial public offering on the Nasdaq since Alibaba in 2024.

However, things started turning around when it started recording positive EBITDA margins for its e-commerce business in the first quarter of 2022.

Maintaining the momentum, Coupang logged a positive EBITDA margin for overall business in the second quarter, and recorded operating profits in the third quarter for the first time, with aggressive investment in automation technologies for its logistics business.

Bom Kim, founder and CEO of Coupang, said during a conference call that there are a lot of reasons to be optimistic about Coupang's future, stating that an overwhelming majority of Korea's retail market is still focused on the offline market which sells products with high prices and limited selection.

"We have an opportunity to provide customers with a better alternative, one with wider selection, lower prices, and exceptional service, which in turn should lead us to significant growth in the overall retail market for years to come," said Kim.

"Additionally, our investments in nascent initiatives like food delivery, video streaming services, fintech services and international (logistics business) have the potential to unlock outsized value for customers and shareholders in promising new areas of growth.” Kim added.

"As we look forward to 2023, we expect to see margin expansion, though it may not be meaningful or consistent each quarter, and our strong foundation and momentum give us confidence in our ability to drive further penetration in the vast retail market while delivering new moments of ‘Wow’ for our customers," said Coupang’s Chief Financial Officer Gaurav Anand during the earnings call.

By Lee Yoon-seo (yoonseo.3348@heraldcorp.com)