Coupang Inc swung to a first-quarter operating loss of 354.5 billion won. Customer compensation paid after a personal data incident and temporary inefficiency in its logistics network hurt profitability. Revenue kept rising, but growth slipped into single digits for the first time since its listing, and active customers fell from the previous quarter.

Coupang Inc reported first-quarter revenue of 12.46 trillion won ($8.50 billion), up 8% from a year earlier, in a filing on May 5 (local time). The won figure applies an average won-dollar exchange rate of 1,465.16 for the first quarter. It had maintained double-digit quarterly growth through last year since its New York listing, but fell into single digits for the first time this quarter.

Profitability also worsened. The first-quarter operating loss was 354.5 billion won ($242 million), a swing to a loss, and net loss was 389.7 billion won ($266 million). Both were the largest in 4 years and 3 months since the fourth quarter of 2021. At that time, operating loss was 480 billion won and net loss was 522 billion won. The operating loss this quarter equals 52% of last year’s full-year operating profit of 679 billion won.

By business segment, revenue in product commerce, the core shopping service including Rocket Delivery, rose 4% to 10.51 trillion won from 9.98 trillion won a year earlier. In contrast, revenue from growth businesses such as its Taiwan business and Coupang Eats rose 28% to 1.95 trillion won from 1.51 trillion won a year earlier. Slower growth in core commerce and fast growth in growth businesses appeared at the same time.

Customer metrics also added pressure. Active customers in the first quarter rose 2% from a year earlier to 23.9 million, but fell by 700,000 from the fourth quarter of last year, when it had 24.6 million. Revenue per active customer rose 3% to 439,540 won from 427,080 won a year earlier, showing fewer customers but larger purchases by those who remained.

Data incident compensation and logistics inefficiency pressure profitability

Two factors directly drove the drop in profitability this quarter. They were compensation in the form of customer purchase credits due to a personal data incident and temporary inefficiency in the logistics network that occurred after actual demand fell short of planned demand after the incident.

Coupang Inc implemented a customer compensation programme starting on Jan. 15, providing purchase credits worth 50,000 won per person to all 33.7 million customers for three months, totalling 1.69 trillion won (about $1.2 billion). The amount used is deducted from revenue. Coupang Inc Chairman Bom Kim (김범석) said on the first-quarter earnings conference call that the impact of the purchase credits was "one-off, mostly reflected in the first quarter, with some impact continuing into early in the second quarter."

The second factor stemmed from structural features of the logistics network. Kim explained that Coupang’s facility expansion and supply chain planning are built on stable and predictable customer patterns. But an external factor, the personal data incident, disrupted customer demand patterns, leaving actual demand short of planned demand and resulting in idle facilities and inventory cost burdens.

Gaurav Anand said these factors drove product commerce gross profit margin to 30.3 percent, down 1 percentage point from a year earlier and down 1.6 percentage points from the previous quarter. Adjusted EBITDA margin also fell to 5 percent, down about 3 percentage points from a year earlier and down 2.7 percentage points from the previous quarter.

Wow membership recovers 80%, but growth rate normalisation to take time

Coupang stressed that customer metrics are recovering after the incident. Kim said January marked the low point for product commerce revenue growth, and the pace of year-on-year improvement accelerated in February and March. As of the end of April, it recovered about 80% of the decline in Wow membership after the incident as former members rejoined and new sign-ups increased, and sign-up and churn rates returned to past stable levels, he said.

It said it will take time for the recovery to be fully reflected in year-on-year growth. Kim said customer behaviour is normalising, but growth that was temporarily interrupted over the months affected continues to weigh on year-on-year comparisons. He expected margin expansion on an annual basis to resume from next year.

Anand forecast consolidated revenue growth of about 9 to 10 percent in the second quarter on a constant-currency basis. But he expected second-quarter consolidated adjusted EBITDA margin to fall 3 to 4 percent from a year earlier due to short-term factors tied to the personal data incident.

Coupang to pursue long-term margin recovery with Rocket Delivery assortment, automation and AI

Coupang said it will continue expanding the Rocket Delivery assortment and investing in automation and AI, separately from the short-term recovery process. Kim said many items customers want to buy are still not available via Rocket Delivery and that combining its direct-purchase catalogue and Rocket Growth (FLC) would narrow the gap. He also reaffirmed plans to apply automation and AI across logistics and delivery networks to raise service levels while cutting costs.

On its Taiwan growth business, it said its own last-mile delivery network that guarantees next-day delivery currently covers most volume. Customer retention resembles the pattern seen when it first began product commerce in South Korea, and it plans to focus this year on building a foundation for long-term growth. It also said Coupang Eats is showing a recovery trend similar to product commerce.

Revenue from growth businesses rose 25% on a constant-currency basis to $1.3 billion. It said this reflected strong growth in Taiwan and growth in Coupang Eats and Japan Rocket Now. The adjusted EBITDA loss for growth businesses was $329 million, which it said was within the annual investment range it had previously presented. Coupang Inc repurchased 20.4 million shares worth $391 million this quarter, and its board approved an additional $1 billion share buyback programme.