Coupang reports third profitable quarter in a row

South Korea’s Coupang Inc. on Wednesday reported three quarters of consecutive profits, calming investors' concerns about its cumulative losses as the e-commerce leader faces growing competition for its flagship ultra-fast delivery services.

The first-quarter results marked the first time for SoftBank-backed Coupang to post profits for three quarters in a row since introducing “Rocket Delivery” in 2014.

Its quarterly operating profit surpassed the $100 million mark for the first time as well.

Operating profit came in at $106.8 million for the January-March period, reversing the $205.7 million loss in the year-earlier period, the company said.

Coupang founder and CEO Bom Kim credited the earnings to the improved operational efficiency of its e-commerce platform, rather than advertising revenue and membership fees.

Moreover, it halved losses from new businesses such as over-the-top streaming platform Coupang Play, food delivery app Coupang Eats and fintech Coupang Pay.

“We improved our margins without raising product prices nor sacrificing customer experience,” he said on an earnings call with analysts.

The three-month earnings are based on the quarter’s average exchange rate of 1,275.58 won per dollar. Its first-quarter revenue also marked its largest-ever results for a single quarter, up 13% on-year to $5.8 billion.

Kim expressed confidence that Coupang would continue to increase both profits and revenue by expanding Rocket Delivery, its next-day delivery service, beyond food and daily necessities into a broader range of goods such as consumer electronics and furniture.

Its earnings have been rising since the third quarter of last year, when it swung to a profit.

Rocket Delivery is offered to paid members and those who buy at least 19,800 won ($15) worth of products through Coupang in one order.

MARGINS

Coupang boasts 19 million active users — those who make at least one purchase via Coupang every quarter — up 5% on-year.

Its free cash flows on a trailing 12-month basis turned to the black, reaching $451 million, a surge of $1.5 billion from a year earlier.

Earnings before interest, tax, depreciation and amortization (EBITDA) stood at $241 million in the first quarter. Its EBITDA margin, or operating profit as a percentage of revenue, was 4.2% versus a negative 1.8% a year earlier.

Over the longer term, Coupang aims to lift its EBITDA margin to 10% or higher.

The first-quarter results deducted its spending of several hundred million dollars on new projects, CEO Kim said.

Coupang made its trading debut on the New York Stock Exchange in March 2021, when its accumulated losses stood at $4.1 billion.

Write to Dong-Hui Park at donghuip@hankyung.com
Yeonhee Kim edited this article