The sharp deterioration, driven largely by a massive data breach disclosed in November, undercut profitability, disrupted cash conversion and triggered regulatory scrutiny on both sides of the Pacific — even as the company posted record annual revenue for 2025.
According to its filing with the U.S. Securities and Exchange Commission, the South Korean e-commerce giant, headquartered in the United States, generated $34.53 billion in net revenue in 2025, up 14 percent year-on-year and 18 percent on a constant-currency basis.
Net income attributable to shareholders reached $208 million, while adjusted EBITDA increased to $1.49 billion from $1.38 billion a year earlier. Gross profit climbed 15 percent to $10.14 billion, with margin improving modestly to 29.4 percent.
On the surface, scale and operating leverage appear intact.
But free cash flow tells a different story.
Free cash flow fell to $527 million in 2025 from $1.02 billion in 2024 — a 48 percent decline, representing $489 million less in cash generation. Management explicitly attributed the drop primarily to “the impact the data incident had on working capital in Q4 2025,” alongside elevated capital expenditures.
Operating cash flow slipped to $1.773 billion from $1.886 billion a year earlier.
Meanwhile, equipment-related capital expenditures surged to $1.015 billion from $634 million.
The working capital shock is particularly revealing. Coupang’s business model depends on rapid cash cycles — collecting from customers quickly while managing payables efficiently.
In the fourth quarter, however, cash lingered in refunds, credits, remediation costs and legal provisions rather than converting cleanly into free cash flow.
Demand did not collapse. Cash efficiency did.
Fourth-quarter profitability cratered
The October–December quarter marked a sharp inflection.
Revenue rose 11 percent year-on-year to $8.84 billion. However, operating income plunged to $8 million — a 97 percent decline — while net income swung to a $26 million loss.
Adjusted EBITDA fell to $267 million from $421 million, with margin compressing from 5.3 percent to 3.0 percent.
Sequentially, revenue declined from $9.27 billion in the third quarter to $8.84 billion in the fourth, marking a rare quarter-on-quarter contraction since Coupang’s 2021 New York listing.
Gross margin deteriorated by 248 basis points in Q4, underscoring the cost of remediation, security upgrades and customer-related expenses following the breach.
The episode illustrates a classic platform dynamic: transaction volumes can remain resilient, but profitability can deteriorate quickly when trust is impaired.
Bom Kim: Trust remains central
On the earnings conference call, founder and board chairman Bom Kim acknowledged the setback.
“Everything Coupang has achieved has been driven by our single goal of delivering a Wow experience to our customers,” he said. “We are doing our utmost to earn customers' trust, as nothing is more serious for us than failing to meet their expectations.”
He added, “While we faced challenges this quarter, particularly with the data incident, we remain committed to strengthening our operations and expanding our offerings. Our strong cash position allows us to invest in long-term growth opportunities.”
The remarks reflect management’s effort to frame the incident as a temporary disruption rather than a structural impairment.
The key question for investors, however, is whether the working capital shock was truly one-off — or whether heightened cybersecurity spending, compliance costs and customer incentives will structurally weigh on margins.
Core resilient, expansions magnify volatility
Coupang’s Product Commerce segment — including Rocket Delivery and Fresh — generated $29.59 billion in annual revenue, up 11 percent. Adjusted EBITDA improved to $2.5 billion, with margin expanding to 8.4 percent.
Active customers rose 8 percent year-on-year to 24.6 million in Q4, suggesting the core ecosystem remains broadly intact despite the breach.
This imbalance amplifies consolidated volatility: while the core produces steady cash flow, expansion businesses increase sensitivity to shocks.
The fourth-quarter incident exposed how quickly margin compression in emerging segments can compound pressure from unexpected events.
Regulatory scrutiny intensifies
The breach involved unauthorized access to roughly 34 million customer accounts, exposing names, phone numbers and shipping addresses, though not payment details or login credentials.
South Korea’s Personal Information Protection Commission has launched an investigation into whether Coupang’s internal access controls met legal standards.
In the United States, members of Congress have sought briefings on the scope of the breach, reflecting the company’s status as a New York–listed firm subject to global governance scrutiny.
While management says no secondary misuse has been detected, the scale of the breach presents a significant reputational risk in a subscription-driven model built on loyalty and trust.
Coupang shares closed Thursday at $18.71 on the Nasdaq, up 1.91 percent in regular trading. Following the earnings release, the stock fell roughly 3.6–3.7 percent in after-hours trading.
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