Kim Beom-seok, Chairman of Coupang Inc., announced plans to continue investing in the Wow membership program and logistics innovation despite a decline in profitability due to a data breach incident. As customers who left after the breach return, the number of Wow members has reached an all-time high, and he anticipates that profitability in core businesses will approach pre-incident levels next year.
During a conference call on November 4, Kim stated, "Strong growth momentum continued across the business in the third quarter," adding that consolidated revenue grew by 11% year-over-year on a constant currency basis, exceeding guidance.
He noted that despite unfavorable conditions during the Chuseok holiday, growth accelerated compared to the second quarter, with the product commerce segment growing by 8% on a constant currency basis, and nearly 9% when excluding holiday impacts.
Coupang reported third-quarter revenue of 14.22 trillion won, an 11% increase from the same period last year, but recorded an operating loss of 642.3 billion won, marking the third consecutive quarter of losses since the data breach incident late last year.
For the first three quarters of this year, the cumulative operating loss reached 1.8318 trillion won, nearing the total operating profit of 1.8987 trillion won that Coupang achieved during its profitable years from 2023 to 2025.
Kim highlighted the expansion of the Wow membership as a key growth strategy, stating, "Wow membership has shown solid growth compared to both the previous year and the previous quarter, reaching an all-time high," with net increases surpassing past levels due to returning and new members.
He emphasized ongoing investments to enhance value propositions for Wow members, aiming to make it the most valuable membership program across the retail sector.
New benefits include a 'try before you buy' service for fashion items, allowing customers to wear products before making a purchase within seven days, thereby broadening the membership's utility.
However, Kim acknowledged that the impact of the data breach has not completely dissipated. He mentioned, "There remains a small group of customers who left after the data incident and have not yet returned."
Returning customers have restored their spending levels to pre-incident amounts, and existing members are increasing their purchases, but it will take time for new members' spending to reach that of existing customers.
Regarding the decline in product commerce margins, Kim identified three factors affecting the financials: disruptions in the supply chain, fixed cost burdens from facilities built to match pre-incident demand curves, and increased marketing investments to accelerate the return of lost customers. He stated that none of these factors represent structural issues, noting that some are short-term investments chosen by the company while others are temporary headwinds. He remains confident that product commerce margins will recover to pre-incident levels next year.
To support this recovery, Coupang is enhancing logistics automation. In the third quarter, the company introduced AI cameras to replace manual scanning in packaging processes, which automatically adjust packaging sizes per order, reducing both processing time and packaging material usage.
Coupang is also expanding its Rocket Delivery product range. Kim reported that the number of products handled under Rocket Delivery saw double-digit growth in the third quarter, with Rocket Fresh volumes increasing at more than double the rate of overall product commerce.
Internationally, Coupang is developing its Taiwan operations as a new growth driver. The number of Wow members in Taiwan has more than doubled year-over-year and increased by 14% compared to the previous quarter. The early morning delivery service has also been expanded to reach over half of Taiwan's population. Kim expects the Taiwan business to make a significant contribution to consolidated cash flow in the coming years.
Coupang Eats is also expanding its quick commerce service beyond food delivery to include non-food items.
Coupang anticipates continued revenue growth in the fourth quarter. Chief Financial Officer Gaurav Anand projected that fourth-quarter consolidated revenue would increase by 13% to 14% year-over-year on a constant currency basis. He also expects adjusted EBITDA margins to improve by 0.5 to 1.5 percentage points compared to the third quarter.
However, investments related to building logistics infrastructure in Taiwan are expected to increase. Anand indicated that the upper end of the annual adjusted EBITDA loss forecast for the growth business segment would be raised from $1 billion to approximately $500 million to $1 billion.
* This article has been translated by AI.
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