Coupang, Inc. (CPNG) Earnings

Management highlights

- Product Commerce Recovery Post Data Incident * 8% year-over-year constant currency revenue growth is a sequential improvement from Q1's 5% growth. Most of the spend disrupted by the 2025 data incident has returned, and WOW membership totals now exceed pre-incident levels. * Excluding customers who have not returned, underlying customer spend growth is 16% year-over-year, matching pre-incident growth rates. Returning customers are higher-spending on average, and now spend above their prior pre-incident levels and continue growing at historical rates. * Margin compression is temporary, driven by fixed capacity planned for pre-incident demand, elevated marketing spend for customer reacquisition, and lost volume-based supply chain savings. Management chose not to cut capacity to protect long-term customer experience. - Long-Term Core Growth Drivers * Customer cohorts continue to increase spend over time: the oldest 15-year cohorts now spend 10x their first-year spend, while newer cohorts grow even faster. Korea retail wallet share penetration remains below global peer levels, leaving significant long-term room for expansion. * AI acts as a multiplier for Coupang's 15 years of built assets (fulfillment network, operating data, direct customer relationships), improving customer discovery/personalization, driving operational productivity, and boosting returns for margin-accretive offerings like advertising. - Developing Offering Progress * Taiwan: Built an end-to-end fulfillment network delivering next-day 7-day-a-week service (the only such offering in Taiwan) 3x faster than Korea's original buildout, and early customer cohorts are following the same healthy spend growth trajectory that Korea saw. The business is still in early buildout, with current economics reflecting its early stage rather than long-term potential. * On-demand delivery: Korea's Eats has completed the full development cycle, growing the overall Korean food delivery category more than 4x and now being sustainably profitable. Rocket Now (Japan on-demand) is in early investment, and the combined Eats/Rocket Now business is already sustainably profitable. Non-food on-demand delivery is now rolling out using the existing Eats network.

Guidance

- Q3 2026 consolidated constant currency revenue growth is expected to be 8-9%, with growth depressed by the shifting timing of the Chuseok holiday creating a year-over-year comparison headwind. - Q3 2026 will see 300 to 400 basis points of year-over-year consolidated adjusted EBITDA margin contraction, matching the contraction seen in Q2, as underlying margin improvements are offset by seasonal cost headwinds and holiday timing impacts. - Full-year 2026 adjusted EBITDA losses for developing offerings are maintained at a range of $950 million to $1 billion, with most losses from long-term investments in the Taiwan retail buildout. - Product commerce adjusted EBITDA margins are expected to return to approximately pre-data incident levels by mid-2027, as the non-returning customer cohort drops out of year-over-year comparisons, demand recovers, and capacity utilization normalizes. More detailed 2027 guidance will be provided by the end of 2026.

Segment performance

1. Product Commerce: Net revenues were $7.4 billion, growing 1% on a reported basis and 8% year-over-year in constant currency, accounting for 83.1% of total consolidated net revenue. Active customers reached 24.7 million, growing 3% year-over-year. Gross profit was $2.3 billion with a 30.5% gross margin. Adjusted EBITDA (excluding regulatory fines) was $382 million, with an adjusted EBITDA margin of 5.1%. 2. Developing Offerings: Net revenues were $1.4 billion, growing 20% on a reported basis and 24% year-over-year in constant currency, accounting for 15.7% of total consolidated net revenue. Gross profit was $226 million with a 15.8% gross margin. Adjusted EBITDA losses were $219 million, an improvement of $110 million quarter-over-quarter. 3. Consolidated: Total net revenues were $8.9 billion, growing 4% on a reported basis and 10% year-over-year in constant currency. Gross profit was $2.5 billion with a 28.2% gross margin. Adjusted EBITDA (excluding $410 million in regulatory fines) was $163 million, with an adjusted EBITDA margin of 1.8%.

Risks & headwinds

- A $410 million regulatory fine imposed by Korean authorities was recorded in Q2 2026 SG&A; the fine is subject to judicial appeal, but creates near-term downward pressure on profitability. - The Q2 2026 fire at one Korean fulfillment center has an estimated total carrying value of affected inventory and fixed assets of $246 million. Financial impacts and insurance recoveries will be recorded in future quarters starting in Q3, though the fire has not had a material impact on current customer service ability. - Near-term revenue and margin results are distorted by the residual impact of the 2025 data incident, which reduced customer counts temporarily and created mismatches between pre-planned fixed capacity and current revenue levels.

Analyst Q&A

• Q: Analyst asks to confirm that product commerce margins will recover to 2025 pre-incident levels by mid-2027, requests margin drivers, and asks if increased competition is adding cost pressure. /

  A: Management confirms the margin recovery guidance for product commerce, noting nothing structural has changed: current margin pressure comes only from temporary lower volume relative to pre-planned capacity. While competitive activity has been elevated, the customer return data is a strong vote of confidence in Coupang's value proposition: most customers who left returned to full prior spend and are now growing at historical rates, with membership at all-time highs.

• Q: Analyst asks why the gap between 16% underlying spend growth (exiting missing customers) and 8% reported growth is so large, and if a meaningful growth step-up will occur in Q4 2026 as lapping post-incident periods. /

  A: Management clarifies the 16% growth reflects three healthy groups: customers who never left, customers who left and returned (disproportionately higher spenders), and new customers joining faster than pre-incident. The large gap comes almost entirely from the small cohort of missing non-returning customers, which lowers the overall reported growth rate. The full growth step-up will occur after the affected periods are fully lapped in Q2 2027, when the missing cohort drops fully out of the year-over-year comparison base.

• Q: Analyst asks what business drove the narrowing of developing offering losses in Q2, asks for Q3/Q4 loss expectations, and asks about Coupang's plans for agentic AI. /

  A: Most current developing offering investment is focused on Taiwan, which is on the same growth curve as Korea, just at an earlier stage. Management does not emphasize quarter-to-quarter loss variance and remains aligned with full-year 2026 loss guidance. AI is already deployed across operations and customer-facing functions, delivering productivity and service improvements, and Coupang is investing in exploring agentic AI with the same capital discipline used for all other initiatives while the winning customer experience format for this technology is still emerging.

• Q: Analyst asks if the 8-9% Q3 2026 consolidated growth guidance implies a product commerce growth deceleration, what the holiday timing impact is, and confirms mid-2027 margin recovery applies only to product commerce. /

  A: Management confirms the Q3 growth guidance is not a reflection of weak underlying fundamentals: the underlying customer base that is active with Coupang continues to grow at ~16% year-over-year, and the deceleration in reported growth is purely from temporary holiday calendar shifting and the distortion from the missing non-returning customer cohort. Management confirms the mid-2027 margin recovery guidance applies specifically to product commerce.