Coupang, Inc. Q3 FY2024 earnings call

Key Takeaways: Strong and consistent growth with expanding margins; Product Commerce growth driven by existing customers' deeper engagement; Nascent offerings like Eats Taiwan, Play, Farfetch, Ads, and FLC progressing. Highlights: Constant currency revenues grew 32%; Active customers in Product Commerce up 11%; WOW membership program driving higher engagement; Launched R.Lux luxury offering; FLC growth over 130% year-over-year; Farfetch achieved near break-even profitability.

Product Commerce: Total net revenues grew 27% year-over-year or 20% excluding Farfetch. Constant currency revenue growth was 32% or 25% excluding Farfetch. Gross profit was $2.1 billion, margin 30%. Adjusted EBITDA was $470 million, margin 6.8%. Developing Offerings: Revenues grew nearly 350% year-over-year or over 350% in constant currency. Excluding Farfetch, revenues grew over 145% or 155% in constant currency. Adjusted EBITDA was a $127 million loss for the quarter, improving $34 million year-over-year and $73 million quarter-over-quarter.

• Farfetch hit near break-even profitability goal. • Expect OG&A to decline as a percentage of revenue over time due to investment leverage. • Confidence in long-term margin expansion for Product Commerce, with expectations of continued growth and margin improvement.

• Fluctuations in free cash flow due to nonrecurring working capital benefits and timing of capital expenditures. • Seasonal and timing impacts on OG&A and quarter-to-quarter margin unevenness.

Q: Could you elaborate on the Developing Offerings loss trend and fourth quarter/Future year guidance?

A: Developing Offerings loss has quarterly fluctuations due to investment timing; no material updates on fourth quarter yet, but focus remains on Farfetch stabilization.

Q: On Farfetch, can we expect profits in fourth quarter/next year and synergy with Coupang?

A: Farfetch achieved near break-even, but job not done; focus on stabilization this year, synergy assessment for next year.

Q: On OG&A cost increase, is it temporary or structural?

A: Higher tech/infrastructure spend is timing-related, not structural; expect OG&A to decline as a percentage of revenue over time.

Q: FLC year-over-year growth?

A: FLC saw over 130% growth in units, sellers, and volumes year-over-year, still in early stages.

Q: Product Commerce margin expansion speed next year?

A: Product Commerce margin has quarterly fluctuations, but long-term adjusted EBITDA margin target over 10% with opportunities from tech, automation, etc.

Q: Ad take rate range and cross-border fulfillment?

A: Ad take rate is early-stage, lower than global peers; cross-border fulfillment is one of many initiatives to increase selection.

Q: Eats loss improvement and Taiwan progress?

A: Developing Offerings loss improved due to Farfetch and Eats; Taiwan is early-stage with momentum, leveraging Korea's experience for scaling, disciplined with spend.