Key Points
- Net revenue increased by 25% year-over-year to $7.3 billion.
- Gross profit climbed 41% year-over-year to $2.1 billion.
- Net loss for the quarter was $77 million, with diluted EPS at negative $0.04.
Coupang (CPNG 0.25%), the largest online marketplace in South Korea, released its second-quarter 2024 earnings on Aug. 6, 2024. Coupang reported net revenue of $7.3 billion, a 25% year-over-year increase, though marginally underperforming some analysts' expectations of 26.5% growth. Gross profit grew significantly to $2.1 billion, up 41% from the prior year. However, the company faced profitability issues, with a net loss of $77 million for Coupang shareholders, driven largely by $121 million in administrative fines and operating losses from its acquisition of Farfetch. Overall, the quarter showcased robust revenue growth but highlighted challenges in profitability.
| Metric | Q2 2024 | Q2 2023 | % Change YoY |
|---|---|---|---|
| Net Revenue | $7.3 billion | $5.84 billion | 25% |
| Gross Profit | $2.1 billion | $1.49 billion | 41% |
| Net Income | ($77 million) | $145 million | (153%) |
| Diluted EPS | ($0.04) | $0.08 | (150%) |
Overview of Coupang's Business
Coupang, South Korea's leading e-commerce platform, is renowned for its innovative delivery service, Rocket Delivery, which includes dawn, same-day, and next-day delivery.
Recently, Coupang has concentrated on expanding its offerings and investing significantly in tech and infrastructure. Its customer-centric focus and diverse merchant offerings, together with end-to-end technological investments, are key factors for its sustained growth. The company has diversified into new markets with acquisitions like Farfetch, enhancing its portfolio despite profitability challenges.
Notable Events and Financial Performance in Q2 2024
Coupang reported strong revenue growth in Q2 2024, with net revenues reaching $7.3 billion, a 25% increase from the same period last year. Excluding Farfetch, revenue growth was 18% YoY on a reported basis and 23% on a constant currency basis. Gross profit rose significantly to $2.1 billion, marking a 41% increase with a gross profit margin of 29.3%, indicating improved margin efficiency.
In terms of profitability, Coupang experienced a decline. Adjusted EBITDA for the quarter was $330 million, with a margin of 4.5%, down from 5.1% in the same period last year. Without Farfetch, adjusted EBITDA was $361 million, indicating a lower-than-previous-quarter performance. Net loss attributable to Coupang shareholders was $77 million, a decline of $222 million from the prior year. This net loss resulted mainly from the operating losses incurred at Farfetch and an administrative fine of $121 million.
The Product Commerce segment, Coupang's core revenue driver, saw revenues grow to $6.4 billion, a YoY increase of 13%, and adjusted EBITDA in this segment rose by $122 million to $530 million. The Developing Offerings segment, encompassing newer initiatives, experienced an impressive 472% revenue growth YoY to $892 million, although it faced a $200 million adjusted EBITDA loss, including $31 million from Farfetch's operations.
Future Outlook and Guidance
Looking ahead, management remains focused on achieving positive adjusted EBITDA for Farfetch by the end of 2024. Ongoing investments in infrastructure and technology aim to enhance operational efficiency and customer experience. Despite not providing significant updates on future revenue and profit expectations, Coupang's focus on improving customer-centric strategies and expanding its diversified offerings appears promising.
Management's guidance from the previous quarter indicated a close-to-positive adjusted EBITDA run rate for Farfetch by year-end and targeted adjusted EBITDA losses for the Developing Offerings segment at around $750 million. Investors should monitor Coupang's progress in these areas and its ability to mitigate competitive pressures and profitability challenges in the upcoming quarters.
