CPNG - Earnings call transcript Q1 2022

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Operator

Good afternoon. My name is Josh and I will be your conference operator today. At this time, I would like to welcome everyone to the Coupang Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

to of call Investor like Parker, to Vice President Relations. turn I’d over the Mike Now,

You may begin your conference.

Mike Parker

to XXXX. quarter Thanks, Inc.’s operator. call Kim; March today first CEO, Founder on as responses not Anand. The made of forward-looking and your quarterly law. management’s or obligation Coupang, pleased today’s undertake XX, ended Bom only. earnings including conference by be questions, by Welcome, call for to our discussion, statements. everyone information views following joined on this I do date We am to any our and Gaurav required to include our except update the CFO, revise reflects today’s as call statements Certain

on statements. refer the with most materially. about may You should Actual then with in statements. uncertainties and on not results March these to well the as XXXX earnings place XX-K Please release risks as forward-looking and could which differ annual factors, report our SEC Form the described results materially forward-looking differ recent cause our undue from SEC today’s on filed to X, actual made for filings other information reliance

present and both we financial measures. non-GAAP call, today’s During will GAAP

subject these unaudited reminder, numbers As a and to may are be change.

regarding over website Investor most turn to will our non-GAAP SEC company’s which And non-GAAP comparable Additional filings, call in the of disclosures earnings ir.aboutcoupang.com. the these Relations and release Bom. measures, posted now, GAAP to the included measures reconciliations including our measures, are at are I on

Bom Kim

Thanks, everyone today. for joining us

results. basis, constant year-over-year. On few quarter-over-quarter a highlights consolidated currency with and our QX X% from quarter begin me operating XX% first Let revenues grew a

that years rate are be to come. segment and for growth faster segment e-commerce than confident the multiples to QX of will to significantly grow continue we the continues we Our

unmatched and deeper active million, grew increase engagement. customers is our of XX% over even to experience customer an Our year-over-year XX driving

rate. spend And a our are Coupang even of online are of spending on still XX% oldest our over today. cohorts, compounding customers oldest, estimated our active fast at All total their

company, our about highest opportunity is excited the the billion be of quarter-over-quarter, $X the XXXX. also in process we generating improvement gross in and margin billion gross what improvement, in recorded That profit point profit an basis driven XX% supply represents and are growth gross e-commerce quarter, optimization. initiatives by over $XXX over world, year-over-year in and largest by largely around the chain first XX% in exceeding gross automation significant gross In in in potential the margin the XXX to profit improvement We history margin. a projected third exceeding and

As million a from an our XXXX. recorded $XXX adjusted of consolidated improvement of EBITDA QX result,

begin offerings; we commerce, our fresh more our nascent one, we in initiatives represents our like our two operating As developing last which which previewed reporting in product quarter video, two, international and segments: expansion. call, FinTech this and and e-commerce core offerings, results earnings Eats, represents

commerce EBITDA have First, provided late XXXX. profitable be in commerce, last in would product we call that on product adjusted our guidance

and highest XXX ever. QX, as reach points in were adjusted we QX quarter-over-quarter profitable, million year-over-year increased both improvement grew are these fresh XX% basis even and improvements $XXX and We year-over-year approximately EBITDA commerce XX% a from experienced profit gains Product quarter in growth. profit quarter-over-quarter. margin the $XX core that to a report gross first to gross our pleased million powered improvement Both year-over-year and significant

accelerated areas. advertising, part short-term disruptions pandemic. by operational net our as continued we scaling XXXX. challenges results obscured we supporting to and in Most were While chain investments, continuous chain positive the process of headwinds utilization are technology, supply resources others and capacity, on in inflation other past were and among from past directed before supply saw and some improvements quarter, around of timing progress the of some improvement launched by The brought due that growth programs of that disruptions quarters the were of previously were explosive and optimization,

will we long-term ability operational communicated headwinds to that in likely will continue our our confident in year. business. control more the target we the and remain drive this for EBITDA would strive trajectory that to persist, progress earnings evident prior Some in we towards but our our in become inputs We excellence our call adjusted

to profitable and Looking its expect commerce product over forward, we EBITDA upwards March continue for remain to adjusted time.

X% rate improvements quarter. not programs each will be always operational Korea dramatic at these of drivers, expand in spite over of e-commerce grew revenues product year-over-year margins believe and and will product results the long-term. by supply in least the of optimization our growth, will X% and consolidated X% and a the negative improvement other efficiency, to merchant flywheel build adjusted year-over-year However, scaling continued in potentially segment On We produced XX% unevenly services, momentum. than materialize growing EBITDA our XX% as to and at continues constant quarter-over-quarter. currency commerce as chain the basis among quarter-over-quarter Product commerce X% higher on

using nearly categories and customers active percentage increased the time same grew increased of in past over that X year. number XXXX more over over or but the the tripled share XX% share period growth more every Our and first in buying XX% Coupang of year. last higher X was quarter of this three customers e-commerce Active years, of or over quarter the even product in customers offerings the

the groceries within doors One enabled by Rocket customers believe largest the the Korea same of or day of in delivery, hours dawn network their in fulfillment centers national cold proprietary our grocery is Fresh delivery online we fresh of offers Fresh, delivered is offerings Rocket selection service via of purchase to and logistics. a chain fastest national largest growing what market.

Fresh customers XX% operation X of in number launch, Rocket increased annualized removed delivers in the Just of Fresh using dollars QX. an orders Rocket from and billions full years year-over-year on basis of

service QX, total ahead. opportunity paid the the the Xx significant of offering also Coupang’s with largest program. by WOW subscription used of highlights membership continues we engagement which XX% Xx and the estimate deepen membership members next as attract with just more that retail However, number in WOW members Coupang, e-commerce active the paid or to is in largest the customers market, far their or

have added X and new the We ago X services to since its and launch way. benefits on years the program more

journey a on WOW of are part our lives. We to an indispensable make customers’

increasing to Rocket offerings value compound network & customers of the WOW as selection on available more Logistics the like our the by promises Just by have exponentially. delivery for delivery on network, to Fresh Rocket delivered Rocket of foundation Coupang, FLC value and Fulfillment the customers

merchant-facing to Our the and continues we opportunity XP spend and multiple at by also of see penetration an merchants a improving segment our grow overall accelerate services. tools to e-commerce

We the our scaling potential about including impact are services, FLC in merchant excited come. the to of years

XX% currency Offerings. Developing Second, a Offerings segment by increased driven Revenues year-over-year constant on from our our chiefly basis offering. Eats on Developing

As improved to progress reflected in mentioned us $XX we this were in Eats primary million more position to our of for in on last in adjusted of efficient profitability our call, meaningfully focus related our which be is improving The expansion. segment, EBITDA efforts, the quarter-over-quarter. phase earnings next

make decrease improvements to further. Eats losses Offerings and expect to We in continue Developing to

underlying in been quarter in focus are strength the on we customer offering. this operating engagement Eats improving by has of primarily also leverage, past While the our encouraged

their more increasing customers, are global with those are customers Eats levels order we order whose mature of peers. frequency exceeding frequency newer in leading our line believe Our

segment, that of between We are Eats the Offerings beyond engagement. of exploring offerings initiatives opportunity other outside projected e-commerce these synergies also includes our billion amplify to to our potential by Eats have Developing and expand levels the $XXX unmatched beyond XXXX. the

are investing in video, we to capture in additional like Specifically, areas and initiatives fin-tech, international. spend

WOW quarter. from with create operating in and execute dropping for amazing will investments and leverage. passing tenants, challenge the excellence last areas The in that we the cash which clearer each invest don’t cash start. in start customer with our of in more embrace experiences, well to offerings Three, expect exist business customers We cash allocators. quarter customers. five, with And innovation flows. are backwards time start drive trade-offs disciplined time. we what iterate we over and technology, of in flow operating for flows our experiences operational prioritize Four, off we WOW imagining easy. to good Two, granted. line year. We as work leverage process deliver work capital and and And opportunities with long-term economies a rigorously. moments always best take test to One, continue capital to XXXX to new our second growth of improve create to shared that jaw we we is will long-term customer employ customer all significant moments in we scale is small over the in to required looks hard We investments, our continue new we then We as of becoming these in previously operating of momentum have potential. both and

our Now, I’ll detail. through to in Gaurav and the outlook turn to quarter call the more go over

Gaurav Anand

Bom. Thanks,

on demand started impact conditions XX% In Our was foreign constant a even to grew first we quarter, currency normalize. with year-over-year COVID in basis. XX% as strong, is which surrounding currency, the reported year-over-year

over We are in annualized currently $XX at of billion run-rate an revenue.

customers adjusted XX% a a continue to to Our XX% Net our a drive have the categories quarter. reported on a This of $XX customer throughout EBITDA constant increased year-over-year. unparalleled margin all the results high the to retention. over customers record for in X.X% best attract These continue revenue per performance offerings efficiencies $X in basis be to million improvement strong and on more history. driving to QX as operations. company’s across customer increased losses year-over-year part come currency profit billion, a new This EBITDA represents and in on helped gross more focus and minus the and drive increase customer X% offerings. engaged basis

as times enhanced example, route better to an and efficient increased estimate of robotics, within network. create As fulfillment assignments machine including this well more in delivery our learning as automation, includes investments utilization

will guided expect momentum forward earnings we expect $XXX we EBITDA profitability of improvements. call adjusted our ability continue million. to In the to more in loss continue Product no in performance, XXXX, are first As driving Commerce light that of our believe including to EBITDA than to in We we trends that the confident last the our remainder improve. year. in quarter our look business, target an profit meaningful XXXX this our we exceed of We adjusted in

our sequencing and of efforts cadence potentially will benefit disproportionate in the result quarter-to-quarter. However,

will our like fin-tech. we and approach mentioned, Bom As international a with Eats, disciplined video, maintain investment Developing Offerings

for demand our variables impact recognize about near-term, such the that the the in continue here our there e-commerce travel. Korean ongoing in as at to of we unpredictable the are but We Korea segment, reopening and strong of pent-up ability growing optimistic multiples also trend are of

our more about are long-term enterprise excited We value. than ever to opportunity create

in to Our believe guided EBITDA XXXX already much of potential, long-term our Moreover, revenue more support X% or higher and towards early market which only to. in to categories expand have our top margin our in revenue offerings. are our opportunities results will to drive strong that concentrated leverage. We position journey higher the strengthen XX% adjusted margins generate our previously ahead we will and in continue operating line turn of opportunities

opportunity have our add automation. capture to fixed profitable. technology to categories through more less cost us the significant penetrated and Greater and leverage selection more increases that efficiency in We enables scale are

first we us. advertising have Additionally, about we is to should margin now also scaling but the we closing, including EBITDA adjusted are growth. In are and continue drivers ready momentum substantial the more continue drive to highlighted merchant in us higher profit about and excited are Operator, revenue long-term begin growth Q&A. built even in excited our The for what front services, we the quarter margin confidence offerings in potential. to growth of give

Operator

Sachs. from first Cha line Goldman [Operator Instructions] Eric Your the of question with comes

Your line is open.

Eric Cha

opportunity. I to have ask. Hi, questions the thank two you for

profit on gross margin EBITDA Firstly, and trend.

obviously, drivers, elaboration quarter, very two I you strong. be detailed this helpful. the the but would think, First trend on the anticipate quarter’s year? How upcoming do more briefly, mentioned for You

us, for could realize be that you. international? guidance. a guidance? your any also whether And this there Or way, you and I change in not as well? so, may fin-tech Thank Second, changes I in you it And year Can any chance if please? your in COVID add, during can impact maybe plans the different investment put changed this you’ve if quarter’s share into video, confirm

Gaurav Anand

Sure. Thanks, Eric.

investments this exceed you improve quarter. Eric, a first current see and in increase target intend we the don’t So to we benefits year, continue had very first the we of versus will EBITDA plan. be confident may we that developing strong plan And that light quarter-over-quarter the are The to through our profitability, though performance in this our gave Commerce Product in versus year. adjusted the And the we ability quarter services, this disproportionate. trends, to

exceed in we that confident overall, EBITDA So are gave. our we the ability to adjusted

Bom Kim

most improvement improvement the came XXX continuous of from On improvement side, the bps programs.

As chain optimization around I year before and among other around process drivers. launched this that were mentioned, supply technology,

these past, disruptions the some I’ve They timing And of or short-term mentioned backdrop. of as the efforts, by were obscured in happening investments. in were

past And some of were we quarter Commerce remain Gaurav profitable. with had Product mentioned, as them previously directed these expect accelerated dedicated – to pandemic-related to more that just this as been towards resources challenges. These dealing segment

show time. We’re to improvement continue to in over

projects in economies these over drivers of But And have that the long but to the Of quarter. achieve mentioned we record These think COVID, improved do give drove our benefits XX% EBITDA time. higher highest X% QX, improvement, categories every a past number. are There company’s and to expect decreasing to ability excellence don’t of greater margins come costs growth run. COVID I adjusted operational continue history the the or that course, of are the services. the that is equal from this I are margin exact same from scale, higher-margin our same still, And confidence gross in impact see course, won’t in they I those to in the quarter. on some drivers us that be

Eric Cha

Thank you.

Operator

of Your comes Mizuho. James with line the question from Lee next

open. is line Your

James Lee

if COGS. think most taking talk of out even is like seeing have category product kind the but the two or And guys outperformance you Thanks. shopping for seeing you parse for With a COGS bit business? Can behavior? resilient? quarter-over-quarter, industry what I consumer flattish any quite my which in of travel here. services us like Which that is question more Revenue down, shift Are impact? any start a come for changes of you questions. can And about I are to cases Thanks we developing you see in quite in category to to and similar sort U.S.? Gaurav. do COVID offline Great. both to second so, noticed down came core is bit. for you

Bom Kim

to of reopening variables impact. COVID at around a mean, course, there the work On here I related COVID. is, of lot the

that level and of engagement evidence increases seeing in the We’re changes internally a COVID. lot consumer behavior the

still compared but the a And temporary, relatively at a now long-term. growth for broader – across stage strong right not our We’re we’re conditions. where all at to categories still is

the X% in Our in demand, product strong only as currency e-commerce was broader segment negative was broader We Korea, in The even for up. was segment in for example, started segment down, Korea, to the normalize. quarter-over-quarter. example, COVID in constant were e-commerce the up was around Year-over-year, year-over-year. product QX X% segment e-commerce conditions up

at Commerce Product nearly rate Xx Our that of growth was XX%.

the that variables related any share of and e-commerce be to trajectory across grow in lots long-term of us to continue short-term. our categories. we unpredictable clear the is the to very faster will segment to significantly there continue to gain continues But all So scenario, opening in

and significant pace China. third question? opportunity In in second by want only and market world nearly on after take to that’s in Gaurav, We’re become the an expected U.S. XXXX to segment, e-commerce you the $XXX the gain share. the billion do e-commerce largest to approach Yes. sales

Gaurav Anand

earlier, on improvement did Bom And Yes. the XXX margin Product as out overall we split Services second improvement margin the Commerce, was and margin Developing James, bps. give between the question, improvement. highlighted

operational the improvements On we chain quarter. most seeded of in build other part the a process hope your improvements, that improvements side, I to Developing it large the answers that have. – it Commerce in came came while we in continue initiatives had Product supply the earlier Services, excellence, that we came from question. from of On on Eats

James Lee

thank you. Great, Okay.

Operator

Bank. Peter with [Operator Milliken Instructions] line of the comes Your next Deutsche from question

is line Your open.

Peter Milliken

build Yes. that quarters But invested with get terms to with now? to that’s companies like they target close they Thanks. of more getting IPO. is price three still grab, you period lot the My of to land perhaps completely are mandates, your what Good then since more question is a would your right? that? does do change Look, on feel adjacencies. dominant and of balance are the on after – that happened like you you morning, demand Are there focus a Or side of that to time. Initially, in breakeven they right than the down in to share is everybody. also quickly of the

Bom Kim

know question hear your changed, as my on don’t was mandate, think it changes the our I environment. if didn’t I strategy question that But around has just stock I has in market clearly. end. given James, the was our

Peter, Peter, Peter. was Sorry. that probably? sorry, Was the it question

Peter Milliken

that’s question. the Yes,

Bom Kim

Yes.

we were One operating five year And really tenants breaking wanted focused customer of things for well before and we – also out we’re the operational we what market. the out, laid we our exactly changes creating have about to investing on in ago, trade-offs any wow, long-term, point excellence. a laid the out

produced we – well the We QX, lot efficiency. them that of the we think to more happening programs by way seeing, going we were with DNA, And want test improve program mentioned, have with were – started in you’re you’re before highest it’s I these and our and And lot being were yes, they customer evidently allocate the QX. iterate first a core way many seeing they a in fruits they of but capital, of operational as these operational a excellence. I were that out rigorous – We we the culture of were the in – least to really disciplined experience going laid create which – best mean in to excellence. which the

bearing disruptions being that were a lot obscured Some pandemic-related short-term of earlier. of that we lots fruit by was shared had disruptions,

strategy culture, consistent. for remains So us, our our

disciplined. We’re

unafraid and on customer WOW and we’re take leverage. operating to also rigorous, to create We’re hard challenges

we to in the quarters So that progress demonstrate that hope ahead. fronts show continue to continue show our and on both and to

Peter Milliken

That’s very a clear. quick you. that. Thank And on just follow-up

So, on the way. that and businesses I sort can you’re moving of the ahead core still in developing the see same

need start still On higher media do well like to is massive or into there that before something like is like that you you as case side, a the more resources businesses the you say the that? feel putting more bid

Bom Kim

Yes.

have in and operating it’s we our have And how a always we the – in outlined had fintech tenants early We test invest. play. international,

are services you it was I little out. think those It a I the mentioned. quite couldn’t – make

Peter Milliken

something that. Yes. Yes, like

Bom Kim

with budget. that Yes. test in evergreen Again, cases our to be But of continues Look, opportunity like vast areas. And operating fintech, capped We a that it’s continues We to many grow. us. within of in for our it proof – these potential. We – scale these get we areas nail as framework our we it. have that. ecosystem a It continues before are concept. as ecosystem builds to grows, an opportunity

and we are so and iterate to continue – very test, patient, will we we disciplined patient learn. are And way, and a in

Peter Milliken

Thank Thanks. it. you. Got

Operator

comes line with the JPMorgan. Your question Stanley from next Yang of

line Your open. is

Stanley Yang

margin second quarter the quarter the of the And you my I or the issue. you taking top Do the trend? of supply full question reopening the second in questions. into expect for of in Q-o-Q my two is going line the operation momentum setback half? in terms labor what half? additional improvement GP And case Thanks growth and margin about next second the Hi. share the will temporary of be drivers have Can second question. about margin

you labor And this those questions. the – two labor additional in labor on issue margin constraint be the your of or of are any this forward, tight expect or growth, of do side. two any drive and That’s what the efficiency regard? the – key one Do you So, my reserve quarter? see room And going are will structural of increases? initiatives first has savings headwinds this to supply major cost supply been

Bom Kim

to on – But the what’s Yes. of we short-term, upcoming to that grow segment. even – were fact, Stanley, as every as significantly e-commerce year. there what lots of last faster mentioned. and see quarter day. in of to variables that in is share we higher there clearer QX, our us every becoming so is are will I we clear continue think of trajectory growth, we is and clearer was in That grew lots That we quarter, continue grew the growth on in And unpredictable mentioned, part are QX. – in we

think are than gain continue significant precision in near-term, to can’t while predict years I in in significantly for the any the we continue long-term we e-commerce that segment will market very think and confident grow for faster in I speak So, we share to to come. with and scenario, – the the

margin You mentioned drivers for improvement.

improvements, of we our mentioned, we ability automation There that benefits services. economies exciting – – What’s scale bigger, our technology automation was increases Also of were process chain as our from were opportunities either for categories and services. in higher-margin optimization. various supply software from biggest some and scaling it’s hardware efficiency and becoming are – There As projects. are coming in get of also growth invest more to and seeing is improvements. there we more continued us for scale,

And growth margin the higher the about margin. us, in in what be for the exciting should future it’s that’s future. growth So, really in looks,

steady going commerce the we over scale mentioned, profitable, show show as see think improvement I will remain to expect won’t impact Gaurav time. or improvement And – improvement be do the But to quarter. of as the forward, continue product every improvement. you dramatic

make see will improvements continue to also You quarter-over-quarter. offerings developing

we are labor seeing mentioned You any capacity. not constraint in structural supply, labors

headwinds our had we to record we our helped are, things we – We have disruption, mentioned so offset of really from in improvements did chain inflation there manage And and course, to that are our a optimism continues And anchor we the making the we because that confident statement that there see what the challenges Of variables improvements of is capacity be achieve supply drive lot was long-term. some were in but drivers drive in control. adjusted in improvements, continue the – course, been to will to among us on able ability forward that we X% have of don’t we there inputs margins the we earlier in we EBITDA very investments And far. that’s believe XX% the our always higher related going over to technology that other ability that to process control. are control. – we are of QX our they to – or and

Operator

[Operator further Instructions] questions. does conclude you joining. There This no for call. are Thank today’s conference

disconnect. may now You

Coupang (CPNG) 12 May 222022 Q1 Earnings call transcript