Coupang logs third straight loss in Q3 despite record paid membership

E-commerce giant Coupang posted its third consecutive quarterly operating loss, weighed down by a recent warehouse fire and lingering fallout from its data breach despite double-digit revenue growth and record paid membership.

The company said Wednesday that revenue for the July-September period rose 11 percent on-year on a constant currency basis to $10 billion and swung to an operating loss of $450 million from an operating profit of $162 million a year earlier.

The deficit marks Coupang's second-largest quarterly loss on record, trailing only the second quarter's $556 million, when a $410 million privacy fine swelled its losses. The company also booked a $242 million loss in the first quarter.

The biggest hit came from about $248 million in expenses tied to a fire at a fulfillment center in Incheon in July, while supply chain headwinds, heavier promotions and fixed costs built for pre-breach demand added to the strain.

Excluding the fire, the operating loss stood at $202 million. The net loss reached $501 million, or $321 million without the fire, compared with net income of $95 million a year earlier.

Even so, founder and CEO Bom Kim pointed to a membership rebound, with new arrivals offsetting shoppers who have yet to return.

"Our WOW membership in Korea is at the highest level in our history," Kim said during Wednesday's earnings call. Returning members have regained their prior spending and kept growing it, while those who never left are buying at record levels, he added.

Kim expects the margin strain from supply chain disruptions and marketing outlays to fade.

"We don't believe any of these items are structural — some are near-term investments we've chosen to make, while others are temporary headwinds," he stressed. Coupang still anticipates product commerce margins returning to near pre-breach levels next year.

The product commerce segment, comprising Rocket Delivery, Rocket Fresh, Rocket Growth and Marketplace, grew net revenue 8 percent on-year in constant currency to $8.4 billion. Active customers rose 2 percent to 25.2 million.

Coupang kept innovating at home with a try-before-you-buy service for members, while artificial intelligence cameras and automated baggers speed up packing in its warehouses. Fresh grocery volumes grew more than twice as fast as the broader segment.

The developing offerings segment, which includes Taiwan Rocket Delivery, Farfetch, Coupang Eats and Rocket Now in Japan, grew revenue 27 percent in constant currency to $1.6 billion.

Taiwan led the charge, with Dawn Delivery reaching more than half the population a quarter after launching and WOW membership there more than doubling on-year.

"This is remarkably similar behavior to what we saw in Korea at the same stage," Kim said.

For the fourth quarter, Coupang guided to 13 to 14 percent constant-currency revenue growth and a 50 to 150 basis-point rise in its adjusted earnings before interest, taxes, depreciation and amortization margin, according to Chief Financial Officer Gaurav Anand.

It also widened its full-year loss forecast for developing offerings by up to $100 million, citing faster infrastructure investment in Taiwan. "We continue to evaluate each investment in Developing Offerings against the same discipline we apply across the business," Anand said.