Bom Kim: "Profitability Slump Is Temporary... Recovery by Mid-Next Year"

Lingering impact of personal data incident and fixed-cost burden

Increased marketing investment weigh on profitability

Targets recovery by mid-next year; Wow membership reaches record high

Coupang, Inc. Chairman Bom Kim expressed confidence that profitability would recover next year, saying the deterioration in the company’s third-quarter results was due to temporary factors. He said customer departures following the personal data incident, fixed costs associated with the logistics network, and increased marketing expenses had weighed on profitability, but did not reflect structural problems. While the effects of customer departures following the incident remain, he pointed to the record-high number of Wow membership subscribers and the normalization of spending by returning customers as signs of recovery.

Speaking on a third-quarter earnings call held on the 4th (Korea time), Kim said, "Strong growth momentum continued across our business in the third quarter," adding, "Consolidated revenue grew 11% on a constant-currency basis, exceeding our guidance."

Kim particularly emphasized the rapid recovery in customers' purchasing activity following the personal data incident. "Wow membership continued to grow solidly both year over year and quarter over quarter, reaching a record high," he said. "Net additions exceeded historical levels, supported by the return of existing members and strong new-member acquisition."

He also said that spending by customers who left Coupang during the personal data incident and later returned had recovered to pre-incident levels. "Members who briefly left the service to use other platforms and then returned have not only recovered their previous spending levels but are also continuing to show solid spending growth at normalized levels," Kim said. He added that members who did not leave during the incident were also spending at record levels and increasing their purchases at the same pace as before the incident.

However, the effects of the personal data incident have not been fully resolved. Kim acknowledged that "the impact of a small group of customers who left following the incident and have yet to return remains."

Still, he said the influx of new members is more than making up for the shortfall caused by existing customers leaving. "New-member acquisition is more than enough to fill the membership gap, but because of the nature of new members, their spending curve starts at an early stage, and it takes time for their spending to increase," Kim said.

In fact, Coupang's Product Commerce segment, which includes its core Rocket Delivery service, generated $8.4 billion in revenue in the third quarter, up 5% year over year and 8% on a constant-currency basis. Meanwhile, its adjusted EBITDA margin, a measure of profitability, fell sharply from 8.8% in the third quarter of 2025 to 4.6% in the third quarter of 2026.

Coupang said the decline reflected the combined impact of delivery volumes falling short of expectations as customers left following the personal data incident, fixed costs for its existing logistics network, and increased marketing expenses to bring customers back. The company said it had built its logistics facilities based on pre-incident demand, but actual order volumes had not kept pace, reducing cost efficiency.

Kim stressed that the deterioration in profitability was not a structural problem. "Three factors—the disruption in the supply chain, the fixed-cost burden from facilities built to match the pre-incident demand curve, and increased marketing investment to accelerate the return of customers who left—are flowing through the income statement in line with our expectations," he said.

"We do not consider any of these factors to be structural problems," he added. "Our confidence that the Product Commerce margin will recover to near pre-incident levels next year remains unchanged."

Coupang set the middle of next year as its target for recovery. "Underlying customer behavior patterns remain solid," Kim said. "Once we move past the period in which the effects of these factors are reflected, we expect both growth and margins to return to historical levels."

The company also forecast improved results in the fourth quarter. Coupang Chief Financial Officer Gaurav Anand expected consolidated revenue to increase 13-14% year over year on a constant-currency basis in the fourth quarter. He also forecast that the consolidated adjusted EBITDA margin would improve by 0.5-1.5 percentage points from the previous quarter.

Coupang plans to continue investing to strengthen customer loyalty. After recently introducing a "Try Before You Pay" service in its fashion business, which lets customers try items for seven days before paying, the company is also expanding its Rocket Delivery product selection. "Our goal is to make Wow membership the highest-value membership program across the retail industry," Kim said.

This content was produced with the assistance of AI translation services.