Coupang's Customer Base Recovers to Pre-"Coupang Exodus" Levels, But Why the Massive Losses? [Weekend Money]

Coupang surpassed 25 million active customers and posted quarterly revenue of more than 14 trillion won, demonstrating growth in scale. However, losses from a fire at its Incheon logistics center in July and pressure on margins in its core business led it to report large operating losses for the third consecutive quarter. Although key customer metrics rebounded after the personal data breach, one-off expenses and the burden of investing in new businesses have led analysts to expect that Coupang will not return to profitability until 2027.

Coupang's third-quarter revenue rose 7% year over year to $9.962 billion. Revenue growth was 11% on a constant-currency basis, exceeding the company's forecast of 8% to 9%. At the quarterly average exchange rate of 1,427.52 won per dollar, revenue amounted to 14.2209 trillion won.

Profitability deteriorated sharply. Coupang posted an operating loss of $450 million in the third quarter, swinging to a loss from a profit in the same period a year earlier. It has now recorded losses for three consecutive quarters, following the first and second quarters. The biggest cause of the deterioration was a one-off loss of $250 million related to the fire at its Incheon Mega Fulfillment Center (FC) in July. As a result, the company's gross profit margin (GPM) fell 3.6 percentage points to 25.7%.

The problem is that margins in the core business have clearly weakened even excluding the cost of the fire. According to Shinhan Securities, the operating loss would still have been about $200 million even without the one-off fire-related loss, indicating that weak profitability in the core business persists.

Despite weak profitability, the recovery in key customer metrics and revenue is considered an encouraging development. Coupang's third-quarter active customers totaled 25.2 million, up 500,000 from the previous quarter and above the 25 million mark. About 700,000 customers left in the first quarter, immediately after the personal data breach, but customer numbers rose for two consecutive quarters, returning to the level seen before the breach, in the third quarter of 2025. Average spending per customer also returned to growth, reaching $332.

"With Product Commerce revenue growing 8%, faster than the 6% growth in South Korea's online shopping market, Coupang is demonstrating its irreplaceable competitiveness," said Joo Young-hoon, an analyst at NH Investment & Securities.

Revenue from its Developing Offerings segment, which includes Rocket Delivery in Taiwan, Coupang Play, and Farfetch, also increased 27% year over year, contributing to growth in scale. However, the adjusted loss before interest, taxes, depreciation, and amortization (EBITDA) widened to $270 million, compared with a loss of $220 million in the previous quarter, indicating that the burden of investment in Taiwan continues.

Analysts say the pace of profitability normalization will be key to a short-term rebound in Coupang's share price, as the company is addressing major headwinds this year, including fines and compensation costs related to the personal data breach and expenses related to the logistics center fire.

"The recovery in customer metrics and the $1.05 billion in share repurchases accumulated since the start of the year are positive. However, key variables include whether the effects of the fire will persist into the fourth quarter and how quickly margins in Product Commerce recover," said Cho Sang-hoon, a research fellow at Shinhan Securities. He added, "Profitability in the core business remains weak even excluding the fire, so it will take time for performance to normalize."

However, Coupang is expected to return to operating profitability next year. "We believe the likelihood of a return to profitability next year is high," said Joo Young-hoon. "Key revenue indicators have recovered, and quarterly revenue in won has exceeded 14 trillion won. Even a modest improvement in profitability metrics would therefore have a substantial impact on operating profit, while operating losses in the new-business segment are also continuing to narrow."

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