Coupang Posts First Operating Profit After Winning More Shoppers

Sohee Kim, Bloomberg News

A Coupang Corp. employee holds packages in front of an apartment building in Bucheon, South Korea, on Friday, Feb. 19, 2021. South Korean e-commerce giant Coupang filed for an initial public offering in the U.S. and that could raise billions of dollars to battle rivals and kick off a record year for IPOs in the Asian country. , Bloomberg

(Bloomberg) -- Coupang Inc., the South Korean e-commerce firm backed by SoftBank Group Corp., posted its first operating profit on record after winning more customers and improving cost efficiency.

The third-quarter operating profit amounted to $77.4 million, compared with a loss of $315 million on that basis a year earlier, the US-listed company said in a statement Wednesday. Net revenue climbed 10% from a year earlier to $5.1 billion, while the number of active clients rose 7%.

Coupang, which went public in New York last year, has adopted more technology at its distribution centers and raised the price of its monthly delivery membership to improve its profitability. The company is set to gain market share as smaller e-commerce startups struggle to raise funds in a tough market for tech stocks and venture financing, said Kim Myoung-joo, an analyst at Korea Investment & Securities.

“In 2023, Coupang’s position in the market will be solidified through an online-market shakeup,” Kim said ahead of the results. “A lot of startups are facing financial crises as they are having difficulties raising funds amid high interest rates.”

Kim expects Coupang’s online commerce market share in South Korea to rise by 3.8 percentage points to 24% next year and by 5 percentage points in 2024, projecting the company will reach annual net income in 2026.

Founder and Chief Executive Officer Bom Kim has vowed to bring Coupang to profitability by expanding its business and improving operational efficiency. Shares of the company have lost about half their value since it went public in one of last year’s highest-profile initial public offerings.

On a conference call, Kim said Coupang will continue to add features to its monthly delivery service. The membership program, similar to Amazon.com Inc.’s Prime, now costs 4,990 won a month -- about $3.65 -- up from 2,900 won.

“While the macro conditions are uncertain, we continue to be confident about our ability to drive the inputs that we control in our business,” he said.

(Adds Chief Executive Officer comment, details of fee increase)