Coupang Sales Miss Estimates Despite Reporting Profit

Sohee Kim, Bloomberg News

The Coupang Inc. log on an insulted food bag in Daegu, South Korea, on Monday, Feb. 6, 2023. Coupang, the South Korean e-commerce pioneer, has invested about $260 million in the 12-story fulfillment operation in Daegu. Photographer: SeongJoon Cho/Bloomberg , Bloomberg

(Bloomberg) -- Coupang Inc., the South Korean e-commerce giant backed by SoftBank Group Corp., reported lower sales than analysts estimated, marring another profitable quarter for the company.

Revenue gained 4.9% to $5.33 billion in the October-December period, the US-listed company said in a statement. That compared with an average estimate of $5.45 billion. Coupang’s active customers grew just 1% to 18.1 million, also missing projections.

Slowing sales growth overshadowed the company turning its second straight quarterly profit after years of losses. Coupang posted earnings of 6 cents a share, compared with a loss of 23 cents a year earlier. Analysts had predicted a 4.6-cent profit. Shares of Coupang fell 2%, after rising as much as 5.6%.

“There are economic uncertainties globally that affect all of us,” Bom Kim, founder and chief executive officer at Coupang, said on a call with analysts. “But as you’ve seen, we continue to grow much faster in the market and continue to grow at a robust pace.”

Known as South Korea’s answer to Amazon.com Inc., Coupang had lost money for years as it built out the business. The company is now looking to save money with what it calls extreme automation, where thousands of robots deliver products and sort out packages at its newest fulfillment center.

Automation more than doubles the fulfillment network’s efficiency, Kim said, adding that the company will continue to lower costs by using more robots. The company is now targeting margins of 10% or more on its adjusted earnings before interest, taxes, depreciation and amortization, he said.

Stalling demand in the post-pandemic e-commerce sector has spurred Coupang to lock in shoppers with subscriptions. Coupang faces competition not just from internet giant Naver Corp., but also retail conglomerates Shinsegae Inc. and Lotte Shopping Co., which are investing heavily in their online offerings. Coupang’s customer base remains loyal despite a price hike in its monthly payment service, said Nam Seong-hyun, an analyst at IBK Securities.

The company is seeking revenue in other areas too, including its money-losing Coupang Eats food delivery service and Coupang Play streaming service. The company also plans to expand its fast-delivery services in Taiwan and Japan.

--With assistance from Nick Turner.

(Updates with executive comment from earnings call)