Coupang Inc., the parent company of Coupang's Korean unit, posted an operating loss exceeding 800 billion KRW in the second quarter of this year. It was the largest quarterly figure since its 2021 listing on the New York Stock Exchange. For the first half as a whole, it recorded a loss exceeding 1 trillion KRW for the first time. Following the large-scale issuance of compensation discount coupons in the first quarter after the personal data breach in November last year, the recognition in the second quarter of an administrative fine of around 620 billion KRW imposed by the Personal Information Protection Commission weighed heavily on the results.

By contrast, second-quarter revenue surpassed 13 trillion KRW to set a record high. The number of customers using Coupang also recovered to pre-breach levels. Kim Beom-seok, Chair of Coupang Inc., said, “We have returned to the growth trajectory seen before the incident,” signaling confidence. However, losses of around 350 billion KRW from the Incheon logistics center fire and about 300 billion KRW in additional taxes from the National Tax Service are slated to be reflected in results starting in the third quarter, making a full recovery in the short term unlikely.

Coupang Inc. disclosed on the 4th (local time) that second-quarter revenue came to $8.856 billion (13.3007 trillion KRW), up 4% from a year earlier. This is the highest quarterly revenue on record. On a constant-currency basis, which excludes exchange-rate effects, revenue grew 10%.

The operating loss for the quarter was $556 million (835 billion KRW), swinging from a profit of $149 million (209.3 billion KRW) in the same period last year. The second-quarter operating loss was the largest on a quarterly basis since the 2021 New York listing and was about 20% larger than Wall Street expectations. Following a swing to loss in the first quarter due to the data-breach impact, the company posted a loss for a second straight quarter. Adding the first-quarter loss of $242 million (354.5 billion KRW), the cumulative operating loss for the first half reached $798 million (1.1895 trillion KRW). It is the first time Coupang Inc. has recorded a first-half loss exceeding 1 trillion KRW.

The main driver of the second-quarter deterioration was an administrative fine of about 624.6 billion KRW imposed in June by the Personal Information Protection Commission in connection with the data breach. Excluding this fine, the second-quarter operating loss would have been about 219.2 billion KRW. Although Coupang has filed an administrative lawsuit challenging the commission's decision, the amount was recognized in the accounts in advance.

By business segment, revenue in Product CommerceCoupang Inc.'s core business that includes Rocket Deliverygrew 8% year on year on a constant-currency basis to 11.1515 trillion KRW. Active customers in Product Commerce, defined as customers who purchased at least once on Coupang during the quarter, totaled 24.7 million, up 3%. Active customers fell from 24.6 million in the fourth quarter of last year to 23.9 million in the first quarter of this year, but recovered in the second quarter to pre-incident levels.

Coupang Inc.'s second-quarter results contain mixed figures that support both positive and negative outlooks. However, factors that will weigh on earnings remain in the third quarter, making a quick return to a normal trajectory difficult. Coupang estimated losses from the recent fire at its Incheon logistics center at about $246 million (350 billion KRW). These losses are expected to be reflected starting in the third quarter. The company carries insurance, so a significant portion of the losses is likely to be recoverable, but receiving the insurance payout is expected to take considerable time.

In addition, Coupang Inc. said it received a notice of proposed additional assessment totaling about $208 million (300 billion KRW) for corporate tax, value-added tax, and other items following a tax audit by the National Tax Service. The main issues reportedly concern transfer pricing and transactions between Coupang and Coupang Fulfillment Services (CFS). The National Tax Service launched a special tax investigation into Coupang in late December last year, immediately after the data breach. Coupang Inc. stated, “We will pursue administrative remedies and, if necessary, actively present our position through judicial proceedings.”

Coupang Inc. forecast that, once these one-off headwinds pass, it will be able to return to a normal trajectory starting next year. Chair Kim Beom-seok said, “Customers who left after the data breach are coming back, and spending levels are recovering,” adding, “The number of paid membership subscribers (Wow members) has surpassed pre-breach levels.” However, he noted, “The recovery this year will not be linear,” and added, “When the affected period fully passes next year, we expect to return to the growth rates and margin structure achieved previously.”