# Coupang, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Coupang, Inc.](/companies/cpng.md) (CIK 1834584)
- Form: 10-Q
- Filed: 2024-05-08
- Accepted by EDGAR: May 8, 2024, 16:04 ET
- Period: 2024-03-31
- Accession: 0001834584-24-000044
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1834584/000183458424000044/cpng-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1834584/000183458424000044/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $7.11bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $5.18bn | us-gaap:CostOfGoodsAndServicesSold |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $40.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $27.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $83.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $5.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 1,815,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $212.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $107.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-03-31 | $5.23bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $8.57bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $14.95bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $7.43bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $10.75bn | us-gaap:Liabilities |
| Current portion of debt | at 2024-03-31 | $196.0m | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2024-03-31 | $272.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-03-31 | $4.08bn | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 36,334 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Form 10-Q, as well as our audited consolidated financial statements included in our 2023 Form 10-K. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Form 10-Q. As a result of many factors, including, without limitation, those factors set forth in the “Risk Factors” section of our 2023 Form 10-K and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, our actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements. In the following discussion and analysis, amounts may not foot due to rounding.*

|  | Page |
| --- | ---: |
| Overview | 17 |
| Key Business Metrics | 18 |
| Non-GAAP Financial Measures | 19 |
| Results of Operations | 21 |
| Liquidity and Capital Resources | 23 |
| Critical Accounting Policies and Estimates | 25 |
| Recently Adopted Accounting Pronouncements | 25 |

Overview

Coupang provides retail, restaurant delivery, video streaming, and fintech services to customers around the world. Coupang’s mission is to revolutionize the everyday lives of its customers and create a world where people wonder, “How did I ever live without Coupang?” Headquartered in the United States, Coupang has operations and support services in geographies including South Korea, Taiwan, Singapore, China, India and Europe.

We believe that we are a preeminent retail destination because of our broad selection, low prices, and exceptional delivery and customer experience across our owned inventory selection as well as products offered by third-party merchants, in Korea. Our unique end-to-end integrated fulfillment, logistics, and technology network enables Rocket Delivery, which provides free, next-day delivery for orders placed anytime of the day, even seconds before midnight—across millions of products in Korea. Our structural advantages from complete end-to-end integration, investments in technology, and scale economies generate higher efficiencies that allow us to pass savings to customers in the form of lower prices. The capabilities we have built provide us with opportunities to expand into other offerings and geographies.

In January 2024 we acquired the business and assets of Farfetch, a leading global marketplace for the luxury fashion industry which connects customers with some of the world’s best luxury boutiques and brands.

Our segments reflect the way we evaluate our business performance and manage operations. See Note 3 — "Segment Reporting" to the condensed consolidated financial statements included elsewhere in Part I, Item 1 of this Quarterly Report on Form 10-Q.

*Product Commerce* primarily includes core Korean retail (owned inventory) and marketplace offerings (third-party merchants) and Rocket Fresh, our fresh grocery offering, as well as advertising products associated with these offerings. Revenues from Product Commerce are derived primarily from online product sales of owned inventory to customers in Korea, commissions, logistics and fulfillment fees earned from merchants that sell products through our mobile application and website, and from Rocket WOW membership.

*Developing Offerings* includes more nascent offerings and services, including Coupang Eats, our restaurant ordering and delivery service in Korea, Coupang Play, our online content streaming service in Korea, fintech, our retail operations in Taiwan, as well as advertising products associated with these offerings, and also includes Farfetch, our newly acquired global luxury fashion marketplace. Revenues from Developing Offerings are primarily generated from our global luxury fashion marketplace, online restaurant ordering and delivery services in Korea and retail operations in Taiwan.

#### Key Financial and Operating Highlights:

*(in millions)*

| 2024(1) | Three Months Ended March 31, 2023 |  | % Change |
| --- | ---: | ---: | ---: |
| Total net revenues | $7,114 | $5,801 | 23% |
| Total net revenues, constant currency(2) | $7,397 |  | 28% |
| Gross profit(3) | $1,929 | $1,420 | 36% |
| Net (loss) income | $(24) | $91 | (126)% |
| Net income margin | (0.3)% | 1.6% |  |
| Adjusted EBITDA(2) | $281 | $241 | 17% |
| Adjusted EBITDA margin(2) | 3.9% | 4.2% |  |
| Net cash provided by (used in) operating activities | $212 | $501 | (58)% |
| Free cash flow(2) | $107 | $407 | (74)% |
| Segment adjusted EBITDA: |  |  |  |
| Product Commerce | $467 | $288 | 62% |
| Developing Offerings | $(186) | $(47) | NM(4) |

*(in millions)*

|  | Trailing Twelve Months Ended March 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $2,363 | $1,122 | 111% |
| Free cash flow(2) | $1,475 | $451 | NM(4) |

(1) Includes results of operations of Farfetch from acquisition date, January 30, 2024.

(2) Total net revenues, constant currency; total net revenues growth, constant currency; adjusted EBITDA; adjusted EBITDA margin; and free cash flow are non-GAAP measures. See “Non-GAAP Financial Measures” and “Reconciliations of GAAP to Non-GAAP Measures” below for the reconciliation of the Non-GAAP measures with their comparable amounts prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

(3) Gross profit is calculated as total net revenues minus cost of sales.

(4) Non-meaningful

Key Business Metrics

As of March 31, 2024, we are providing quarterly Product Commerce Active Customers and Total net revenues per Product Commerce Active Customer metrics in lieu of Active Customers and Total net revenues per Active Customer. We believe these metrics provide a better presentation of our more mature retail operations and predominant customer base as they exclude revenue and customer data specific only to our more nascent Developing Offerings. Product Commerce Active Customers includes those customers that use both our Product Commerce and Coupang Eats offerings, but excludes those customers that only use our Coupang Eats offering and customers outside Korea.

*(in millions, except net revenues per Product Commerce Active Customer)*

|  | Three Months Ended March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product Commerce Active Customers | 21.5 | 20.8 | 20.2 | 19.4 | 18.6 |
| Net revenues per Product Commerce Active Customer | $302 | $302 | $296 | $293 | $305 |

#### Product Commerce Active Customers

As of the last date of each reported period, we determine our number of Product Commerce Active Customers by counting the total number of individual customers who have ordered at least once directly from our Product Commerce apps or websites during the relevant period. A customer is anyone who has created an account on our apps or websites, identified by a unique email address. The change in Product Commerce Active Customers in a reported period captures both the inflow of new customers as well as the outflow of existing customers who have not made a purchase in the period. We view the number of Product Commerce Active Customers as a key indicator of growth in our net revenue, the reach of our network, the awareness of our brand, and the engagement of our customers.

#### Net Revenues per Product Commerce Active Customer

Net revenues per Product Commerce Active Customer is the total Product Commerce net revenues generated in a period divided by the total number of Product Commerce Active Customers in that period. A key driver of growth is increasing the frequency and the level of spend of customers who are shopping on our Product Commerce apps or websites. We therefore view net revenues per Product Commerce Active Customer as a key indicator of engagement and retention of our customers and our ability to drive future revenue growth, though there may be a short-term dilutive impact when a large number of new Product Commerce active customers are added in a recent period.

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance. These non-GAAP financial measures may be different than similarly titled measures used by other companies.

Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with U.S. GAAP. Non-GAAP measures have limitations in that they do not reflect all the amounts associated with our results of operations as determined in accordance with U.S. GAAP. These measures should only be used to evaluate our results of operations in conjunction with the corresponding U.S. GAAP measures.

| Non-GAAP Measure | Definition | How We Use The Measure |
| --- | --- | --- |
| Free Cash Flow | • Cash flow from operations Less: purchases of property and equipment, Plus: proceeds from sale of property and equipment. | • Provides information to management and investors about the amount of cash generated from our ongoing operations that, after purchases and sales of property and equipment, can be used for strategic initiatives, including investing in our business and strengthening our balance sheet, including paying down debt, and paying dividends to stockholders. |
| Adjusted EBITDA | • Net income (loss), excluding the effects of: - depreciation and amortization, - interest expense, - interest income, - other income (expense), net, - income tax expense (benefit), - equity-based compensation, - impairments, and - other items not reflective of our ongoing operations. | • Provides information to management to evaluate and assess our performance and allocate internal resources. • We believe Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by investors and other interested parties in evaluating companies in the retail industry for period-to-period comparisons as they remove the impact of certain items that are not representative of our ongoing business, such as material non-cash items, acquisition-related transaction and restructuring costs, and certain variable charges. |
| Adjusted EBITDA Margin | • Adjusted EBITDA as a percentage of total net revenues. |  |
| Constant Currency Revenue | • Constant currency information compares results between periods as if exchange rates had remained constant. • We define constant currency revenue as total revenue excluding the effect of foreign exchange rate movements, and use it to determine the constant currency revenue growth on a comparative basis. • Constant currency revenue is calculated by translating current period revenues using the prior period exchange rate. | • The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons. Our financial reporting currency is the U.S. dollar (“USD”) and changes in foreign exchange rates can significantly affect our reported results and consolidated trends. For example, our business generates sales predominantly in Korean Won (“KRW”), which are favorably affected as the USD weakens relative to the KRW, and unfavorably affected as the USD strengthens relative to the KRW. • We use constant currency revenue and constant currency revenue growth for financial and operational decision-making and as a means to evaluate comparisons between periods. We believe the presentation of our results on a constant currency basis in addition to U.S. GAAP results helps improve the ability to understand our performance because they exclude the effects of foreign currency volatility that are not indicative of our actual results of operations. |
| Constant Currency Revenue Growth | • Constant currency revenue growth (as a percentage) is calculated by determining the increase in current period revenue over prior period revenue, where current period foreign currency revenue is translated using prior period exchange rates. |  |

**Coupang, Inc. Q1 2024 Form 10-Q** 19

Reconciliation of GAAP to Non-GAAP Measures

#### Free Cash Flow

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Trailing Twelve Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net cash provided by operating activities** | **$212** | **$501** | **$2,363** | **$1,122** |
| Adjustments: |  |  |  |  |
| Purchases of land and buildings | (10) | (27) | (357) | (231) |
| Purchases of equipment | (97) | (68) | (551) | (450) |
| Total purchases of property and equipment | (107) | (95) | (908) | (681) |
| Proceeds from sale of property and equipment | 2 | 1 | 20 | 10 |
| Total adjustments | $(105) | $(94) | $(888) | $(671) |
| **Free cash flow** | **$107** | **$407** | **$1,475** | **$451** |
| Net cash used in investing activities | $(117) | $(83) | $(961) | $(682) |
| Net cash provided by financing activities | $52 | $78 | $173 | $127 |

#### Adjusted EBITDA and Adjusted EBITDA Margin

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Total net revenues | $7,114 | $5,801 |
| **Net (loss) income** | **(24)** | **91** |
| Net income margin | (0.3)% | 1.6% |
| Adjustments: |  |  |
| Depreciation and amortization | 95 | 64 |
| Interest expense | 27 | 8 |
| Interest income | (55) | (32) |
| Income tax expense | 83 | 33 |
| Other expense, net | 9 | 7 |
| Acquisition and restructuring related costs | 58 | — |
| Equity-based compensation | 88 | 70 |
| **Adjusted EBITDA** | **$281** | **$241** |
| Adjusted EBITDA margin | 3.9% | 4.2% |

#### Constant Currency Revenue and Constant Currency Revenue Growth

*(in millions)*

| Consolidated | Three Months Ended March 31, 2024 As Reported | Exchange Rate Effect | Constant Currency Basis | 2023 As Reported | Year over Year Growth As Reported | Constant Currency Basis |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net retail sales | $5,895 | $239 | $6,134 | $5,205 | 13% | 18% |
| Net other revenue | 1,219 | 44 | 1,263 | 596 | 105% | 112% |
| **Total net revenues** | **$7,114** | **$283** | **$7,397** | **$5,801** | **23%** | **28%** |
| **Net Revenues by Segment** |  |  |  |  |  |  |
| Product Commerce | $6,494 | $269 | $6,763 | $5,658 | 15% | 20% |
| Developing Offerings | 620 | 14 | 634 | 142 | NM(1) | NM(1) |
| **Total net revenues** | **$7,114** | **$283** | **$7,397** | **$5,801** | **23%** | **28%** |

(1) Non-meaningful

Results of Operations

*(in millions)*

|  | Three Months Ended March 31, 2024(1) | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Net retail sales | $5,895 | $5,205 | 13% |
| Net other revenue | 1,219 | 596 | 105% |
| **Total net revenues** | **7,114** | **5,801** | **23%** |
| Cost of sales | 5,185 | 4,381 | 18% |
| Operating, general and administrative | 1,889 | 1,313 | 44% |
| **Total operating cost and expenses** | **7,074** | **5,694** | **24%** |
| **Operating income** | **40** | **107** | **(63)%** |
| Interest income | 55 | 32 | 72% |
| Interest expense | (27) | (8) | NM(2) |
| Other expense, net | (9) | (7) | 29% |
| **Income before income taxes** | **59** | **124** | **(52)%** |
| Income tax expense | 83 | 33 | 152% |
| **Net (loss) income** | **$(24)** | **$91** | **(126)%** |

(1) Includes results of operations of Farfetch from acquisition date, January 30, 2024.

(2) Non-meaningful

#### Total Net Revenues

We categorize our total net revenues as (1) net retail sales and (2) net other revenue. Total net revenues incorporate reductions for estimated returns, promotional discounts, and earned loyalty rewards and exclude amounts collected on behalf of third parties, such as value added taxes. We periodically provide customers with promotional discounts to retail prices, such as percentage discounts and other similar offers, to incentivize increased customer spending and loyalty. These promotional discounts are discretionary and are reflected as reductions to the selling price and revenue recognized on each corresponding transaction. Loyalty rewards are offered as part of revenue transactions to all retail customers in Korea, whereby rewards are earned as a percentage of each purchase, for the customer to apply towards the purchase price of a future transaction. We defer a portion of revenue from each originating transaction, based on the estimated standalone selling price of the loyalty reward earned, and then recognize the revenue as the loyalty reward is redeemed in a future transaction, or when they expire. The amount of the deferred revenue related to these loyalty rewards is not material.

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | % Change As Reported | Constant Currency |
| --- | ---: | ---: | ---: | ---: |
| Net retail sales | $5,895 | $5,205 | 13% | 18% |
| Net other revenue | 1,219 | 596 | 105% | 112% |
| **Total net revenues** | **$7,114** | **$5,801** | **23%** | **28%** |

Net retail sales represent the majority of our total net revenues which we earn from online product sales of our owned inventory to customers. Net other revenue includes revenue from commissions earned from merchants that sell their products through our apps or websites. We are not the merchant of record in these transactions, nor do we take possession of the related inventory. Net other revenue also includes consideration from online restaurant ordering and delivery services performed by us, as well as advertising services provided on our apps or websites. We also earn subscription revenue from memberships to our Rocket WOW membership program, which is also included in net other revenue.

Fulfillment and Logistics by Coupang (“FLC”) is a Product Commerce offering that enables participating merchants to leverage our end-to-end integrated logistics and fulfillment network. The previous contract terms with FLC merchants resulted in the transfer of control of the merchants’ products to us and Coupang is the seller of record in these transactions, whereby revenue is recorded on a gross basis (principal). Beginning in the second quarter of 2023, we changed the FLC program and related contracts with merchants, streamlining the overall process for merchants and us. As a result of these changes, control of these products is no longer transferred to the Company prior to sales. The change impacted how we recognize a portion of our revenue, from a gross basis (principal) to a net basis (agent). As of the end of the second quarter of 2023, the previous contract terms had expired, after which commissions and logistics and fulfillment fees earned from FLC merchants under the new contracts are recorded in net other revenue. This will continue to result in a prospective reduction in total net revenues associated with FLC compared to historical periods, with no significant corresponding impact on gross profit expected.

The following table presents our total net revenues by segment.

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | % Change As Reported | Constant Currency |
| --- | ---: | ---: | ---: | ---: |
| Product Commerce | $6,494 | $5,658 | 15% | 20% |
| Developing Offerings | 620 | 142 | NM(1) | NM(1) |
| **Total net revenues** | **$7,114** | **$5,801** | **23%** | **28%** |

(1) Non-meaningful

The increase in Product Commerce for the three months ended March 31, 2024 is due to increased customer engagement within and across more product categories, as well as year over year growth in our Product Commerce Active Customers and total net revenues per Product Commerce Active Customer excluding effects of foreign exchange rates. The growth rate was partially reduced by the net revenue impact of our transition of FLC merchants to new contracts now recognized on a net basis.

The increase in Developing Offerings for the three months ended March 31, 2024 is primarily due to $288 million of incremental revenues from our acquisition of Farfetch in the quarter, and our growth initiatives in Taiwan and Eats.

#### Cost of Sales

Cost of sales primarily consists of the purchase price of products sold directly to customers where we record revenue gross, and includes logistics costs. Inbound shipping and handling costs to receive products from suppliers are included in inventory and recognized in cost of sales as products are sold. Additionally, cost of sales includes outbound shipping and logistics related expenses, delivery costs from our restaurant delivery business, and depreciation and amortization expense.

The increase for the three months ended March 31, 2024 primarily reflects higher volume from increased sales and customer demand as well as from the acquisition of Farfetch. Cost of sales as a percentage of revenue decreased from 75.5% for the three months ended March 31, 2023 to 72.9% for the three months ended March 31, 2024, primarily due to further operational efficiencies, continued supply chain optimization, and an increased percentage of revenues earned from higher margin revenue categories and offerings, including FLC. Cost of sales as a percentage of revenue also benefited from the inclusion of Farfetch, which operates with a higher gross profit margin and generated gross profit of $122 million. These benefits were partially offset by the impacts from our other growth initiatives in developing offerings, such as Taiwan and Eats.

#### Operating, General and Administrative Expenses

Operating, general and administrative expenses include all our operating costs excluding cost of sales, as described above. More specifically, these expenses include costs incurred in operating and staffing our fulfillment centers (including costs attributed to receiving, inspecting, picking, packaging, and preparing customer orders), customer service-related costs, payment processing fees, costs related to the design, execution, and maintenance of our technology infrastructure and online offerings, advertising costs, general corporate function costs, and depreciation and amortization expense.

The increase for the three months ended March 31, 2024 primarily reflects increases in fulfillment costs due to growth in our business and Farfetch operating costs, including restructuring and acquisition-related costs of $58 million. These expenses as a percentage of revenue increased from 22.6% for the three months ended March 31, 2023 to 26.6% for the three months ended March 31, 2024 primarily due to the inclusion of Farfetch, which operates with a higher expense margin, and decreased revenues from the transition to the new FLC contracts beginning in the second quarter of 2023.

#### Interest Income

Interest income primarily consists of interest earned on our deposits held with financial institutions.

Interest income for the three months ended March 31, 2024 increased $23 million compared to the prior year period, primarily due to higher interest rates combined with higher average cash balances.

#### Income Tax Expense

We are subject to income taxes predominantly in Korea, as well as in the United States and other foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate is subject to significant variation and can vary based on the amount of pre-tax income or loss, the relative proportion of foreign to domestic income, use of tax credits and changes in the valuation of our deferred tax assets and liabilities. Beginning in 2022, the Tax Cuts and Jobs Act, as currently enacted, requires taxpayers to capitalize research and development expenses with amortization periods over five and fifteen years, which has and is expected to continue to increase the amount of our global intangible low-taxed income (GILTI) inclusion.

Our effective tax rate was 140.1% for the three months ended March 31, 2024, compared to 26.6% for the prior year period. The increase in our effective tax rate is primarily due to the loss before income taxes incurred by Farfetch with no offsetting tax benefit, which added approximately 97% to the effective tax rate, and the impact of releasing the valuation allowance on our Korean deferred tax assets in the fourth quarter of 2023.

Our effective rates for the three months ended March 31, 2024 and 2023 differed from the federal statutory rate due to the impact of valuation allowances on our deferred tax assets, and tax credits used for the period, and the mix of our income before income taxes generated across the various jurisdictions in which we operate, including the impact of international provisions of the Tax Cuts and Jobs Act and permanent differences from non-deductible expenses. We expect that our effective tax rate in future periods will continue to differ significantly from the applicable statutory rate.

#### Segment adjusted EBITDA

The operating performance measure of each segment is segment adjusted EBITDA. Segment adjusted EBITDA is defined as income (loss) before income taxes for a period before depreciation and amortization, interest expense, interest income, income tax expense (benefit), other income (expense), net, equity-based compensation, impairments, and other items that we do not believe are reflective of our ongoing operations associated with our segments.

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Product Commerce | $467 | $288 | 62% |
| Developing Offerings | (186) | (47) | NM(1) |
| **Consolidated adjusted EBITDA** | **$281** | **$241** | **17%** |

(1) Non-meaningful

The improvement for the three months ended March 31, 2024 in Product Commerce segment adjusted EBITDA was primarily due to an increase in net revenues, further operational efficiencies, improvements from supply chain optimization, an increased percentage of revenues earned from higher margin revenue categories and offerings, and improved operating leverage.

The increased loss for the three months ended March 31, 2024 in Developing Offerings adjusted EBITDA was the result of the increased investments in our Eats and Taiwan offerings, higher content costs for our Coupang Play offering and $31 million incremental adjusted EBITDA loss from Farfetch, which was acquired during the quarter.

Liquidity and Capital Resources

#### Liquidity

Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations. Our primary sources of liquidity are cash on hand, supplemented through various debt financing arrangements and sales of our equity securities. We had total cash, cash equivalents and restricted cash of $5.6 billion as of March 31, 2024, of which $4.2 billion was held by foreign subsidiaries, primarily in Korea, and may not be freely transferable to the U.S. due to local laws or other restrictions. Additionally, we have approximately $1.0 billion available under our 2022 and 2021 revolving credit facilities as described below.

The ability of certain subsidiaries to transfer funds or pay dividends to Coupang, Inc. is also restricted due to terms which require the subsidiaries to meet certain financial covenants, including requirements to maintain a positive net equity balance or having current period income.

As of March 31, 2024 and December 31, 2023, we had equity of $4.1 billion and $4.1 billion, respectively. We may incur losses in the future. We expect that our investment into our growth strategy will continue to be significant, particularly with respect to our Developing Offerings segment, which will continue to focus on our newer offerings and entrance into new geographies, as well as overall expansion of our fulfillment, logistics, and technology capabilities. As part of this expansion to fulfill anticipated future customer demand and continuation to expand services, we plan to build new fulfillment centers. We have entered into various new construction contracts for capital projects which are expected to be completed over the next two years. These contracts have remaining capital expenditures commitments of $104 million as of March 31, 2024. We expect that our future expenditures for both infrastructure and workforce-related costs will exceed several billion dollars over the next several years.

Changes in our cash flows were as follows:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $212 | $501 | $(289) |
| Net cash used in investing activities | (117) | (83) | (34) |
| Net cash provided by financing activities | 52 | 78 | (26) |

#### Operating Activities

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net (loss) income | $(24) | $91 | $(115) |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities | 420 | 286 | 134 |
| Change in operating assets and liabilities | (184) | 124 | (308) |
| **Net cash provided by operating activities** | **$212** | **$501** | **$(289)** |

The year-over-year change in operating cash flow was driven by a $115 million decrease in net income, which resulted in a net loss for the current period. Cash provided by operating activities was also impacted by the changes in operating assets and liabilities, including $115 million from other assets primarily and $193 million from accounts payable primarily as a result of improved payment terms, primarily with certain large, multi-national suppliers which occurred in 2023.

#### Investing Activities

The increase in cash outflow was mainly driven by an additional $75 million bridge loan made to Farfetch prior to the closing of the acquisition and a $12 million increase in purchases of property and equipment. This was partially offset by the net cash acquired in the acquisition of Farfetch in exchange for the noncash contribution of the outstanding bridge loan.

#### Financing Activities

The decrease in cash inflow was primarily driven by an $18 million decrease in proceeds from debt and short-term borrowing and a $16 million increase in repayments of debt and short-term borrowings due to the timing of maturities.

We believe that our sources of liquidity will be sufficient to meet our anticipated cash requirements for at least the next 12 months. However, we may need additional cash resources in the future if we find and pursue opportunities for investment, acquisition, strategic cooperation, or other similar actions, which may include investing in technology, our logistics and fulfillment infrastructure, or related talent. If we determine that our cash requirements exceed our amounts of cash on hand or if we decide to further optimize our capital structure, we may seek to issue additional debt or equity securities or obtain credit facilities or other sources of financing. This financing may not be available on favorable terms, or at all.

#### Capital Resources

We have entered into material unconditional purchase obligations. These contractual commitments primarily relate to technology related service contracts, fulfillment center construction contracts and software licenses. We generally enter into term loan facility agreements to finance the acquisition of property or construction of our fulfillment centers. These agreements may require that we provide for collateral equal to or greater than the amount borrowed under the arrangement. As we continue to build additional fulfillment centers, we expect our borrowings under debt financing arrangements to continue to increase.

Refer to Note 13 — "Commitments and Contingencies" of our consolidated financial statements in Part II, Item 8 of our 2023 Form 10-K for disclosure of our minimum contractual commitments. As part of the acquisition of Farfetch, we have a technology related service contract with minimum remaining payments of $170 million covering services through 2027, and a license arrangement with minimum guarantees of approximately $290 million which are to be paid over 9 years.

Our short-term and long-term borrowings generally include lines of credit with financial institutions available to be drawn upon for general operating purposes.

#### Revolving Credit Agreement

We have a two-year revolving credit agreement (the “Revolving Credit Agreement”) with a borrowing limit of $119 million that bears interest at the average of 91-days CD interest rate plus 2.30%. The Revolving Credit Agreement is secured by certain of our inventories. As of March 31, 2024, there was no balance outstanding on the 2022 Revolving Credit Agreement.

#### Revolving Credit Facility

In January 2024, our senior unsecured credit facility (“the Revolving Credit Facility”) was amended to extend the maturity date to February 2026 and to bring the aggregate principal amount to $875 million. The Revolving Credit Facility continues to provide us the right to request incremental commitments up to $1.25 billion, subject to customary conditions.

Refer to Note 12 — "Short-Term Borrowings and Long-Term Debt" of our consolidated financial statements in Part II, Item 8 of our 2023 Form 10-K for disclosure of our debt obligations and collateral.

#### Farfetch Acquisition

On January 31, 2024, we completed the acquisition of the business and assets of Farfetch, a leading global marketplace for the luxury fashion industry. In advance of the acquisition, our subsidiary provided $150 million to Farfetch under a bridge loan which was contributed towards the Farfetch Acquisition.

As part of the Farfetch Acquisition, a subsidiary of the Company assumed the then outstanding syndicated Term Loans under Farfetch’s existing Credit Agreement with certain banks and financial institutions of $575 million, inclusive of fees incurred and less $58 million we repurchased upon acquisition. The Farfetch Term Loans is due in quarterly installments, of 0.25%, payable on the last business day of each fiscal quarter. The Farfetch Term Loans mature in October 2027, and early repayment is permitted. The Term Loans bear interest at a rate equal to SOFR plus 6.25% per annum.

The Term Loans contain customary affirmative covenants as well as customary negative covenants, including, but not limited to, restrictions on certain entities within Farfetch’s ability to incur additional debt, make investments, make distributions, dispose of assets, or enter into certain types of related party transactions. The loans are secured against specified assets of the Farfetch group and guaranteed by certain subsidiaries of Farfetch.

Critical Accounting Policies and Estimates

We prepare our financial statements in accordance with U.S. GAAP. Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. For a discussion of our critical accounting policies and estimates, refer to the section entitled “Critical Accounting Policies and Estimates” in our 2023 Form 10-K.

Other significant accounting policies are also discussed in Note 1 — “Description of Business and Summary of Significant Accounting Policies” to the consolidated financial statements in Part II, Item 8 of our 2023 Form 10-K.

Recently Adopted Accounting Pronouncements

See Note 1 — "Basis of Presentation and Summary of Significant Accounting Policies" to the condensed consolidated financial statements included elsewhere in Part I, Item 1 of this Quarterly Report on Form 10-Q.

## Market risk

As filed, 4,637 characters.

In addition to the risks inherent in our operations, we are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates, foreign currency, and credit.

Interest Rate Risk

As of March 31, 2024, we had cash, cash equivalents, and restricted cash of $5.6 billion. Interest-earning instruments carry a degree of interest rate risk. Our interest rate risk arises primarily from our variable rate debt as well as our undrawn revolving credit facilities. Borrowings issued at variable rates expose us to variability in cash flows. We are a party to interest rate swap agreements to reduce some of our exposure to interest rate volatility of certain term loans. Our policy, in the management of interest rate risk, is to structure a reasonable balance between fixed and floating rate financial instruments as well as our cash and cash equivalents and any short-term investments we may hold. The balance struck by our management is dependent on prevailing interest rate markets at any point in time.

Our borrowings generally include lines of credit with financial institutions, some of which carry variable interest rates. As of March 31, 2024, there was no balances outstanding on our revolving credit facilities. Any future borrowings incurred under the 2021 and 2022 revolving credit facilities would accrue interest at rates subject to current market conditions.

Foreign Currency Risk

We have accounts on our foreign subsidiaries’ ledgers, which are maintained in the respective subsidiary’s local currency and translated into USD for reporting of our consolidated financial statements. As a result, we are exposed to fluctuations in the exchange rates of various currencies against the USD and other currencies, including the KRW.

#### Transactional

We generate the majority of our revenue from customers within Korea. Typically, we aim to align costs with revenue denominated in the same currency, but we are not always able to do so. As a result of the geographic spread of our operations and due to our reliance on certain products and services priced in currencies other than KRW, our business, results of operations, and financial condition have been and will continue to be impacted by the volatility of the KRW against foreign currencies.

#### Translational

Coupang, Inc.’s functional currency and reporting currency is the USD. The local and functional currency for our Korean subsidiary, Coupang Corp., which is our primary operating subsidiary, is the KRW. The other subsidiaries predominantly utilize their local currencies as their functional currencies. Assets and liabilities of each subsidiary are translated into USD at the exchange rate in effect at the end of each period. Revenue and expenses for these subsidiaries are translated into USD using average rates that approximate those in effect during the period. Consequently, increases or decreases in the value of the USD affect the value of these items with respect to the non-USD-denominated businesses in the consolidated financial statements, even if their value has not changed in their original currency. For example, a stronger USD will reduce the reported results of operations of non-USD-denominated businesses and conversely a weaker USD will increase the reported results of operations of non-USD-denominated businesses. An assumed hypothetical 10% adverse change in average exchange rates used to translate foreign currencies to USD would have resulted in a decline in total net revenues of approximately $635 million and an immaterial impact in net income for the three months ended March 31, 2024, respectively.

At this time, we do not, but we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency risk. It is difficult to predict the impact hedging activities would have on our results of operations.

Credit Risk

Our cash and cash equivalents, deposits, and loans with banks and financial institutions are potentially subject to concentration of credit risk. We place cash and cash equivalents with financial institutions that management believes are of high credit quality. The degree of credit risk will vary based on many factors, including the duration of the transaction and the contractual terms of the agreement. As appropriate, management evaluates and approves credit standards and oversees the credit risk management function related to investments.

## Controls and procedures

As filed, 4,574 characters.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2024, our disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the securities exchange act of 1934, as amended (the “Exchange Act”)) were evaluated, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to assess whether they are effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Based on this evaluation, and subject to the below exclusion, our CEO and CFO have concluded that, as of March 31, 2024, our disclosure controls and procedures were effective at a reasonable assurance level.

In accordance with the interpretative guidance issued by SEC staff, companies are allowed to exclude acquired businesses from the assessment of internal control over financial reporting during the first year after completion of an acquisition and the disclosure controls and procedures of the acquired entity that are subsumed in the internal control over financial reporting from the assessment of disclosure controls and procedures. Based on this guidance, our assessment of the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2024 excluded the portion of disclosure controls and procedures that are subsumed by internal control over financial reporting of Farfetch. The Company completed the acquisition of Farfetch on January 30, 2024. Farfetch’s total assets, excluding the effects of purchase accounting, represented 10% and 4% of the Company’s consolidated total assets and consolidated total revenues, respectively, as of and for the quarter ended March 31, 2024.

#### Material Weakness in Internal Control over Financial Reporting of Farfetch

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. Farfetch disclosed the existence of material weaknesses in its internal control over financial reporting in Item 15 of its Annual Report on Form 20-F for the year ended December 31, 2022.

The unremediated material weakness identified and disclosed by Farfetch related to the operating effectiveness of certain business process and information technology controls in the New Guards business. We are in the process of reviewing the operations of Farfetch and implementing Coupang’s internal control structure over the acquired operations. While we did not include Farfetch in our assessment of internal control over financial reporting as of March 31, 2024, we determined the material weakness previously disclosed by Farfetch was not fully remediated as of March 31, 2024 and could result in a material misstatement of our annual or interim consolidated financial statements that will not be prevented or detected on a timely basis. We are actively engaged in the remediation efforts.

Changes in Internal Control over Financial Reporting

Other than the changes relating to the acquisition and material weakness in internal control over financial reporting disclosed above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

## Risk factors

As filed, 776 characters.

*Investing in our securities involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties disclosed in Part 1, Item 1A, under the caption “Risk Factors,” of our 2023 Form 10-K which risks could materially and adversely affect our business, results of operations, financial condition, and liquidity. No material change in the risk factors discussed in such Form 10-K has occurred. Such risk factors may not be the only ones that we face because our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. Our business operations could also be affected by additional factors that apply to all companies operating globally.*

Filed May 8, 2024.
Source: SEC EDGAR, the filing index for accession 0001834584-24-000044. Last ingested by Listed: Nov 3, 2026, 19:39 ET. No prices; not investment advice.