South Korean eCommerce company Coupang reported its first earnings report since it’s IPO Wednesday. CPNG reported mixed results with higher revenue but on a much wider loss than expected. Total Active Customers continued to grow., up 21 percent year over year to 16 million.
South Korean eCommerce company Coupang reported its first earnings report since it’s IPO Wednesday. CPNG reported mixed results with higher revenue but on a much wider loss than expected. Total Active Customers continued to grow., up 21 percent year over year to 16 million.
Earnings
Coupang reported sales up 74 percent from their $4.2 billion performance at this time last year above analysts’ estimates of $4.19 billion. Earnings, however showed an adjusted loss of 68 cents a share, far larger than the estimated 16-cent loss analysts were looking for. The loss of $474.6 million is an improvement from a loss of $699 million at the same time last year. However the loss more than doubled on a yr/yr basis, which was largely attributed to CPNG’s efforts to expand into grocery and food delivery while improving delivery times on all other products. Gross profit was $733 million in the first quarter, a 70 percent increase from last year.
Founder Bom Suk Kim spoke with investors post-release. “Coupang was founded with a mission to make customers wonder ‘How did I ever live without Coupang?’—a vision that forced us to reexamine the tradeoffs in commerce and to build hard things to tackle them,” “Our strong 2021 first quarter results show that we are making meaningful progress towards that goal. We’re excited that our underlying fundamentals are better than ever and our differentiation keeps growing over time.”
Highlights
- Coupang’s total Active Customers grew 21 percent year over year to 16 million.
- Total net revenues per Active Customer was also up, reaching 44 percent to $262 in the first quarter.
- CPNG faced multiple headwinds during Q1.
- The company was forced to close 20 of its operational centers due to COVID, which impacted margins.
“We also earn subscription revenue from memberships to our Rocket WOW membership program, which provides customers with access to benefits such as access to Rocket Fresh, no minimum spend for Rocket Delivery, and free shipping on returns, which is also included in net other revenue.”
Outlook
Widening losses were expected from the expansion into grocery and food delivery. “Coupang aims to add 50% to its e-commerce infrastructure in a single year, compared with what it built since its founding in 2010.” Bloomberg reported.
The cost of a new logistics network and hiring additional drivers requires steep upfront costs. Since the pandemic it is fair to say grocery and food delivery is the right move for CPNG as the 2020 trends have turned into habits with online adoption. A sensible development, though probably enforced by the COVID 19 travel restrictions, CPNG is staying focused on South Korea and not moving out to other countries too quickly. This is holding back new network costs and risk.
One thing is to not get ahead of yourelf and expect CPNG to be Amazon overnight. The company is not expected to be profitable until 2024.
IPO
The firm’s IPO raised $4.55 billion and received a market valuation near $60 billion. That made Coupang the largest foreign IPO on the U.S. market since Alibaba’s in September 2014. The stock has mostly been under pressure since its debut. The IPO priced at $35 and opened at $63.50 on March 11. It popped higher the first day but has been in a downward trend since then. Coupang saw the global pandemic, which has prompted shoppers to turn to online purchases en masse, as the right time to go public.
About Coupang
Coupang operates an e-commerce site in South Korea, similar to Amazon (AMZN) in the US and Alibaba (BABA) in China. The company offers free same-day or next-day delivery on many products through its Rocket Wow membership (similar to Amazon Prime). In addition, the company delivers groceries under its Coupang Fresh segment and food under its Coupang Eats segment. SoftBank (OTCMKTS:SFTBY) owns 35.1% of CPNG through the telecom and tech giant’s Vision Fund.
From The TradersCommunity News Desk