Coupang back in the red after data breach fallout

E-commerce giant Coupang swung to a quarterly loss despite continued revenue growth, amid the aftershocks of a data breach that disrupted demand and strained its logistics network.

The New York Stock Exchange-listed company reported Wednesday that revenue for the January-March period rose 8 percent on-year to $8.5 billion, while posting an operating loss of $242 million. Adjusted earnings before interest, taxes, depreciation and amortization fell to $29 million, down sharply from $382 million a year earlier.

For the first time in seven quarters, Coupang slipped into the red, while revenue growth slowed to a single-digit pace, also a first since its listing.

Founder and CEO Bom Kim attributed the red ink to two main factors: $1.2 billion in customer vouchers tied to last year’s data breach and temporary inefficiencies in its logistics network.

“The customer vouchers we issued in response to the incident are one-time in nature,” Kim said during the earnings call Wednesday, adding that the bulk of the impact was contained to the first quarter.

Temporary inefficiencies in its logistics network stemmed from a mismatch between preplanned capacity and weaker-than-expected demand in the aftermath of the breach. "As demand returns to a predictable curve, we expect our capacity and supply chain to come back into balance and the inefficiencies to work their way out," he noted.

The company said January marked the nadir for its product commerce segment, which accounts for $7.2 billion in revenue, but that conditions have improved each month since, particularly in membership.

Kim said the vast majority of Wow members never left, and that by late April roughly 80 percent of lapsed memberships had returned. "New Wow signups and churn have returned to historical, stable levels," he added.

Active users in the segment reached 23.9 million, up 2 percent on-year, but down 3 percent from the prior quarter. Chief Financial Officer Gaurav Anand attributed the decline to "the lagging effect of the data incident," noting that customer counts are measured on a trailing basis.

The developing offerings segment, which spans Taiwan Rocket Delivery, Farfetch, Coupang Eats and Coupang Play, saw revenue rise 28 percent to $1.3 billion, while adjusted EBITDA losses nearly doubled to $329 million.

Kim flagged Taiwan as a priority, saying its logistics build-out was gaining traction. "Our own last-mile delivery network, which guarantees next-day delivery, now covers the vast majority of our volume and that coverage continues to expand" he said.

On the regulatory front, Coupang faces tighter scrutiny in Korea after the Fair Trade Commission designated Kim as a controlling figure, a move that could tighten oversight and impose additional restrictions. Anand said the company is reviewing the matter and remains in contact with regulators.