Coupang, Inc. 2026 Q2 Earnings Call

Thanks, operator. Welcome everyone to Coupang's second quarter 2026 earnings conference call. I'm pleased to be joined on the call today by our Founder and CEO, Bom Kim, and our CFO, Gaurav Anand. The following discussion, including responses to your questions, reflects management's views as of today's date only. We do not undertake any obligation to update or revise this information except as required by law. Certain statements made on today's call may include forward-looking statements, including statements regarding future financial and operational results. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and in our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings.

As we share our second quarter 2026 results on today's call, the comparisons we make to prior periods will be on a year-over-year basis, unless otherwise noted. We may also present both GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures, are included in our earnings release, our slides accompanying this webcast, and our SEC filings, which are posted on the company's investor relations website. I'll turn the call over to Bom.

Thanks everyone for joining us today. Consolidated revenue grew 10% year-over-year in constant currency. That's a step up from the growth in Q1 and in line with the guidance we provided. Adjusted EBITDA margin also came in within the range of guidance. First, product commerce saw its revenue growth increase to 8% year-over-year in constant currency. Let me spend a moment on the customer behavior behind that number, because the reported rate blends groups moving in different directions. The vast majority of our customer spend never moved. That group is spending at the highest levels in our history and compounding similarly to before last year's data incident. The spend that did leave was a minority of the total, and most of it has already returned. Some of these customers were away for months, long enough to settle in somewhere else.

These customers not only came back, they returned to their full prior spend levels and have since gone beyond it, compounding their spend at similar high rates as before. Because the customers who returned were, on average, higher spenders than those who haven't, the picture in spend terms is even clearer than in customer counts. The vast majority of the spend the incident disrupted is back and growing the way it did before. On top of that, new customers keep arriving. Total WOW membership, for example, now exceeds its levels before the incident. New members begin at the early stage of the spend curve, where new members always begin, so record membership shows up in revenue on a lag. Every cohort before them has climbed that curve, and we expect these to do the same.

The spend of all customers, excluding just those that left during the incident and haven't returned, is growing around 16% year-over-year, which is closer to the spend growth product commerce delivered in Q2 last year before the incident. Spend growth does outpace revenue growth, but the gap between the 16% and the reported 8% revenue growth is driven mostly by the missing spend of the cohort that hasn't returned. We'll keep chipping away at earning them back. After we lap the affected periods, we expect the spend growth for all of product commerce to reflect the growth rate of this underlying customer base because the cohort that has not returned will no longer be in our year-over-year comparison. On margins, we're continuing to work through the disruption. We plan capacity and fixed costs against the predicted demand curve, and much of that capacity has long lead times.

With revenue temporarily below that plan, those costs represent a larger share of revenue today. We could cut them significantly, we've chosen not to because the right long-term decision is to grow into the capacity and support our customer experience that has always been our North Star. There are also meaningful volume-based savings in our supply chain that we're missing this year that we expect to recover next year. We've also deliberately increased marketing spend to reacquire customers, we plan to reduce it next year after we've lapped the period. We run this business with precision on capacity utilization and volume economics. That's what allows us to deliver double-digit growth along with expanding margins in normal times. It's also why a sudden shock is more visible in our numbers than it might be somewhere else.

The same discipline that makes the disruption more visible is what will enable us to reverse it. We've seen elements of this before. Coming out of COVID, a sudden shift in the demand curve pressured margins, and we returned to normal levels. The shape of the recovery this year won't move in a straight line. Holiday timing and seasonal cost patterns will affect the reported improvement quarter to quarter. Gaurav will walk through how that shapes the back half. The arc we're managing to runs through next year. After we lap the affected period next year, we expect to work our way back to the growth and margin structure that product commerce ran at before. I want to also note a few trends that we track closely and the broader opportunity we see before us.

Our cohorts have continued to increase their spend with us year after year, including through this past year. Our oldest cohorts, the customers we acquired about a decade and a half ago, are still increasing their spend today. They now spend nearly 10 times what they spent in their first year, and climbing. Our newest cohorts are growing fastest of all, at the beginning of the same curve. Each year adds a new cohort at the start of the curve, while every earlier cohort keeps climbing it. All three trends, our oldest cohorts continuing to grow spend, the spend of our subsequent cohorts climbing the curve to convert to higher levels, and new cohorts joining, power our growth. The past year tested us, all three trends held. The spend of our cohorts climbs because spend growth is wallet share growth.

As we expand selection, customers find more and more of the things they buy for which we've broken the trade-off between price, selection, and speed. We're saving customers more money and more time with every item we add on Rocket Delivery. Our wallet share, or penetration of the overall retail spend in Korea, remains below the levels of penetration we see from global peers in markets like the U.S. We don't view these levels as our ceiling because penetration follows the strength of the offering. Every trade-off we break brings purchases online that were never in reach before. As the offering improves, the addressable share of retail expands with it. The same logic applies to margins. The long-term margin drivers keep compounding. Automation continues to improve productivity across our fulfillment and logistics network. Margin-accretive offerings like advertising and FLC are still early in their scale.

AI raises the ceiling on both. We think of AI as a multiplier, and what it multiplies is a set of assets we've been building for 15 years. The physical network, operating data from billions of orders picked, packed, and delivered, and direct relationships with tens of millions of customers. Applied to the customer experience, AI improves discovery, personalization, and service. Applied to operations, it compounds productivity and lowers the cost to serve. Applied to margin-accretive offerings, it raises the returns for the merchants and brands who use them, which expands the addressable opportunity itself. Turning now to developing offerings, where we're running the playbook I just described in new markets and categories.

In Taiwan, we've built out and continue to expand our own end-to-end fulfillment and logistics network that now delivers the vast majority of our shipments next day, seven days a week, the only service in Taiwan, to our knowledge, that does. We also began rolling out our dawn delivery experience, which became a defining part of the customer experience in Korea, to our first neighborhoods in Taiwan. We're building it faster than the first time because Taiwan didn't start from scratch. Taiwan inherits over a decade of technology and process innovation from our Korean operations. The design, the systems, the operational playbook, refined shipment by shipment. It took us four years into our logistics journey in Korea before we were able to launch dawn delivery. Taiwan reached it in just one year. With the network in place, the work shifts to the input we know best, selection.

Our selection in Taiwan today is a fraction of Rocket Delivery in Korea. Every item we add is another purchase where our customer saves both money and time, and each of those purchases earns more of their wallet. That's the same dynamic that has our Korean cohorts still climbing 15 years in, and we can already see it taking hold. Our early cohorts in Taiwan are retaining and growing their spend, tracing the curve Korea's cohorts produced at the same age. Taiwan is on the same compounding curve as Korea, just earlier on in it. Two things to keep in mind as this scales. First, the path won't be linear quarter-to-quarter. Sometimes building selection at the right cost structure means stepping back in a category to rebuild it. Second, today's economics reflects the stage of our build-out, not the destination.

As we work out the inefficiencies of an early supply chain and our volumes grow into the network, volume economics engage, and we expect Taiwan's P&L to follow the path that Korea paved. Let me turn to our on-demand delivery service, which includes both Eats in Korea and Rocket Now in Japan. We've shared in the past our approach to developing offerings. We make disciplined initial investments where we see the potential for meaningful long-term cash flows. We look for early proof points in customer behavior, and we scale investments only as results validate the opportunity. The cycle is complete when an offering stops drawing on the portfolio and starts funding it. Eats has traveled that entire arc.