(As a reminder, this is a Business Recap, which are shorter than our Business Updates).
3Q25 Earnings Update.
Coupang’s 3Q25 FXN revenues increased +20% y/y with gross profits up +22% y/y. As we mentioned over the past couple quarters, as Coupang shifts more sales to 3rd party from 1st party, gross profits becomes a better barometer of how growth is trending.
Case in point, Product Commerce revenues were up +18% y/y on an FXN basis but gross profit were up 26% y/y. This growth rate is unchanged from last quarter.
Active customers grew +10% y/y again, reaching 24.7mn.
Product Commerce adjusted EBITDA was $705mn, representing a 8.8% margin, down 20bps q/q.
Developing Offerings grew +31% y/y to $1.3bn with losses of $292mn.
In total operating cash flow for the trailing twelve months was $2.4bn, and increase of $550mn y/y.
All in all, 3Q was another quarter of strong execution. Coupang continues to execute on their core Korea ecommerce opportunity by expanding selection, increasing the items applicable for Rocket delivery, and improving operational efficiency.
As we have long noted, Coupang just needs to simply increase selection in order to continue to increase spend per customer. This message was repeated by Bom Kim on the call when he emphasized “one of the biggest opportunities to expand our customer value proposition and drive future growth is broadening selection”.
It was also interesting to hear Bom Kim talk about the acceleration of automation technologies and acknowledge that it was at low levels relative to its potential. If you recall from our last update, in an AlphaSense Expert call a Former Head of Supply Chain at Coupang for 2 years (but at Amazon for 23 years prior) commented negatively about Coupang’s ability to automate. He said that “it required a tremendous amount of willpower and commitment to do that [at Amazon]. I don’t see Coupang making that step and a company that’s willing to put in that kind of investment has an opportunity to surpass Coupang and coming up with a more efficient, higher performant, broader selection set of offerings”.
At the time we said of this experts commentary that: “It is hard to know how much his experience is representative of Coupang as a whole, as it certainly seems like Bom Kim is trying to automate the process as much as possible to squeeze every last ounce of efficiency out of the system”. Bom Kim’s 3Q25 commentary only further emphasizes their commitment to automation.
In response to a question about Coupang’s acquisition of 260,000 GPUs, Bom Kim said that they are first focused on building their own internal AI computing infrastructure, but are not at the stage of offering an external service for general use. However, they are experimenting with a few external customers currently.
On Taiwan they noted continued momentum with their Rocket Wow offering and that they are starting to build out their last mile logistics capability there.
You can refer to last quarter’s reverse DCF for a sense of potnetial returns as the outputs haven’t changed meaningfully in the past quarter. On a high level though, another way to think of valuation is as follows. LTM revenues are $34bn. If they hit their 10% adjusted EBITDA target and layering in D&A (1.5% of revenue currently and rounding it to 2%) is $2.7bn in mature EBIT. (We think they will ultimately achieve higher adjusted EBITDA margins). With 25% tax that gets us 26x mature margins at their current EV of ~$53bn. If they can continue to grow low 20%s to mid-teens for some time, then that multiple will quickly come down.
Call Notes
Selection
- We believe one of the biggest opportunities to expand our customer value proposition and drive future growth is broadening selection across both first-party and marketplace offerings.
- On the first-party side, we’re onboarding new brands at an accelerating pace, but there’s still tremendous runway ahead. Many products in our first-party catalog aren’t yet sourced directly from brand partners. Deepening those direct relationships will allow us to provide more choice, better value, and greater convenience for our customers.
FLC
- Investing to expand deeper into newer categories like furniture, fashion, and sporting goods, enhancing the breadth and depth of selection available to customers
Automation
- We’re aggressively accelerating the deployment of automation technologies across our logistics and fulfillment network, which remains at low levels relative to its potential.
AI
- We have some small effort to test and learn on the — on making parts of that technology available externally. But we’re not at the stage of having or discussing any real customer demand or capital plans there
- AI has always been very central to operations, and that’s only becoming more true. AI is developing — delivering tangible benefits across our operations, including in areas that relate to demand forecasting, automating, fulfillment processes, optimizing delivery routes among many other applications. These advances are helping us reduce waste, improve productivity and enhance the customer experience.
Margins
- So with many initiatives, we expect Product Commerce margins to move well past the 10% margins, and the consolidated margins would continue over time.
Taiwan
- We expect the continued growth in Taiwan to be driven primarily by 2 factors: first, our rapidly expanding selection. While still very early, we’re making considerable progress in growing our first-party assortment.
- We also began rolling out our 3P marketplace recently, which we expect will allow us to significantly expand selection, increasing the value proposition for consumers. And second, we’ve begun building out our own last mile logistics in Taiwan. While it’s still early, the team has made impressive progress this past quarter. We’ve seen significant growth in the share of our volume being delivered through our own last mile logistics, creating the potential for us to approach the levels of speed and reliability that customers have come to expect from Coupang in Korea.
In order to invest in Coupang, an investors needs to understand their value prop and the core Korea ecommerce opportunity, which we cover extensively in our report!
Check it out here: Coupang Extensive Research Report here.
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*At the time of this writing, one or more contributors to this report has a position in Coupang. Furthermore, accounts one or more contributors advise on may also have a position in Coupang. This may change without notice.
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