Coupang: 2Q26 Business Recap
Data Scandal Lingers on Growth, Trading at 12x Mature Earnings
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2Q26 Update.
Coupang reported 2Q26 and the data leak continued to weigh on their growth as some customers have yet to return. Their Product Commerce revenues were +8% y/y on a constant currency basis (versus +5% y/y last quarter), but they noted that customer spend is growing +16% y/y. The difference between these two figures is the churned customers that have yet to return. So, while the majority of customers have returned and continue to increase their spend, there is still a lingering headwind from the data leak.
Active customers grew +3% y/y, returning to a pre-data leak level. They noted that the majority of customers who have left have already returned and that total WOW Memberships now exceeds the level before the incident.
It speaks to Coupang’s value prop that most churned customers have already returned and that they continue to increase their spending. When customers left, they were able to try many alternative ecommerce sites and it speaks volumes that they still came back to Coupang.
Reported GAAP results look significantly worse than results on a constant currency basis, given than the Korean Won reached its lowest level in 15 years. Total reported revenues were +4% y/y versus +10% on a constant currency basis.
Reported gross profits actually decreased -3% on a GAAP basis but were +3% on constant currency. Still, this represents gross margin pressure of -180bps y/y. Product Commerce gross profit margins were 30.5%, -210bps y/y, but +25bps sequentially. This is driven by 2 main factors. The first is higher promotional activity to reacquire and retain users post the data incident, but Bom Kim said that promotions are going to be temporary, not a structural change to their cost base. The second has to do with capacity underutilization. They noted that they have long-term capex plans to expand their warehouse and logistic network based off of their demand estimates, but when demand fell short (because of the data leak) they couldn’t pull their capex on that short of a timeline. The net result is that they are a bit overbuilt for their current demand levels, but expect this dynamic to pass by next year, which will lead to margin expansion.
Developing offerings grew +24% y/y driven by Taiwan, Coupang Eats, and Farfetch. They also mentioned a newer service, Rocket Now in Japan, which is quick delivery service that is still in an early investment phase. In Taiwan they started rolling out Dawn Delivery, which will be key for them to differentiate versus other ecommerce offerings. They still have far to go in terms of selection and coverage in Taiwan but note they can grow their logistics network faster than the first time they built it in Korea. On the call they noted how Coupang Eats has successfully grown the food delivery market in Korea and are adding non-food items to that delivery network.
Other notables from the quarter were a fire incident at one of their logistics centers that cost an estimated $246mn in inventory loss (recoverable through insurance though and did not cause disruptions) and a $410mn fine imposed by Korean regulators, which they intend to appeal (but it is currently recorded as an expense). Lastly, they repurchased $459mn of shares in the quarter.
They guided 3Q revenue growth to 8-9% in constant currency. They expect growth to continue to be weighed down by the churned customer cohort until they lap that comp in 1Q27. Additionally, there are one-off factors (different timing of the Chuseok holiday season) that are having a slight impact on 3Q revenue estimates. They also expect similar margin pressure next quarter for the same undercapacity reasons mentioned above, which they believe will continue to be pressured until mid-2027.
Big picture Coupang is continuing to execute strongly through a temporary demand headwind. It is unfortunate that the data scandal issue looks like it will linger on comps until 1Q27 and maybe margins until 2Q27, but it does not change their long-term value prop or earnings generation capabilities.
In terms of valuation, at $16 a share Coupang has an enterprise value of $26.3b (after backing out $3b on net cash). We estimate that their Product Commerce segment can generate 10% EBIT margins at maturity (which translates to ~12% adjusted EBITDA margins, slightly above their current long-term guidance of 10% EBITDA). Given their current $30bn in Product Commerce revenues, this yields $2.2bn in NOPAT. This is an implied 12x mature margin multiple, with value only attributed to their Product Commerce segment. So, any value in their Taiwan operation, Coupang Eats, Farfetch, and their newer Japanese Rocket Now service is not accounted for.
For further reading, check out our 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.