Coupang ($CPNG) reported higher annual third-quarter results late Tuesday, with revenue surpassing market expectations as the e-commerce firm's operating segments saw impressive growth. The company, based in the US and primarily selling products in South Korea, posted adjusted earnings of $0.06 per share for the September quarter, an increase from $0.05 the previous year.
Four analysts polled by Capital IQ anticipated normalized EPS of $0.01. Overall revenue climbed 27% to $7.87 billion, exceeding the Street's estimate of $7.73 billion. Net income declined to $0.04 a share from $0.05 in the 2023 quarter, largely attributed to the operating losses associated with Farfetch, the online luxury retailer that Coupang acquired in January.
Following the announcement, Coupang's shares dropped 6.1% in Wednesday's premarket activity. "With Farfetch, our team is making significant progress in driving operational efficiency through disciplined execution," Chief Executive Bom Kim stated during an earnings call, as noted in a Capital IQ transcript.
The company achieved "near breakeven profitability" at Farfetch in the third quarter, sooner than its year-end target, according to Kim. Product commerce sales surged 16% to $6.89 billion as active customers increased by 11% to 22.5 million. "As we remain a very small portion of the total commerce spend in Korea, we see a massive runway for growth ahead of us," Chief Financial Officer Gaurav Anand commented on the call, highlighting the segment's potential.
Revenue in the developing offerings division, which encompasses Farfetch, skyrocketed to $975 million from $218 million in the same period last year. The segment recorded negative adjusted earnings before interest, tax, depreciation, and amortization of $127 million, contrasting with a $161 million loss a year ago.
"While we expect to continue to experience some unevenness in the level of losses from quarter to quarter, the improvements we saw this quarter can be attributed mainly to enhancements in both (Coupang) Eats and Farfetch," Anand informed analysts. Gross profit margin enhanced by 350 basis points to 28.8% for the quarter.
Total operating costs and expenses expanded to $7.76 billion from nearly $6.1 billion year-over-year, the company reported..