Executive Summary / Key Takeaways

• Coupang is solidifying its market leadership in South Korea and rapidly expanding in Taiwan, driven by an integrated logistics network, AI-powered operations, and a relentless focus on customer experience.
• The Product Commerce segment continues to deliver robust growth and significant margin expansion, with Q3 2025 net revenues reaching $7.98 billion (18% constant currency growth) and adjusted EBITDA margins hitting 8.8%.
• Developing Offerings, particularly Taiwan, is a high-conviction growth vector, showing accelerating triple-digit revenue growth and prompting increased investments, with full-year 2025 adjusted EBITDA losses now expected at the higher end of the $900 million to $950 million range.
• Technological differentiation, including advanced automation, robotics, and AI, is central to Coupang's strategy, driving operational efficiencies, enhancing customer service, and contributing to long-term margin expansion targets exceeding 10% for Product Commerce.
• While facing competitive pressures and legal/regulatory risks, Coupang's disciplined capital allocation, including a $1 billion share repurchase program, and its deep understanding of local market dynamics position it for sustained growth and shareholder value creation.

The Integrated Powerhouse: Coupang's Blueprint for E-commerce Dominance

Coupang, Inc., established in 2010, has revolutionized commerce in South Korea through its unwavering commitment to customer obsession and operational excellence. At its core, Coupang operates an end-to-end integrated technology and logistics network, a foundational strength that enables its signature "Rocket Delivery" service. This proprietary infrastructure, built over years of strategic investment, allows for unparalleled speed and reliability, offering free next-day delivery for millions of products, often for orders placed just seconds before midnight. This integrated approach not only enhances the customer experience but also generates significant efficiencies and cost savings, which Coupang passes on to consumers through lower prices.

In the highly competitive e-commerce landscape, Coupang distinguishes itself from global giants like Amazon (AMZN) and Alibaba (BABA) through its hyper-localized execution and deep market penetration in South Korea. While Amazon boasts a vast global scale and diversified services, and Alibaba excels in ecosystem building and cross-border commerce, Coupang's focused investment in its domestic logistics network provides a distinct advantage in delivering rapid, tailored services to Korean consumers. This localized expertise often translates into stronger customer loyalty and potentially superior cash flow generation within its core market. Similarly, against JD.com (JD), known for its supply chain excellence in China, Coupang's concentrated market approach allows for greater agility and efficiency in a dense urban environment. Even against marketplace-focused platforms like eBay (EBAY), Coupang's direct retail model and integrated services offer a more seamless and reliable shopping experience, potentially leading to materially lower operating costs.

The broader industry is witnessing a significant shift towards AI-driven commerce and the expansion of AI cloud computing. Coupang is actively participating in these trends, leveraging AI and automation to enhance its operations and explore new growth avenues. This technological prowess, combined with its robust logistics, forms a formidable competitive moat, enabling Coupang to consistently outpace overall retail market growth.

Technological Edge: The Engine of Efficiency and Customer Wow

Coupang's technological differentiation is not merely an add-on; it is the bedrock of its operational efficiency and customer value proposition. The company's end-to-end integrated fulfillment, logistics, and technology network is a complex system optimized for speed and precision. This system enabled a 45% increase in same-day or dawn deliveries in Q4 2024, with the order cutoff for same-day delivery extended by two hours. This tangible benefit of speed and convenience directly translates into a superior customer experience, fostering loyalty and increased engagement.

Beyond delivery, Coupang is aggressively accelerating the deployment of automation technologies across its logistics and fulfillment network. While still in the "low teens" in terms of highly automated infrastructure, this initiative is already yielding significant results, including a 16% improvement in line-haul costs in Q4 2024. The company's investment in robotics and automation is designed to make jobs easier for its workforce while simultaneously boosting productivity.

Artificial intelligence (AI) is central to Coupang's operations, impacting nearly every aspect from personalized recommendations and dynamic pricing to inventory forecasting and route optimization. Management highlights that AI is already writing up to 50% of new code in early implementations, demonstrating its immediate impact on software development efficiency. Looking ahead, AI is expected to have a transformative impact through enhanced automation and humanoid robotics. The company's rebranding of its AI cloud computing service as Coupang Intelligent Cloud (CIC) in July 2025 signals a strategic pivot to leverage its retail and logistics scale in the AI infrastructure race, focusing on specialized GPU-as-a-Service (GPUaaS) and advanced data centers. These technological advancements are critical to Coupang's competitive moat, driving lower costs, better margins, and a stronger market position, ultimately contributing to its long-term growth strategy.

Product Commerce: Sustained Growth and Expanding Profitability

Coupang's Product Commerce segment, encompassing its core Korean retail and marketplace offerings, continues to be the primary engine of its financial performance. For the three months ended September 30, 2025, the segment reported net revenues of $7,980 million, representing a robust 18% year-over-year growth in constant currency. This growth is not merely from new customers but from deeper engagement across all customer cohorts, with even the oldest cohorts demonstrating compounding double-digit spending increases. Product Commerce active customers grew 10% year-over-year to 24.70 million in Q3 2025, with net revenues per active customer increasing 7% in constant currency.

Profitability in Product Commerce is also expanding impressively. Gross profit for the segment reached $2,564 million in Q3 2025, a 26% increase in constant currency year-over-year, with a gross profit margin of 32.1%. This margin expansion is attributed to a growing percentage of revenues from higher-margin categories and offerings, particularly Fulfillment and Logistics by Coupang (FLC), and ongoing supply chain optimization. FLC, which provides logistics and fulfillment services for third-party merchants, is growing at a rate several times faster than the overall Product Commerce segment, empowering small and medium-sized enterprises (SMEs) and expanding Coupang's reach into new categories like furniture and fashion. The segment's adjusted EBITDA surged 50% year-over-year to $705 million in Q3 2025, resulting in an adjusted EBITDA margin of 8.8%. Management anticipates Product Commerce margins will move "well past the 10%" mark, driven by continued application of technology, AI, and automation.

Developing Offerings: High-Conviction Bets for Future Expansion

Coupang's Developing Offerings segment represents its strategic investments in nascent, high-potential initiatives aimed at replicating the "wow experience" of Product Commerce in new markets and services. While these offerings currently operate with lower margins and require significant investment, they are viewed as critical for unlocking future growth vectors.

For the three months ended September 30, 2025, Developing Offerings generated net revenues of $1,287 million, growing 31% year-over-year in constant currency. However, the segment reported a gross profit of $156 million, a 22% decrease year-over-year, and an adjusted EBITDA loss of $292 million, a 130% increase in loss compared to the prior year. This increased loss reflects the company's rising confidence and accelerated investments in these early-stage initiatives.

Taiwan stands out as a key growth driver, exhibiting accelerating triple-digit year-over-year revenue growth. Customer adoption and retention in Taiwan are mirroring the patterns observed during the early stages of Coupang's retail business in Korea, reinforcing management's long-term conviction. The company launched its WOW membership program in Taiwan in Q1 2025, alongside a nearly 500% expansion in selection. The ongoing build-out of its own last-mile logistics and the rollout of a 3P marketplace are expected to further fuel growth. Taiwan's market characteristics, including low e-commerce penetration and high population density, present an ideal environment for Coupang's integrated Rocket Delivery model, with relatively low competition in last-mile delivery.

The Farfetch acquisition in January 2024, aimed at expanding into luxury retail, has seen a dramatic turnaround. Despite facing significant losses and declining growth prior to acquisition, Coupang's disciplined execution has shrunk Farfetch's losses to a breakeven run rate by Q4 2024, with minimal loss of scale. Restructuring efforts included a settlement with Authentic Brands Group LLC in February 2025, terminating $264 million in guaranteed minimum royalty payments. The strategy for Farfetch is to streamline operations and focus on customer experience and operational excellence to achieve sustainable growth in the global luxury fashion market.

Coupang Eats, the restaurant ordering and delivery service, continues its strong momentum, driven by a focus on broad selection, great value, and fast, reliable delivery, including free delivery with zero additional fees for customers and competitive commissions for merchants. Coupang Play, the online content streaming service, expanded its offerings with a "Sports Pass" and became available to all Coupang customers in Korea (including non-WOW members) with ad-supported free content.

Financial Health and Outlook

Coupang's consolidated financial performance for Q3 2025 reflects a company in a strong growth phase, balancing investments with profitability. Total net revenues reached $9,267 million, growing 20% year-over-year in constant currency. Consolidated gross profit was $2,720 million, up 20% year-over-year, with a gross profit margin expanding over 50 basis points to 29.4%. Adjusted EBITDA for the quarter was $413 million, a 20% increase year-over-year, resulting in an adjusted EBITDA margin of 4.5%. Net income attributable to Coupang stockholders was $95 million.

The company maintains a healthy liquidity position, with $7.30 billion in cash, cash equivalents, and restricted cash as of September 30, 2025, supplemented by $1.10 billion available under its revolving credit facilities. A $1 billion stock repurchase program, authorized in May 2025, underscores management's commitment to opportunistic capital allocation and shareholder returns. Capital expenditures are primarily directed towards expanding fulfillment and logistics infrastructure in Korea and Taiwan, with management expecting CapEx as a percentage of revenue to remain relatively consistent over time.

For the full year 2025, Coupang anticipates consolidated constant currency revenue growth of approximately 20%. Product Commerce gross profit is expected to grow faster than its constant currency revenues, driven by the rapid expansion of FLC. While quarterly margins may exhibit variability, the company expects consolidated adjusted EBITDA margins to continue expanding on an annual basis for the foreseeable future, inclusive of its investments in Developing Offerings. The full-year adjusted EBITDA losses for Developing Offerings have been revised upwards to the higher end of the $900 million to $950 million range, primarily due to increased investments in Taiwan. The effective tax rate is expected to be temporarily elevated at 60% to 65% for FY2025 due to losses in early-stage operations and the impact of the One Big Beautiful Bill Act (OBBBA), with a long-term normalization target of 25%. Selling, General & Administrative (OG&A) expenses as a percentage of revenue are projected to decline in the near to medium term.

Risks and Challenges

Despite its strong trajectory, Coupang faces several risks. The company is currently involved in securities litigation, including a class action lawsuit dismissed in September 2025 but now under appeal, and derivative actions. While the company intends to vigorously defend these claims, the potential for adverse judgments or outcomes, which cannot be reasonably estimated, could materially impact its financial position.

Regulatory scrutiny from the Korea Fair Trade Commission (KFTC) also presents a challenge. Investigations into alleged violations by Coupang's Korean subsidiaries resulted in an administrative fine of approximately $121 million in Q2 2024 and a criminal referral, with appeals and trial proceedings ongoing. The inability to reasonably estimate potential penalties from other ongoing KFTC investigations poses further uncertainty. Furthermore, macroeconomic uncertainties and foreign currency fluctuations, particularly the weakening Korean Won, could impact reported results. The company's reliance on the South Korean market, while a strength for localized execution, also presents a concentration risk compared to globally diversified competitors.

Conclusion

Coupang's journey from a nascent e-commerce player to a dominant force in South Korea and a rising contender in new markets like Taiwan is a testament to its integrated strategy, technological leadership, and customer-centric approach. The company's core Product Commerce segment continues to demonstrate robust growth and impressive margin expansion, fueled by its unparalleled logistics network, AI-driven efficiencies, and the rapidly scaling FLC offering. The strategic investments in Developing Offerings, particularly the accelerating momentum in Taiwan and the successful turnaround of Farfetch, underscore Coupang's disciplined approach to identifying and cultivating future growth vectors.

While navigating legal and regulatory challenges and macroeconomic uncertainties, Coupang's commitment to operational excellence and disciplined capital allocation remains steadfast. Its technological differentiation, from Rocket Delivery to advanced AI and automation, provides a sustainable competitive advantage that is expected to drive further margin expansion and solidify its market position. For investors, Coupang represents a compelling opportunity in a growing e-commerce market, backed by a proven playbook for value creation and a clear roadmap for leveraging technology to deliver both customer delight and attractive long-term returns.