Coupang, Inc.

Results of Operations

(1)Includes results of operations of Farfetch from acquisition date, January 30, 2024.

(2)Non-meaningful.

Total Net Revenues

We categorize our total net revenues as (1) net retail sales and (2) net other revenue. Total net revenues incorporate reductions for estimated returns, promotional discounts, and earned loyalty rewards and exclude amounts collected on behalf of third parties, such as value added taxes. We periodically provide customers with promotional discounts to retail prices, such as percentage discounts and other similar offers, to incentivize increased customer spending and loyalty. These promotional discounts are discretionary and are reflected as reductions to the selling price and revenue recognized on each corresponding transaction. Loyalty rewards are offered as part of revenue transactions to all retail customers, whereby rewards are earned as a percentage of each purchase, for the customer to apply towards the purchase price of a future transaction. We defer a portion of revenue from each originating transaction, based on the estimated standalone selling price of the loyalty reward earned, and then recognize the revenue as the loyalty reward is redeemed in a future transaction, or when the reward expires. The amount of the deferred revenue related to these loyalty rewards is not material.

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Net retail sales represent the majority of our total net revenues which we earn from online product sales of our owned inventory to customers. Net other revenue includes revenue from commissions earned from merchants that sell their products through our apps or websites. We are not the merchant of record in these transactions, nor do we take possession of the related inventory. Net other revenue also includes consideration from online restaurant ordering and delivery services performed by us, as well as advertising services provided on our apps or websites. We also earn subscription revenue from memberships to our Rocket WOW membership program, which is also included in net other revenue.

The following table presents our total net revenues by segment.

The increase in Product Commerce net revenues for the three months ended March 31, 2025 is primarily due to continued growth in our Product Commerce Active Customers and total net revenues per Product Commerce Active Customer, increasing 9% and 6%, year-over-year, respectively, excluding effects of foreign exchange rates, driven by increased customer engagement within and across more product categories. The growth rate for the three months ended March 31, 2025 was partially offset by a 10% negative impact from foreign exchange.

The increase in Developing Offerings net revenues for the three months ended March 31, 2025 is due to an increase in total net revenues in each of our growth initiatives in Developing Offerings, as we are seeing greater levels of customer engagement in these early-stage offerings.

Cost of Sales

Cost of sales primarily consists of the purchase price of products sold directly to customers where we record revenue gross, and includes logistics costs. Inbound shipping and handling costs to receive products from suppliers are included in inventory and recognized in cost of sales as products are sold. Additionally, cost of sales includes outbound shipping and logistics related expenses, delivery costs from our restaurant delivery business, and depreciation and amortization expense.

Cost of sales increased $407 million or 8% mainly due to higher volume from increased sales and customer demand. Cost of sales as a percentage of revenue decreased from 72.9% for the three months ended March 31, 2024 to 70.7% for the three months ended March 31, 2025. The decrease in cost of sales as a percentage of revenue is primarily due to a decrease for Product Commerce from 71.7% for the three months ended March 31, 2024 to 68.7% for the three months ended March 31, 2025, resulting from an increased percentage of revenues earned from higher margin revenue categories and offerings, including revenue earned from Fulfillment and Logistics by Coupang (“FLC”) merchants as we see greater levels of merchant adoption and customer engagement, as well as continued supply chain optimization and further operational efficiencies.

Operating, General and Administrative Expenses

Operating, general and administrative expenses include all our operating costs excluding cost of sales, as described above. More specifically, these expenses include costs incurred in operating and staffing our fulfillment centers (including costs attributed to receiving, inspecting, picking, packaging, and preparing customer orders), customer service-related costs, payment processing fees, costs related to the design, execution, and maintenance of our technology infrastructure and online offerings, advertising costs, general corporate function costs, and related depreciation and amortization expense.

The increase for the three months ended March 31, 2025 primarily reflects increases in technology and infrastructure costs to support our continued growth. Operating, general and administrative expenses as a percentage of revenue increased from 26.6% for the three months ended March 31, 2024 to 27.3% for the three months ended March 31, 2025. The increase is due primarily to increased technology and infrastructure costs, partially offset by net restructuring gains for the three months ended March 31, 2025 compared to net restructuring costs in the prior year period of $58 million.

Interest Income

Interest income primarily consists of interest earned on our deposits held with financial institutions.

Interest income for the three months ended March 31, 2025 remained relatively flat when compared with the prior year period due to consistent cash balances and stable interest rates.

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Income Taxes

We are subject to income taxes predominantly in Korea, as well as in the United States and other foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate is subject to significant variation and can vary based on the amount of pre-tax income or loss, the relative proportion of foreign to domestic income, use of tax credits and changes in the valuation of our deferred tax assets and liabilities.

The decrease in our effective income tax rate for the three months ended March 31, 2025 is primarily due to the loss before income taxes incurred by Farfetch in the comparable period with no offsetting tax benefit, and the decrease in U.S. taxes on foreign earnings.

Our effective rates for the three months ended March 31, 2025 and 2024 differed from the federal statutory rate due to the impact of valuation allowances on our deferred tax assets, and tax credits used for the period, and the mix of our income before income taxes generated across the various jurisdictions in which we operate, including the impact of international provisions of the Tax Cuts and Jobs Act and permanent differences from non-deductible expenses. We expect that our effective tax rate in future periods will continue to differ significantly from the applicable statutory rate.

Segment Gross Profit and Adjusted EBITDA

Segment gross profit is defined as net revenues less cost of sales attributable to each reportable segment. Gross margin is defined as gross profit divided by net revenues attributable to each reportable segment.

Segment adjusted EBITDA is defined as income (loss) before income taxes for a period before depreciation and amortization, equity-based compensation expense, interest expense, interest income, other income (expense), net, impairments and other items that we do not believe are reflective of our ongoing operations associated with our segments.

(1)See “Non-GAAP Financial Measures” below for the reconciliation of the non-GAAP measures with their comparable amounts prepared in accordance with U.S. GAAP.

Product Commerce

The increase in gross profit for the three months ended March 31, 2025 was primarily due to an increase in revenue of $376 million compared to the prior year period. Gross profit grew at a faster rate than net revenues due to an increased percentage of revenues earned from higher margin revenue categories and offerings, including revenue earned from FLC merchants as we see greater levels of merchant adoption and customer engagement, as well as continued supply chain optimization and further operational efficiencies.

The increase in Product Commerce adjusted EBITDA for the three months ended March 31, 2025 was primarily due to the increase in gross profit described above.

Developing Offerings

The increase in gross profit for the three months ended March 31, 2025 was consistent with the increase in revenue described above.

The decreased loss for the three months ended March 31, 2025 in Developing Offerings adjusted EBITDA was primarily the result of improved unit economics for Eats and ongoing cost reduction efforts for Farfetch.