E-commerce marketplace Coupang (NYSE:CPNG) beat Wall Street’s revenue expectations in Q3 CY2024, with sales up 27.2% year on year to $7.87 billion. Its GAAP profit of $0.04 per share was also 289% above analysts’ consensus estimates.
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Coupang (CPNG) Q3 CY2024 Highlights:
- Revenue: $7.87 billion vs analyst estimates of $7.73 billion (1.7% beat)
- EPS: $0.04 vs analyst estimates of $0.01 ($0.03 beat)
- EBITDA: $343 million vs analyst estimates of $263.8 million (30% beat)
- Gross Margin (GAAP): 28.8%, up from 25.3% in the same quarter last year
- Operating Margin: 1.4%, in line with the same quarter last year
- EBITDA Margin: 4.4%, in line with the same quarter last year
- Free Cash Flow was -$46 million, down from $488 million in the previous quarter
- Active Customers: 22.5 million, up 2.3 million year on year
- Market Capitalization: $46.1 billion
“This quarter we continued the strong momentum we’ve seen throughout this year, delivering robust growth in revenues and margins,” said Gaurav Anand, CFO of Coupang.
Company Overview
Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE:CPNG) is a South Korean e-commerce giant often referred to as the "Amazon of South Korea".
Online Retail
Consumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.
Sales Growth
A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Coupang’s sales grew at an impressive 19% compounded annual growth rate over the last three years. This is encouraging because it shows Coupang’s offerings resonate with customers, a helpful starting point.
This quarter, Coupang reported robust year-on-year revenue growth of 27.2%, and its $7.87 billion of revenue topped Wall Street estimates by 1.7%.
Looking ahead, sell-side analysts expect revenue to grow 21.8% over the next 12 months, an acceleration versus the last three years. This projection is admirable and shows the market thinks its newer products and services will spur faster growth.
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Active Customers
Buyer Growth
As an online retailer, Coupang generates revenue growth by expanding its number of buyers and the average order size in dollars.
Over the last two years, Coupang’s active customers, a key performance metric for the company, increased by 9.7% annually to 22.5 million in the latest quarter. This growth rate is solid for a consumer internet business and indicates people are excited about its offerings. 
In Q3, Coupang added 2.3 million active customers, leading to 11.4% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating buyer growth.
Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like Coupang because it measures how much customers spend per order.
Coupang’s ARPB growth has been impressive over the last two years, averaging 8.6%. Its ability to increase monetization while quickly growing its active customers reflects the strength of its platform, as its buyers continue to spend more each year. 
This quarter, Coupang’s ARPB clocked in at $349.60. It grew 14.2% year on year, faster than its active customers.
Key Takeaways from Coupang’s Q3 Results
We were impressed by how significantly Coupang blew past analysts’ revenue and EBITDA estimates this quarter. However, expectations were sky-high going into the quarter as shares were up 71% YTD before the print. Investors were likely expecting more, and the stock traded down 5.9% to $25.30 immediately after reporting.
So should you invest in Coupang right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
