South Korean e-commerce platform Kupang said its net loss in the first quarter was down 29% year-over-year. The company reported a net loss of $209.2 million in the first quarter of this year, in contrast to last year’s net loss of $295 million in the first quarter and $404.9 million in the fourth quarterrespectively.
Investors cheered the result, sending Coupang’s share price up over 13% in pre-market trading.
The SoftBank Vision fund-backed company said in a income statement it “recorded the highest gross margin and gross profit margin in the company’s history”, which in turn helped its grocery trading segment reach profitability in the first quarter.
“In the first quarter, we recorded the highest gross margin and gross margin in the history of the company,” Beom Kim, Chairman of Coupang, said during Wednesday’s earnings announcement. “Creating over a billion dollars in gross margins and over 20% of gross margins. This represents a 42% increase in gross margin compared to last year.”
Coupang’s revenue rose to $5.12 billion for the period ended March 2022, up from $4.2 billion in the first quarter of 2021, representing a 22% increase. The company also reported that its active customer base grew 13% year-on-year.
Saying its results were “largely driven by process improvement, automation and supply chain optimization initiatives”, Coupang was able to note a $194 million improvement in adjusted EBITDA over Q4 2021, which is a heavily adjusted measure of earnings.
However, according to this measure, the company was not profitable, as its first quarter 2022 adjusted EBITDA was -$91 million, although this is better than a loss of $132.9 million a year earlier.
“While we experienced some headwinds last quarter due to inflation and some supply chain disruptions, our performance was positive through process and technology improvements, capacity utilization, supply chain optimization and continued advertising scaling among other areas.” – Kim. said.
According to Kim, one of Coupang’s fastest growing offerings is Rocket Fresh, a same-day fresh food delivery service in South Korea that delivers to customers’ doors within hours of purchase. The service is available to members of the Coupang, Rocket Wow Club membership program. (Such fast delivery services have become popular around the world, despite concerns about their profitability.)
The firm has recently raised the cost of membership for both new and existing clients to increase its profitability.
“As we have already mentioned, there are still many unpredictable variables in the short term, but [the long term trajectory] we will continue to grow significantly faster than the e-commerce segment,” Kim said in a telephone conversation.
The company said that as the size of the company grows, it expects to gain more economies of scale, and its ability to invest in automation and software and hardware efficiency projects will drive growth.
In March, the SoftBank Vision fund sold 50 million shares According to documents filed with the U.S. Securities and Exchange Commission, in September 2021, the Japanese fund sold $1.69 billion worth of Coupang shares worth $1 billion at $20.87 each.
Credit: techcrunch.com /