How much of Coupang's revenue growth came from the Farfetch acquisition?

Farfetch contributed $439 million of net revenue in Q3 2024. Reported growth was 27%, but excluding Farfetch it was 20% (25% on a constant-currency basis), so roughly 7 percentage points of reported growth came from the acquisition.

Why did EPS decline even though revenue and gross profit grew strongly?

Diluted EPS fell to $0.04 from $0.05, primarily because Farfetch incurred operating losses. Farfetch's net loss attributable to Coupang stockholders was $38 million in the quarter, or about $0.02 per diluted share. Excluding those losses, adjusted diluted EPS was $0.06, up from $0.05. Higher income tax expense ($68 million versus $26 million) also weighed on results.

How is the core Product Commerce business performing?

Product Commerce revenue grew 16% reported and 20% constant currency to $6.9 billion. Active customers reached 22.5 million (up 11%), and segment adjusted EBITDA rose $71 million to $470 million, with a 6.8% margin (up 10 bps year over year but down 140 bps sequentially). Management pointed to Fulfillment and Logistics by Coupang (FLC) and the R.Lux luxury offering as growth drivers.

Is Developing Offerings on a path to profitability?

Developing Offerings revenue was $975 million, but segment adjusted EBITDA was -$127 million, a $34 million deterioration year over year and a $73 million deterioration sequentially. The segment includes Farfetch, Coupang Eats, Play, Fintech, and International. Farfetch's near break-even adjusted EBITDA is a positive milestone, but the segment as a whole remains loss-making, so investors should watch the trajectory of these offerings.

CPNG 8-K: Earnings & Results

Q: Why did free cash flow drop so much?

Quarterly free cash flow was -$42 million versus $536 million a year earlier. Management attributed the trailing-twelve-month decline to non-recurring working capital benefits in the prior period and the timing of capital expenditure payments. Quarterly capital expenditures rose to $380 million from $191 million, and operating cash flow fell to $334 million from $722 million.

01—Abstract

Summary

Summary of the 8-K filed November 5, 2024. Cited figures are marked; the original filing is the authoritative source.

Coupang reported third-quarter 2024 net revenues of $7.9 billion^a, up 27% year over year on a reported basis and 32% on a constant-currency basis.

Excluding Farfetch, which Coupang consolidated after acquiring its assets in early 2024, growth was 20% reported and 25% constant currency. Gross profit rose 45% to $2.3 billion^b, and gross margin expanded 350 basis points to 28.8%. Adjusted EBITDA was $343 million, a 4.4% margin, up 50 basis points year over year.

Profitability was mixed. Net income attributable to Coupang stockholders fell 23% to $70 million^c, and diluted EPS was $0.04 versus $0.05, driven by Farfetch operating losses. Excluding Farfetch, adjusted diluted EPS was $0.06.

Farfetch was near break-even on an adjusted EBITDA basis (-$2 million^d) in the quarter, which management described as earlier than planned. The Product Commerce core delivered 16% reported revenue growth, 22.5 million active customers (up 11%), and a 6.8% segment adjusted EBITDA margin. Developing Offerings remained loss-making at -$127 million of segment adjusted EBITDA.

Cash generation weakened sharply. Quarterly operating cash flow was $334 million (versus $722 million) and free cash flow was -$42 million (versus $536 million).

Trailing-twelve-month free cash flow fell to $935 million from $1,855 million, reflecting non-recurring working capital benefits in the prior period and the timing of capital expenditure payments. Investors should weigh strong top-line momentum and margin expansion against lower earnings quality, higher tax expense ($68 million in the quarter), and reduced cash conversion.

02—Key points

Key Highlights

Net revenues of $7.866 billion, up 27% YoY reported and 32% constant currency; excluding Farfetch, growth was 20% reported and 25% constant currency.
Gross profit of $2.269 billion, up 45% YoY, with gross margin of 28.8% (up 350 bps); excluding Farfetch, gross margin was 28.1%.
Adjusted EBITDA of $343 million (4.4% margin, up 50 bps YoY); excluding Farfetch, $345 million (4.6% margin).
Net income attributable to Coupang stockholders of $70 million, down 23% YoY; diluted EPS of $0.04 versus $0.05, with adjusted diluted EPS of $0.06 excluding Farfetch losses.
Product Commerce segment revenue of $6.9 billion (up 16% reported, 20% constant currency), with 22.5 million active customers (up 11%) and a 6.8% segment adjusted EBITDA margin.
Developing Offerings revenue of $975 million (up 347% reported, largely from Farfetch) but segment adjusted EBITDA of -$127 million; Farfetch reached near break-even adjusted EBITDA (-$2 million) in the quarter.
Free cash flow turned negative at -$42 million for the quarter (versus $536 million last year); trailing-twelve-month free cash flow fell 51% to $935 million, driven by non-recurring working capital benefits in the prior year and capex timing.

03—Questions

Frequently Asked Questions

How much of Coupang's revenue growth came from the Farfetch acquisition?
Farfetch contributed $439 million of net revenue in Q3 2024. Reported growth was 27%, but excluding Farfetch it was 20% (25% on a constant-currency basis), so roughly 7 percentage points of reported growth came from the acquisition.
Why did EPS decline even though revenue and gross profit grew strongly?
Diluted EPS fell to $0.04 from $0.05, primarily because Farfetch incurred operating losses. Farfetch's net loss attributable to Coupang stockholders was $38 million in the quarter, or about $0.02 per diluted share. Excluding those losses, adjusted diluted EPS was $0.06, up from $0.05. Higher income tax expense ($68 million versus $26 million) also weighed on results.
Why did free cash flow drop so much?
Quarterly free cash flow was -$42 million versus $536 million a year earlier. Management attributed the trailing-twelve-month decline to non-recurring working capital benefits in the prior period and the timing of capital expenditure payments. Quarterly capital expenditures rose to $380 million from $191 million, and operating cash flow fell to $334 million from $722 million.
How is the core Product Commerce business performing?
Product Commerce revenue grew 16% reported and 20% constant currency to $6.9 billion. Active customers reached 22.5 million (up 11%), and segment adjusted EBITDA rose $71 million to $470 million, with a 6.8% margin (up 10 bps year over year but down 140 bps sequentially). Management pointed to Fulfillment and Logistics by Coupang (FLC) and the R.Lux luxury offering as growth drivers.
Is Developing Offerings on a path to profitability?
Developing Offerings revenue was $975 million, but segment adjusted EBITDA was -$127 million, a $34 million deterioration year over year and a $73 million deterioration sequentially. The segment includes Farfetch, Coupang Eats, Play, Fintech, and International. Farfetch's near break-even adjusted EBITDA is a positive milestone, but the segment as a whole remains loss-making, so investors should watch the trajectory of these offerings.

04—Continue

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