Coupang Faces $560 Million Loss Amid Data Breach Fine

Coupang Inc. reported an operating loss of 835 billion won ($560 million) in the second quarter of this year, largely due to the impact of a fine related to a data breach.

According to a quarterly report submitted to the U.S. Securities and Exchange Commission (SEC) on August 5, the operating loss for the second quarter was 835 billion won, a stark contrast to the operating profit of $149 million reported during the same period last year. This follows a first-quarter operating loss of $242 million after the data breach incident last year.

Second-quarter revenue reached 13.3 trillion won ($8.86 billion), marking a 4% increase compared to the previous year. When adjusted for currency fluctuations, the revenue growth rate was 10%. The net loss for the quarter was 856 billion won ($570 million), a reversal from a net profit of $31 million during the same period last year.

The significant loss in the second quarter was heavily influenced by the fine related to the data breach. Coupang Inc. disclosed that approximately $410 million in fines were included in the operating and net losses for the quarter. The Personal Information Protection Commission announced in June that it would impose a fine of 624.7 billion won and an additional penalty of 1.68 million won on Coupang for the data breach. Coupang Inc. indicated to the SEC that it would account for the estimated fine of about $410 million in its selling, general, and administrative expenses for the second quarter.

Excluding the fines, Coupang Inc. estimated its operating loss and net loss for the second quarter to be approximately 219.2 billion won ($146 million) and 240.3 billion won ($160 million), respectively.

Coupang's core product commerce segment continued to show growth. Revenue from this segment, which includes Rocket Delivery, Rocket Fresh, Rocket Growth, and Marketplace, reached 11.2 trillion won ($7.43 billion) in the second quarter, reflecting an 8% increase when adjusted for currency.

The number of active customers in the product commerce segment rose to 24.7 million, up 3% from 23.9 million in the same period last year. Revenue per customer also increased to 452,060 won, a 5% rise when adjusted for currency.

The growth segment, which includes Rocket Delivery in Taiwan, Farfetch, and Coupang Eats, reported revenue of 2.1 trillion won ($1.43 billion), a 20% increase compared to the previous year.

However, cash generation has slowed. The cumulative operating cash flow over the past 12 months was $1.4 billion, a decrease of $484 million from the previous year. Free cash flow during the same period was $10.5 million, down $679 million. Free cash flow for the second quarter was $5.1 million, a 79% decline compared to the same period last year.

Additionally, Coupang Inc. announced that it repurchased 23.2 million Class A common shares for a total of $459 million during the second quarter. The company had previously approved a $1 billion share buyback program as part of its capital allocation strategy during the first quarter earnings announcement.