Coupang, Inc.

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Results of Operations

(1)The Farfetch acquisition date was January 30, 2024, thus results of operations for 2023 do not include Farfetch and for 2024 Farfetch results were included from the acquisition date.

A discussion regarding our financial condition and results of operations for 2024 compared to 2023 can be found under Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for 2024.

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.

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 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 WOW membership programs, which is also included in net other revenue.

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The following table presents our total net revenues by segment.

The increase in Product Commerce net revenues is primarily due to the growth in total net revenues per Product Commerce Active Customer ranging from 3% to 7% each quarter during 2025, excluding effects of foreign exchange rates, driven by increased customer engagement within and across more product categories. This was combined with the increase in our Product Commerce Active Customers ranging from 8% to 10% each quarter during 2025. However, we experienced a lower growth rate in Product Commerce Active Customers in the fourth quarter of 2025 primarily due to seasonality and the impact of the Incident on customer demand. The annual growth in Product Commerce net revenues was partially offset by 5% due to the negative impact of foreign exchange.

The increase in Developing Offerings net revenues is primarily due to an increase in total net revenues from our growth initiatives, 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 mainly due to higher volume from increased sales and customer demand. Additionally, the insurance gain related to an inventory loss from the FC Fire reduced cost of sales by $116 million in 2024. The decrease in cost of sales as a percentage of revenues is due to a decrease in Product Commerce cost of sales as a percentage of revenues from 69.6% to 68.0%, 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”) as we saw greater levels of merchant adoption and customer engagement, as well as further supply chain optimization, partially offset by the reduction in expenses from the insurance gain in 2024, resulting in a 0.4% reduction of cost of sales as a percentage of revenue in 2024. This was also partially offset by a 1.4% impact from the growth in certain Developing Offerings initiatives that currently operate with lower margins.

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 depreciation and amortization expense.

The increase in operating, general and administrative expenses primarily reflects increases in infrastructure and technology costs to support our continued growth, partially offset by the KFTC administrative fine (the “administrative fine”) of $121 million in 2024. Operating, general and administrative expenses as a percentage of revenue increased due to increased infrastructure and technology costs, most notably in Developing Offerings, partially offset by a 0.4% impact from the administrative fine in 2024.

Interest Expense

Interest expense primarily consists of interest on our short-term borrowings and long-term debt.

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Interest expense decreased $54 million compared to 2024, primarily due to the redemption of the syndicated term loans we assumed as part of the Farfetch Acquisition (“Farfetch Term Loans”) in July 2025, which was financed by borrowing under our five-year revolving credit agreement (“Revolving Credit Facility”) at a lower interest rate.

Interest Income

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

Interest income remained relatively flat when compared to 2024.

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.

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA introduces a broad range of tax reform provisions, including the allowance of immediate deduction of qualified domestic research and development expenses, modifications to the international tax framework, and changes to certain business-related exclusions, deductions, and credits. Certain provisions of the OBBBA were effective starting in 2025 and are reflected in our results for 2025, resulting in an immaterial decrease in our tax provision.

In December 2025, due to a change in the Korean tax law, the enacted statutory tax rates increased 1% for all taxable income brackets effective January 1, 2026. Under U.S. GAAP, we are required to recognize the effect of a change in tax law in the period of enactment. As a result, we recorded a one-time immaterial tax benefit in the fourth quarter of 2025 due to the revaluation of the Korean net deferred tax assets.

Our effective income tax rate decreased primarily due to a decrease in U.S. taxes on foreign income resulting from lower taxable income attributable to the OBBBA and changes in the mix of our jurisdictional earnings. Our effective tax rate also decreased due to the impact of the administrative fine in 2024 as discussed in Note 6 — "Income Taxes" in Part II, Item 8. “Financial Statements and Supplementary Data” of this Form 10-K. Pre-tax losses from loss making jurisdictions, for which we recognized no income tax benefit due to the related valuation allowances, increased the effective income tax rate by 44.2%. We expect that our effective tax rate in future periods will continue to differ significantly from the applicable statutory rate.

Cash paid for income taxes, net of refunds was $177 million and $138 million for the years 2025 and 2024, respectively.

In addition to the United States tax law changes, our global operations make the tax rate sensitive to significant foreign tax law changes. A number of countries have begun to enact legislation to implement the OECD’s international tax framework, including Pillar Two global minimum tax regime. Korea has enacted legislation to implement OECD framework including the Under-taxed Profit Rules (the “UTPR”) which is effective from January 1, 2025. Based on the Safe Harbor Rules provided by OECD guidance, including the Transitional Safe Harbor Rules, Coupang, Inc. does not owe Pillar Two liability for 2025. Furthermore, pursuant to the latest discussions within the Inclusive Framework of the OECD, including the Side-by-Side Safe Harbor approach, Coupang, Inc. is expected to qualify for safe harbor from Income Inclusion Rules and the UTPR for 2026 and onwards. This minimum tax will be treated as a period cost in future years and did not impact operating results for 2025. We are continuing to monitor legislative developments and are in the process of evaluating the potential impact of Korean and other legislation on our results of future operations.

Segment Gross Profit and Adjusted EBITDA

Segment gross profit is defined as net revenues less cost of sales 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, and other income (expense), net. Segment adjusted EBITDA also excludes impairments, and other items that we do not believe are reflective of our ongoing operations.

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(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 2025 is primarily due to an increase in revenue of $2.9 billion compared to 2024. 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 as we continue to see greater levels of merchant adoption and customer engagement, as well as further supply chain optimization. Partially offsetting these improvements was a $116 million insurance gain related to an inventory loss from the FC Fire that reduced cost of sales in 2024.

The increase in Product Commerce segment adjusted EBITDA was primarily due to the increase in gross profit described above.

Developing Offerings

The decrease in gross profit for 2025 is primarily the result of growth in initiatives currently operating with lower margins as described previously. This is partially offset by the increase in revenue described above.

The increased loss for 2025 in Developing Offerings adjusted EBITDA was the result of increased investments in our Developing Offerings initiatives, including Taiwan.