Coupang, Inc.

Good afternoon. My name is Paula, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Coupon Third Quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. Now, I would like to turn the call over to Mike Parker, Vice President of Investor Relations. You may begin your conference.

Thanks, Operator. Welcome, everyone, to Coupon's third quarter 2022 earnings conference call. I'm pleased to be joined on the call today by our founder and CEO, Bom Kim, and our CFO, Gaurav Anand. The following discussion, including responses to your questions, reflects management's views as of today's date only. We do not undertake any obligation to update or revise this information, except as required by law. Certain statements made on today's call include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and in our filings with the SEC. including our most recent annual report on Form 10-K and subsequent filings. During today's call, we may present both GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures, are included in our earnings release and our SEC filings, which are posted on the company's investor relations website. And now, I'll turn the call over to Bob.

Thanks, everyone, for joining us today. I'm excited to share with you some highlights from our third quarter operating results. Revenues increased to $5.1 billion, growing 27% year over year on an FX neutral basis and over 10% year over year on a US dollar basis. This was driven by an increase in both active customers and revenue per active customer. We generated over $1.2 billion in gross profit with a record 24.2% gross margin, representing over $3.4 billion in gross profit recorded year-to-date. Our adjusted EBITDA was $195 million for the quarter at a 3.8% adjusted EBITDA margin. Our cumulative adjusted EBITDA year-to-date is positive $170 million. And in Q3, we achieved positive net income of $91 million for the consolidated business, improving $415 million year over year. First, on product commerce, while the macro environment remains uncertain around the world, the Korean retail market in Q3 grew at a strong pace of 7% year over year. Even as the world reopens post-COVID, our growth has been resilient. Our FX-neutral revenue recorded a robust 27% year over year growth. our active customers for product commerce grew even faster than the 7% year-over-year active customer growth for the consolidated business. The spend of our customer cohorts, even our oldest, continues to compound at a fast rate, and that strong spend growth can be seen across all categories, even our most mature. We still don't know the entitlement spend of our customers in any category, much less than aggregate in a total commerce market projected to exceed $600 billion by 2025. That momentum positions us well to support merchants, suppliers, and consumers to succeed in the current economic environment. Over 70% of our merchants are small and medium enterprises or SMEs with less than $2.5 million in annual revenues. Those merchants generated growth on Coupang that was multiples of the overall retail market. We believe we've become the number one source of growth for our SMEs. Q3 marked the third quarter in a row of significant profitability improvement. While we continue to see positive impact from increasing economies of scale and margin accretive offerings, most of the recent improvement has been the result of investments in technology, infrastructure, supply chain optimization, and process innovation. including automation. For instance, typically inventory loss grows as you increase the breadth of selection in Fresh, especially across multiple regions. We set out to break this trade-off and provide customers with the widest assortment of Fresh at the lowest cost. Our teams found ways to leverage machine learning, among other means, to better predict changes in customer demand by region and optimize inventory orders and placement. That was a key driver of the over 50% year-over-year reduction in fresh inventory losses in Q3 alone. There are numerous such efforts across the company to improve efficiency, many of which have been ongoing for years. The rate of improvement won't be consistent or as dramatic each quarter, but we're excited about the potential ahead. Above all, the results of the quarter reflect our accelerating flywheel that is powered by our relentless focus on customer experience and operational excellence. We obsess about how to make experiences richer and prices lower for our customers. And our unique e-commerce network scale and design enable our superior customer service and efficiency. Over the past seven years, We invested billions of dollars to build a network that integrated from inception fulfillment and last mile logistics. Today, we have built the largest fulfillment infrastructure in the market. We also believe we have the largest last mile network of directly employed drivers. And from order to delivery to returns, virtually every aspect of our customer experience is orchestrated by our technology. Our homegrown technology directs the movement of our goods and tens of thousands of drivers and staffers seamlessly across our integrated network of over 40 million square feet of infrastructure stacked side by side. That would be the equivalent of 500 soccer fields or an area larger than that of Central Park in New York. That distinct integration of technology, fulfillment infrastructure, and last mile logistics allows us to break traditional trade-offs between selection, service, and price for our customers. Because of it, we're able to deliver millions of items via dawn delivery, ordered as late as midnight and arriving at the door before 7 a.m. with unlimited free shipping. Because of it, our customers can leave items for return outside their door without the hassle of of packaging in a box or even printing a label. And because of it, we're able to eliminate box packaging for over 85% of our rocket deliveries, as well as deliver most of our fresh orders and eco bags that we pick up and reuse. Much of the efficiency gains we've captured are exclusive to a network of our design. We customize processes upstream to generate efficiencies downstream and alter design downstream to optimize processes upstream. The integration also allows us to deliver fresh products in the same last mile trucks with our general merchandise deliveries without a separate cold chain delivery network. Boxless and eco bag deliveries make customer lives easier and drive significant reductions in packaging waste and the number of trips our trucks make to complete deliveries, which result in lower emissions. Our increasing scale will help us fulfill our potential, but we will also continue to invest in automation, including machine learning and robotics. This will make work even easier for our workers and prices even lower for our customers. In addition to better service and low prices, we'll continue to expand both first party and third party selection for our customers. That includes new selection on Rocket enabled by Fulfillment and Logistics by Coupon, or FLC. FLC provides hundreds of thousands of merchants access to the speed, efficiency, and convenience of rocket delivery and returns. We're excited to share the benefits of billions of dollars of investment in infrastructure and technology with tens of thousands of small and medium enterprises that have traditionally been excluded from shelves and offline stores. This will help them capture the growth and savings generated by our end-to-end integrated operations. In turn, they'll help customers gain access to even wider selection with the experience of Rocket and build an even richer ecosystem that benefits both small businesses and customers alike. Finally, let me touch on developing offerings where revenues increase 10% year-over-year on a constant currency basis, driven by our ETH offering. As we stressed recently, our focus in ETH has been on creating a profitable foundation, and the dramatic improvements in economics over the last few quarters are reflected in the gross profit improvement of nearly $42 million year over year. We're also excited by the customer engagement that we're seeing in our initial efforts in Coupang Play, FinTech, and International. We're in the very early stages of these offerings, but we believe they have the potential to expand the TAM for Coupang and extend our innovations to customers in new sectors and new markets. We'll continue to invest with discipline in keeping with our operating tenants, starting with small investments, testing rigorously, and allocating more capital and opportunities that maximize our long-term cash flows. As you've seen with our execution and product commerce, we'll be disciplined and long-term oriented in our investments in developing offerings. Overall, the results of Q3, despite the challenging environment, reflects the focused execution of our teams and the fruits of significant investment over many years. While we remain vigilant about the persistent short-term pressures in the macro environment, we also continue to be excited by the strong underlying trends that we're seeing in the business. Now, I'll turn the call over to Gaurav to review the financials in more detail.