Coupang, Inc.

Hello, my name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Coupang 2023 Second Quarter 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 five on your telephone keypad. If you would like to withdraw your question, press star and the number five once again. Thank you. Now I'd like to turn the call over to Mike Parker, Vice President of Investor Relations. You may begin your conference.

Thanks, Operator. Welcome, everyone, to Coupang's second quarter 2023 earnings conference call. I'm pleased to be joined on the call today by our founder and CEO, Bom Kim, and our CFO, Gaurav Vinod. 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 those non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures, are included in our earnings release, slides accompanying this webcast, and our SEC filings, which are posted on the company's investor relations website. And now, I'll turn the call over to Baum.

Thanks everyone for joining us today. Before Gaurav goes over our financial results in greater detail, I'd like to take a moment to frame our Q2 results under five key takeaways. First, we continue to deliver expanding profitability and sustained high growth, not one at the expense of the other, because of our years of unparalleled investment and an unrelenting focus on both the customer experience and operational excellence. Second, our flywheel is accelerating. Both revenue and active customers increased at a faster pace this quarter. It's worth highlighting that the growth of active customers accelerated from 1% year over year in Q4 of last year to 5% in Q1 to 10% this quarter. Additionally, all of our customer cohorts, even our oldest, continue to increase their spend and the number of categories they are purchasing on coupon. All of these trends underscore how differentiated our value proposition is in a retail market that we believe is defined by high prices and limited selection. They're also a reflection of our early stage of growth. We have just single-digit share today of a massive retail market expected to reach $550 billion in the next three years. It's hard to overstate just how early we are on this journey. Third, we reached another significant milestone this quarter, delivering in the trailing 12 months $2 billion of operating cash flow and over $1 billion of free cash flow. We also delivered our fourth consecutive quarter of significant gap profitability, with $145 million of net income in Q2. In addition, our free cash flow has converged with adjusted EBITDA, as promised. We're more confident than ever that we will deliver on our long-term guidance of higher than 10% adjusted EBITDA. Fourth, we are seeing powerful momentum in our growth initiatives. We're less than a decade old as a retailer and only a few years into newer categories like fashion and beauty. Accordingly, all of our categories on Rocket are still growing at a fast rate and newer categories like fashion and beauty are growing significantly faster than our overall business. And high growth isn't limited to our first-party offering. Third-party sales in virtually every category, including fashion and beauty, are growing at a multiple of the retail market. And our emerging merchant services like advertising and fulfillment and logistics by Coupa, or FLC, are growing more than twice as fast as our overall business. Finally, we're also seeing exciting potential and progress in developing offerings, particularly in Eats and in Taiwan. In Eats, we spent several quarters achieving positive unit economics and improving almost every customer experience metric. We've reinvested our positive contribution margin back in the form of a discount of up to 10% for WOW members on unlimited orders. In the regions where we've launched our EATS benefit, we've already seen an 80% increase in total WOW members participating in EATS and a 20% increase in average WOW members spend on EATS. This has helped drive over 500 basis points of segment share gain in those regions. Moreover, we've been delighted by the value Eats is generating across our ecosystem. Customers who purchase Eats have significantly higher spend in e-commerce and higher retention on WOW membership. Eats has the potential to accelerate the flywheel for our business as a whole. In light of the success of this strategy, we've made our unlimited Eats discount a permanent feature of our WOW membership program. And with the majority of WOW members still yet to place an order on Eats, we believe the lion's share of growth is ahead of us. Taiwan is another investment that is thus far exceeding our expectations. We have always believed that the transformational commerce experience we've enabled in Korea could delight customers around the world. We're seeing this play out in Taiwan. In Q2, Coupang was the most downloaded app in Taiwan. And in the 10 months since we launched rocket delivery, Taiwan has scaled faster than rocket delivery in Korea did in its first 10 months post-launch. Our bar for new initiatives is high. We've exited investments that didn't meet our internal thresholds and deferred countless others that ranked below our most attractive opportunities. So far, Taiwan is leaping over that bar. In view of that progress, we will invest at a higher level in Taiwan this year. As always, we'll remain disciplined capital allocators, investing more only if the underlying metrics continue to validate our convictions. Our updated estimate of investment in developing offerings, including Taiwan, Play, and Eats, will be around $400 million in 2023. We expect our investment in developing offerings to remain generally at these levels, and in every case, we remain committed to generating meaningful free cash flow at the consolidated level. In summary, we're excited about the momentum we've built and the massive market opportunities we have before us. We'll continue to execute with unwavering focus on customer experience and operational excellence and allocate capital with rigor and discipline. With that, I'll turn the call over to Gaurav.