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What changed in Coupang, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Coupang, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+310 added−276 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-01)

Top changes in Coupang, Inc.'s 2023 10-K

310 paragraphs added · 276 removed · 227 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

17 edited+4 added−3 removed12 unchanged
Biggest changeSeasonality Typically, we see peak order volumes in and around the first and fourth quarters, which include major holidays. Human Capital Our global team of employees is the driving force in creating a one-of-a-kind experience for millions of customers.
Biggest changeHuman Capital Our global team of employees is the driving force in creating a one-of-a-kind experience for millions of customers. In the same way our employees aim to go above and beyond for our customers, we aim to go above and beyond for them.
We have trademark rights in our name and other brand indicia and have trademark registrations for select marks in Korea, the United States, and other jurisdictions around the world. We also have registered domain names for websites that we use in our business, such as www.aboutcoupang.com and similar variations.
We have trademark rights in our name and other brand indicia and have trademark registrations for select marks in Korea, the United States, Taiwan and other jurisdictions around the world. We also have registered domain names for websites that we use in our business, such as www.aboutcoupang.com and similar variations.
Our Merchant Experience Small and medium-sized enterprises (SMEs) on Coupang form an essential part of our business, and we strive to be a growth driver for these companies through our win-win model. Over 70% of Coupang merchants are SMEs, which can leverage our nationwide fulfillment and logistics infrastructure to connect with millions of customers.
Our Merchant Experience Small and medium-sized enterprises (SMEs) on Coupang form an essential part of our business, and we strive to be a growth driver for these companies through our win-win model. Over 75% of Coupang merchants are SMEs, which can leverage our nationwide fulfillment and logistics infrastructure to connect with millions of customers.
We therefore encourage investors and others interested in our Company to review the information that we make available on our websites. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. Coupang, Inc. 2022 Form 10-K 6 Table of Contents
We therefore encourage investors and others interested in our Company to review the information that we make available on our websites. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. Coupang, Inc. 2023 Form 10-K 6 Table of Contents
Other trade names, trademarks, and service marks used in this Form 10-K are the property of their respective owners. Government Regulation Government regulation impacts key aspects of our business. In particular, we are subject to a number of national, state/region, and local laws, standards and regulations in Korea, the U.S., China, and other countries where we operate.
Other trade names, trademarks, and service marks used in this Form 10-K are the property of their respective owners. Government Regulation Government regulation impacts key aspects of our business. In particular, we are subject to a number of national, state/region, and local laws, standards and regulations in Korea, the U.S., Taiwan, China, and other jurisdictions where we operate.
These laws and regulations involve matters that are central to our business, including our interactions with customers, suppliers, and merchants. These laws and regulations involve fair trade, competition, labor and employment, privacy, data protection, intellectual property, consumer protection, import and export regulations, and other subjects.
These laws and regulations involve matters that are often central to our business, including our interactions with customers, suppliers, and merchants. They may regulate fair trade, competition, labor and employment, privacy, data protection, intellectual property, consumer protection, import and export regulations, and other subjects.
Our Competition We compete with: (1) offline, online, and omnichannel retailers, suppliers, distributors, manufacturers, and producers of the products we offer and sell to consumers and businesses; (2) web search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of discovering, using, or acquiring goods and services, either directly or in Coupang, Inc. 2022 Form 10-K 4 Table of Contents collaboration with other retailers; (3) companies that provide e-commerce merchant services; (4) companies that sell grocery products online and offline; (5) on-demand food delivery services; (6) companies that provide fulfillment and logistics services for themselves or for third parties; (7) companies that provide online advertising products and services; (8) on-demand streaming entertainment services; and (9) financial services companies, including credit card issuers and payment platforms.
Our Competition We compete with: (1) offline, online, and omnichannel retailers, suppliers, distributors, manufacturers, and producers of the products we offer and sell to consumers and businesses; (2) web search engines, comparison shopping websites, social networks, web portals, and other online and app-based means of discovering, using, or acquiring goods and services, either directly or in collaboration with other retailers; (3) companies that provide retail merchant services; (4) companies that sell grocery products online and offline; (5) on-demand food delivery services; (6) companies that provide fulfillment and logistics services for themselves or for third parties; (7) companies that provide online advertising products and services; (8) on-demand streaming entertainment services; and (9) financial services companies, including credit card issuers and payment platforms.
We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Coupang, Inc. 2023 Form 10-K 5 Table of Contents file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
We promptly make available on our investor relations website, free of charge, the reports that we file or furnish with the Securities and Exchange Commission (the “SEC”), corporate governance information (including our Code of Business Conduct and Ethics) and select press releases.
We promptly make available on our investor relations website, free of charge, the reports that we file or furnish with the Securities and Exchange Commission (the “SEC”), corporate governance information (including our Code of Business Conduct and Ethics) and select press releases. We 1 Measured using work-related and accident-related fatalities.
Item 1. Business The Company We are building the next generation experience for e-commerce. By investing for the long term with a fanatical culture of customer centricity, we believe we are delivering a superior customer experience at a lower cost and continue to redefine standards for e-commerce worldwide.
Item 1. Business The Company We have created and continue to build a next generation experience for retail. By investing for the long term with a fanatical culture of customer centricity, we believe we are delivering a superior customer experience at a lower cost as we continue to redefine retail standards worldwide.
In addition to Rocket Delivery available to all our customers, our Rocket WOW membership program allows members to enjoy unlimited free shipping with no minimum spend, free unlimited returns for 30 days, delivery of groceries via Rocket Fresh, and content streaming on Coupang Play.
In addition to Rocket Delivery available across Korea, our Rocket WOW membership program allows members to enjoy unlimited free shipping with no minimum spend, free unlimited returns for 30 days, delivery of groceries via Rocket Fresh, discounts on restaurant orders via Coupang Eats, and content streaming on Coupang Play.
We reimagined the e-commerce experience with our Rocket Delivery service: • Dawn and Same-Day Delivery. Orders are delivered within hours via Dawn Delivery (ordered as late as midnight, arrive before 7am) or Same-Day Delivery (ordered in the morning, arrive same-day). • Next-Day Delivery. Customers are eligible for free, one-day delivery nationwide 365 days a year. • Frictionless Returns.
Orders are delivered within hours via Dawn Delivery (ordered as late as midnight, arrive before 7am) or Same-Day Delivery (ordered in the morning, arrive same-day). • Next-Day Delivery. Customers are eligible for free, one-day delivery nationwide 365 days a year. • Frictionless Returns.
In the same way our employees aim to go above and beyond for our customers, we aim to go above and beyond for them. As one of the largest private sector employers in South Korea, we directly employ approximately 63,000 employees as of December 31, 2022.
As one of the largest private sector employers in South Korea, we directly employ approximately 78,000 employees as of December 31, 2023.
Our efforts have centered on building an end-to-end integrated system of technology and infrastructure, and most importantly, an innovation-focused culture driven to raise our customers’ expectations and lead them to wonder “How did I ever live without Coupang?” On March 2, 2022, we announced that management revised its reportable segments to reflect the way we now manage our business and to promote improved visibility to our business performance.
Our efforts have centered on building an end-to-end integrated system of technology and infrastructure, and most importantly, an innovation-focused culture driven to raise our customers’ expectations and lead them to wonder “How did I ever live without Coupang?” Our Customer Experience We are committed to delivering a “wow” experience to all of our customers every day.
We also recently launched Rocket Overseas to customers in Taiwan, empowering SME partners to unlock even more growth through sales to customers outside of Korea, at no additional effort or cost on their part. Advertising In addition to our e-commerce services, we also have offerings for our suppliers and merchants to advertise on our websites and mobile applications.
We also launched Rocket Overseas to customers in Taiwan, empowering SME partners to unlock even more growth through sales to customers outside of Korea, at no additional effort or cost on their part. We offer merchants of all sizes the opportunity to sell on Coupang and provide effective solutions to improve their customer experiences and enhance demand generation.
For additional information, see the risk factors herein in Part I—Item 1A.“Risk Factors” under the sub-caption “Risks Related to Laws, Regulation and Intellectual Property” in this Form 10-K. 1 Measured using work-related and accident-related fatalities. In our twelve year history, Coupang has not had a single accident-related fatality.
For additional information, see the risk factors herein in Part I—Item 1A.“Risk Factors” under the sub-caption “Risks Related to Laws, Regulation and Intellectual Property” in this Form 10-K. Company Website, Social Media, and Availability of SEC Filings Our corporate website address is http://www.aboutcoupang.com and our investor relations website is www.ir.aboutcoupang.com.
Coupang, Inc. 2022 Form 10-K 5 Table of Contents Company Website, Social Media, and Availability of SEC Filings Our corporate website address is http://www.aboutcoupang.com and our investor relations website is www.ir.aboutcoupang.com. Information on our website is not incorporated by reference herein and is not a part of this Form 10-K.
Information on our website is not incorporated by reference herein and is not a part of this Form 10-K.
Removed
The change led to the following two reportable segments: • Product Commerce, which primarily includes our core retail (owned inventory) and marketplace offerings (third-party merchants) and Rocket Fresh, our fresh grocery offering, as well as advertising products associated with these offerings; and • Developing Offerings, which primarily includes our more nascent offerings and services, including Coupang Eats, our restaurant ordering and delivery service, Coupang Play, our online content streaming service, fintech, certain international initiatives, as well as advertising products associated with these offerings.
Added
This commitment drives every aspect of our operations and pushes us to redefine the standards of the retail experience. We reimagined the retail customer experience with our Rocket Delivery service in Korea: • Dawn and Same-Day Delivery.
Removed
Our Customer Experience We are committed to delivering a “wow” experience to all of our customers every day. In order to improve the customer experience with end-to-end control, we launched our owned-inventory selection. Through this, we offer our customers a wide selection of general merchandise ranging from consumer electronics to personal care.
Added
We believe the success of these offerings demonstrates the power of our network to extend offerings to our loyal customers. In January 2024 we acquired the business and assets of Farfetch, a leading global marketplace for the luxury fashion industry which connects customers with some of the world’s best boutiques and brands.
Removed
We’ve also extended our network and systems to other offerings that further improve our customers’ lives such as our restaurant ordering and delivery services from Coupang Eats. We believe the success of these offerings demonstrates the power of our network to extend offerings to our loyal customers.
Added
Our fulfillment & logistics by Coupang (“FLC”) offering empowers merchants by offering them our fulfillment, logistics, delivery, and customer service network services. Advertising We also have offerings for our suppliers and merchants to advertise on our websites and mobile applications.
Added
Coupang, Inc. 2023 Form 10-K 4 Table of Contents Seasonality Our overall operating results may fluctuate from quarter to quarter as a result of a variety of factors, including seasonal factors, economic cycles that influence consumer spend, and our ability to attract and retain new customers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

138 edited+28 added−18 removed412 unchanged
Biggest changeOther factors and uncertainties relating to health epidemics, including the ongoing COVID-19 pandemic include, but are not limited to: • the severity and duration of the pandemic, including future mutations or related variants of the virus in areas in which we operate; • evolving macroeconomic factors, including general economic uncertainty, unemployment rates, inflation and recessionary pressures; • changes in labor markets affecting us and our suppliers; • unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response; • the impact of governmental restrictions; • the pace of recovery as the pandemic subsides; • the long-term impact of the pandemic on our business, including consumer behaviors; and • disruption and volatility within the financial and credit markets.
Biggest changeThe ultimate impact of any health epidemic on our business depends on many factors and uncertainties outside of our control, including, but not limited to: • the severity and duration of any such health epidemic in areas in which we operate; • evolving macroeconomic factors, including general economic uncertainty, unemployment rates, inflation and recessionary pressures; • changes in labor markets affecting us and our suppliers; • unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response; • the impact of governmental restrictions; • the long-term impact of the epidemic on our business, including consumer behaviors; • disruption and volatility within the financial and credit markets; and • the pace and extent of the ultimate recovery from the epidemic.
Under the rules of the Internal Revenue Code of 1986, as amended (the “Code”), we may be subject to U.S. federal income tax on a substantial portion of any income earned by our non-U.S. affiliates, regardless of whether that income is distributed to us, although it may be possible to offset some or all of any U.S. tax liability with credits for non-U.S. income taxes paid by the non-U.S. affiliates.
Under the rules of the Internal Revenue Code of 1986, as amended, we may be subject to U.S. federal income tax on a substantial portion of any income earned by our non-U.S. affiliates, regardless of whether that income is distributed to us, although it may be possible to offset some or all of any U.S. tax liability with credits for non-U.S. income taxes paid by the non-U.S. affiliates.
We may experience fluctuations in our tax obligations and effective tax rate, which could materially and adversely affect our results of operations. We are subject to taxes in the United States, Korea, China, and other foreign jurisdictions where we operate. We are a Delaware corporation that is treated as a domestic corporation for U.S. federal income tax purposes.
We may experience fluctuations in our tax obligations and effective tax rate, which could materially and adversely affect our results of operations. We are subject to taxes in the United States, Korea, China, Taiwan and other foreign jurisdictions where we operate. We are a Delaware corporation that is treated as a domestic corporation for U.S. federal income tax purposes.
Potential developments that could have an adverse impact on Korea’s economy include: • declines in customer confidence, decreases in consumer disposable income, a slowdown in customer spending and higher levels of unemployment; • adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe, and Japan, or in emerging market economies in Asia or elsewhere, including as a result of deteriorating economic and trade relations between the United States and China and increased uncertainties resulting from the United Kingdom’s exit from the European Union; • adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the KRW, the USD, the euro or other exchange rates, or the revaluation of the Chinese Renminbi), interest rates, inflation rates, or stock markets; • increased sovereign default risk of select countries and the resulting adverse effects on the global financial markets; • investigations of large Korean business groups and their senior management for possible misconduct; • a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers in Korea; • the continued emergence of the Chinese economy, to the extent its benefits (such as increased exports to China) are outweighed by its costs (such as competition in export markets or for foreign investment and the relocation of the manufacturing base from Korea to China), as well as a slowdown in the growth of China’s economy, which is one of Korea’s most important export markets; • the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements; • social or labor unrest; • substantial changes in the market prices of Korean real estate; • a decrease in tax revenue and a substantial increase in the Korean government’s expenditures for fiscal stimulus measures, unemployment compensation, and other economic and social programs that, together, would lead to an increased government budget deficit; • financial problems or lack of progress in the restructuring of certain Korean conglomerates, certain other large troubled companies, or their suppliers; • loss of investor confidence arising from corporate accounting irregularities and corporate governance issues concerning certain Korean conglomerates; • increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea; • geopolitical uncertainty and risk of further attacks by terrorist groups around the world; • the occurrence of severe health epidemics in Korea or other parts of the world; • deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy (such as the ongoing trade disputes with Japan); Coupang, Inc. 2022 Form 10-K 28 Table of Contents • political uncertainty or increasing strife among or within political parties in Korea; • hostilities or political or social tensions involving oil producing countries in the Middle East and North Africa and any material disruption in the global supply of oil or increase in the price of oil; • an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States; • political or social tensions involving Russia and any resulting adverse effects on the global supply of oil or the global financial markets; • natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and • changes in financial regulations in Korea.
Potential developments that could have an adverse impact on Korea’s economy include: • declines in customer confidence, decreases in consumer disposable income, a slowdown in customer spending and higher levels of unemployment; • adverse conditions or developments in the economies of countries and regions that are important export and import markets for Korea, such as Taiwan, China, the United States, Europe, and Japan, or in emerging market economies in Asia or elsewhere, including as a result of deteriorating economic and trade relations between the United States and China and increased uncertainties resulting from the United Kingdom’s exit from the European Union; • adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the KRW, the USD, the euro or other exchange rates, or the revaluation of the Chinese Renminbi), interest rates, inflation rates, or stock markets; • increased sovereign default risk of select countries and the resulting adverse effects on the global financial markets; • investigations of large Korean business groups and their senior management for possible misconduct; • a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers in Korea; • the continued emergence of the Chinese economy, to the extent its benefits (such as increased exports to China) are outweighed by its costs (such as competition in export markets or for foreign investment and the relocation of the manufacturing base from Korea to China), as well as a slowdown in the growth of China’s economy, which is one of Korea’s most important export markets; • the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements; • social or labor unrest; • substantial changes in the market prices of Korean real estate; • a decrease in tax revenue and a substantial increase in the Korean government’s expenditures for fiscal stimulus measures, unemployment compensation, and other economic and social programs that, together, would lead to an increased government budget deficit; • financial problems or lack of progress in the restructuring of certain Korean conglomerates, certain other large troubled companies, or their suppliers; • loss of investor confidence arising from corporate accounting irregularities and corporate governance issues concerning certain Korean conglomerates; • increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea; • acts of war or geopolitical uncertainty and risk of further attacks by terrorist groups around the world; • the occurrence of severe health epidemics in Korea or other parts of the world; • deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy (such as the ongoing trade disputes with Japan); Coupang, Inc. 2023 Form 10-K 28 Table of Contents • political uncertainty or increasing strife among or within political parties in Korea; • hostilities or political or social tensions involving oil producing countries in the Middle East and North Africa and any material disruption in the global supply of oil or increase in the price of oil; • an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States; • political or social tensions involving Russia and any resulting adverse effects on the global supply of oil or the global financial markets; • natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and • changes in financial regulations in Korea.
If we decide to convert our KRW into USD for the purpose of repaying principal or interest expense on our outstanding USD-denominated debt, making payments for dividends on our Class A common stock, or other business purposes, depreciation of the KRW or other foreign currencies against the USD would have a negative effect on the USD amount we would receive.
If we decide to convert our KRW into USD for the purpose of repaying principal or interest expense on our outstanding USD-denominated debt, making payments for stock repurchases or dividends on our Class A common stock, or other business purposes, depreciation of the KRW or other foreign currencies against the USD would have a negative effect on the USD amount we would receive.
We use independent delivery partners to deliver prepared food and some packages. For example, on top of the tens of thousands of individuals that have signed up as Coupang Flex partners, we have contracted with other Delivery Service Providers (DSPs). Similarly, our Coupang Eats service delivers food prepared by independent restaurants using the services of independent EDPs.
We use independent delivery partners to deliver prepared food and some packages. For example, on top of the tens of thousands of individuals that have signed up as Coupang Flex partners, we have contracted with other Delivery Service Providers. Similarly, our Coupang Eats service delivers food prepared by independent restaurants using the services of independent EDPs.
These reasons include those described elsewhere in this “Risk Factors” section as well as the following: • our ability to attract new and retain existing customers, increase sales to existing customers, and satisfy our customers’ demands; • our ability to offer merchandise and services on favorable terms, manage inventory, and fulfill orders in a timely manner; • the introduction or activities of competitive stores, apps, websites, merchandise, or services; • the success of our growth and expansion efforts, including investments into new initiatives; • variations in our level of merchandise and supplier returns; • the extent to which we offer fast and free delivery through Rocket Delivery, continue to offer a compelling value proposition to our customers, and provide additional benefits to our customers; • factors affecting our reputation or brand image or awareness; • the extent to which we finance our current operations and future growth, and the terms of any such financing; • the timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; • the outcomes of any legal proceedings and claims or regulatory investigations, which may include significant monetary damages, injunctive relief, personal liability (including criminal liability), sanctions, fines, suspensions or revocations of related permits and licenses, and penalties; • the extent to which we invest in technology and content, fulfillment, and other expense categories; • increases in our temporary or long-term costs such as labor and energy sources, packing supplies, and other goods not for resale; • changes in existing, or development of new, laws, regulations, or other regulatory practices and enforcement in the countries where we operate; • the extent to which our services are affected by cybersecurity and data security incidents, including but not limited to spyware, viruses, phishing, and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and Coupang, Inc. 2022 Form 10-K 9 Table of Contents • disruptions from natural or man-made disasters, extreme weather conditions and other catastrophic events, global health epidemics and pandemics, geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes, macroeconomic conditions, and other similar events.
These reasons include those described elsewhere in this “Risk Factors” section as well as the following: • our ability to attract new and retain existing customers, increase sales to existing customers, and satisfy our customers’ demands; • our ability to offer merchandise and services on favorable terms, manage inventory, and fulfill orders in a timely manner; • the introduction or activities of competitive stores, apps, websites, merchandise, or services; • the success of our growth and expansion efforts, including investments into new initiatives and expansion into new geographies; • variations in our level of merchandise and supplier returns; • the extent to which we offer fast and free delivery through Rocket Delivery, continue to offer a compelling value proposition to our customers, and provide additional benefits to our customers; • factors affecting our reputation or brand image or awareness; • the extent to which we finance our current operations and future growth, and the terms of any such financing; • the timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; • the outcomes of any legal proceedings and claims or regulatory investigations, which may include significant monetary damages, injunctive relief, personal liability (including criminal liability), sanctions, fines, suspensions or revocations of related permits and licenses, and penalties; • the extent to which we invest in technology and content, fulfillment, and other expense categories; • increases in our temporary or long-term costs such as labor and energy sources, packing supplies, and other goods not for resale; • changes in existing, or development of new, laws, regulations, or other regulatory practices and enforcement in the countries where we operate; Coupang, Inc. 2023 Form 10-K 9 Table of Contents • the extent to which our services are affected by cybersecurity and data security incidents, including but not limited to spyware, viruses, phishing, and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and • disruptions from natural or man-made disasters, extreme weather conditions (including as a result of climate change) and other catastrophic events, global health epidemics and pandemics, geopolitical events and security issues (including terrorist attacks and armed hostilities), labor or trade disputes, macroeconomic conditions, and other similar events.
These risks and uncertainties include but are not limited to our ability to effectively and in a timely manner: • attract, on a cost-effective basis, new customers who purchase merchandise and services from us at similar or higher rates and amounts as compared to existing customers; • retain our existing customers and motivate their continued purchases from our apps and websites at rates and amounts consistent with or higher than their historical purchases; • encourage customers to expand the categories of merchandise and services they purchase from us; • retain and expand our network of suppliers and merchants; • manage and expand our fulfillment and logistics infrastructure and related operations; Coupang, Inc. 2022 Form 10-K 8 Table of Contents • fulfill and deliver customer orders on time and in accordance with customer expectations, which may change over time; • increase awareness of our brand and protect our reputation; • respond to changes in the way customers access and use the Internet and mobile devices; • react to challenges from existing and new competitors; • expand our business in new and existing markets; • avoid interruptions or disruptions in our business; • further develop our scalable, high-performance technology and fulfillment infrastructure that can efficiently and reliably handle increased usage, as well as the deployment of new features and the sale of new merchandise and services; and • hire, integrate, motivate and retain qualified personnel.
These risks and uncertainties include but are not limited to our ability to effectively and in a timely manner: • attract, on a cost-effective basis, new customers who purchase merchandise and services from us at similar or higher rates and amounts as compared to existing customers; • retain our existing customers and motivate their continued purchases from our apps and websites at rates and amounts consistent with or higher than their historical purchases; • encourage customers to expand the categories of merchandise and services they purchase from us; Coupang, Inc. 2023 Form 10-K 8 Table of Contents • retain and expand our network of suppliers and merchants; • manage and expand our fulfillment and logistics infrastructure and related operations; • fulfill and deliver customer orders on time and in accordance with customer expectations, which may change over time; • increase awareness of our brand and protect our reputation; • respond to changes in the way customers access and use the Internet and mobile devices; • react to challenges from existing and new competitors; • expand our business in new and existing geographies; • avoid interruptions or disruptions in our business; • further develop our scalable, high-performance technology and fulfillment infrastructure that can efficiently and reliably handle increased usage, as well as the deployment of new features and the sale of new merchandise and services; and • hire, integrate, motivate and retain qualified personnel.
Coupang, Inc. 2022 Form 10-K 20 Table of Contents We are subject to payment-related risks, and if payment processors are unwilling or unable to provide us with payment processing services or impose onerous requirements on us in order to access their services, or if they increase the fees they charge us for these services, our business, financial condition, and results of operations could be materially and adversely affected.
Coupang, Inc. 2023 Form 10-K 20 Table of Contents We are subject to payment-related risks, and if payment processors are unwilling or unable to provide us with payment processing services or impose onerous requirements on us in order to access their services, or if they increase the fees they charge us for these services, our business, financial condition, and results of operations could be materially and adversely affected.
Moreover, the frequency and intensity of weather events related to climate change are increasing, which could increase the likelihood and severity of such disasters as well as related damage and business interruption.
The frequency and intensity of weather events related to climate change are increasing, which could increase the likelihood and severity of such disasters as well as related damage and business interruption.
Any complaints from merchants may in turn result in a negative impact on our brand and reputation. If we experience significant supplier or merchant attrition, or if we are unable to attract new suppliers or merchants, our revenue and results of operations may Coupang, Inc. 2022 Form 10-K 16 Table of Contents be materially and adversely affected.
Any complaints from merchants may in turn result in a negative impact on our brand and reputation. If we experience significant Coupang, Inc. 2023 Form 10-K 16 Table of Contents supplier or merchant attrition, or if we are unable to attract new suppliers or merchants, our revenue and results of operations may be materially and adversely affected.
Moreover, negative publicity arising from these types of disruptions could damage our reputation and may adversely impact use of our apps and websites. Coupang, Inc. 2022 Form 10-K 21 Table of Contents AWS enables us to access and use its service offerings in varying amounts and sizes, and across multiple regions.
Moreover, negative publicity arising from these types of disruptions could damage our reputation and may adversely impact use of our apps and websites. Coupang, Inc. 2023 Form 10-K 21 Table of Contents AWS enables us to access and use its service offerings in varying amounts and sizes, and across multiple regions.
Coupang, Inc. 2022 Form 10-K 27 Table of Contents Our business may be adversely affected by developments that negatively impact the Korean economy and uncertainties in economic conditions that impact spending patterns of our customers in Korea. We have historically generated a substantial majority of our revenue from sales in Korea.
Coupang, Inc. 2023 Form 10-K 27 Table of Contents Our business may be adversely affected by developments that negatively impact the Korean economy and uncertainties in economic conditions that impact spending patterns of our customers in Korea. We have historically generated a substantial majority of our revenue from sales in Korea.
Coupang, Inc. 2022 Form 10-K 17 Table of Contents Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and materially and adversely affect our business, financial condition, and results of operations.
Coupang, Inc. 2023 Form 10-K 17 Table of Contents Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and materially and adversely affect our business, financial condition, and results of operations.
The market price of shares of our Class A common stock could be subject to wide fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this “Risk Factors” section and this Form 10-K and the following: • actual or anticipated fluctuations in our results of operations; • overall performance of the equity markets and the economy as a whole; • changes in the financial projections we may provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • actual or anticipated changes in our growth rate relative to that of our competitors; • changes in the anticipated future size or growth rate of our addressable markets; • announcements of new products, or of acquisitions, strategic partnerships, joint ventures, or capital-raising activities or commitments, by us or by our competitors; • additions or departures of board members, management, or key personnel; • rumors and market speculation involving us or other companies in our industry; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to data privacy and cyber security in Korea or globally; • lawsuits or investigations threatened or filed against us; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; • health epidemics, such as the COVID-19 pandemic, influenza, and other highly communicable diseases or viruses; and • sales or expectations with respect to sales of shares of our Class A common stock by us or our security holders.
The market price of shares of our Class A common stock could be subject to wide fluctuations in response to a broad and diverse range of factors, including those described elsewhere in this “Risk Factors” section and this Form 10-K and the following: • actual or anticipated fluctuations in our results of operations; • overall performance of the equity markets and the economy as a whole; • changes in the financial projections we may provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • actual or anticipated changes in our growth rate relative to that of our competitors; • changes in the anticipated future size or growth rate of our addressable markets; • changes in our dividend or stock repurchase activities; • announcements of new products, or of acquisitions, strategic partnerships, joint ventures, or capital-raising activities or commitments, by us or by our competitors; • additions or departures of board members, management, or key personnel; • rumors and market speculation involving us or other companies in our industry; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including those related to data privacy and cyber security in Korea or globally; • lawsuits or investigations threatened or filed against us; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; • health epidemics and pandemics, influenza, and other highly communicable diseases or viruses; and • sales or expectations with respect to sales of shares of our Class A common stock by us or our security holders.
The occurrence of any of these foregoing risks could have a material adverse effect on our business, financial condition, and results of operations. Our business depends on the continued growth of online commerce and the increased acceptance of online transactions by potential customers. Online commerce is still developing in the markets in which we operate.
The occurrence of any of these foregoing risks could have a material adverse effect on our business, financial condition, and results of operations. Our business depends on the continued growth of online commerce and the increased acceptance of online transactions by potential customers. Online commerce is still developing in the geographies in which we operate.
Coupang, Inc. 2022 Form 10-K 34 Table of Contents We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties. The protection of our intellectual property rights may require the expenditure of significant financial, managerial, and operational resources.
Coupang, Inc. 2023 Form 10-K 34 Table of Contents We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties. The protection of our intellectual property rights may require the expenditure of significant financial, managerial, and operational resources.
Coupang, Inc. 2022 Form 10-K 18 Table of Contents As new mobile devices and operating systems are released, we may encounter problems in developing or supporting applications for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources.
Coupang, Inc. 2023 Form 10-K 18 Table of Contents As new mobile devices and operating systems are released, we may encounter problems in developing or supporting applications for them. In addition, supporting new devices and mobile device operating systems may require substantial time and resources.
For more, see “Risks Related to Intellectual Property—We may be accused of infringing intellectual property rights of third parties.” Government regulation of the Internet, e-commerce, and mobile commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could adversely affect our business, financial condition, and results of operations.
For more, see “Risks Related to Intellectual Property—We may be accused of infringing intellectual property rights of third parties.” Government regulation of the Internet, online retail, and mobile commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could adversely affect our business, financial condition, and results of operations.
Our future business and financial performance depends on continued demand for the types of goods and services that we and our merchants offer through our apps and websites. The popularity of certain products, including apparel, beauty, food, and consumer electronics, may vary over time due to perceived availability, subjective value, seasonality, and/or general societal trends.
Our future business and financial performance depends on continued demand for the types of goods and services that we and our merchants offer. The popularity of certain products, including apparel, beauty, food, and consumer electronics, may vary over time due to perceived availability, subjective value, seasonality, and/or general societal trends.
These risks are more fully described in this “Risk Factors” section, including the following: • our results of operations may fluctuate significantly, which makes our future results of operations difficult to predict and could cause our results of operations to fall below expectations; • we may be unable to effectively manage the continued growth of our workforce and operations, including the development and management of new business initiatives; • our business is rapidly evolving, and we plan to continue to forgo short-term financial performance for long-term growth, which makes it difficult to evaluate our future prospects and predict our future results of operations, including our revenue growth rate; • we have a history of net losses, and we may not be able to generate sufficient revenues to achieve or maintain profitability in future periods; • if we were to lose the services of members of our senior management team, we may not be able to effectively execute on our business strategy; • we face intense competition and could lose market share to our competitors if we do not innovate or compete effectively; • ongoing or future pandemics may continue to adversely affect our business, operations, and the markets and communities in which we, our customers, suppliers, merchants, and advertisers operate; • because some of our operations are subject to Korean law, there are circumstances in which certain of our Korean affiliates’ executive officers may be held either directly or vicariously criminally liable for the actions of our Korean affiliates or our Korean affiliates’ executives and employees; • some of our operations are subject to certain detailed and complex fair trade, labor, employment, and workplace safety laws and regulations, which continue to evolve and have and will continue to affect our operations and financial performance, could subject us to costs and penalties, and may affect our reputation; • harm to our Coupang brand or our associated brands and marks (our “brand”) or reputation may occur if manufacturers and distributors from whom we buy products (“suppliers”) or the parties that sell their products on our marketplace (“merchants”) use unethical or illegal business practices, such as the sale of counterfeit or fraudulent products, or if our protocols with respect to such sales are perceived or found to be inadequate, which may also subject us to possible sanctions or penalties; • any significant interruptions or delays in service on our apps or websites, or any undetected errors or design faults, could result in limited capacity, reduced demand, processing delays, and loss of customers, suppliers, or merchants; • any failure to protect our apps, websites, networks, and systems against security breaches or otherwise protect our confidential information could damage our reputation and brand and may subject us to possible sanctions or penalties; • any failure to comply with privacy laws or regulations, or to fulfill privacy-related customer expectations in the jurisdictions where we operate, could damage our reputation and brand and business and may subject us to possible sanctions or penalties; • we rely on Coupang Pay to conduct a substantial amount of the payment processing.
These risks are more fully described in this “Risk Factors” section, including the following: • our results of operations may fluctuate significantly, which makes our future results of operations difficult to predict and could cause our results of operations to fall below expectations; • we may be unable to effectively manage the continued growth of our workforce and operations, including the development and management of new business initiatives; • our business is rapidly evolving, and we plan to continue to forgo short-term financial performance for long-term growth, which makes it difficult to evaluate our future prospects and predict our future results of operations, including our revenue growth rate; • we have a history of net losses, and we may not be able to generate sufficient revenues to achieve or maintain profitability in future periods; • if we were to lose the services of members of our senior management team, we may not be able to effectively execute on our business strategy; • we face intense competition and could lose market share to our competitors if we do not innovate or compete effectively; • ongoing or future pandemics may continue to adversely affect our business, operations, and the geographies and communities in which we, our customers, suppliers, merchants, and advertisers operate; • because some of our operations are subject to Korean law, there are circumstances in which certain of our Korean affiliates’ executive officers may be held either directly or vicariously criminally liable for the actions of our Korean affiliates or our Korean affiliates’ executives and employees; • some of our operations are subject to certain detailed and complex fair trade, labor, employment, and workplace safety laws and regulations, which continue to evolve and have and will continue to affect our operations and financial performance, could subject us to costs and penalties, and may affect our reputation; • harm to our Coupang brand or our associated brands and marks (our “brand”) or reputation may occur if manufacturers and distributors from whom we buy products (“suppliers”) or the parties that sell their products on our marketplace (“merchants”) use unethical or illegal business practices, such as the sale of counterfeit or fraudulent products, or if our protocols with respect to such sales are perceived or found to be inadequate, which may also subject us to possible sanctions or penalties; • The acquisition of Farfetch creates incremental risk to our business, financial condition and results of operations; • any significant interruptions or delays in service on our apps or websites, or any undetected errors or design faults, could result in limited capacity, reduced demand, processing delays, and loss of customers, suppliers, or merchants; • any failure to protect our apps, websites, networks, and systems against security breaches or otherwise protect our confidential information could damage our reputation and brand and may subject us to possible sanctions or penalties; • any failure to comply with privacy laws or regulations, or to fulfill privacy-related customer expectations in the jurisdictions where we operate, could damage our reputation and brand and business and may subject us to possible sanctions or penalties; Coupang, Inc. 2023 Form 10-K 7 Table of Contents • we rely on Coupang Pay to conduct a substantial amount of the payment processing.
In addition, because we have limited historical financial data and our business continues to evolve and expand, any predictions about our future revenue and expenses may not be as accurate as they would be if we had a longer operating history or operated a business that is not rapidly evolving and growing.
In addition, because we have limited historical financial data and our business continues to evolve and expand, any predictions about our future revenue, expenses, and results of operations may not be as accurate as they would be if we had a longer operating history or operated a business that is not rapidly evolving and growing.
We may need to price aggressively to gain market share or remain competitive in new categories. It may be difficult for us to achieve profitability in the new product or service categories and our profit margin, if any, may be lower than we anticipate, which would materially and adversely affect our results of operations.
We may need to price aggressively to gain market share or remain competitive in new categories. It may be difficult for us to achieve profitability in the new product or service categories and our profit margin, if any, may be lower than we anticipate, which would materially and adversely affect our business, financial condition and results of operations.
If we are not successful in expanding into particular international markets or in generating revenue from such international operations, our business, financial condition, and results of operations may be materially and adversely affected.
If we are not successful in expanding into particular international geographies or in generating revenue from such international operations, our business, financial condition, and results of operations may be materially and adversely affected.
Additionally, there are, and will likely continue to be, an increasing number of laws and regulations pertaining to the Internet and e-commerce that may relate to liability for information retrieved from or transmitted over the Internet, display of certain taxes and fees, online editorial and user-generated content, user privacy, data security, network and information systems security, behavioral and online advertising, taxation, liability for third-party activities, quality of services, and consumer protection.
Additionally, there are, and will likely continue to be, an increasing number of laws and regulations pertaining to the Internet and retail sales that may relate to liability for information retrieved from or transmitted over the Internet, display of certain taxes and fees, online editorial and user-generated content, user privacy, data security, network and information systems security, behavioral and online advertising, taxation, liability for third-party activities, quality of services, and consumer protection.
In particular, the competitive norm for, and the expected level of service from, retailers (including e-commerce retailers) and marketplaces has increased due to, among other factors, improved customer experience, greater ease of buying goods, lower (or no) shipping costs, faster shipping times, and more favorable return policies.
In particular, the competitive norm for, and the expected level of service from, retailers and marketplaces has increased due to, among other factors, improved customer experience, greater ease of buying goods, lower (or no) shipping costs, faster shipping times, and more favorable return policies.
In particular, we intend to continue to spend significant amounts to increase our customer base, increase the number and variety of merchandise and services we offer, expand our marketing channels, broaden our operations, develop additional fulfillment centers, hire additional and retain existing employees and managers, and develop our technology and fulfillment infrastructure.
In particular, we intend to continue to spend significant amounts to increase our customer base, increase the number and variety of merchandise and services we offer, expand our marketing channels, expand into new geographies, broaden our operations, develop additional fulfillment centers, hire additional and retain existing employees and managers, and develop our technology and fulfillment infrastructure.
Our business and financial performance could be adversely affected by unfavorable changes in or interpretations of existing laws, rules, and regulations or the promulgation of new laws, rules, and regulations applicable to us and our business, including those relating to the Internet and e-commerce, Internet advertising and price display, consumer protection, economic and trade sanctions, tax, payments, foreign exchange regulations, banking, data security, network and information systems security, data protection, and privacy.
Our business and financial performance could be adversely affected by unfavorable changes in or interpretations of existing laws, rules, and regulations or the promulgation of new laws, rules, and regulations applicable to us and our business, including those relating to the Internet and retail sales, Internet advertising and price display, consumer protection, economic and trade sanctions, tax, payments, foreign exchange regulations, banking, data security, network and information systems security, data protection, and privacy.
Further, the growth and development of e-commerce may prompt calls for more stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional burdens on online businesses generally. Additionally, the law relating to liability of online service providers is currently unsettled.
Further, the growth and development of online retail may prompt calls for more stringent consumer protection laws and more aggressive enforcement efforts, which may impose additional burdens on online businesses generally. Additionally, the law relating to liability of online service providers is currently unsettled.
The holders of approximately 40% of our shares of our Class A and Class B common stock are entitled to rights with respect to the registration of their shares under the Securities Act.
The holders of approximately 36% of our shares of our Class A and Class B common stock are entitled to rights with respect to the registration of their shares under the Securities Act.
In addition, certain manufacturers may limit or cease distribution of their products through online channels, such as our apps or websites. Manufacturers may attempt to use contractual obligations or existing or future government regulation to prohibit or limit e-commerce in certain categories of goods or services.
In addition, certain manufacturers may limit or cease distribution of their products through online channels, such as our apps or websites. Manufacturers may attempt to use contractual obligations or existing or future government regulation to prohibit or limit retailers in certain categories of goods or services.
We cannot predict the effect of current attempts to impose sales, income, or other taxes on e-commerce. New or revised taxes could increase the cost of doing business online and decrease the attractiveness of advertising and selling merchandise and services over the Internet.
We cannot predict the effect of current attempts to impose sales, income, or other taxes on online retail. New or revised taxes could increase the cost of doing business online and decrease the attractiveness of advertising and selling merchandise and services over the Internet.
Realization of these NOL carryforwards depends on our future taxable income and there is a risk that our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could materially and adversely affect our operating results.
Realization of these NOL carryforwards depends on our future taxable income in Korea and there is a risk that portions of our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could materially and adversely affect our operating results.
Heightened regulatory and public concerns over operation of our business, including but not limited to those related to any ongoing or potential labor and employment disputes, consumer protection and consumer safety issues, and cybersecurity and data security incidents, may subject us to additional legal and reputational risks and increased scrutiny.
Heightened regulatory and public concerns over operation of our business, including but not limited to those related to any ongoing or potential labor and employment disputes, consumer protection and consumer safety issues, supplier relationships, environmental and sustainability concerns, and cybersecurity and data security incidents, may subject us to additional legal and reputational risks and increased scrutiny.
The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to successfully complete identified acquisitions. Further, once we have completed an acquisition, we may not be able to successfully integrate the acquired business.
The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to successfully complete identified acquisitions. Further, once we have completed an acquisition (such as the Farfetch Acquisition), we may not be able to successfully integrate the acquired business.
Coupang, Inc. 2022 Form 10-K 22 Table of Contents Our business could be disrupted by catastrophic occurrences and similar events.
Coupang, Inc. 2023 Form 10-K 22 Table of Contents Our business could be disrupted by catastrophic occurrences and similar events.
We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories and evolving businesses that operate in highly regulated and competitive industries.
We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories and evolving businesses that operate in highly regulated and competitive industries or have fixed expenses.
Expansion of our offerings may also strain our management and operational resources. We may also face greater competition in specific categories from e-commerce and traditional retailers that are more focused on such categories.
Expansion of our offerings may also strain our management and operational resources. We may also face greater competition in specific categories from retailers that are more focused on such categories.
We may find that these efforts are more expensive than we currently anticipate and/or encounter technological and other development delays. We will also face increased compliance costs associated with growth, the expansion of our customer base, and being a public company.
We may find that these efforts are more expensive than we currently anticipate and/or encounter technological and other development delays. We will also face increased compliance costs associated with growth and the expansion of our customer base.
We may face a number of challenges that may affect our ability to sustain our corporate culture, including a potential failure to attract and retain employees who embrace and further our culture, any expansion into additional markets, competitive pressures that may divert us from our vision and values, and the integration of new personnel and businesses from acquisitions.
We may face a number of challenges that may affect our ability to sustain our corporate culture, including a potential failure to attract and retain employees who embrace and further our culture, any expansion into additional geographies, competitive pressures that may divert us from our vision and values, and the integration of new personnel and businesses from acquisitions, including the recent acquisition of Farfetch.
Failure to hire and retain capable fulfillment, delivery personnel, and other labor support may lead to underperformance of these functions and cause disruption to our business. Labor costs in Korea have increased in connection with heightened scrutiny of workplace conditions in connection with the COVID-19 pandemic.
Failure to hire and retain capable fulfillment, delivery personnel, and other labor support may lead to underperformance of these functions and cause disruption to our business. Labor costs in Korea have increased in connection with heightened scrutiny of workplace conditions.
It is not clear how existing laws governing issues such as property ownership, fair trade, sales and other taxes, and consumer privacy apply to the Internet as the vast majority of these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet, e-commerce, and m-commerce.
It is not clear how existing laws governing issues such as property ownership, fair trade, sales and other taxes, and consumer privacy apply to the Internet as the vast majority of these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet, online retail, and mobile commerce.
We could experience diversion of attention by management to address these claims, and such claims can result in significant costs to investigate and defend, regardless of their merits. These claims could adversely affect our business, financial condition, and results of operations.
The frequency of such claims is unpredictable. We could experience diversion of attention by management to address these claims, and such claims can result in significant costs to investigate and defend, regardless of their merits. These claims could adversely affect our business, financial condition, and results of operations.
As we respond to changes in the competitive environment, we may, from time to time, make pricing, service, or marketing decisions or acquisitions that may lead to dissatisfaction among customers and merchants, which could reduce activity on our apps or websites and adversely affect our results of operations.
As we respond to changes in the competitive environment, we may, from time to time, make pricing, service, or marketing decisions or acquisitions that may lead to dissatisfaction among customers and merchants, which could reduce activity on our apps or websites and adversely affect our results of operations. We face increased competitive pressure online and offline.
Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock has the effect of concentrating voting control with Bom Kim, who beneficially holds all of our Class B common stock representing in the aggregate 76.0% of the voting power of our capital stock.
Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock has the effect of concentrating voting control with Bom Kim, who beneficially holds all of our Class B common stock representing in the aggregate 75.8% of the voting power of our capital stock.
Factors such as inflation, increased food costs, increased labor and employee benefit costs, increased rental costs, and increased energy costs may increase our operating costs and those of our suppliers and independent contractors. Many of the factors affecting suppliers and independent contractors are beyond the control of these parties.
Factors such as inflation, increased food costs, increased labor and employee benefit costs, increased rental costs, or increased energy costs have increased, and may continue to increase, our operating costs and those of our suppliers and independent contractors. Many of the factors affecting suppliers and independent contractors are beyond the control of these parties.
The Korean National Tax Service or the Korean Ministry of Economy and Finance may attempt to introduce new tax regimes in alignment with the Korean government’s recent international-tax overhaul attempt to address the tax challenges arising from the digitalization of the economy including e-commerce.
The Korean National Tax Service or the Korean Ministry of Economy and Finance may attempt to introduce new tax regimes in alignment with the Korean government’s recent international-tax overhaul attempt to address the tax challenges arising from the digitalization of the economy including online retail.
Coupang, Inc. 2022 Form 10-K 39 Table of Contents Item 1B. Unresolved Staff Comments None.
Coupang, Inc. 2023 Form 10-K 39 Table of Contents Item 1B. Unresolved Staff Comments None.
Our business and the infrastructure on which our business relies is vulnerable to damage or interruption from catastrophic occurrences, such as earthquakes, floods, fires, extreme weather events (whether as a result of climate change or otherwise), power loss, telecommunication failures, criminal acts, sabotage, other intentional acts of violence, vandalism and misconduct, war, civil unrest, terrorist attacks, geopolitical events, including those related to hostilities between North Korea and Korea, disease, such as the COVID-19 pandemic, and similar events.
Our business and the infrastructure on which our business relies is vulnerable to damage or interruption from catastrophic occurrences, such as earthquakes, floods, fires, extreme weather events (whether as a result of climate change or otherwise), power loss, telecommunication failures, criminal acts, sabotage, other intentional acts of violence, vandalism and misconduct, war, civil unrest, terrorist attacks, geopolitical events, including those related to hostilities between North and South Korea and tensions between China and Taiwan, disease and pandemics, and similar events.
If we are not able to maintain our culture as we continue to grow, our business, financial condition, and results of operations could be adversely affected. Health epidemics, including the ongoing COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business.
If we are not able to maintain our culture as we continue to grow, our business, financial condition, and results of operations could be adversely affected. Health epidemics have had, and could in the future have, an adverse impact on our business.
Our Korean subsidiary, Coupang Corp., and a group of companies affiliated with it have been designated as a business group subject to disclosure under the Korean Monopoly Regulation and Fair Trade Act.
Our Korean subsidiary, Coupang Corp., and a group of companies affiliated with it have been designated as a business group subject to regulatory oversight and restrictions under the Korean Monopoly Regulation and Fair Trade Act.
Currently, some of our workforce are members of labor unions, with which we are currently negotiating collective bargaining agreements. Unionization of more of our employees or any of our independent delivery partners may occur and could have an adverse impact on our business, financial condition, or results of operations.
Currently, some of our workforce are members of labor unions, with which we are currently negotiating collective bargaining agreements. Unionization of more of our employees or any of our independent delivery partners, actual or threatened strikes, work stoppages or slowdowns may occur and could have an adverse impact on our business, financial condition, or results of operations.
The e-commerce industry is characterized by vigorous protection and pursuit of intellectual property rights, which has resulted in protracted and expensive litigation or investigations for many companies.
The online retail industry is characterized by vigorous protection and pursuit of intellectual property rights, which has resulted in protracted and expensive litigation or investigations for many companies.
Our strategy is to continue to build on our market position by continuing to implement certain key strategic initiatives, which include the following: • building our brand and further expanding our customer base; • providing high-quality merchandise and services at attractive prices; Coupang, Inc. 2022 Form 10-K 10 Table of Contents • focusing on customer satisfaction and our customers’ loyalty to our apps, websites, and programs, including our Rocket WOW membership program; • expanding our product offerings; and • enhancing our apps and websites and developing personalization tools to enhance our customers’ experience with our apps and websites.
Our strategy is to continue to build on our market position by continuing to implement certain key strategic initiatives, which include the following: • building our brand and further expanding our customer base; • providing high-quality merchandise and services at attractive prices; • focusing on customer satisfaction and our customers’ loyalty to our apps, websites, and programs, including our Rocket WOW membership program; • expanding our product offerings; and • enhancing our apps and websites and developing personalization tools to enhance our customers’ experience with our apps and websites.
Our effective tax rate in a given financial statement period may be materially impacted by: • Changes in tax laws, regulations, and treaties, or the interpretation thereof, • the practices of tax authorities in jurisdictions in which we operate, • tax policy initiatives and reforms under consideration, • changes to existing accounting rules or regulations, or • changes to our ownership or capital structure.
Our effective tax rate in a given financial statement period may be materially impacted by: • Changes in tax laws, regulations, and treaties, or the interpretation thereof, • the practices of tax authorities in jurisdictions in which we operate, • tax policy initiatives and reforms under consideration, • changes in the need for a valuation allowance on our deferred tax assets; • changes to existing accounting rules or regulations, or • changes to our ownership or capital structure.
We have not conducted an open source license review and may inadvertently use open source software in a manner that exposes us to claims of non-compliance with the applicable terms of such license, including claims for infringement of intellectual property rights or for breach of contract.
We may inadvertently use open source software in a manner that exposes us to claims of non-compliance with the applicable terms of such license, including claims for infringement of intellectual property rights or for breach of contract.
Coupang, Inc. 2022 Form 10-K 35 Table of Contents Risks Related to Taxes Changes in the tax treatment of companies engaged in e-commerce may adversely affect the commercial use of our apps and websites and our financial results.
Coupang, Inc. 2023 Form 10-K 35 Table of Contents Risks Related to Taxes Changes in the tax treatment of companies engaged in online retail may adversely affect the commercial use of our apps and websites and our financial results.
If we are unable to successfully implement some or all of our key strategic initiatives in an effective and timely manner, our ability to maintain and improve our market position, and our competitive position, brand, and reputation may be harmed, which may materially and adversely affect our business, financial condition, and results of operations.
If we are unable to successfully implement some or all of our key strategic initiatives in an effective and timely manner, our ability to maintain and improve our market position, Coupang, Inc. 2023 Form 10-K 10 Table of Contents and our competitive position, brand, and reputation may be harmed, which may materially and adversely affect our business, financial condition, and results of operations.
Because of the 29-to-one voting ratio between our Class B and Class A common stock, the Class B common stock held by Mr. Kim represent, in the aggregate, 76.0% of the combined voting power of our capital stock as of December 31, 2022. The control by Mr.
Because of the 29-to-one voting ratio between our Class B and Class A common stock, the Class B common stock held by Mr. Kim represent, in the aggregate, 75.8% of the combined voting power of our capital stock as of December 31, 2023. The control by Mr.
In addition, our apps, websites, networks, and systems are subject to security threats, including hacking of our systems, denial-of-service attacks, viruses, malicious software, ransomware, break-ins, phishing attacks, social engineering, security breaches, or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our apps, websites, networks, and systems, or that we otherwise maintain.
In addition, our apps, Coupang, Inc. 2023 Form 10-K 31 Table of Contents websites, networks, and systems are subject to security threats, including hacking of our systems, denial-of-service attacks, viruses, malicious software, ransomware, break-ins, phishing attacks, social engineering, security breaches, or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our apps, websites, networks, and systems, or that we otherwise maintain.
Our industry is characterized by rapidly changing technology, new mobile applications and protocols, new products and services, new media and entertainment content, including user-generated content, and changing consumer demands and trends.
Our industry is also characterized by rapidly changing technology, including artificial intelligence or AI, new mobile applications and protocols, new products and services, new media and entertainment content, including user-generated content, and changing consumer demands and trends.
We are subject to general business regulations and laws as well as regulations and laws specifically governing the Internet, e-commerce, and mobile commerce (“m-commerce”). Existing, proposed, and future regulations and laws could change our liabilities and impede the growth of the Internet, e-commerce, or m-commerce.
We are subject to general business regulations and laws as well as regulations and laws specifically governing the Internet, online retail, and mobile commerce. Existing, proposed, and future regulations and laws could change our liabilities and impede the growth of the Internet, online retail, or mobile commerce.
Coupang, Inc. 2022 Form 10-K 38 Table of Contents Our certificate of incorporation designates the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States as the exclusive forums for certain disputes between us and our stockholders, which will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or employees.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States as the exclusive forums for certain disputes between us and our stockholders, which will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, or employees.
These policies are relatively new and it is unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect our value compared to similar companies that are included in such indices.
These policies are relatively new and it is unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely Coupang, Inc. 2023 Form 10-K 37 Table of Contents affect our value compared to similar companies that are included in such indices.
Any failure to accurately predict revenue or to adjust our expenses could adversely affect our results of operations in any given quarter, or a series of quarters, which could cause the price per share of our Class A common stock to decline.
Any failure to accurately predict revenue or to control our expenses could adversely affect our results of operations in any given quarter, or a series of quarters, which could cause the price per share of our Class A common stock to decline. We may experience significant fluctuations in our results of operations.
Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
Coupang, Inc. 2023 Form 10-K 36 Table of Contents Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
If we do not expand and operate our fulfillment and logistics infrastructure successfully and efficiently, or there are delays in the expansion of our fulfillment and logistics operations, we could experience excess or insufficient fulfillment and logistics capacity in Coupang, Inc. 2022 Form 10-K 11 Table of Contents one or more locations, an increase in costs or impairment charges, or other adverse impacts.
If we do not expand and operate our fulfillment and logistics infrastructure successfully and efficiently, or there are delays in the expansion of our fulfillment and logistics operations, we could experience excess or insufficient fulfillment and logistics capacity in one or more locations, an increase in costs or impairment charges, or other adverse impacts.
Our credit agreements may limit our ability to, among other things: • incur or guarantee additional debt; • make certain investments and acquisitions; • make certain restricted payments and prepayments of certain indebtedness; • incur certain liens or permit them to exist; and • make fundamental changes and dispositions (including dispositions of equity interests of any subsidiary guarantors).
Our credit agreements may limit our ability to, among other things: • incur or guarantee additional debt; • make certain investments and acquisitions; • make certain restricted payments and prepayments of certain indebtedness; Coupang, Inc. 2023 Form 10-K 23 Table of Contents • incur certain liens or permit them to exist; and • make fundamental changes and dispositions (including dispositions of equity interests of any subsidiary guarantors).
These shares will be able to be sold freely in the public market upon issuance, subject to applicable vesting requirements, compliance by affiliates with Rule 144, and other restrictions provided under the terms of the applicable plan and/or the award agreements entered into with participants.
These shares will be able to be sold freely in the public market upon issuance, subject to applicable vesting requirements, compliance by affiliates Coupang, Inc. 2023 Form 10-K 38 Table of Contents with Rule 144, and other restrictions provided under the terms of the applicable plan and/or the award agreements entered into with participants.
If Coupang Pay’s services were limited, restricted, curtailed, or degraded in any way, or become unavailable to us or our customers for any reason, our business may be adversely affected; Coupang, Inc. 2022 Form 10-K 7 Table of Contents • our expansion into new geographic markets and offerings and substantial increase in the number of our offerings may expose us to new and increased challenges and risks; • international relations, including escalations in tensions with North Korea, could adversely affect the Korean or global economies and demand for our products and services; and • the dual class structure of our common stock has have the effect of concentrating voting control with Mr.
If Coupang Pay’s services were limited, restricted, curtailed, or degraded in any way, or become unavailable to us or our customers for any reason, our business may be adversely affected; • our expansion into new geographies and offerings and substantial increase in the number of our offerings may expose us to new and increased challenges and risks; • international relations, including escalations in tensions between North and South Korea, and other global conflicts could adversely affect the Korean or global economies and demand for our products and services; and • the dual class structure of our common stock has the effect of concentrating voting control with Mr.
New legislative proposals may expose our business to additional risks from litigation, regulation, and government investigations. We are subject to changing laws and regulations everywhere we do business, including in Korea. For example, the KFTC is increasingly focused on regulating various new industries including online platform companies. The KFTC takes the position these regulations could apply to the Company.
New legislative proposals may expose our business to additional risks from litigation, regulation, and government investigations. We are subject to changing laws and regulations everywhere we do business, including in Korea. For example, the KFTC is increasingly focused on regulating various new industries including what they describe as online platform companies.
We operate in a highly competitive industry and we may be unsuccessful in competing against current and future competitors, which could have a negative impact on the success of our business. The industry in which we operate is intensely competitive and we expect that competition will continue to increase.
Coupang, Inc. 2023 Form 10-K 12 Table of Contents We operate in a highly competitive industry and we may be unsuccessful in competing against current and future competitors, which could have a negative impact on the success of our business. The industry in which we operate is intensely competitive and we expect that competition will continue to increase.
Coupang, Inc. 2022 Form 10-K 26 Table of Contents Our Korean subsidiary, Coupang Corp., and a group of companies affiliated with it have been designated an affiliated group under Korean law, which would require that group of companies to make certain disclosures and implement additional corporate governance requirements.
Our Korean subsidiary, Coupang Corp., and a group of companies affiliated with it have been designated an affiliated group under Korean law, which would require that group of companies to make certain disclosures and implement additional corporate governance requirements.
In addition, any change to economic and trade sanctions laws and regulations, shift in the enforcement or scope of existing regulations or change in the countries, government, or persons targeted by such regulations could impact our ability to engage in transactions and dealings with certain parties and countries and could harm our business.
In addition, any change to economic and trade sanctions laws and regulations, shift in the enforcement or scope of existing regulations or change in the countries, Coupang, Inc. 2023 Form 10-K 33 Table of Contents government, or persons targeted by such regulations could impact our ability to engage in transactions and dealings with certain parties and countries and could harm our business.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Coupang, Inc. 2022 Form 10-K 23 Table of Contents We have remediated the material weaknesses previously reported in our internal control over financial reporting, but if we fail to properly manage our internal control over financial reporting on a go forward basis, future material weaknesses could be identified that could result in a material misstatement in our financial statements.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” We have had material weaknesses previously reported in our internal control over financial reporting that have been remediated, but if we fail to properly manage our internal control over financial reporting on a go forward basis, future material weaknesses could be identified that could result in a material misstatement in our financial statements.
Our tax expense could also be impacted by changes in non-deductible expenses; changes in excess tax benefits of equity-based compensation expense; changes in the valuation of, or our ability to use, deferred tax assets; and the applicability of withholding taxes.
Our tax expense could also be impacted by changes in non-deductible expenses; changes in excess tax benefits of equity-based compensation expense; changes in the valuation of, or our ability to use, deferred tax assets; impacts from global intangible low-taxed income (“GILTI”); and the applicability of withholding taxes.
The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such practices could adversely affect our business, financial condition, and results of operations.
The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make Coupang, Inc. 2023 Form 10-K 32 Table of Contents effective use of services that employ such practices could adversely affect our business, financial condition, and results of operations.
Periodically, for reasons such as changing consumer preferences and other unforeseen circumstances, decisions may be made to discontinue investment in certain parts of our business. Such decisions require management effort to reorganize or reassign employees.
Periodically, for reasons such as changing consumer preferences and other unforeseen circumstances, we have made, and may make in the future, decisions to discontinue investments in certain parts of our business. Such decisions require management effort to reorganize or reassign employees.
We may experience higher return rates on new products, customer complaints about new products and services, and costly liability claims as a result of selling such products and services, any of Coupang, Inc. 2022 Form 10-K 14 Table of Contents which would harm our brand and reputation as well as our results of operations.
We may experience higher return rates on new products, customer complaints about new products and services, and costly liability claims as a result of selling such products and services, any of which would harm our brand and reputation as well as our results of operations.
However, if the classification of any of our independent delivery partners as independent contractors were to be challenged by legislation, regulation or legal interpretation, the costs associated with defending, settling, or resolving these matters could be material to our Coupang, Inc. 2022 Form 10-K 30 Table of Contents business.
However, if the classification of any of our independent delivery partners as independent contractors were to be challenged by legislation, regulation or legal interpretation, the costs associated with defending, settling, or resolving these matters could be material to our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease our principal executive office in Seattle, Washington and additional office space in Korea, the United States and throughout Asia. We lease or own approximately 47 million square feet of fulfillment and logistics space throughout Korea, as well as other parts of Asia and the United States.
Biggest changeItem 2. Properties We lease our principal executive office in Seattle, Washington and additional office space in Korea, the United States, and throughout Asia. We lease or own over 55 million square feet of fulfillment and logistics space throughout Korea, as well as other parts of Asia and the United States.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe have received, and may in the future continue to receive, claims, litigation, governmental audits, inspections, and investigations relating to issues such as employment and labor, worker classification and assignment, worker pay, hours and benefits, labor relations including union and collective bargaining issues, employment authorization and immigration, health and safety, workplace harassment, workplace sexual harassment, intellectual property (including patent, trademark, and copyright), product safety, personal injury, privacy, information security, tax compliance, import/export regulations, foreign exchange regulations, licenses and permits, food safety, medical products, drugs and devices, financial services, antitrust and fair trade matters, consumer protection, and environmental issues.
Biggest changeWe have received, and may in the future continue to receive, claims, litigation, governmental audits, inspections, and investigations relating to issues such as employment and labor, worker classification and assignment, worker pay, hours and benefits, labor relations including union and collective bargaining issues, employment authorization and immigration, health and safety, workplace harassment, workplace sexual harassment, intellectual property (including patent, trademark, and copyright), product safety, personal injury, privacy, information security, tax compliance, Coupang, Inc. 2023 Form 10-K 40 Table of Contents import/export regulations, foreign exchange regulations, licenses and permits, food safety, medical products, drugs and devices, financial services, antitrust and fair trade matters, consumer protection, and environmental issues.
Coupang, Inc. 2022 Form 10-K 40 Table of Contents PART II
Coupang, Inc. 2023 Form 10-K 41 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 40 PART II Item 5 . Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities 41 Item 6 . [Reserved] 42 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 41 PART II Item 5 . Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities 42 Item 6 . [Reserved] 42 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCoupang, Inc. 2022 Form 10-K 41 Table of Contents Issuer Purchases of Equity Securities, Sales of Unregistered Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities None. Sales of Unregistered Equity Securities None.
Biggest changeIssuer Purchases of Equity Securities and Sales of Unregistered Equity Securities Issuer Purchases of Equity Securities None. Sales of Unregistered Equity Securities None.
Because some of our shares of class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividend Policy We intend to retain any future earnings and do not anticipate declaring or paying any cash dividends in the foreseeable future.
Because some of our shares of class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividend Policy We have not in the past and do not anticipate declaring or paying any cash dividends in the foreseeable future.
Holders of Common Stock As of February 17, 2023, there were 47 holders of record of our Class A common stock and one holder of record of our Class B common stock.
Holders of Common Stock As of February 22, 2024, there were 37 holders of record of our Class A common stock and one holder of record of our Class B common stock.
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Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Coupang, Inc. under the Securities Act or the Exchange Act.
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The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the S&P 500 Index (“S&P 500”) and the S&P 500 Retailing Index (“S&P 500 Retailing”).
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The graph assumes $100 was invested at the market close on March 11, 2021, which was the first day our Class A common stock began trading. Data for the S&P 500 Index and S&P 500 Retailing Index assume reinvestment of dividends.
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The graph uses the closing market price on March 11, 2021 of $49.25 per share as the initial value of our Class A common stock. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock.
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Use of Proceeds The Registration Statement on Form S-1 (File No. 333-253030) for our IPO of our Class A common stock was declared effective by the SEC on March 10, 2021.
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There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act and other periodic reports previously filed with the SEC.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeChanges in our cash flows were as follows: Change (in thousands) 2022 2021 2022 vs 2021 Net cash provided by (used in) operating activities $ 565,439 $ (410,578) $ 976,017 Net cash used in investing activities $ (848,254) $ (675,525) $ (172,729) Net cash provided by financing activities $ 247,352 $ 3,576,850 $ (3,329,498) Operating Activities The year-over-year change in operating cash flow was primarily driven by a $1.5 billion decrease in net loss partially offset by a $(125) million decrease in our non-cash expenses contributing to the net loss for 2022.
Biggest changeChanges in our cash flows were as follows: (in millions) 2023 2022 Change Net cash provided by operating activities $ 2,652 $ 565 $ 2,087 Net cash used in investing activities $ (927) $ (848) $ (79) Net cash provided by financing activities $ 199 $ 247 $ (48) Operating Activities (in millions) 2023 2022 Change Net income (loss) $ 1,360 $ (92) $ 1,452 Adjustments to reconcile net income (loss) to net cash provided by operating activities 354 1,035 (681) Change in operating assets and liabilities 938 (378) 1,316 Net cash provided by operating activities $ 2,652 $ 565 $ 2,087 The year-over-year change in operating cash flow was primarily driven by a $1.5 billion improvement in net income (loss), which resulted in net income for the year.
Segment adjusted EBITDA is defined as loss before income taxes for a period before depreciation and amortization, interest expense, interest income, income tax expense (benefit), other income (expense), net, equity-based compensation, impairments, and other items that we do not believe are reflective of our ongoing operations associated with our segments.
Segment adjusted EBITDA is defined as income (loss) before income taxes for a period before depreciation and amortization, interest expense, interest income, income tax expense (benefit), other income (expense), net, equity-based compensation, impairments, and other items that we do not believe are reflective of our ongoing operations associated with our segments.
However, we may need additional cash resources in the future if we find and pursue opportunities for investment, acquisition, strategic cooperation, or other similar actions, which may include investing in technology, our logistics and fulfillment infrastructure, or related talent.
However, we may need additional cash resources in the future if we find and pursue other opportunities for investment, acquisition, strategic cooperation, or other similar actions, which may include investing in technology, our logistics and fulfillment infrastructure, or related talent.
See Note 3 — "Segment Reporting" to the consolidated financial statements included elsewhere in Part II, Item 8 of this Annual Report on Form 10-K. Product Commerce primarily includes core retail (owned inventory) and marketplace offerings (third-party merchants) and Rocket Fresh, our fresh grocery offering, as well as advertising products associated with these offerings.
See Note 3 — "Segment Reporting" to the consolidated financial statements included elsewhere in Part II, Item 8 of this Annual Report on Form 10-K. Product Commerce primarily includes core Korean retail (owned inventory) and marketplace offerings (third-party merchants) and Rocket Fresh, our fresh grocery offering, as well as advertising products associated with these offerings.
The 2021 revolving credit facility contains a number of covenants that, among other things, restrict our ability to: • incur or guarantee additional debt; • make certain investments and acquisitions; • make certain restricted payments and payments of certain indebtedness; • incur certain liens or permit them to exist; and • make fundamental changes and dispositions (including dispositions of the equity interests of subsidiary guarantors).
The Revolving Credit Facility contains a number of covenants that, among other things, restrict our ability to: • incur or guarantee additional debt; • make certain investments and acquisitions; • make certain restricted payments and payments of certain indebtedness; • incur certain liens or permit them to exist; and • make fundamental changes and dispositions (including dispositions of the equity interests of subsidiary guarantors).
Each of these restrictions is subject to various exceptions. The 2021 revolving credit facility is guaranteed on a senior unsecured basis by certain material restricted subsidiaries of Coupang, Inc. (including Coupang Corp.), subject to customary exceptions. The 2021 revolving credit facility also contains certain customary affirmative covenants and events of default for facilities of this type.
Each of these restrictions is subject to various exceptions. The Revolving Credit Facility is guaranteed on a senior unsecured basis by certain material restricted subsidiaries of Coupang, Inc. (including Coupang Corp.), subject to customary exceptions. The Revolving Credit Facility also contains certain customary affirmative covenants and events of default for facilities of this type.
Income Taxes We record deferred tax assets net of valuation allowances when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods. Realization of deferred tax assets is dependent on the generation of future taxable income.
We record deferred tax assets net of valuation allowances when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods. Realization of deferred tax assets is dependent on the generation of future taxable income.
Adjusted EBITDA • Net income (loss), excluding the effects of: - depreciation and amortization, - interest expense, - interest income, - other income (expense), net, - income tax expense (benefit), - equity-based compensation, - impairments, and - other items not reflective of our ongoing operations. • Provides information to management evaluate and assess our performance and allocate internal resources. • We believe Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by investors and other interested parties in evaluating companies in the e-commerce industry for period-to-period comparisons as they remove the impact of certain items that are not representative of our ongoing business, such as material non-cash items and certain variable charges.
Adjusted EBITDA • Net income (loss), excluding the effects of: - depreciation and amortization, - interest expense, - interest income, - other income (expense), net, - income tax expense (benefit), - equity-based compensation, - impairments, and - other items not reflective of our ongoing operations. • Provides information to management evaluate and assess our performance and allocate internal resources. • We believe Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by investors and other interested parties in evaluating companies in the retail industry for period-to-period comparisons as they remove the impact of certain items that are not representative of our ongoing business, such as material non-cash items and certain variable charges.
Refer to Note 13 — "Commitments and Contingencies", Note 5 — "Defined Severance Benefits", and Note 11 — "Leases" in Part II, Item 8 - “Financial Statements and Supplementary Data” for disclosure of our future commitments. Our short-term and long-term borrowings generally include lines of credit with financial institutions available to be drawn upon for general operating purposes.
Refer to Note 13 — "Commitments and Contingencies", Note 5 — "Defined Severance Benefits", and Note 10 — "Leases" in Part II, Item 8 - “Financial Statements and Supplementary Data” for disclosure of our future commitments. Our short-term and long-term borrowings generally include lines of credit with financial institutions available to be drawn upon for general operating purposes.
In estimating these rates, we review rates of return on high-quality corporate bond indices, which approximate the timing and amount of benefit payments. Assuming all other defined benefit plan assumptions remain constant, a one percentage point decrease in the discount rates would result in an immaterial change in benefit plan expense during 2023.
In estimating these rates, we review rates of return on high-quality corporate bond indices, which approximate the timing and amount of benefit payments. Assuming all other defined benefit plan assumptions remain constant, a one percentage point decrease in the discount rates would result in an immaterial change in benefit plan expense during 2024.
A discussion regarding our financial condition and results of operations for 2021 compared to 2020 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 2021.
A discussion regarding our financial condition and results of operations for 2022 compared to 2021 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 2022.
Our unique end-to-end integrated fulfillment, logistics, and technology network enables Rocket Delivery, which provides free, next-day delivery for orders placed anytime of the day, even seconds before midnight—across millions of products.
Our unique end-to-end integrated fulfillment, logistics, and technology network enables Rocket Delivery, which provides free, next-day delivery for orders placed anytime of the day, even seconds before midnight—across millions of products in Korea.
The 2021 and 2022 revolving credit facilities both require us to (i) maintain a ratio of secured indebtedness to total consolidated tangible assets of less than 35%, if we have $1 or more of revolving loans or any unreimbursed drawn letters of credit outstanding under the 2021 or 2022 revolving credit facility at the end of each fiscal quarter and (ii) maintain a minimum amount of liquidity of at least $625 million (or $313 million to the extent the aggregate commitment of the 2021 or the 2022 revolving credit facility, respectively, is $500 million).
The Revolving Credit Agreement and Revolving Credit Facility both require us to (i) maintain a ratio of secured indebtedness to total consolidated tangible assets of less than 35%, if we have $1 or more of revolving loans or any unreimbursed drawn letters of credit outstanding under the Revolving Credit Agreement or Revolving Credit Facility at the end of each fiscal quarter and (ii) maintain a minimum amount of liquidity of at least $625 million (or $313 million to the extent the aggregate commitment of the Revolving Credit Agreement or Revolving Credit Facility, respectively, is $500 million).
Additionally, we have: • operating leases that have not commenced with future minimum lease payments of $308 million with non-cancellable lease terms of 1 to 10 years; • expected defined severance benefits to be paid of $708 million; and • open purchase orders for inventories that are primarily due in the next twelve months, and are generally cancellable, in full or in part, through the contractual provisions.
Additionally, we have: • operating leases that have not commenced with future minimum lease payments of $355 million with non-cancellable lease terms of 1 to 10 years; • expected defined severance benefits to be paid of $889 million; and • open purchase orders for inventories that are primarily due in the next twelve months, and are generally cancellable, in full or in part, through the contractual provisions.
As part of this expansion to fulfill anticipated future customer demand and continuation to expand services, we plan to build new fulfillment centers. We have entered into various new construction contracts for capital projects which are expected to be completed over the next three years. These contracts have remaining capital expenditures commitments of $466 million as of December 31, 2022.
As part of this expansion to fulfill anticipated future customer demand and continuation to expand services, we plan to build new fulfillment centers. We have entered into various new construction contracts for capital projects which are expected to be completed over the next three years. These contracts have remaining capital expenditures commitments of $114 million as of December 31, 2023.
Recently Adopted Accounting Pronouncements See Note 1 — "Basis of Presentation and Summary of Significant Accounting Policies" to the consolidated financial statements included elsewhere in Part II, Item 8 of this Annual Report on Form 10-K. Coupang, Inc. 2022 Form 10-K 52 Table of Contents
Recently Adopted Accounting Pronouncements See Note 1 — "Basis of Presentation and Summary of Significant Accounting Policies" to the consolidated financial statements included elsewhere in Part II, Item 8 of this Annual Report on Form 10-K. Coupang, Inc. 2023 Form 10-K 54 Table of Contents
As of December 31, 2022, we determined the salary growth rates for the severance benefit plan used in determining the projected and accumulated benefit obligations to be 5.00% to 8.00%, as compared to 5.00% to 5.24% as of December 31, 2021. In estimating these rates, we review our historical and expected rates as well as industry growth rates.
As of December 31, 2023, we determined the salary growth rates for the severance benefit plan used in determining the projected and accumulated benefit obligations to be 5.00% to 7.00%, as compared to 5.00% to 8.00% as of December 31, 2022. In estimating these rates, we review our historical and expected rates as well as industry growth rates.
We believe that we are the preeminent online destination in the market because of our broad selection, low prices, and exceptional delivery and customer experience across our owned inventory selection as well as products offered by third-party merchants.
We believe that we are a preeminent online destination because of our broad selection, low prices, and exceptional delivery and customer experience across our owned inventory selection as well as products offered by third-party merchants.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K (“Form 10-K”).
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Form 10-K.
Revenues from Product Commerce are derived primarily from online product sales of owned inventory to customers in Korea and from commissions earned from merchants that sell products through our mobile application and website.
Revenues from Product Commerce are derived primarily from online product sales of owned inventory to customers in Korea, commissions, logistics and fulfillment fees earned from merchants that sell products through our mobile application and website, and from Rocket WOW membership.
We had total cash and cash equivalents and restricted cash of $3.7 billion as of December 31, 2022, of which $2.0 billion was held by our foreign subsidiaries and may not be freely transferable to the U.S due to local laws or other restrictions.
We had total cash, cash equivalents and restricted cash of $5.6 billion as of December 31, 2023, of which $3.9 billion was held by our foreign subsidiaries and may not be freely transferable to the U.S due to local laws or other restrictions.
This valuation requires management judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product suppliers, or liquidations, and expected recoverable values of separate inventory categories.
This valuation requires management judgments, based on currently available Coupang, Inc. 2023 Form 10-K 52 Table of Contents information, about the likely method of disposition, such as through sales to individual customers, returns to product suppliers, or liquidations, and expected recoverable values of separate inventory categories.
Borrowings under the 2021 revolving credit facility bear interest, at our option, at a rate per annum equal to (i) a base rate equal to the highest of (A) the prime rate, (B) the higher of the federal funds rate or a composite overnight bank borrowing rate plus 0.50%, or (C) an adjusted London interbank offered rate (“LIBOR”) for a one-month interest period plus 1.00% or (ii) an adjusted LIBOR plus a margin equal to 1.00%.
Borrowings under the Revolving Credit Facility will bear interest, at our option, at a rate per annum equal to (i) a base rate equal to the highest of (A) the prime rate, (B) the higher of the federal funds rate or a composite overnight bank borrowing rate plus 0.50%, or (C) an adjusted Term Secured Overnight Funding Rate (“SOFR”) rate for a one-month interest period plus 1.00% or (ii) an adjusted Term SOFR plus a margin equal to 1.00%.
As of December 31, 2022, we determined the discount rates for the severance benefit plan used in determining the projected and accumulated benefit obligations to be 5.10% to 5.30%, as compared to 2.70% to 3.00% as of December 31, 2021.
As of December 31, 2023, we determined the discount rates for the severance benefit plan used in determining the projected and accumulated benefit obligations to be 4.30% to 4.80%, as compared to 5.10% to 5.30% as of December 31, 2022.
The improvement in Product Commerce segment adjusted EBITDA was primarily due to an increase in net revenues, improved margins from supply chain optimization, an increased percentage of revenues earned from higher margin revenue offerings, and improved operating leverage.
The improvement in Product Commerce segment adjusted EBITDA was primarily due to an increase in net revenues, further operational efficiencies, improvements from supply chain optimization, and an increased percentage of revenues earned from higher margin revenue categories and offerings.
These valuations incorporate the following significant assumptions: • discount rates; and • salary growth rates Management believes that these assumptions are critical accounting estimates because significant changes in these assumptions could impact our results of operations and financial position.
Actuarial valuations are used in determining amounts recognized in the financial statements for our severance benefit plans. These valuations incorporate the following significant assumptions: • discount rates; and • salary growth rates Management believes that these assumptions are critical accounting estimates because significant changes in these assumptions could impact our results of operations and financial position.
We therefore view net revenues per Active Customer as a key indicator of engagement and retention of our customers and our success in increasing the share of wallet. Coupang, Inc. 2022 Form 10-K 44 Table of Contents Non-GAAP Financial Measures We report our financial results in accordance with U.S. GAAP.
We therefore view net revenues per Active Customer as a key indicator of engagement and retention of our customers and our ability to drive future revenue growth. Coupang, Inc. 2023 Form 10-K 44 Table of Contents Non-GAAP Financial Measures We report our financial results in accordance with U.S. GAAP.
Coupang, Inc. 2022 Form 10-K 51 Table of Contents Inventories We account for our inventories, which consist of products available for sale, using the weighted average cost method, and value them at the lower of cost or net realizable value.
Inventories We account for our inventories, which consist of products available for sale, using the weighted average cost method, and value them at the lower of cost or net realizable value.
Key Business Metrics and Non-GAAP Financial Measures Key Business Metrics Three Months Ended December 31, (in thousands, except net revenues per Active Customer) 2022 2021 Active Customers 18,115 17,936 Total net revenues per Active Customer $ 294 $ 283 Active Customers As of the last date of each reported period, we determine our number of Active Customers by counting the total number of individual customers who have ordered at least once directly from our apps or websites during the relevant period.
Key Business Metrics Three Months Ended December 31, (in millions, except net revenues per Active Customer) 2023 2022 Active Customers 21.0 18.1 Total net revenues per Active Customer $ 312 $ 294 Active Customers As of the last date of each reported period, we determine our number of Active Customers by counting the total number of individual customers who have ordered at least once directly from our apps or websites in Korea during the relevant period.
The loan bears interest at a fixed rate of 4.26%. 2022 Revolving Credit Facility In October 2022, we entered into a two-year revolving facility agreement with a borrowing limit of $126 million that bears interest at the average of 91-days CD interest rate plus 2.30%. The revolving facility is secured by certain of our inventories.
Revolving Credit Agreement We have a two-year Revolving Credit Agreement with a borrowing limit of $124 million that bears interest at the average of 91-days CD interest rate plus 2.30%. The revolving facility is secured by certain of our inventories.
See “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” below for the reconciliation of the Non-GAAP measures with their comparable amounts prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
See “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Measures” below for the reconciliation of the Non-GAAP measures with their comparable amounts prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). (2) Gross profit is calculated as total net revenues minus cost of sales. (3) Non-meaningful.
Refer to Note 12 — "Short-Term Borrowings and Long-Term Debt" in Part II, Item 8 - “Financial Statements and Supplementary Data” for disclosure of our debt obligations. Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with U.S.
Refer to Note 12 — "Short-Term Borrowings and Long-Term Debt" in Part II, Item 8 - “Financial Statements and Supplementary Data” for disclosure of our debt obligations.
We also have material operating leases which expire over the next ten years as well as obligations for our debts. Total minimum contractual commitments due within the next 12 months were $814 million as of December 31, 2022.
We also have material operating Coupang, Inc. 2023 Form 10-K 50 Table of Contents leases which expire over the next ten years as well as obligations for our debts. Total minimum contractual commitments due within the next 12 months were $1.0 billion as of December 31, 2023.
We also recognize and measure uncertain tax positions taken or expected to be taken in a tax return utilizing a two-step process. In the first step, recognition, we determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
In the first step, recognition, we determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step addresses measurement of a tax position that meets the more-likely-than-not criteria.
Additionally, we have over $1.0 billion available under our 2022 and 2021 revolving credit facilities as described below. The ability of certain subsidiaries to transfer funds or pay dividends to Coupang, Inc. is restricted due to terms which require the subsidiaries to meet certain financial covenants, including requirements to maintain a positive net equity balance or having current period income.
The ability of certain subsidiaries to transfer funds or pay dividends to Coupang, Inc. is also restricted due to terms which require the subsidiaries to meet certain financial covenants, including requirements to maintain a positive net equity balance or having current period income.
Investing Activities The increase was mainly driven by a $151 million increase in purchases of property and equipment, primarily related to our fulfillment and logistics infrastructure, including purchases of buildings, land and equipment.
Investing Activities The increase was primarily driven by the $75 million bridge loan made to Farfetch as of December 31, 2023, and a $72 million increase in purchases of property and equipment, primarily related to investments made in the current year in our fulfillment and logistics infrastructure, including purchases of buildings, land and equipment.
Developing Offerings primarily includes more nascent offerings and services, including Coupang Eats, our restaurant ordering and delivery service, Coupang Play, our online content streaming service, fintech, certain international initiatives, as well as advertising products associated with these offerings. Revenues from Developing Offerings are primarily generated from online restaurant ordering and delivery services provided on our mobile applications and websites.
Developing Offerings primarily includes more nascent offerings and services, including Coupang Eats, our restaurant ordering and delivery service in Korea, Coupang Play, our online content streaming service in Korea, fintech, our retail operations in Taiwan, as well as advertising products associated with these offerings.
If changes in market conditions result in reductions to the estimated net realizable value of our inventory, we would increase our valuation in the period in which we made such a determination.
If changes in market conditions result in reductions to the estimated net realizable value of our inventory, we would increase our valuation in the period in which we made such a determination. Income Taxes We record a provision for income taxes for the anticipated tax consequences of our reported results of operations using the asset and liability method.
Assuming all other defined benefit plan assumptions remain constant, a one percentage point decrease in the salary growth rates would result in an immaterial change in benefit plan expense during 2023.
Coupang, Inc. 2023 Form 10-K 53 Table of Contents Assuming all other defined benefit plan assumptions remain constant, a one percentage point decrease in the salary growth rates would result in an immaterial change in benefit plan expense during 2024. Business Combinations In January 2024, the Farfetch Acquisition was completed.
"Risk Factors" in this Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Overview We are a leading e-commerce retailer in Korea with operations in the United States, Japan, Taiwan, Singapore and China.
"Risk Factors" in this Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
The amount of the deferred revenue related to these loyalty rewards is not material. % Change (in thousands) 2022 2021 As Reported Constant Currency Net retail sales $ 18,338,177 $ 16,487,975 11 % 26 % Net other revenue 2,244,438 1,918,397 17 % 32 % Total net revenues $ 20,582,615 $ 18,406,372 12 % 26 % Net retail sales represent the majority of our total net revenues which we earn from online product sales of our owned inventory to customers.
The amount of the deferred revenue related to these loyalty rewards is not material. % Change (in millions) 2023 2022 As Reported Constant Currency Net retail sales $ 21,223 $ 18,338 16 % 17 % Net other revenue 3,160 2,245 41 % 42 % Total net revenues $ 24,383 $ 20,583 18 % 20 % Net retail sales represent the majority of our total net revenues which we earn from online product sales of our owned inventory to customers.
As of December 31, 2022 and 2021, we had stockholders’ equity of $2.4 billion and $2.2 billion, respectively. We may incur losses in the future.
Coupang, Inc. 2023 Form 10-K 49 Table of Contents As of December 31, 2023 and 2022, we had stockholders’ equity of $4.1 billion and $2.4 billion, respectively. We have periodically incurred losses in prior periods and may incur losses in the future.
In considering the need for a valuation allowance, we consider historical, as well as future projected taxable income, along with other positive and negative evidence in assessing the realizability of its deferred tax assets. We recorded valuation allowances of $1.1 billion and $1.3 billion as of December 31, 2022 and 2021, respectively.
In considering the need for a valuation allowance, we consider historical, as well as future projected taxable income on a jurisdiction-by-jurisdiction basis, along with other positive and negative evidence in assessing the realizability of its deferred tax assets. Actual operating results in future years could differ from our current assumptions, judgments, and estimates.
Coupang, Inc. 2022 Form 10-K 47 Table of Contents Net revenues by segment was as follows: % Change (in thousands) 2022 2021 As Reported Constant Currency Product Commerce $ 19,954,594 $ 17,837,717 12 % 26 % Developing Offerings 628,021 568,655 10 % 25 % Total net revenues $ 20,582,615 $ 18,406,372 12 % 26 % The increases in Product Commerce net revenues are primarily due to continued growth in our Active Customers and total net revenues per Active Customer, driven by increased product selection of our owned inventory, and increased customer engagement across more product categories.
The following table presents our total net revenues by segment. % Change (in millions) 2023 2022 As Reported Constant Currency Product Commerce $ 23,594 $ 19,955 18 % 19 % Developing Offerings 789 628 26 % 27 % Total net revenues $ 24,383 $ 20,583 18 % 20 % The increase in Product Commerce net revenues are primarily due to continued growth in our Active Customers and total net revenues per Active Customer, driven by increased product selection of our owned inventory, increased customer engagement across more product categories, and increased merchants available on our marketplace.
The improved Developing Offerings segment adjusted EBITDA was the result of lower advertising and promotional costs as well as lower delivery costs per order associated with Coupang Eats, offset by continued investments in licensed content for Coupang Play as well as our international expansion.
The increased loss in Developing Offerings segment adjusted EBITDA was the result of increased investments in our Eats and Taiwan offerings, and higher content costs for our Coupang Play offering. These losses were partially offset by efficiencies in delivery costs associated with Coupang Eats.
See Part II, Item 8 “Financial Statements and Supplementary Data” — Note 5 — "Defined Severance Benefits" to the consolidated financial statements. Actuarial valuations are used in determining amounts recognized in the financial statements for our severance benefit plans.
See Part II, Item 8 “Financial Statements and Supplementary Data” — Note 6 — "Income Taxes" to the consolidated financial statements. Defined Severance Benefits We have severance benefits primarily related to employees in Korea. See Part II, Item 8 “Financial Statements and Supplementary Data” — Note 5 — "Defined Severance Benefits" to the consolidated financial statements.
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 service costs from our restaurant delivery business, and depreciation and amortization expense.
Additionally, cost of sales includes outbound shipping and logistics related expenses, delivery costs from our restaurant delivery business, and depreciation and amortization expense. The increase in cost of sales primarily reflects higher volume from increased sales and customer demand.
We have in turn successfully reinvested to expand into new offerings, such as with our owned-inventory selection, Rocket WOW membership, Rocket Fresh, Coupang Eats, and Coupang Play, among others. We will continue to reinvest cash flows generated by our established offerings into new initiatives and innovations for our customers.
We have in turn successfully reinvested to expand existing offerings and develop new offerings, such as with our owned-inventory and marketplace selection, FLC merchant services, Rocket WOW membership, Rocket Fresh, Coupang Eats, and Coupang Play, among others in Korea. Our segments reflect the way we evaluate our business performance and manage operations.
The increase in cost of sales was primarily attributable to increased volume resulting from increased sales and customer demand. Cost of sales as a percentage of revenue decreased from 84.0% for 2021 to 77.1% for 2022 primarily due to our efforts around supply chain optimization and increased volume in higher margin offerings.
Cost of sales as a percentage of revenue decreased from 77.1% for 2022 to 74.6% for 2023 primarily due to further operational efficiencies, continued supply chain optimization, and an increased percentage of revenues earned from higher margin revenue categories and offerings, including the enhanced FLC program.
In March 2022, we entered into a new five-year loan agreement to borrow $316 million, which was partially used to extinguish the $149 million August 2020 term loan facility which matured in March 2022, and to finance infrastructure of a fulfillment center. We pledged up to $379 million of certain existing land and a building as collateral.
Term Loan Facilities In April 2023, we entered into a new three-year term loan facility agreement to borrow $178 million to finance the purchase of a fulfillment center and land. We pledged up to $214 million of certain land and buildings as collateral. The loan bears interest at a fixed rate of 6.76%.
The increase in Developing Offerings net revenues is primarily from an increase in the average spend from Active Customers using our Eats offering, partially offset by a decrease in those customers. 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.
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.
The second step addresses measurement of a tax position that meets the more-likely-than-not criteria. The tax position is measured at the largest amount of benefit that has a likelihood of greater than 50 percent of being realized upon ultimate settlement. Defined Severance Benefits We have severance benefits covering employees in Korea.
The tax position is measured at the largest amount of benefit that has a likelihood of greater than 50 percent of being realized upon ultimate settlement. Due to uncertainties in any tax audit outcome, our estimates of the ultimate settlement of our unrecognized tax positions may change and the actual tax benefits may differ significantly from our estimates.
Financing Activities The decrease was primarily driven by $3.4 billion of proceeds, net of underwriting discounts of $69 million and other offering costs, from the issuance of 100,000,000 shares of our Class A common stock upon the completion of our IPO in 2021, a $132 million increase in repayments of debt and short-term borrowings, all partially offset by a $267 million increase in proceeds from debt and short-term borrowings.
Financing Activities The decrease was primarily driven by a $129 million decrease in proceeds from debt and short-term borrowings, partially offset by a $75 million decrease in repayments of debt and short-term borrowings due to the timing of maturities.
We expect that our future expenditures for both infrastructure and workforce-related costs will exceed several billion dollars over the next several years. During the first quarter of 2021, we completed our IPO, in which we issued and sold 100,000,000 shares of our Class A common stock at a price of $35.00 per share.
We expect that our future expenditures for both infrastructure and workforce-related costs will exceed several billion dollars over the next several years. At closing of the Farfetch Acquisition, a Coupang subsidiary provided additional cash funding to Farfetch of $150 million, and contributed the outstanding $150 million bridge loan towards the Farfetch Acquisition.
Key Financial and Operating Highlights: 2022 2021 % Change Total net revenues $ 20,582,615 $ 18,406,372 12 % Total net revenues, constant currency (1) $ 23,235,971 $ 17,850,617 26 % Gross profit (2) $ 4,709,873 $ 2,951,128 60 % Net loss (4) $ (92,042) $ (1,542,590) (94) % Net loss margin (0.4) % (8.4) % Adjusted EBITDA (1) $ 381,212 $ (747,636) NM (3) Adjusted EBITDA margin (1) 1.9 % (4.1) % Net cash provided by (used in) operating activities $ 565,439 $ (410,578) NM (3) Free cash flow (1) $ (245,641) $ (1,082,377) (77) % Segment adjusted EBITDA: Product Commerce $ 605,838 $ (360,896) NM (3) Developing Offerings $ (224,626) $ (386,740) (42) % (1) Total net revenues, constant currency; total net revenues growth, constant currency; adjusted EBITDA; adjusted EBITDA margin; and free cash flow are non-GAAP measures.
Coupang, Inc. 2023 Form 10-K 43 Table of Contents Key Financial and Operating Highlights: (in millions) 2023 2022 % Change Total net revenues $ 24,383 $ 20,583 18 % Total net revenues, constant currency (1) $ 24,637 $ 23,236 20 % Gross profit (2) $ 6,190 $ 4,710 31 % Net income (loss) $ 1,360 $ (92) NM (3) Net income (loss) margin 5.6 % (0.4) % Adjusted EBITDA (1) $ 1,074 $ 381 182 % Adjusted EBITDA margin (1) 4.4 % 1.9 % Net cash provided by operating activities $ 2,652 $ 565 NM (3) Free cash flow (1) $ 1,775 $ (246) NM (3) Segment adjusted EBITDA: Product Commerce $ 1,540 $ 606 154 % Developing Offerings $ (466) $ (225) 107 % (1) Total net revenues, constant currency; total net revenues growth, constant currency; adjusted EBITDA; adjusted EBITDA margin; and free cash flow are non-GAAP measures.
Cost of sales as a percentage of revenue for 2021 was also negatively impacted by $158 million in non-recurring inventory losses related to the FC Fire. Operating, General and Administrative Expenses Operating, general and administrative expenses include all our operating costs excluding cost of sales, as described above.
These benefits were partially offset by the impacts from our growth initiatives in developing offerings. Operating, General and Administrative Expenses Operating, general and administrative expenses include all our operating costs excluding cost of sales, as described above.
(in thousands) 2022 2021 % Change Product Commerce $ 605,838 $ (360,896) NM (1) Developing Offerings (224,626) (386,740) (42) % Consolidated adjusted EBITDA $ 381,212 $ (747,636) NM (1) (1) Non-meaningful.
(in millions) 2023 2022 % Change Product Commerce $ 1,540 $ 606 154 % Developing Offerings (466) (225) 107 % Consolidated adjusted EBITDA $ 1,074 $ 381 182 % (1) Non-meaningful.
The increase in operating, general and administrative expenses primarily reflects the growth we have achieved in our overall business. While our advertising expenses increased $172 million to support growth and expansion, this is primarily the result of lower advertising expenses we incurred in the prior two years due to COVID-related impacts.
The increase in operating, general and administrative expenses primarily reflects increases in fulfillment costs due to growth in our business and slightly higher advertising expenses, reflecting growth in revenues.
Removed
We plan to invest and maximize value for customers and shareholders in the long term over optimizing our short-term results. Beginning in the first quarter of 2022, we organized our operations into two segments: Product Commerce and Developing Offerings. These segments reflect the way management evaluates its business performance and manages its operations.
Added
Page Overview 43 Key Business Metrics 44 Non-GAAP Financial Measures 45 Results of Operations 47 Liquidity and Capital Resources 49 Critical Accounting Policies and Estimates 52 Recently Adopted Accounting Pronouncements 54 Overview Coupang is one of the largest retailers in Asia, with a mission to revolutionize the everyday lives of its customers and create a world where people wonder, “How did we ever live without Coupang?” Coupang is headquartered in the United States, with operations and support services performed in geographies including South Korea, Taiwan, Singapore, China, and India.
Removed
Initial Public Offering On March 15, 2021, we completed our initial public offering (“IPO”) in which we issued and sold 100,000,000 shares of our Class A common stock at an IPO price of $35.00 per share. We received net proceeds of $3.4 billion after deducting underwriting discounts of $69 million and other offering costs.
Added
Revenues from Developing Offerings are primarily generated from online restaurant ordering and delivery services in Korea and retail operations in Taiwan. Farfetch Acquisition In January 2024 we completed the Farfetch Acquisition which will be consolidated in our results beginning in Q1 2024.
Removed
Immediately prior to effectiveness of our IPO registration statement on Form S-1, Coupang, LLC, a Delaware limited liability company, converted into a Delaware corporation pursuant to a statutory conversion, which changed our name to Coupang, Inc. (“Corporate Conversion”).
Added
Farfetch has a history of operating losses, and to what extent their future results may impact our consolidated results is unknown.
Removed
As a result of the Corporate Conversion and IPO, our redeemable convertible preferred units (“preferred units”) and common units (which included common units designated as profits interests (“PIUs”)), in each case, automatically converted into an equal number of shares of Class A or Class B common stock, except with respect to a conversion adjustment to certain PIUs, which reduced the outstanding common units designated as PIUs that converted into the shares of Class A common stock.
Added
Coupang, Inc. 2023 Form 10-K 45 Table of Contents Reconciliation of GAAP to Non-GAAP Measures Free Cash Flow (in millions) 2023 2022 Net cash provided by operating activities $ 2,652 $ 565 Adjustments: Purchases of land and buildings (374) (226) Purchases of equipment (522) (598) Total purchases of property and equipment $ (896) $ (824) Proceeds from sale of property and equipment 19 13 Total adjustments $ (877) $ (811) Free cash flow $ 1,775 $ (246) Net cash used in investing activities $ (927) $ (848) Net cash provided by financing activities $ 199 $ 247 Adjusted EBITDA and Adjusted EBITDA Margin (in millions) 2023 2022 Total net revenues $ 24,383 $ 20,583 Net income (loss) 1,360 (92) Net income (loss) margin 5.6 % (0.4) % Adjustments: Depreciation and amortization 275 231 Interest expense 48 27 Interest income (178) (53) Income tax benefit (776) (1) Other expense, net 19 7 Equity-based compensation 326 262 Adjusted EBITDA $ 1,074 $ 381 Adjusted EBITDA margin 4.4 % 1.9 % Constant Currency Revenue and Constant Currency Revenue Growth 2023 2022 Year over Year Growth (in millions) As Reported Exchange Rate Effect Constant Currency Basis As Reported As Reported Constant Currency Basis Consolidated Net retail sales $ 21,223 $ 221 $ 21,444 $ 18,338 16 % 17 % Net other revenue 3,160 33 3,193 2,245 41 % 42 % Total net revenues $ 24,383 $ 254 $ 24,637 $ 20,583 18 % 20 % Net Revenues by Segment Product Commerce $ 23,594 $ 246 $ 23,840 $ 19,955 18 % 19 % Developing Offerings 789 8 797 628 26 % 27 % Total net revenues $ 24,383 $ 254 $ 24,637 $ 20,583 18 % 20 % Certain amounts may not foot due to rounding.
Removed
Also, our convertible notes were automatically converted into 171,750,446 shares of our Class A common stock.
Added
Coupang, Inc. 2023 Form 10-K 46 Table of Contents Results of Operations % Change (in millions) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Net retail sales $ 21,223 $ 18,338 $ 16,488 16 % 11 % Net other revenue 3,160 2,245 1,918 41 % 17 % Total net revenues 24,383 20,583 18,406 18 % 12 % Cost of sales 18,193 15,873 15,455 15 % 3 % Operating, general and administrative 5,717 4,822 4,445 19 % 8 % Total operating cost and expenses 23,910 20,695 19,900 16 % 4 % Operating income (loss) 473 (112) (1,494) NM (1) (93) % Interest income 178 53 9 NM (1) NM (1) Interest expense (48) (27) (45) 78 % (40) % Other expense, net (19) (7) (12) 171 % (38) % Income (loss) before income taxes 584 (93) (1,542) NM (1) (94) % Income tax (benefit) expense (776) (1) 1 NM (1) NM (1) Net income (loss) $ 1,360 $ (92) $ (1,543) NM (1) (94) % (1) Non-meaningful.
Removed
For additional information related to the Corporate Conversion and IPO, see Note 14 — "Redeemable Convertible Preferred Units and Stockholders'/Members' Equity (Deficit)" and Note 15 — "Convertible Notes and Derivative Instrument" in Part II, Item 8 - “Financial Statements and Supplementary Data” in our consolidated financial statements.
Added
Coupang, Inc. 2023 Form 10-K 47 Table of Contents Fulfillment and Logistics by Coupang (“FLC”) is a Product Commerce offering that enables participating merchants to leverage our end-to-end integrated logistics and fulfillment network.
Removed
Coupang, Inc. 2022 Form 10-K 43 Table of Contents Fulfillment Center Fire In June 2021, a fire extensively damaged our Deokpyeong fulfillment center (“FC Fire”) resulting in a loss of the inventory, building, equipment, and other assets at the site.
Added
The previous contract terms with FLC merchants resulted in the transfer of control of the merchants’ products to us and Coupang is the seller of record in these transactions, whereby revenue is recorded on a gross basis (principal).
Removed
Inventory and property and equipment losses from the FC Fire of $158 million and $138 million were recognized in “Cost of sales” and “Operating, general and administrative”, respectively, in 2021. While we are insured on property losses from the FC Fire, investigations surrounding the fire continue.
Added
Beginning in the second quarter of 2023, we changed the FLC program and related contracts with merchants, streamlining the overall process for merchants and us. As a result of these changes, control of these products is no longer transferred to the Company prior to sales.
Removed
In December 2022, we received a refundable insurance cash advance payment of $79 million, which is included within other current liabilities and reflected as an inflow for operating cash flows. We have not recognized any insurance benefit in our consolidated statements of operations to date.
Added
The change impacted how we recognize a portion of our revenue, from a gross basis (principal) to a net basis (agent). As of the end of the second quarter of 2023, the previous contract terms had expired, after which commissions and logistics and fulfillment fees earned from FLC merchants under the new contracts are recorded in net other revenue.
Removed
Whether and to what extent the advance will become non-refundable or additional proceeds will be received is currently unknown.
Added
This will continue to result in a prospective reduction in total net revenues associated with FLC compared to historical periods, with no significant corresponding impact on gross profit expected.
Removed
(2) Gross profit is calculated as total net revenues minus cost of sales, and for 2021 includes $158 million related to inventory losses from the FC Fire. (3) Non-meaningful. (4) Net loss for 2021 includes $296 million in losses recognized during the second quarter of 2021 related to the FC Fire.
Added
This was partially offset by the net revenue impact of our transition of FLC merchants to new contracts now recognized on a net basis. The increase in Developing Offerings net revenues are primarily due to our growth initiatives in Taiwan.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed8 unchanged
Biggest changeWe do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Our interest rate risk arises primarily from our undrawn 2022 revolving credit facility. Borrowings issued at variable rates expose us to variability in cash flows.
Biggest changeWe do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Our interest rate risk arises primarily from some of our variable rate debt as well as our undrawn Revolving Credit Agreement. Borrowings issued at variable rates expose us to variability in cash flows.
Consequently, increases or decreases in the value of the USD affect the value of these items with respect to the non-USD-denominated businesses in the consolidated financial statements, even if their value has not changed in their original currency.
Increases or decreases in the value of the USD affect the value of these items with respect to the non-USD-denominated businesses in the consolidated financial statements, even if their value has not changed in their original currency.
Our borrowings generally include lines of credit with financial institutions, some of which carry variable interest rates. As of December 31, 2022, we had no balances outstanding under our lines of credit. An assumed hypothetical 10% change in prevailing interest rates would not have a material impact on our results of operations.
Our borrowings generally include lines of credit with financial institutions, some of which carry variable interest rates. As of December 31, 2023, we had no balances outstanding under our lines of credit. An assumed hypothetical 10% change in prevailing interest rates would not have a material impact on our results of operations.
Any future borrowings incurred under the 2021 and 2022 revolving credit facilities would accrue interest at rates subject to current market conditions. Foreign Currency Risk We have accounts on our foreign subsidiaries’ ledgers, which are maintained in the respective subsidiary’s local currency and translated into USD for reporting of our consolidated financial statements.
Any future borrowings incurred under the Revolving Credit Facility and Revolving Credit Agreement would accrue interest at rates subject to current market conditions. Foreign Currency Risk We have accounts on our foreign subsidiaries’ ledgers, which are maintained in the respective subsidiary’s local currency and translated into USD for reporting of our consolidated financial statements.
The degree of credit risk will vary based on many factors, including the duration of the transaction and the contractual terms of the agreement. As appropriate, management evaluates and approves credit standards and oversees the credit risk management function related to investments. Coupang, Inc. 2022 Form 10-K 53 Table of Contents
The degree of credit risk will vary based on many factors, including the duration of the transaction and the contractual terms of the agreement. As appropriate, management evaluates and approves credit standards and oversees the credit risk management function related to investments. Coupang, Inc. 2023 Form 10-K 55 Table of Contents
Our market risk exposure is primarily the result of fluctuations in interest rates, foreign currency, and credit. Interest Rate Risk As of December 31, 2022, we had cash, cash equivalents, and restricted cash of $3.7 billion. Interest-earning instruments carry a degree of interest rate risk.
Our market risk exposure is primarily the result of fluctuations in interest rates, foreign currency, and credit. Interest Rate Risk As of December 31, 2023, we had cash, cash equivalents and restricted cash of $5.6 billion. Interest-earning instruments carry a degree of interest rate risk.
An assumed hypothetical 10% adverse change in average exchange rates used to translate foreign currencies to USD would have resulted in a decline in total net revenues of $1.8 billion and an increase in net loss of $(28) million for 2022.
An assumed hypothetical 10% adverse change in average exchange rates used to translate foreign currencies to USD would have resulted in a decline in total net revenues of $2.2 billion and a decrease in net income of $175 million for 2023.
Removed
Assets and liabilities of each subsidiary are translated into USD at the exchange rate in effect at the end of each period. Revenue and expenses for these subsidiaries are translated into USD using average rates that approximate those in effect during the period.

Other CPNG 10-K year-over-year comparisons