The aftermath of a data breach has severely impacted growth: Coupang (CPNG.US) encountered its largest quarterly loss in over four years, warning of a slowdown in revenue growth for the whole year.

South Korean e-commerce giant Coupang (CPNG.US) is currently facing its most severe trust crisis and performance slump since its listing in 2021. The major data breach that erupted at the end of last year continues to erode consumer confidence, coupled with strong statements from regulatory agencies on corporate governance. The company recorded its largest quarterly loss in over four years in the first quarter of 2026, and explicitly warned that revenue growth for the full year will further slow down. The company, listed in New York, announced on Tuesday that it incurred an operating loss of $242 million in the period from January to March, a sharp reversal from the profit of $154 million in the same period last year, with Wall Street expecting a loss of only around $39 million. This loss almost swallowed up half of the company's annual revenue in 2025. The net loss attributable to shareholders expanded to $266 million, marking the worst quarterly profit performance since the fourth quarter of 2021. Revenue for the quarter grew by 8% year-on-year, reaching $8.5 billion, but the growth rate significantly slowed down from the double-digit growth that it had maintained for a long time. Double-digit growth has been a key indicator of Coupang's rise since its listing on the New York Stock Exchange in 2021. At the core of the deteriorating performance is one of the most serious e-commerce data breaches in South Korean history. Prior to this, South Korean regulatory agencies discovered that a former employee had illegally accessed personal information of nearly 34 million accounts over several months, affecting approximately two-thirds of South Korea's population. To address the resulting regulatory investigations and consumer lawsuits, Coupang launched a compensation plan worth around $1.2 billion in shopping points. The company stated that these compensation points were deducted directly from sales, severely impacting revenue and profits in the current quarter, as these points expired on April 15. CEO Bom Kim candidly stated during the financial report call, "As a result of the incident, the platform has lost consumer revenue growth that should have continued for several months. Under the revenue shortfall, the year-on-year growth rate of the company will significantly weaken, and the scale of business demand corresponding to fixed costs will also be lower than previously expected." At the same time, the core business product sector under Coupang continued to experience slow growth. This sector covering Rocket Delivery and Rocket Fresh only saw a 4% year-on-year increase in revenue, reaching $7.2 billion, a significant drop from the 12% growth in the previous quarter. Profit margins were also squeezed, with gross margin falling from 29.3% in the same period last year to 27%, and adjusted EBITDA plummeted by 92% to only $29 million. Total operating expenses reached $8.75 billion, exceeding the quarterly revenue. Customer indicators also show warning signs. The number of active customers increased by only 2% year-on-year to 23.9 million, with a net decrease of approximately 700,000 from the previous quarter. The expansion of the paid membership (WOW membership) ecosystem, which has long been seen as the strongest loyalty engine, showed signs of slowing down, with industry insiders closely monitoring whether the data breach and controversy surrounding the platform's practices have weakened the retention rate of high-frequency users. Amid pressure on performance, the shadow of regulation continues to loom over the expansion of this e-commerce giant. In the current quarter, the Korea Fair Trade Commission (KFTC) made a crucial ruling, redefining Bom Kim as the actual controlling person of Coupang, replacing the previous corporate entity holding designation. The KFTC pointed out that Kim Yoo-suk (Bom Kim's brother) who held a vice president-level position, had a salary commensurate with formal executives and had actual decision-making power in certain business operations of the company, indicating that Coupang no longer met the criteria for being identified based on a corporate entity as the holding entity. This change comes at a sensitive time for the company, and it also means that Bom Kim himself must assume more direct governance responsibility. In recent years, Coupang and its logistics-related companies have been under repeated investigation by regulatory agencies and legislators for issues such as unfair trade practices, warehouse safety, and delivery personnel treatment. During the performance call, both Bom Kim and CFO Gaurav Anand did not directly address the issue of the re-designation of the actual controlling person by the KFTC. However, Bom Kim attempted to reassure investors, stating that consumer purchasing choices are a vote for the platform every time, and loyalty and spending trends still show resilience. He emphasized that Coupang plans to respond to challenges by further expanding infrastructure investment, expanding delivery coverage, and increasing membership benefits, vowing to "spare no effort in creating new WOW moments for customers in product selection, price, and service." The company disclosed plans to expand WOW-related customer benefits to over $4 billion this year, including free delivery, returns, and streaming-related additional services. Anand also attempted to alleviate concerns about the slowing growth and increased external regulatory pressure in the market, stating that short-term disruptions do not change the company's long-term profit improvement trend. "We believe there is still significant room for improvement in business gross margins and have full confidence in continuously raising the overall gross margin." To boost market confidence, Coupang continues to advance its aggressive shareholder return strategy. In the first quarter, the company spent $391 million repurchasing 20.4 million shares, and the board has additionally approved a $1 billion stock repurchase plan. Following the financial report release, Coupang's stock price fell by over 7% in after-hours trading, continuing a decline of about 12% since the beginning of the year, before recovering some lost ground in late trading.