10-Q 1 cpng-20220630.htm 10-Q cpng-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2022
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 001-40115
cpng-20220630_g1.jpg
COUPANG, INC.
(Exact name of Registrant as specified in its charter)
Delaware27-2810505
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)

720 Olive Way, Suite 600
Seattle, Washington 98101
(206) 333-3839
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Tower 730, 570, Songpa-daero, Songpa-gu, Seoul
Republic of Korea 05510
+82 (2) 6150-5422
(Former name, former address, and formal fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s) Name of Each Exchange on Which Registered
Class A Common Stock, par value $0.0001 per shareCPNGNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmall reporting company
Emerging growth company
                        

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 4, 2022, there were 1,591,879,911 shares of the registrant’s Class A common stock and 174,802,990 shares of the registrant’s Class B common stock, each with a par value of $0.0001 per share, outstanding.
                        

COUPANG, INC.
Form 10-Q
For the Quarterly Period Ended June 30, 2022
TABLE OF CONTENTS
Page









1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “toward,” “will,” or “would,” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
the COVID-19 pandemic and its impact on our business, operations, and the markets and communities in which we, our customers, suppliers, and merchants operate;
our expectations regarding our future operating and financial performance;
the continued growth of the e-commerce segment and the increased acceptance of online transactions by potential customers;
the size of our addressable markets, market share, and market trends;
our ability to compete in our industry;
our ability to manage expansion into new markets, segments, and offerings;
our ability to effectively manage the continued growth of our workforce and operations;
the sufficiency of our cash and cash equivalents, and investments to meet our liquidity needs;
our ability to retain existing suppliers and merchants and to add new suppliers and merchants;
our suppliers’ and merchants’ ability to supply high-quality and compliant merchandise to our customers;
our relationship with our employees and the status of our workers;
our ability to maintain and improve our segment position;
our ability to operate and manage the expansion of our fulfillment and delivery infrastructure;
the effects of seasonal trends on our results of operations;
our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates;
the effects of global macroeconomic conditions, including impacts relating to the invasion of Ukraine by Russia and its regional and global ramifications, inflationary pressures, a general economic slowdown or recession, further increases in interest rates and changes in monetary policy;
our ability to attract, retain, and motivate skilled personnel, including key members of our senior management;
our ability to stay in compliance with laws and regulations, including tax laws, that currently apply or may become applicable to our business both in Korea and internationally and our expectations regarding various laws and restrictions that relate to our business;
the outcomes of any claims, litigation, governmental audits, inspections, and investigations;
our intended use of the net proceeds from our initial public offering; and
the other factors set forth in Part 1, Item 1A, under the caption “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”)
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Form 10-Q.
2

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in Part 1, Item1A, under the caption “Risk Factors,” of our 2021 Form 10-K and elsewhere in this Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. While we believe such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (ir.aboutcoupang.com), our filings with the Securities and Exchange Commission (“SEC”), webcasts, press releases, conference calls, and social media. We use these mediums to communicate with investors and the general public about our company, our products, and other issues. It is possible that the information that we make available on our website may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website. Notwithstanding the foregoing, the information contained on our website as referenced in this paragraph is not incorporated by reference into this Form 10-Q or any other report or document we file with the SEC.
3

Part I. Financial Information
Item 1.  Financial Statements (Unaudited)
COUPANG, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares)
(unaudited)
June 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$3,107,535 $3,487,708 
Restricted cash163,468 319,800 
Accounts receivable, net187,644 175,350 
Inventories1,451,428 1,421,501 
Other current assets251,324 232,447 
Total current assets5,161,399 5,636,806 
Long-term restricted cash1,151 2,839 
Property and equipment, net1,471,013 1,347,531 
Operating lease right-of-use assets1,436,363 1,374,629 
Goodwill9,707 9,739 
Long-term lease deposits and other345,570 270,290 
Total assets$8,425,203 $8,641,834 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$3,294,481 $3,442,720 
Accrued expenses241,316 304,293 
Deferred revenue105,429 93,972 
Short-term borrowings47,551 7,811 
Current portion of long-term debt6,108 341,717 
Current portion of long-term operating lease obligations302,148 287,066 
Other current liabilities266,295 266,709 
Total current liabilities4,263,328 4,744,288 
Long-term debt595,557 283,190 
Long-term operating lease obligations1,268,744 1,201,277 
Defined severance benefits and other229,478 237,122 
Total liabilities6,357,107 6,465,877 
Commitments and contingencies (Note 8)
Stockholders' equity
Class A common stock, $0.0001 par value, 10,000,000,000 shares authorized, 1,590,313,751 and 1,579,399,667 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively; Class B common stock, $0.0001 par value, 250,000,000 shares authorized, 174,802,990 shares issued and outstanding as of June 30, 2022 and December 31, 2021
177 175 
Additional paid-in capital8,014,912 7,874,038 
Accumulated other comprehensive loss(11,691)(47,739)
Accumulated deficit(5,935,302)(5,650,517)
Total stockholders' equity2,068,096 2,175,957 
Total liabilities and stockholders' equity$8,425,203 $8,641,834 
The accompanying notes are an integral part of these condensed consolidated financial statements
4

COUPANG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net retail sales$4,481,165 $3,994,506 $9,037,272 $7,801,549 
Net other revenue556,656 483,608 1,117,235 883,425 
Total net revenues5,037,821 4,478,114 10,154,507 8,684,974 
Cost of sales3,884,028 3,819,620 7,957,308 7,293,974 
Operating, general and administrative1,220,936 1,173,430 2,470,047 2,173,252 
Total operating cost and expenses5,104,964 4,993,050 10,427,355 9,467,226 
Operating loss(67,143)(514,936)(272,848)(782,252)
Interest income7,364 1,907 10,898 2,847 
Interest expense(6,143)(5,848)(13,511)(30,671)
Other (expense) income, net(9,229)373 (8,739)(3,453)
Loss before income taxes(75,151)(518,504)(284,200)(813,529)
Income tax expense340 97 585 105 
Net loss(75,491)(518,601)(284,785)(813,634)
Net loss attributable to Class A and Class B common stockholders per share, basic and diluted$(0.04)$(0.30)$(0.16)$(0.74)
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted1,763,264 1,743,109 1,760,019 1,092,626 
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax(4,970)(351)(1,959)14,621 
Actuarial gain (loss) on defined severance benefits, net of tax34,196 (9,892)38,007 (8,974)
Total other comprehensive income (loss)29,226 (10,243)36,048 5,647 
Comprehensive loss$(46,265)$(528,844)$(248,737)$(807,987)

The accompanying notes are an integral part of these condensed consolidated financial statements
5

COUPANG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED UNITS AND STOCKHOLDERS’/MEMBERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited)
Redeemable Convertible Preferred UnitsCommon UnitsClass A and Class B Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive
Loss
Accumulated
Deficit
Total Stockholders'/Members' Equity
UnitsAmountUnitsAmountSharesAmount
Balance as of December 31, 2021$ $ 1,754,203$175 $7,874,038 $(47,739)$(5,650,517)$2,175,957 
Net loss— — — — — (209,294)(209,294)
Foreign currency translation adjustments, net of tax— — — — 3,011 — 3,011 
Actuarial gain on defined severance benefits, net of tax— — — — 3,811 — 3,811 
Issuance of common stock upon exercise of stock options— — 4,1471 8,182 — — 8,183 
Issuance of common stock upon settlement of restricted stock units— — 2,708— — — —  
Equity-based compensation— — — 55,593 — — 55,593 
Balance as of March 31, 2022$ $ 1,761,058$176 $7,937,813 $(40,917)$(5,859,811)$2,037,261 
Net loss— — — — — (75,491)(75,491)
Foreign currency translation adjustments, net of tax— — — — (4,970)— (4,970)
Actuarial gain on defined severance benefits, net of tax— — — — 34,196 — 34,196 
Issuance of common stock upon exercise of stock options— — 2,0311 4,183 — — 4,184 
Issuance of common stock upon settlement of restricted stock units— — 2,028— — — —  
Equity-based compensation— — — 72,916 — — 72,916 
Balance as of June 30, 2022$ $ 1,765,117$177 $8,014,912 $(11,691)$(5,935,302)$2,068,096 

The accompanying notes are an integral part of these condensed consolidated financial statements
6

Redeemable Convertible Preferred UnitsCommon UnitsClass A and Class B Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive
Loss
Accumulated
Deficit
Total Stockholders'/Members' Equity (Deficit)
UnitsAmountUnitsAmountSharesAmount
Balance as of December 31, 20201,329,465$3,465,611 105,822$45,122 $ $25,036 $(31,093)$(4,107,927)$(4,068,862)
Net loss— — — — — (295,033)(295,033)
Foreign currency translation adjustments, net of tax— — — — 14,972 — 14,972 
Actuarial gain on defined severance benefits, net of tax— — — — 918 — 918 
Issuance of common units, equity-based compensation plan— 22,90138,968 — — — — 38,968 
Equity-based compensation— 2,974 — — — — 2,974 
Impact of Corporate Conversion and IPO
Conversion of common units into Class A and Class B common stock— (128,723)(87,064)128,64813 87,051 — —  
Conversion of redeemable convertible preferred units into Class A and Class B common stock(1,329,465)(3,465,611)— 1,329,465133 3,465,478 — — 3,465,611 
Issuance of Class A common stock, net of underwriting discounts and offering costs— — 100,00010 3,416,809 — — 3,416,819 
Conversion of convertible notes into Class A common stock— — 171,75017 609,982 — — 609,999 
Issuance of common stock, equity-based compensation plan subsequent to Corporate Conversion and IPO— — 2,680— 4,767 — — 4,767 
Equity-based compensation subsequent to Corporate Conversion and IPO— — — 83,992 — — 83,992 
Balance as of March 31, 2021$ $ 1,732,543$173 $7,693,115 $(15,203)$(4,402,960)$3,275,125 
Net loss— — — — — (518,601)(518,601)
Foreign currency translation adjustments, net of tax— — — — (351)— (351)
Actuarial loss on defined severance benefits, net of tax— — — — (9,892)— (9,892)
Issuance of common stock, equity-based compensation plan— — 3,036— 6,002 — — 6,002 
Equity-based compensation— — — 50,346 — — 50,346 
Balance as of June 30, 2021$ $ 1,735,579$173 $7,749,463 $(25,446)$(4,921,561)$2,802,629 

The accompanying notes are an integral part of these condensed consolidated financial statements
7

COUPANG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June 30,
20222021
Operating activities:
Net loss$(284,785)$(813,634)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization119,639 94,326 
Provision for severance benefits87,436 66,028 
Equity-based compensation128,509 137,312 
Paid-in-kind interest and accretion of discount on convertible notes 20,148 
Inventory and fixed asset losses due to fulfillment center fire 284,825 
Non-cash operating lease expense155,686 121,779 
Non-cash others63,621 17,406 
Change in operating assets and liabilities:
Accounts receivable, net(37,342)(62,381)
Inventories(185,091)(267,191)
Other assets(147,058)(79,439)
Accounts payable190,578 396,485 
Accrued expenses(37,665)9,778 
Deferred revenue20,001 9,136 
Other liabilities(146,730)(87,044)
Net cash used in operating activities(73,201)(152,466)
Investing activities:
Purchases of property and equipment(419,674)(315,496)
Proceeds from sale of property and equipment7,810 125 
Other investing activities(17,834)9,790 
Net cash used in investing activities(429,698)(305,581)
Financing activities:
Proceeds from issuance of Class A common stock upon initial public offering, net of underwriting discounts 3,431,277 
Deferred offering costs paid (11,618)
Proceeds from issuance of common stock/units, equity-based compensation plan12,367 49,737 
Proceeds from short-term borrowings and long-term debt403,436 115,408 
Repayment of short-term borrowings and long-term debt(333,097)(27,465)
Other financing activities(2,038)(981)
Net cash provided by financing activities80,668 3,556,358 
Effect of exchange rate changes on cash and cash equivalents, and restricted cash(115,962)(38,928)
Net (decrease) increase in cash and cash equivalents, and restricted cash(538,193)3,059,383 
Cash and cash equivalents, and restricted cash, as of beginning of period3,810,347 1,401,302 
Cash and cash equivalents, and restricted cash, as of end of period$3,272,154 $4,460,685 
Supplemental disclosure of cash-flow information:
Cash paid (received) for income taxes, net of refunds$1,341 $(267)
Cash paid for interest$11,459 $8,085 
Non-cash investing and financing activities:
Decrease in property and equipment-related accounts payable$(54,975)$(8,738)
Conversion of common units into Class A and Class B common stock$ $87,064 
Conversion of redeemable convertible preferred units into Class A and Class B common stock$ $3,465,611 
Conversion of convertible notes into Class A common stock$ $609,999 
The accompanying notes are an integral part of these condensed consolidated financial statements
8


COUPANG, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.     Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
Coupang, Inc. (“Coupang”), together with its wholly-owned subsidiaries (collectively, the “Company,” “we,” “us,” or “our”), is a Delaware corporation, which owns and operates an e-commerce business that primarily serves the Korean retail market. Through the Company’s mobile applications and Internet websites, the Company offers products and services that span a wide range of categories, including home goods and décor, apparel and beauty products, fresh food and grocery, sporting goods, electronics, restaurant order and delivery, travel, content streaming, advertising, and everyday consumables, which are offered through a fully integrated technology, fulfillment and logistics infrastructure. The Company’s main operations, including procurement, marketing, technology, administrative functions, and fulfillment and logistics infrastructure, are predominantly located in South Korea, with other significant operations and support services performed in China, Singapore, Japan, Taiwan, and the United States.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited consolidated financial statements as of that date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations and comprehensive loss, and redeemable convertible preferred units and stockholders’/members’ equity (deficit), and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period. Certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s 2021 Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates, which include, but are not limited to, equity-based compensation, inventory valuation, income taxes, defined severance benefits, and revenue recognition. Actual results could differ materially from those estimates. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Given the global economic climate and additional or unforeseen effects from the COVID-19 pandemic, these estimates become more challenging, and actual results could differ materially from these estimates.
Segment Information
On March 2, 2022, the Company announced that it revised its reportable segments to reflect the way the Chief Operating Decision Maker (“CODM”) assesses performance and allocates resources. The change led to the following two operating and reportable segments: Product Commerce and Developing Offerings. Refer to Note 14 — "Segment Reporting" for further discussion.
Fulfillment Center Fire
In June 2021, a fire extensively damaged the Company’s Deokpyeong fulfillment center (the “FC Fire”) resulting in a loss of the inventory, building, equipment, and other assets at the site. Inventory and property and equipment losses from the FC Fire of
9

$158 million and $127 million were recognized in “Cost of sales” and “Operating, general and administrative,” respectively, during the second quarter of 2021. The Company is insured on property losses from the FC Fire, however, whether and to what extent the Company may recover insurance proceeds on these losses is currently unknown, and as such, no insurance recoveries have been recognized. During the second quarter of 2021, the Company also incurred or accrued for other costs directly related to the FC Fire of $11 million. The FC Fire resulted in an increase to our net loss of $296 million for the three and six months ended June 30, 2021.
Concentration of Credit Risk
Cash and cash equivalents and restricted cash are potentially subject to concentration of credit risk. Cash and cash equivalents, and restricted cash are placed with several financial institutions that management believes are of high credit quality, of which 68% and 77% were held at two and four financial institutions as of June 30, 2022 and December 31, 2021, respectively.
Recent Accounting Pronouncements Adopted
In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40).” The standard reduces the number of models used to account for convertible instruments, amends diluted earnings per share (“EPS”) calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity. The amendments add certain disclosure requirements to increase transparency and decision-usefulness about a convertible instrument's terms and features. Under the amendment, the Company must use the if-converted method for including convertible instruments in diluted EPS as opposed to the treasury stock method. The ASU is effective for public companies for fiscal years beginning after December 15, 2021. Early adoption is allowed under the standard with either a modified retrospective or full retrospective method. We adopted this ASU effective January 1, 2022. The adoption of the ASU did not have a material impact on our condensed consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). The ASU will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The ASU is effective on a prospective basis for public companies for fiscal years beginning after December 15, 2022 . We early adopted this ASU effective January 1, 2022. The adoption of the ASU did not have a material impact on our condensed consolidated financial statements.
2.    Net Revenues
Details of total net revenues were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Net retail sales$4,481,165 $3,994,506 $9,037,272 $7,801,549 
Third-party merchant services475,553 430,231 966,900 781,165 
Other revenue81,103 53,377 150,335 102,260 
Total net revenues$5,037,821 $4,478,114 $10,154,507 $8,684,974 

This level of revenue disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Net retail sales are recognized from online product sales to consumers. Third-party merchant services represent commissions, advertising, and delivery fees earned from merchants and restaurants that sell their products through the Company’s online business. Other revenue includes revenue earned from our various other offerings.
Contract liabilities consist of payments in advance of delivery and customer loyalty credits, which are included in deferred revenue on the condensed consolidated balance sheets. The Company recognized revenue of $84 million and $60 million for the six months ended June 30, 2022 and 2021, respectively, which were included in deferred revenue on the consolidated balance sheets as of December 31, 2021 and 2020, respectively. Revenue recognized from customer loyalty program liabilities as of December 31, 2021 and 2020 were not material for the six months ended June 30, 2022 and 2021, respectively.
10

3.    Supplemental Financial Information
Property and Equipment, net
The following summarizes the Company’s property and equipment, net:
(in thousands)
June 30, 2022December 31, 2021
Land$133,012 $140,786 
Buildings295,798 320,059 
Equipment and furniture583,476 551,304 
Leasehold improvements421,995 340,468 
Vehicles140,399 168,585 
Software24,028 34,582 
Construction in progress319,094 200,735 
Property and equipment, gross1,917,802 1,756,519 
Less: Accumulated depreciation and amortization(446,789)(408,988)
Property and equipment, net$1,471,013 $1,347,531 

Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss includes all changes in equity during a period that have yet to be recognized in income. The major components are foreign currency translation adjustments and actuarial gains (losses) on the Company’s defined severance benefits. As of June 30, 2022 and December 31, 2021, the ending balance in accumulated other comprehensive loss related to foreign currency translation adjustments was $35 million and $36 million, respectively, and the amount related to actuarial losses on defined severance benefits was $(46) million and $(84) million, respectively.
4.    Leases
The Company is obligated under operating leases primarily for vehicles, equipment, warehouses, and facilities that expire over the next eleven years. These leases generally contain renewal options. Because the Company is not reasonably certain to exercise these renewal options, or the renewal options are not solely within the Company’s discretion, the options are not considered in determining the lease term, and the associated potential option payments are excluded from expected minimum lease payments. The Company’s leases generally do not include termination options for either party or restrictive financial or other covenants.
The components of operating lease cost were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2022202120222021
Operating lease cost$104,446 $84,355 $206,544 $159,752 
Variable and short-term lease cost9,434 7,907 19,562 16,889 
Total operating lease cost $113,880 $92,262 $226,106 $176,641 

Supplemental disclosure of cash flow information related to leases were as follows:
Six Months Ended June 30,
(in thousands)
20222021
Cash paid for the amount used to measure the operating lease liabilities$177,322 $128,892 
Operating lease assets obtained in exchange for lease obligations$291,370 $358,204 
Net increase to operating lease right-of-use assets resulting from remeasurements of lease obligations$32,334 $27,278 
11


The assumptions used to value leases for the periods presented were as follows:
June 30, 2022December 31, 2021
Operating leases weighted-average remaining lease term5.9 years5.8 years
Operating leases weighted-average discount rate6.47 %6.17 %
As of June 30, 2022, the Company had entered into operating leases that have not commenced with future minimum lease payments of $440 million, that have not been recognized on the Company's condensed consolidated balance sheets. These leases have non-cancellable lease terms of 2 to 11 years.
5.    Fair Value Measurement
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP established a hierarchy framework to classify the fair value based on the observability of significant inputs to the measurement. The levels of the fair value hierarchy are as follows:
Level 1: Observable inputs such as quoted prices in an active market for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of the assets or liabilities.
Level 3: Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.
The following table summarizes the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis:
June 30, 2022
(in thousands)Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents$3,107,535 $ $ $3,107,535 
Restricted cash
Time deposit100,036   100,036 
Money market trust63,432   63,432 
Long-term restricted cash
Time deposit1,151   1,151 
Total financial assets$3,272,154 $ $ $3,272,154 
December 31, 2021
(in thousands)Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents$3,487,708 $ $ $3,487,708 
Restricted cash
Time deposit250,839   250,839 
Money market trust68,961   68,961 
Long-term restricted cash
Time deposit2,839   2,839 
Total financial assets$3,810,347 $ $ $3,810,347 
Cash and cash equivalents includes bank deposits, money market trusts and time deposits. The carrying amounts of our cash equivalents approximate their fair values, which are based on Level 1 assumptions.
12

6.    Short-term Borrowings and Long-term Debt
The Company’s short-term borrowings generally include lines of credit or one-year term loan facilities with financial institutions to be utilized for general operating purposes. There were $48 million and $8 million of borrowings outstanding under these facilities as of June 30, 2022 and December 31, 2021, respectively.
Details of carrying amounts of long-term debt were as follows:
(in thousands)June 30, 2022December 31, 2021
Maturity DateInterest rate (%)Borrowing Limit
February 2024(1)
(4)
$1,000,000 $ $ 
July 2022 - April 2025(2)
2.65 4.8020,291 7,741 20,952 
October 2023 - March 2027(3)
2.87 5.95795,732 597,419 605,229 
Total principal long-term debt$1,816,023 $605,160 $626,181 
Less: current portion of long-term debt(6,108)(341,717)
Less: unamortized discounts(3,495)(1,274)
Total long-term debt$595,557 $283,190 
_____________
(1)Relates to the Company’s 2021 revolving credit facility.
(2)The Company entered into various loan agreements with fixed interest rates for general operating purposes.
(3)At June 30, 2022, we had pledged up to $955 million of land and buildings as collateral against term loan facilities.
(4)Borrowings under the 2021 revolving credit facility bear interest, at the Company’s 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 LIBOR for a one-month interest period plus 1.00% or (ii) an adjusted LIBOR plus a margin equal to 1.00%.
In March 2022, the Company entered into a new five-year loan agreement to borrow $309 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. The Company pledged up to $371 million of certain existing land and a building as collateral. The loan bears interest at a fixed rate of 4.26%.
The Company was in compliance with the covenants for each of its borrowings and debt agreements as of June 30, 2022.
The Company’s long-term debt is recorded at amortized cost. The fair value is estimated using Level 2 inputs based on the Company’s current interest rate for similar types of borrowing arrangements. The carrying amount of the long-term debt approximates its fair value as of June 30, 2022 and December 31, 2021 due primarily to the interest rates approximating market interest rates.
7.    Convertible Notes and Derivative Instrument
From February 23, 2018 to May 16, 2018, the Company issued convertible notes in an aggregate principal amount of $502 million (total proceeds of $507 million, which included a total net funding premium at issuance), the majority of which were purchased by existing unitholders of the Company’s preferred units, with a maturity equal to the earlier of (a) the fourth anniversary from the first issuance date, (b) the consummation of a liquidity event, or (c) upon an event of default, as defined in the LLC Agreement. In connection with the Company’s initial public offering (“IPO”) in March 2021, the principal balance and the accrued interest on the convertible notes were automatically converted into 171,750,446 shares of the Company’s Class A common stock.
The convertible notes had an annual effective interest rate of 16.99%. The Company recorded interest expense from its convertible notes for the six months ended June 30, 2021 of $20 million, consisting of $15 million of contractual interest expense and $5 million of debt discount amortization.
The convertible notes contained embedded derivatives that allowed or required the holders of the convertible notes to convert them into a variable number of the Company’s equity securities for a value equal to a significant premium over the then principal and accrued interest balance. These embedded derivatives were bifurcated and accounted for separately as a single, compound derivative instrument. The convertible notes did not convert to common shares based on this embedded feature, rather they converted based on a price calculated by dividing $6.3 billion with the number of common equity securities, on an as-converted and as-exercised basis, outstanding on the closing of the IPO. Following the convertible notes conversion to shares of Class A common stock, the embedded derivatives no longer exist.
13

8.    Commitments and Contingencies
Commitments
The following summarizes the Company’s minimum contractual commitments as of June 30, 2022:
(in thousands)Unconditional purchase obligations (unrecognized)Long-term debt (including interest)Operating leasesTotal
Remainder of 2022$91,933 $12,967 $193,866 $298,766 
2023183,134 93,788 377,523 654,445 
2024148,490 198,560 339,567 686,617 
2025126,880 15,014 282,110 424,004 
202633,805 58,244 214,143 306,192 
Thereafter116,598 312,634 520,207 949,439 
Total undiscounted payments$700,840 $691,207 $1,927,416 $3,319,463 
Less: lease imputed interest(356,524)
Total lease commitments$1,570,892 
Unconditional purchase obligations include legally binding contracts with terms in excess of one year that are not reflected on the consolidated balance sheets. These contractual commitments primarily relate to technology related service contracts, fulfillment center construction contracts and software licenses. For contracts with variable terms, we do not estimate the total obligation beyond any minimum pricing as of the reporting date.
Effective July 2022, the Company expanded and extended an existing service arrangement which increased the service period by two years and increased the non-cancellable commitment from $450 million to $1 billion. The Company is committed to spend a minimum of $150 million per year, which is consistent with current spend levels. If such agreement had not been amended, the remaining non-cancellable commitment as of June 30, 2022, would have been $270 million.
Legal Matters
From time to time, the Company may become party to litigation incidents and other legal proceedings, including regulatory proceedings, in the ordinary course of business. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company's reserves may change in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of currently pending legal matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.
9.    Redeemable Convertible Preferred Units and Stockholders'/Members' Equity (Deficit)
Immediately prior to effectiveness of the Company’s 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 the Company’s name to Coupang, Inc. (“Corporate Conversion”).
Prior to the Corporate Conversion, the Company’s Limited Liability Company Agreement (“LLC Agreement”), as amended and restated on April 11, 2019, authorized the issuance of 1,448,632,049 preferred units, which were convertible into the same number of common voting units issued upon conversion of the preferred units, as well as the issuance of 264,166,544 common units.
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Pursuant to the Corporate Conversion and IPO:
1,196,605,432 preferred units and 85,579,584 common units (which include 22,443,220 PIUs), in each case, automatically converted into an equal number of shares of Class A common stock, except with respect to a conversion adjustment which reduced the outstanding common units designated as PIUs by 75,862 common units, and excluding any such preferred units and common units (including any PIUs) held by Mr. Bom Kim; and
132,859,550 preferred units held by Mr. Kim and 43,143,440 common units (all of which were designated as PIUs) held by Mr. Kim, in each case, converted into an equal number of shares of Class B common stock.
On March 15, 2021, the Company completed its IPO, in which it issued and sold 100,000,000 shares of its Class A common stock at a price of $35.00 per share. The Company received net proceeds of approximately $3.4 billion from its IPO after deducting underwriting discounts of $69 million and other offering costs. Also, the owner of our Class B common stock converted 1,200,000 shares of Class B common stock into Class A common stock, which were sold in the IPO.
Holders of vested PIUs had similar rights to those of common unit holders. The PIUs (with the exception of those granted to the Company’s Chief Executive Officer, which convert into an equal number of shares of Class B common stock) convert to shares of Class A common stock at a ratio based on the excess of the per common unit value of the Company at the time of a Corporate Conversion over the per common unit value designated at the grant date of the PIUs (the participation threshold), as specified in the underlying award agreements. All outstanding PIUs automatically converted into 22,367,358 shares of Class A common stock and 43,143,440 shares of Class B common stock at the time of the Corporate Conversion.
10.    Equity-based Compensation Plans
The 2021 Equity Compensation Plan (the “2021 Plan”) provides for the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other equity-based awards (or the cash equivalent thereof). The number of shares of the Company’s Class A common stock reserved for issuance under the 2021 Plan will be increased on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors. Pursuant to the 2021 Plan, effective January 1, 2022, the maximum number of shares of the Company’s Class A common stock that may be issued under the 2021 plan increased by 87,710,132 shares, or 5% of the total number of shares of the Company’s capital stock outstanding as of December 31, 2021. Following the increase, the maximum number of shares of the Company’s Class A common stock that may be issued under the 2021 Plan is 302,813,864 shares
RSUs
The Company had previously granted restricted equity units under the 2011 Plan, which vest upon the satisfaction of both a service-based condition and a performance-based condition. In connection with the Company’s Corporate Conversion and IPO, the outstanding awards were converted into RSUs.
For the RSUs with the performance condition satisfied upon the completion of the Company’s IPO, the Company recorded $41 million in equity-based compensation expense for the six months ended June 30, 2021, consisting primarily of a cumulative catch-up adjustment related to such awards based on the full or partial fulfillment of requisite service periods. Unrecognized equity-based compensation expense related to these awards are recorded over the remaining requisite service period. RSUs generally vest over 2 to 4 years from the vesting start date, subject to the recipient remaining an employee of the Company at each vesting date.
As of June 30, 2022, the Company had $637 million of unamortized compensation costs related to all unvested RSU awards. The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 2.7 years, net of estimated forfeitures.
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The table below summarizes RSU activity for the six months ended June 30, 2022 is as follows:
Outstanding RSUs
(in thousands, except unit price)Number of RSUsWeighted Average Grant-
Date Fair Value
December 31, 202123,511 $