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Bom Kim -- Founder and Chief Executive Officer

Thanks, everyone, for joining us today. A few highlights to begin over the past 12 months we grew net revenues by nearly $6 billion or 23% in constant currency, excluding Farfetch. Gross profit grew an even stronger 29%, excluding Farfetch and the FLC fire insurance gain we recorded in Q4. And we generated $1.4 billion in adjusted EBITDA, expanding margins to 4.5%, while also delivering over $1 billion in free cash flow.

As we close out 2024, I'd like to share how this year's achievements reflect the core principles that drive us. At Coupang, everything begins and ends with the customer. This orientation is our most important advantage. We work backwards from a vision of a world where our customers have it all, the best experience at the lowest price.

We believe it's only when we provide both in harmony that we deliver a true wow experience. Our ability to break that traditional trade-off between experience and price relies on a relentless focus on innovation and operational excellence. And our mission to continue transforming customers' lives through innovation and operational excellence was at work again this past year. We made significant changes to upgrade our fulfillment and logistics processes, which enabled us this quarter to increase by 45% the deliveries that were either same-day or dawn shipments ordered by midnight and delivered just hours later by 7:00 a.m.

We've also been able to extend the order cutoff for same-day delivery by two hours. We've expanded our next-day rocket delivery to now provide customers with next-day installation services on thousands of items from large appliances, furniture, electronics to even tires for automobiles. Now a customer who realizes that she needs new tires on her car can purchase them online from home and have them delivered and installed the very next day. We've increased our fresh assortment by over 30% this quarter, which now includes fresh flower delivery to customers across the market.

One hundred percent of our fresh selection comes with the promise of free same-day and dawn delivery, which ensures that their orders are delivered within hours. Now a customer who forgets an important birthday can order with a few clicks on his phone just before midnight and have fresh flowers, ice cream, and a cake waiting at the door for his significant other when they wake up the next morning. We're also working to bring dawn and fresh delivery to more remote areas in the market. This includes Jeju Island, where we recently announced that customers can now get free overnight rocket delivery by 7:00 a.m.

for orders placed as late as midnight. Our culture of relentless innovation fuels not only growth but also continuous improvements in our processes and margins. We have always believed that customer experience and operational excellence can advance hand in hand. Better processes lead to better outcomes for customers.

By innovating tirelessly on behalf of customers, we're simultaneously driving down costs and raising the bar on service quality. In the process of upgrading our fulfillment and logistics network this year, we were able to eliminate waste in our processes and improve line haul costs by 16%. A key driver of our efficiency improvements is robotics and automation. We've made significant investments to streamline operations, nearly doubling the portion of our fulfillment and logistics infrastructure that is highly automated in the past year alone.

This helps make jobs easier for our workforce while also increasing productivity. Even with these advances, we've only just begun to tap automation's full potential. The percentage of our total infrastructure that is highly automated is still just in the low teens. That's a huge runway for further improvements.

Just as our past innovations have unlocked new levels of performance, the next wave from robotics in our network to AI and the trillions of predictions we make daily, promises to drive even higher levels of growth and margin expansion in the quarters and years to come. Another pillar of our strategy has been our long view and willingness to make bold decisions and disciplined investments to build enduring value for customers and shareholders. We spent years building an end-to-end integrated technology and logistics infrastructure that allows us to deliver customer experience that we believe to be unmatched in global commerce today. That investment, though capital-intensive, has put us at the frontier of innovation and drives our engine of compounding growth and expanding margins.

We're still in the early innings of that growth and margin expansion. Importantly, our growth story extends far beyond Korea. We believe the playbook we pioneered in Korea can be applied in other markets with equal success. Our first international market, Taiwan is a great example.

We launched our full-stack e-commerce service, Rocket Delivery in Taiwan in late 2022, and the customer response has been impressive. We closed out 2024 with significant momentum, with net revenues in the fourth quarter, growing 23% quarter over quarter, operating at substantial scale. And the vast majority of that growth was organic, a testament to the differentiated customer experience that we're building. We're also delighted to share that we recently launched our WOW membership program in the market.

We have an exciting journey ahead in Taiwan, and 2025 is off to a strong start. Farfetch is another compelling story to highlight. When we acquired Farfetch at the beginning of 2024, it was losing hundreds of millions of dollars annually and facing declining growth metrics. Yet within this challenge, we saw a rare opportunity.

Farfetch was a sector leader with roughly $4 billion in annual transaction volume and a global brand in luxury fashion. In the year since the acquisition, our team applied the same relentless, disciplined execution that defines Coupang's operations. We made tough decisions with the aim of simplifying operations and refocusing the teams on the only two things that truly matter, customer experience and operational excellence. The results speak volumes.

Farfetch's losses have shrunk dramatically to a breakeven run rate today, and this significant turnaround was achieved with minimal loss of scale. Farfetch continues to attract 49 million monthly visitors in over 190 countries around the world. While we're proud of what the Farfetch team has accomplished so far, we're even more excited about the potential for the team to build on this promising foundation to deliver innovations that will transform the customer experience in global luxury commerce. Looking to 2025 and beyond, our strategy is simple.

We'll continue to put our customers first. We'll continue to innovate relentlessly and we'll continue to invest in big opportunities with discipline and a long-term horizon. We expect to expand margins in 2025 through greater utilization of automation and technology further supply chain optimization and the scaling of margin-accretive offerings. In our established and newer markets, we see tremendous opportunities to expand selection through both our first and third-party selection, including FLC that will in turn drive growth.

We're confident that if we keep delivering more value to customers, they will reward us with their enduring trust and loyalty. We're still in the early stages of capturing the full growth and potential of our core offerings. And as we pursue new opportunities, we will maintain a disciplined capital allocation and operational approach. We have a robust pipeline of initiatives, but we carefully prioritize those that we believe can meet our high bar for customer impact and long-term returns.

We've shown that we can launch and scale new offerings in a way that complements our existing business and shared assets. We'll apply the same discipline as we expand into new segments and geographies. Our approach obsess over customers, invest for the long term, and drive operational excellence remains unchanged. None of our 2024 success would have been possible without our incredible teams.

They have embraced the mission wholeheartedly. I want to thank each of them for their passion and dedication to exceed the expectations of our customers. I also want to thank our shareholders for their continued support and belief in our long-term vision and our customers for inspiring us to be better every day. Their trust is our most precious asset, and we do not take it for granted.

With that, I'll turn the call over to our CFO, Gaurav Anand, who will walk you through the financial details of the quarter and year.

Gaurav Anand -- Chief Financial Officer

Thanks, Bom. Q4 was another strong quarter across our business as we again delivered sustained growth in revenues, active customers, and profitability. As I walk through the numbers for the quarter in detail, I need to remind everyone that our Farfetch acquisition completed earlier in Q1 of 2024 impacting comparability. Additionally, this quarter, we recognized a nonrecurring insurance gain of $175 million relating to the fire that damaged 1 of our fulfillment centers in 2021 and a loss of inventory and fixed assets recorded in the P&L in 2021.

This quarter, we agreed to a settlement on a portion of the related insurance claim resulting in the $116 million gain recorded in gross profit and $59 million gain recorded in OG&A expenses where possible, I'll provide results with and without Farfetch and the nonrecurring insurance gains to provide better comparability between periods. Total net revenues this quarter grew 21% year over year or 14% excluding the impact of Farfetch. It's worth highlighting that we have seen a significant weakening of the Korean won versus the U.S. dollar, reaching its lowest levels in over 10 years.

As a result, it's especially important to review our results on a constant-currency basis this quarter. Adjusting for the impacts of these foreign currency changes, we grew 28% or 21% excluding Farfetch. Consolidated gross profit this quarter grew 48% or 29% excluding Farfetch and the fire insurance gain. We are seeing significantly higher growth rates in our FLC offering where revenue is reported on a net basis.

This will naturally compress our revenue growth rates as FLC becomes a more significant part of our overall volumes. As a result, we believe a more meaningful indication of the overall growth of our business going forward will be the growth in gross profit. We are seeing deeper levels of spend across all our customer cohorts as they respond to the value of coupon's differentiated customer offering. This year, the annual spend of each of the customer cohorts, even our oldest grew by more than 20%, and while our newest cohorts follow a similar trend as our OLS cohorts, their spend level is just a fraction of the spend of our oldest cohorts.

Our oldest cohorts are still increasing their spend and that shows that we have yet to realize the full wallet share potential of our cohorts. We also represent a small percentage of the market's total retail spend, which highlights the significant growth opportunity ahead. Our product commerce segment saw revenue growth of 9% year over year. In constant currency, that growth rate was 16%, reflecting the notable impact from the weakening Korean won in Q4.

Gross profit this quarter grew 31% or 24%, excluding the impacts of the fire insurance game. Our product commerce active customers grew 10% year over year. We also saw growth in VAV members this year. We continued to see strong growth in average spend levels with constant-currency revenues per active customer growing 6% year over year.

Developing offering segment revenues in Q4 grew roughly 300% year over year in both reported and constant-currency amounts. Excluding Farfetch, developing offerings segment revenues grew 124% or 136% year over year in constant currency. We are especially encouraged by the growth momentum we saw this quarter in both Eats and Taiwan and expect that momentum to continue throughout 2025. This quarter represented another record quarter in gross profit, where we generated $2.5 billion in gross profit.

This represents a 48% year-over-year growth and a gross profit margin of 31.3%. Excluding both Farfetch and the $116 million insurance gain, adjusted gross profit in Q4 was $2.2 billion, growing 29% year over year, with a gross profit margin of 29%. This represents a margin improvement of over 330 basis points versus last year and 90 basis points over the last quarter. For our product commerce segment, we generated growth in gross profit this quarter of 31% year over year to $2.3 billion and a gross profit margin of 32.7%.

Adjusted for the effects of the insurance gain recorded, gross profit was $2.1 billion, growing 24% year over year with a margin of 31%. This represents a margin improvement of more than 370 basis points over last year, driven again by the benefits from increased efficiencies across operations, including benefits from greater utilization of automation and technology, further supply chain optimization, and the scaling of margin-accretive offerings. On a quarter-over-quarter basis, the adjusted product commerce gross profit margin improved 100 basis points versus Q3. OG&A expense as a percentage of revenue increased over 370 basis points versus last year or over 440 basis points excluding the $59 million insurance gain recorded within OG&A.

This increase is primarily due to the inclusion of Farfetch and its related acquisition and restructuring costs. As we discussed last quarter, we have also increased our technology and infrastructure expense to build a stronger foundation for future scalability. We are excited about the potential we are seeing to drive significant growth in revenues and margins through these increased tech investments into areas like AI and automation. We also expect OG&A expenses will decline over time as a percentage of revenue in the near to medium term.

This quarter, we generated $279 million of income before income taxes and $156 million of net income attributable to Coupang stockholders. This resulted in diluted earnings per share of $0.08. Excluding the fire insurance gain, net income attributable to Coupang shareholders was approximately $24 million for the quarter, and diluted earnings per share was $0.01. On a consolidated basis, we reported $421 million of adjusted EBITDA this quarter, which, among other things, excludes the fire insurance gain and the nonrecurring acquisition and restructuring costs at Farfetch.

This resulted in an adjusted EBITDA margin for the quarter of 5.3% in up 80 basis points over the last year. For the full year, we generated adjusted EBITDA of $1.4 billion with a margin of 4.5%. This represents an expansion of adjusted EBITDA margins on an annual basis. Excluding Farfetch, we reported $391 million of consolidated adjusted EBITDA this quarter and $1.4 billion for the full year with a full year adjusted EBITDA margin of 4.9%.

Our product commerce segment delivered $539 million of adjusted EBITDA in Q4 with a margin of 7.8%. This consists of margin expansion of over 70 basis points year over year and over 100 basis points quarter over quarter. For developing offerings, our Q4 segment adjusted EBITDA loss was $118 million, improving $32 million year over year and $9 million quarter over quarter. The progress we saw this quarter were primarily driven by improvement in both Eats and Farfetch.

We also note that Farfetch benefited this quarter from recurring seasonality and profitability typically seen in Q4 each year, as well as certain one-time adjustments. For the full year, we generated $1.9 billion in operating cash flow and $1 billion in free cash flow. This represents a decrease in free cash flow of $759 million versus last year and an $81 million quarter-over-quarter improvement over the Q3 PPM free cash flow. As we noted last quarter, we do not believe there has been a structural change in our free cash flow generation as a decrease over the prior year is driven primarily by certain nonrecurring working capital benefits that we previously communicated were in the prior year.

This quarter, we reported an effective income tax rate of 53%, driven by consolidation of pre-tax losses in Farfetch and certain nondeductible expenses. As a reminder, this is just an accounting tax rate as our cash tax obligation in 2024 is closer to 20%, excluding Farfetch losses. Now a few comments on our outlook for 2025. We anticipate our constant-currency consolidated growth rates for the full year to be about 20% year over year.

within the range of our 2024 Q4 constant-currency growth rate, excluding Farfetch. We also expect the Q1 constant-currency growth rate to be about 20%. As we have discussed, continues to grow at a faster rate than our overall product commerce revenue growth, which is not fully reflected in the revenue growth rates. As a result, we expect product commerce gross profit to grow faster than the related constant-currency revenues.

And while overall margins may be uneven quarter to quarter, we expect to deliver adjusted EBITDA margin expansion on an annual basis. For developing offerings, we anticipate incurring adjusted EBITDA losses between $650 million to $750 million in 2025. Regarding income tax expense, we anticipate we will continue to experience a temporarily high effective tax rate between 50% to 55% in 2025. As a reminder, this is just an accounting effective tax rate.

We expect our cash tax obligation to be closer to 40%. Operator, we are now ready to begin the Q&A.

Questions & Answers:

Operator

[Operator instructions] Once again, please limit your questions to two per person. We'll pause for just a moment to compile the Q&A roster. The first question is from Stanley Yang with J.P. Morgan.

Your line is now open.

Stanley Yang -- Analyst

Thanks. Thank you for the opportunity to ask two questions. First question is over the past several months, both government data and third-party data have indicated an elevated slowdown of domestic e-commerce market growth since fourth quarter. Have you seen the similar trend in your product e-commerce GMV growth year to date? I would appreciate if you share a bit more color on the macro impact on your top-line growth outlook in 2025.

And I appreciate your guidance of 20% top-line growth, but I just wonder between the breakdown between the product commerce versus digital offering revenue growth. And my second question is about your FLC business, which has emerged as a strong growth driver. Management-guided FLC is margin accretive, but can you please give a bit more color on the SLC margin profile trend going into 2025? Thank you.

Bom Kim -- Founder and Chief Executive Officer

Stan, thanks for your question. I think with macro, we understand that there is some uncertainty in the macro environment. We've seen cycles like this before, including a couple of years ago when we were coming out of COVID. I think our outlook for growth continues to remain strong.

Keep in mind, we're still a relatively small share of the overall retail market, just a small fraction. And what's driving our expansion is not a one-time bump or cycle, but deep and increasing engagement from our customers. The spend of every single quarter of our customers, even our oldest continues to compound each year. And that's driven by our continuous improvement of selection, service and price.

We expect that our focus on these core value proposition drivers will support our growth, continue to support our growth. And as we've mentioned, we expect our Q1 growth to remain consistent relative to our -- the growth that you've seen in Q4 to be in line with Q4, excluding Farfetch. Our strategy remains the same through any phase of these cycles. We provide customers with the best experience at the lowest price.

Whatever the macroeconomic environment may be, and we've seen uncertainty like this before, as long as we deliver that, we're confident we can continue to outpace the market's growth significantly for years to come. On FLC, our focus right now is on optimizing the service levels for our customers and our merchants. We continue to see strong momentum in FLC and the trends that we've shared over the past few quarters have only continued. And FLC is still growing at a high multiple of our overall business.

We're encouraged by the strong rate of adoption that we're seeing from merchants who are increasingly recognizing the benefits of leveraging our operational capabilities to serve customers better and that, in turn, helps their business thrive. Our focus right now is to invest in enhancing that service. There's still a lot more to build out to improve the selection and convenience for our customers, which will, in turn, drive higher levels of engagement and lead to even greater growth opportunities for merchants and suppliers.

Operator

The next question is from Eric Cha with Goldman Sachs. Your line is now open.

Eric Cha -- Analyst

Yeah, thank you for the opportunity to ask questions. I have two. The first thing on Eats. I believe Coupang is adjusting the platform fee.

And could you help us quantify the impact coming from these changes? And is that included in your -- reflected on your developing offering guidance, adjusted EBITDA loss guidance range? The second question is on tech spending. Obviously, we are continuing to see a rise in OG&A driven by these drivers. But when can we expect some moderation of pace in the investment? Could that maybe come within '25? Or should it be a little bit more long term? And what's the -- could you explain to us what the specific benefits that the consumers or the merchants may have coming from these investments? Thank you.

Gaurav Anand -- Chief Financial Officer

Thanks, Eric. I'll take that. So, Eric, we believe we partnered really well with all our stakeholders in Eats, the restaurants, drivers, and customers. As a general practice, we don't comment on the individual profitability of each of these components in our segment.

But in Eats, we see many opportunities to continue improving the customers' offering as we have done, as well as improving our operations. So, in it, we provide free delivery with zero additional fees in any form to our customers. We offer merchants what we believe to be the lowest fees and commission of any food delivery service in the world. With that, we are committed to build a strong partnership with our restaurant and delivery partners and striving to improve the experience for our customers.

And moving on to your next question, Eric, on the overhead expense. So, the OG&A expense as a percentage of revenue has increased versus last year, but this increase is primarily driven due to the inclusion of Farfetch and the related acquisition and restructuring costs. But as we discussed last quarter, we also increased the tech and infrastructure expenses to build a stronger foundation for future scalability. So, we are excited about potential and the potential that we are seeing to drive significant growth in revenues and margins.

Through these increased investments in AI and automation, primarily supporting our per-commerce business. So, we do expect OG&A expenses will decline over time as a percentage of revenue. I think the guidance we are giving is the near to medium term right now.

Bom Kim -- Founder and Chief Executive Officer

And Eric, I'll address your last question about the benefits or the gains that customers and merchants -- what they may or could expect from our investments here. And machine learning and generative AI, in particular, continue to be a core part of our strategy. They have contributed to some of the results that you've seen in the past. And we're deploying them throughout our business.

We expect them to have an impact on the trillions of predictions we make every day from search, ads, catalog our engineering, operations, among many others. And we're already seeing benefits and an even greater potential for improvements to come. So, we'll continue to invest to leverage AI to enhance the customer experience and improve operational efficiencies. And as always, as with all of our investments, we continue to test and iterate and invest only where we're convinced of the potential for attractive returns.

Operator

Our next question comes from Seyon Park with Morgan Stanley. Your line is now open.

Seyon Park -- Analyst

Hi, good morning. Thank you for the opportunity. I also have two questions. The first is on Farfetch.

If maybe management can share what the ambition is now that the restructuring phase appears to be done, what the strategy going forward will be, and whether Farfetch could we could see potentially an integration of Farfetch into Coupang or with the Korean consumers is my first question. The second question is just kind of on the capex investment outlook. I'm assuming that the increase in coverage in Korea is not as fast as it was in the past, given that we already have nationwide coverage. And hence, should we expect the same cadence of capex spending going forward? Or is there a chance that that could be adjusted or a shift to investments outside of just pure coverage? Thank you.

Bom Kim -- Founder and Chief Executive Officer

So let me start with Farfetch. We're pleased with the early progress we've seen at Farfetch. We focused on operational improvements that, as you point out, have helped turn large losses at this time -- sorry, at the time of our acquisition to profitability today. We'll continue to leverage resources and capabilities across the company when helpful and also explore synergies.

But most of all, we want to finish the job of streamlining our operations. and sharpening Farfetch's execution around customer experience. We're committed to delivering exceptional experiences for luxury customers, boutiques, and brands. That and operational rigor will set Farfetch on the path to sustainable growth and leadership in the global luxury retail market.

It won't happen overnight, but we're excited about what's ahead there.

Gaurav Anand -- Chief Financial Officer

Yeah. And I'll take the capex question. On levels of capex, as a percentage of revenue has historically remained relatively consistent over time and leveraging as we scale. And we are very disciplined on how and where we invest our capex into.

The majority of our capex investment is related to building our capacity to support our growth in both Korea and now Taiwan. And that's why we measure it as a percentage of revenue, indicating the growth -- the inherent peaks and lead times naturally create some unevenness in the timing. But overall, we continue and expect to continue to leverage capex as percentage of revenue.

Operator

We will now take our last question from the line of Jiong Shao with Barclays. Your line is now open.

Jiong Shao -- Analyst

Thank you very much for taking my questions. I have two as well. First is on your developing offering guide. I want to -- I was hoping you can elaborate a bit on your guide of $650 million to $750 million investments.

So, I want to be clear, I suspect you have Farfetch in it. Just roughly, the Fartech run rate is about $120 million profit. Does that mean the rest of the old kind of core developing offering, the loss should be $750 million to $850 million? I want to make sure my math or my understanding is correct. And it will be helpful to all of us if you can talk about like what are you thinking of investment directionally for Taiwan or Eats and for play in '25 vis-a-vis '24.

And recently, you entered into Japan food delivery as well according to some media reports, could you talk about the rationale there, especially when you exited Japan a couple of years ago and the level of investment you are looking to do for the Japanese food delivery market? Sorry for the long-winded question. Second question, it's a quick one, at least a shorter one. Your investment intensity last year was very good. As a result, more than -- sorry, the year before last year, for example, you more than doubled your EBITDA margin.

But last year, the EBITDA margin went up only slightly because of the intense investments. I was wondering for -- do you feel like -- because these investment cycles, they come in kind of different magnitude from year to year. I was just wondering for 2025, do you think the investment intensity is going to be similar to -- or is it going to be less or more?

Bom Kim -- Founder and Chief Executive Officer

Jiong, thanks for the question. I think there's a lot of things in your question. In fact, I'll try to address as many of us as I can. I think it's important to remember that developing offerings is really a collection of investments.

We are investing in services and offerings that we believe strengthen our customer value proposition and also generate attractive returns for our shareholders in the long term. Many of these initiatives are gaining solid momentum and already contributing to our long-term strategy. I think to your specific question about Farfetch, I think I would point out that there are some one-off benefits in Q4. So, I think Q4 generally is seasonally a high-profit period for that offering.

But the more important point here, I think, is to take a step back and whether it's Farfetch or Japan, which you mentioned, I think that's one of several investment opportunities that we have in our developing offerings, we evaluate a lot of opportunities. And the select few cases that we do make an investment. And across all of these initiatives, our approach is consistent. Really, it's one of disciplined execution.

We're focusing on ensuring that these investments are driven by two things: one, a clear customer demand for our differentiation and two, a strong path to operational excellence. When the evidence doesn't meet our expectations, we'll be disciplined and reevaluate as we have in the past, and when we do invest more, and I want to emphasize and invest, we hope our shareholders are excited because it's a reflection of our growing confidence from what we're seeing on the ground that will deliver a wow experience for customers and an attractive return for our shareholders. Our investments for developing offerings across all of these initiatives in 2025, is expected to be about between $650 million and $750 million. And there's still a lot to learn across each of these initiatives, and they're all at various stages but where we are investing more, we hope it's a reflection of the confidence.

I hope you see it as a reflection of our growing conviction that we are delivering we have a line of sight to delivering a clear wow experience and attractive returns for our shareholders.

Gaurav Anand -- Chief Financial Officer

Then on your third question on EBITDA margin expansion. I believe you are referring to the opex investment. And we have discussed that a few minutes ago. We continue to be disciplined.

We made decisions to invest and we do expect OG&A expenses will decline over time in the near to medium term.

Jiong Shao -- Analyst

OK, thank you, guys.

Bom Kim -- Founder and Chief Executive Officer

Thank you.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Mike Parker -- Vice President, Investor Relations

Bom Kim -- Founder and Chief Executive Officer

Gaurav Anand -- Chief Financial Officer

Stanley Yang -- Analyst

Eric Cha -- Analyst

Seyon Park -- Analyst

Jiong Shao -- Analyst

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Coupang (CPNG) Q4 2024 Earnings Call Transcript was originally published by The Motley Fool