CPNG Total Net Revenues

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. 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). 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. 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. 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.


CPNG Total Net Revenues

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##%


CPNG Total Net Revenues

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. This was partially offset by the net revenue impact of our transition of FLC merchants to new contracts now recognized on a net basis.


CPNG Total Net Revenues

The increase in Developing Offerings net revenues are primarily due to our growth initiatives in Taiwan.


CPNG 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. Additionally, cost of sales includes outbound shipping and logistics related expenses, delivery costs from our restaurant delivery business, and depreciation and amortization expense.


CPNG Cost of Sales

The increase in cost of sales primarily reflects higher volume from increased sales and customer demand. 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. These benefits were partially offset by the impacts from our growth initiatives in developing offerings.


CPNG Operating, General and Administrative Expenses

Operating, general and administrative expenses include all our operating costs excluding cost of sales, as described above. More specifically, these expenses include costs incurred in operating and staffing our fulfillment centers (including costs attributed to receiving, inspecting, picking, packaging, and preparing customer orders), customer service-related costs, payment processing fees, costs related to the design, execution, and maintenance of our technology infrastructure and online offerings, advertising costs, general corporate function costs, and depreciation and amortization expense.


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. These expenses as a percentage of revenue were unchanged at 23.4% for 2022 and 2023 as continued operating efficiencies were offset by decreased revenues from the transition to the new FLC contracts beginning in the second quarter of 2023.


CPNG Interest Income

Interest income primarily consists of interest earned on our deposits held with financial institutions.


CPNG Interest Income

Interest income increased $125 million compared to the prior year. The increase in interest income was primarily due to higher interest rates in 2023 combined with our higher average cash and cash equivalent balances.


CPNG Income Taxes

We are subject to income taxes predominantly in Korea, as well as in the United States and other foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our Coupang, Inc.##2023 Form 10-K##48


CPNG Income Taxes

foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate is subject to significant variation and can vary based on the amount of pre-tax income or loss, the relative proportion of foreign to domestic income, use of tax credits and changes in the valuation of our deferred tax assets and liabilities. Beginning in 2022, the Tax Cuts and Jobs Act, as currently enacted, requires taxpayers to capitalize research and development expenses with amortization periods over five and fifteen years, which has and is expected to continue to increase the amount of our GILTI inclusion.


CPNG Income Taxes

Our effective income tax rate changed from an expense of 1.1% in 2022 to a benefit of (133.1)% in 2023 due to the release of the valuation allowance for our Korean deferred tax assets in 2023. Our effective tax rate differs from the federal statutory rate due to valuation allowances, net operating losses and tax credits used for the periods, partially offset by the mix of our income (loss) before income taxes generated across the various jurisdictions in which we operate, including the impact of international provisions of the Tax Cuts and Jobs Act and permanent differences from non-deductible expenses. We expect that our effective tax rate in future periods will continue to differ significantly from the applicable statutory rate.


CPNG Income Taxes

During 2023, we continued to see improved and sustained profitability, which presents objective positive evidence for the realizability of certain deferred tax assets. As such, based on the overall analysis of the positive and negative evidence in each tax jurisdiction, during 2023 we released the valuation allowance related to the Korea net operating loss deferred tax assets. The release of the valuation allowance in 2023 resulted in recognition of a portion of our net deferred tax assets and a benefit to our provision for income taxes of $905 million. We expect this change to result in a subsequently higher effective tax rate until the net operating losses are fully utilized, but we do not expect that it will materially impact our cash tax payments and related liabilities.


CPNG Income Taxes

In addition to U.S. tax law changes, our global operations make the tax rate sensitive to significant foreign tax law changes. A number of countries have begun to enact legislation to implement the OECD’s international tax framework, including Pillar Two global minimum tax regime. South Korea has enacted legislation to implement OECD framework including the Under-taxed Profit Rules (the “UTPR”) which may impose additional reporting and compliance obligations to our group effective from January 1, 2025. This minimum tax will be treated as a period cost in future years and did not impact operating results for 2023. We are continuing to monitor legislative developments and are in the process of evaluating the potential impact of Korean and other legislation on our results of future operations.


CPNG Segment Adjusted EBITDA

The operating performance measure of each segment is segment adjusted EBITDA. 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. (in millions)####2023####2022##% Change## Product Commerce##$##1,540##$##606##154##% Developing Offerings####(466)####(225)##107##% Consolidated adjusted EBITDA##$##1,074##$##381##182##%


CPNG Segment Adjusted EBITDA


CPNG Segment Adjusted EBITDA

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.


CPNG Segment Adjusted EBITDA

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.


CPNG Liquidity

Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations. Our primary sources of liquidity are cash on hand, supplemented through various debt financing arrangements and sales of our equity securities. 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. Additionally, we have $875 million available under the Revolving Credit Facility as amended in January 2024, as described below.


CPNG Liquidity

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. Coupang, Inc.##2023 Form 10-K##49


CPNG Liquidity

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. We expect that our investment into our growth strategy will continue to be significant, particularly with respect to our Developing Offerings segment, which will continue to focus on our newer offerings and entrance into new geographies, as well as overall expansion of our fulfillment, logistics, and technology capabilities. 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. We expect that our future expenditures for both infrastructure and workforce-related costs will exceed several billion dollars over the next several years.


CPNG Liquidity

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. The limited partnership is further obligated to fund Farfetch up to $200 million within twelve months of the acquisition date.


CPNG Liquidity

Changes 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)


CPNG 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


CPNG Operating Activities

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. Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities included changes in deferred income taxes of $843 million. Additionally, benefiting the improvement in cash used in operating activities were the changes in operating assets and liabilities, including a decrease in inventories of $323 million primarily from the implementation of the new FLC program combined with improved inventory management, and an increase in accounts payable of $1.1 billion primarily as a result of increased volume of purchases as well as improved payment terms, primarily with certain large, multi-national suppliers, partially offset by a reduction in payables from the FLC changes.


CPNG 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.


CPNG 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.


CPNG Financing Activities

We believe that our sources of liquidity will be sufficient to meet our anticipated cash requirements for at least the next 12 months. 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. If we determine that our cash requirements exceed our amounts of cash on hand or if we decide to further optimize our capital structure, we may seek to issue additional debt or equity securities or obtain credit facilities or other sources of financing. This financing may not be available on favorable terms, or at all.


CPNG Capital Resources

We have entered into material unconditional purchase obligations. These contractual commitments primarily relate to technology related service contracts, fulfillment center construction contracts, and software licenses. We generally enter into term loan facility agreements to finance the construction of our fulfillment centers. These agreements may require that we provide for collateral equal to or greater than the amount borrowed under the arrangement. As we continue to build or purchase additional fulfillment centers, we expect our borrowings under debt financing arrangements to continue to increase. We also have material operating Coupang, Inc.##2023 Form 10-K##50


CPNG Capital Resources

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. 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.


CPNG Capital Resources

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.


CPNG Capital Resources

Our short-term and long-term borrowings generally include lines of credit with financial institutions available to be drawn upon for general operating purposes.


CPNG 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%.


CPNG 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.


CPNG Revolving Credit Facility

In January 2024, our senior unsecured credit facility (“the Revolving Credit Facility”) was amended to extend the maturity date to February 2026 and to bring the aggregate principal amount to $875 million. The Revolving Credit Facility continues to provide us the right to request incremental commitments up to $1.25 billion, subject to customary conditions.


CPNG Revolving Credit Facility

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%. We are also required to pay other customary fees for a credit facility of this size and type, including letter of credit fees, an upfront fee, and an unused commitment fee. 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).


CPNG Revolving Credit Facility

Each of these restrictions is subject to various exceptions.


CPNG Revolving Credit Facility

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.


CPNG Revolving Credit Facility

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).


CPNG Revolving Credit Facility

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. Coupang, Inc.##2023 Form 10-K##51


CPNG Farfetch Acquisition

In December 2023, we announced the pending acquisition of the business and assets of Farfetch, a leading global marketplace for the luxury fashion industry, which included a $500 million bridge loan to Farfetch and certain of its direct or indirect subsidiaries.


CPNG Farfetch Acquisition

We established a limited partnership for the purposes of providing the bridge loan and acquiring all of the business and assets of Farfetch, owned 80.1% by Coupang, Inc and 19.9% by certain funds advised or managed by Greenoaks Capital Partners, LLC (“Greenoaks”). The limited partnership is included in the Company’s consolidated operating results as of December 31, 2023.


CPNG Farfetch Acquisition

As of December 31, 2023, the limited partnership provided $75 million of financing under the bridge loan, and in January 2024, an additional $75 million was provided. Financings under the bridge loan, as well as capital contributions, are provided by the partners in accordance with their ownership percentages.


CPNG Farfetch Acquisition

As announced on January 31, 2024, the acquisition was completed. At closing, the limited partnership provided additional cash funding to Farfetch of $150 million. Additionally, $150 million previously provided under the bridge loan was contributed towards the Farfetch Acquisition. The limited partnership is further obligated to fund Farfetch up to $200 million within twelve months of the acquisition date.


CPNG Farfetch Acquisition

As part of the Farfetch Acquisition, a subsidiary of the limited partnership assumed the then outstanding syndicated Term Loans of $633 million, inclusive of fees incurred, under Farfetch’s existing Credit Agreement with certain banks and financial institutions. The Term Loans are payable on October 20, 2027, early repayment permitted. Repayment of the Term Loans is due in quarterly installments, of 0.25%, payable on the last business day of each fiscal quarter. The Term Loans bear interest at a rate equal to SOFR plus 6.25% per annum. Immediately following the acquisition, Farfetch repurchased $60 million of the outstanding Term Loan.


CPNG Farfetch Acquisition

The Term Loans contain customary affirmative covenants as well as customary negative covenants, including, but not limited to, restrictions on certain entities within Farfetch’s ability to incur additional debt, make investments, make distributions, dispose of assets, or enter into certain types of related party transactions. The loans are secured against specified assets of the Farfetch group and guaranteed by certain subsidiaries of Farfetch.


CPNG Farfetch Acquisition

Refer to Note 15 — " Subsequent Event - Farfetch" in Part II, Item 8 - “Financial Statements and Supplementary Data” for further discussion.


CPNG Critical Accounting Estimates

Our consolidated financial statements are prepared in conformity with U.S. GAAP, which requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. These estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Although we believe that the estimates we use are reasonable, given the inherent uncertainty involved in making those estimates, and due to the unforeseen effects of the current global macroeconomic environment, those estimates required increased judgment, and actual results reported in future periods could differ materially from those estimates and assumptions. See Note 1 — "Description of Business and Summary of Significant Accounting Policies" to our consolidated financial statements appearing elsewhere in in Part II, Item 8 of this Form 10-K for a description of our significant accounting policies.


CPNG Critical Accounting Estimates

The following items require significant estimation or judgment: Revenue Recognition


CPNG Critical Accounting Estimates

The application of various accounting principles related to the measurement and recognition of revenue requires us to make judgments and estimates. Specifically, complex arrangements with non-standard terms and conditions may require relevant contract interpretation to determine the appropriate accounting treatment, including whether the promised goods and services specified in a multiple element arrangement should be treated as separate performance obligations. Other significant judgments include determining whether we are acting as the principal or the agent from an accounting perspective in a transaction.


CPNG Critical Accounting Estimates

For certain arrangements, we apply significant judgment in determining whether we are acting as the principal or agent in a transaction. We are acting as the principal if we obtain control over the goods and services before they are transferred to customers. Generally, when we are primarily obligated in a transaction and are subject to inventory risk or have latitude in establishing prices, or have several but not all of these indicators, we act as the principal and record revenue on a gross basis. We act as the agent and record the net amount as revenue earned if we do not obtain control over the goods and services before they are transferred to the customers.


CPNG 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. This valuation requires management judgments, based on currently available Coupang, Inc.##2023 Form 10-K##52


CPNG Inventories

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. 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.


CPNG 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. Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.


CPNG Income Taxes

Although we believe our assumptions, judgments, and estimates are reasonable, changes in tax laws or our interpretation of tax laws, the resolution of any tax audits, and actual and expected future income could significantly impact the amounts provided for income taxes in our consolidated financial statements.


CPNG 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. 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. As of December 31, 2023, after considering these factors, we determined that the positive evidence overcame any negative evidence, and concluded that it was more likely than not that the Korean deferred tax assets were realizable. As a result, we released the entire valuation allowance of $905 million related to the Korean net deferred tax assets as of December 31, 2023.


CPNG Income Taxes

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. 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. 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. See Part II, Item 8 “Financial Statements and Supplementary Data” — Note 6 — "Income Taxes" to the consolidated financial statements.


CPNG 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.


CPNG Defined Severance Benefits

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


CPNG Defined Severance Benefits

Management believes that these assumptions are critical accounting estimates because significant changes in these assumptions could impact our results of operations and financial position. Management believes that the assumptions utilized to record its obligations under its plans are reasonable based on the plans’ experience and advice received from its outside actuaries. We review the severance benefit plan assumptions annually and modify the assumptions based on current rates and trends as appropriate. The effects of such changes in assumptions are amortized as part of plan income or expense in future periods.


CPNG Defined Severance Benefits

At the end of each fiscal year, we determine the weighted-average discount rates and salary growth rates used to calculate the projected defined severance benefits obligation. The discount rates are an estimate of the current interest rate at which the benefit plan liabilities could be effectively settled at the end of the year. 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. 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. 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. Coupang, Inc.##2023 Form 10-K##53


CPNG Defined Severance Benefits

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.


CPNG Business Combinations

In January 2024, the Farfetch Acquisition was completed. Due to the timing of the acquisition, the initial accounting for the business combination is incomplete. As such, we are not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed. We expect to complete the initial accounting for the acquisition during the first quarter of 2024.


CPNG Business Combinations

Under the acquisition method of accounting, we generally recognize the identifiable assets acquired and the liabilities assumed in an acquiree at their estimated fair values as of the date of acquisition. We measure goodwill as the excess of the fair value of consideration transferred over the net of the estimated fair values of the identifiable assets acquired and liabilities assumed.


CPNG Business Combinations

The acquisition method of accounting requires us to exercise judgment and make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the estimated fair values of identifiable tangible and intangible assets, liabilities assumed, non-controlling interests, deferred tax asset valuation allowances, liabilities related to uncertain tax positions, and contingencies. This method also allows us to refine these estimates over a one-year measurement period to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could materially decrease net income and result in lower asset values on our consolidated balance sheet.


CPNG Business Combinations

These significant estimates are inherently uncertain as they relate to future economic conditions, future cash flows that we expect to generate from the acquired assets and customer behavior. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.


CPNG 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


CPNG Quantitative and Qualitative Disclosures about Market Risk

In addition to the risks inherent in our operations, we are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates, foreign currency, and credit.


CPNG 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. We 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. Our policy, in the management of interest rate risk, is to structure a reasonable balance between fixed and floating rate financial instruments as well as our cash and cash equivalents and any short-term investments we may hold. The balance struck by our management is dependent on prevailing interest rate markets at any point in time.


CPNG Interest Rate Risk

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 Revolving Credit Facility and Revolving Credit Agreement would accrue interest at rates subject to current market conditions.


CPNG 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. As a result, we are exposed to fluctuations in the exchange rates of various currencies against the USD and other currencies, predominantly the KRW.


CPNG Transactional

We generate the majority of our revenue from customers within Korea. Typically, we aim to align costs with revenue denominated in the same currency, but we are not always able to do so. As a result of the geographic spread of our operations and due to our reliance on certain products and services priced in currencies other than KRW, our business, results of operations, and financial condition have been and will continue to be impacted by the volatility of the KRW against foreign currencies.


CPNG Translational

Coupang, Inc.’s functional currency and reporting currency is the USD. The local and functional currency for our Korean subsidiary, Coupang Corp., which is our primary operating subsidiary, is the KRW. The other subsidiaries predominantly utilize their local currencies as their functional currencies. 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. For example, a stronger USD will reduce the reported results of operations of non-USD-denominated businesses and conversely a weaker USD will increase the reported results of operations of non-USD-denominated businesses. 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.


CPNG Translational

At this time, we do not, but we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency risk. It is difficult to predict the impact hedging activities would have on our results of operations.


CPNG Credit Risk

Our cash and cash equivalents, deposits, and loans with banks and financial institutions are potentially subject to concentration of credit risk. We place cash and cash equivalents with financial institutions that management believes are of high credit quality. 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


CPNG INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

######Page ##Report of Independent Registered Public Accounting Firm####57 ##Consolidated Statements of Operations####59 ##Consolidated Statements of Comprehensive Income (Loss)####60 ##Consolidated Balance Sheets####61 ##Consolidated Statements of Redeemable Convertible Preferred Units and Stockholders'/Members’ Equity (Deficit)####62 ##Consolidated Statements of Cash Flows####64 ##Notes to Consolidated Financial Statements####65


CPNG Note 15####Subsequent Event - Farfetch Acquisition##81

Coupang, Inc.##2023 Form 10-K##56


CPNG Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Coupang, Inc.


Opinions on the Financial Statements and Internal Control over Financial Reporting


We have audited the accompanying consolidated balance sheets of Coupang, Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of redeemable convertible preferred units and stockholders’/members’ equity (deficit), and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and schedule of condensed financial information of parent (Coupang Inc.) as of December 2023 and 2022 and for each of the three years in the period ended December 31, 2023 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.


CPNG Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


CPNG Basis for Opinions

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.


CPNG Basis for Opinions

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


CPNG Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Coupang, Inc.##2023 Form 10-K##57


CPNG Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


CPNG Valuation of Defined Severance Benefits Obligation

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s defined severance benefits obligation was $396 million as of December 31, 2023. Management measures the defined severance benefits obligation annually, or more frequently if there is a remeasurement event, based on the measurement date utilizing certain assumptions including discount rates, salary growth rates, and certain employee-related factors, such as turnover, retirement age and mortality. Management reviews its actuarial assumptions and makes modifications to the assumptions based on current rates and trends when appropriate.


The principal considerations for our determination that performing procedures relating to the valuation of defined severance benefits obligation is a critical audit matter are (i) the significant judgment by management when estimating the defined severance benefits obligation; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to discount rates and salary growth rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.


Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate of the defined severance benefits obligation. These procedures also included, among others, testing management’s process for estimating the defined severance benefits obligation; evaluating the appropriateness of the actuarial model; testing the completeness and accuracy of the underlying data used in the model; and evaluating the reasonableness of management’s assumptions related to discount rates and salary growth rates. Evaluating management’s assumptions related to salary growth rates involved evaluating whether the assumptions used were reasonable considering the Company’s historical experience and expectation of future experience. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the actuarial model and the reasonableness of the assumptions relating to discount rates.


CPNG February 28, 2024

We have served as the Company's auditor since 2014. Coupang, Inc.##2023 Form 10-K##58


CPNG February 28, 2024

COUPANG, INC.


CPNG CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)####2023####2022####2021 Net retail sales##$##21,223##$##18,338##$##16,488 Net other revenue####3,160####2,245####1,918 Total net revenues####24,383####20,583####18,406 Cost of sales####18,193####15,873####15,455 Operating, general and administrative####5,717####4,822####4,445 Total operating cost and expenses####23,910####20,695####19,900 Operating income (loss)####473####(112)####(1,494) Interest income####178####53####9 Interest expense####(48)####(27)####(45) Other expense, net####(19)####(7)####(12) Income (loss) before income taxes####584####(93)####(1,542) Income tax (benefit) expense####(776)####(1)##$##1 Net income (loss)##$##1,360##$##(92)##$##(1,543) Earnings per share############ Basic##$##0.76##$##(0.05)##$##(1.08) Diluted##$##0.75##$##(0.05)##$##(1.08) Weighted average shares outstanding############ Basic####1,782####1,765####1,424 Diluted####1,803####1,765####1,424


The accompanying notes are an integral part of these consolidated financial statements. Coupang, Inc.##2023 Form 10-K##59


COUPANG, INC.


CPNG CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)####2023####2022####2021 Net income (loss)##$##1,360##$##(92)##$##(1,543) Other comprehensive (loss) income:############ Foreign currency translation adjustments, net of tax####(2)####9####41 Actuarial (loss) gain on defined severance benefits, net of tax####(18)####41####(57) Total other comprehensive (loss) income####(20)####50####(16) Comprehensive income (loss)##$##1,340##$##(42)##$##(1,559)


The accompanying notes are an integral part of these consolidated financial statements. Coupang, Inc.##2023 Form 10-K##60


CPNG CONSOLIDATED BALANCE SHEETS

(in millions)####December 31, 2023####December 31, 2022 Assets######## Cash and cash equivalents##$##5,243##$##3,509 Restricted cash####353####176 Accounts receivable, net####314####184 Inventories####1,666####1,657 Prepaids and other current assets####316####304 Total current assets####7,892####5,830 Property and equipment, net####2,465####1,820 Operating lease right-of-use assets####1,601####1,405 Deferred tax assets####925####40 Long-term lease deposits and other####463####418 Total assets##$##13,346##$##9,513 Liabilities and stockholders' equity######## Accounts payable##$##5,099##$##3,622 Accrued expenses####352####299 Deferred revenue####97####92 Short-term borrowings####282####175 Current portion of long-term debt####203####129 Current portion of long-term operating lease obligations####386####326 Other current liabilities####526####420 Total current liabilities####6,945####5,063 Long-term debt####529####538 Long-term operating lease obligations####1,387####1,234 Defined severance benefits and other####381####264 Total liabilities####9,242####7,099 Commitments and contingencies (Note 13)######## Redeemable noncontrolling interest####15####— Stockholders' equity######## Common Stock####—####— Class A — shares authorized 10,000, outstanding 1,616 and 1,598 Class B — shares authorized 250, outstanding 175 and 175######## Additional paid-in capital####8,489####8,154 Accumulated other comprehensive (loss) income####(17)####3 Accumulated deficit####(4,383)####(5,743) Total stockholders' equity####4,089##$##2,414 Total liabilities and stockholders' equity##$##13,346##$##9,513


CPNG CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these consolidated financial statements. Coupang, Inc.##2023 Form 10-K##61


CPNG CONSOLIDATED BALANCE SHEETS

COUPANG, INC.


CPNG CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED UNITS AND STOCKHOLDERS’/MEMBERS’ EQUITY (DEFICIT) ####Redeemable Convertible Preferred Units########Common Units########Class A and Class B Common Stock########Additional Paid-in Capital####Accumulated Other Comprehensive Income (Loss)####Accumulated Deficit (in millions)##Units######Amount##Units######Amount##Shares######Amount############ Balance as of December 31, 2020##1,329####$##3,466##106####$##45##—####$##—##$##25##$##(31)##$##(4,108) Net loss##—######—##—######—##—######—####—####—####(1,543) Foreign currency translation adjustments, net of tax##—######—##—######—##—######—####—####41####— Actuarial loss on defined severance benefits, net of tax##—######—##—######—##—######—####—####(57)####— Issuance of common units, equity-based compensation plans##—######—##23######39##—######—####—####—####— Equity-based compensation##—######—##—######3##—######—####—####—####— Impact of Corporate Conversion and IPO#################################### Conversion of common units into Class A and Class B common stock##—######—##(129)######(87)##129######—####87####—####— Conversion of redeemable convertible preferred units into Class A and Class B common stock##(1,329)######(3,466)##—######—##1,329######—####3,466####—####— Issuance of Class A common stock, net of underwriting discounts and offering costs##—######—##—######—##100######—####3,417####—####— Conversion of convertible notes into Class A common stock##—######—##—######—##172######—####610####—####— Net issuance of common stock upon exercise of stock options subsequent to Corporate Conversion and IPO##—######—##—######—##12######—####23####—####— Net issuance of common stock upon settlement of RSUs subsequent to Corporate Conversion and IPO##—######—##—######—##12######—####—####—####— Equity-based compensation subsequent to Corporate Conversion and IPO##—######—##—######—##—######—####246####—####— Balance as of December 31, 2021##—####$##—##—####$##—##1,754####$##—##$##7,874##$##(47)##$##(5,651) Coupang, Inc.##2023 Form 10-K##62 ####Redeemable Convertible Preferred Units########Common Units########Class A and Class B Common Stock########Additional Paid-in Capital####Accumulated Other Comprehensive Income (Loss)####Accumulated Deficit (in millions)##Units######Amount##Units######Amount##Shares######Amount############ Balance as of December 31, 2021##—####$##—##—####$##—##1,754####$##—##$##7,874##$##(47)##$##(5,651) Net loss##—######—##—######—##—######—####—####—####(92) Foreign currency translation adjustments, net of tax##—######—##—######—##—######—####—####9####— Actuarial gain on defined severance benefits, net of tax##—######—##—######—##—######—####—####41####— Net issuance of common stock upon exercise of stock options##—######—##—######—##9######—####18####—####— Issuance of common stock upon settlement of restricted stock units##—######—##—######—##10######—####—####—####— Equity-based compensation##—######—##—######—##—######—####262####—####— Balance as of December 31, 2022##—####$##—##—####$##—##1,773####$##—##$##8,154##$##3##$##(5,743) Net income##—######—##—######—##—######—####—####—####1,360 Foreign currency translation adjustments, net of tax##—######—##—######—##—######—####—####(2)####— Actuarial loss on defined severance benefits, net of tax##—######—##—######—##—######—####—####(18)####— Net issuance of common stock upon exercise of stock options##—######—##—######—##4######—####9####—####— Issuance of common stock upon settlement of restricted stock units##—######—##—######—##14######—####—####—####— Equity-based compensation##—######—##—######—##—######—####326####—####— Balance as of December 31, 2023##—####$##—##—####$##—##1,791####$##—##$##8,489##$##(17)##$##(4,383)


CPNG CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these consolidated financial statements. Coupang, Inc.##2023 Form 10-K##63


CPNG CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)####2023####2022####2021 Operating activities############ Net income (loss)##$##1,360##$##(92)##$##(1,543) Adjustments to reconcile net loss to net cash provided by (used in) operating activities:############ Depreciation and amortization####275####231####201 Provision for severance benefits####159####161####128 Equity-based compensation####326####262####249 Inventory and fixed asset losses due to fulfillment center fire####—####—####285 Non-cash operating lease expense####338####310####259 Deferred income taxes####(884)####(41)####— Non-cash others####140####112####78 Change in operating assets and liabilities:############ Accounts receivable, net####(133)####(34)####(120) Inventories####(44)####(367)####(528) Other assets####(153)####(249)####(178) Accounts payable####1,514####444####728 Accrued expenses####43####7####207 Other liabilities####(289)####(179)####(177) Net cash provided by (used in) operating activities####2,652####565####(411) Investing activities############ Purchases of property and equipment####(896)####(824)####(674) Proceeds from sale of property and equipment####19####13####2 Other investing activities####(50)####(37)####(4) Net cash used in investing activities####(927)####(848)####(676) Financing activities############ Proceeds from issuance of Class A common stock upon initial public offering, net of underwriting discounts####—####—####3,431 Deferred offering costs paid####—####—####(12) Proceeds from issuance of common stock/units, equity-based compensation plan####9####18####62 Proceeds from short-term borrowings and long-term debt####572####701####434 Repayment of short-term borrowings and long-term debt####(392)####(467)####(336) Net short-term borrowings and other financing activities####10####(5)####(2) Net cash provided by financing activities####199####247####3,577 Effect of exchange rate changes on cash and cash equivalents, and restricted cash####(14)####(87)####(81) Net increase (decrease) in cash and cash equivalents, and restricted cash####1,910####(123)####2,409 Cash and cash equivalents, and restricted cash, as of beginning of period####3,687####3,810####1,401 Cash and cash equivalents, and restricted cash, as of end of period##$##5,597##$##3,687##$##3,810


The accompanying notes are an integral part of these consolidated financial statements. Coupang, Inc.##2023 Form 10-K##64


CPNG Description of Business

Coupang, Inc. (“Coupang” or the “Parent”), together with its wholly-owned subsidiaries (collectively, “we,” “us,” or “our”), is a Delaware corporation, which owns and operates a retail business that primarily serves the Korean retail market. Through our mobile applications and Internet websites, we offer 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, everyday consumables, travel, restaurant order and delivery, content streaming, and advertising, which are offered through a fully integrated technology, fulfillment and logistics infrastructure. We are headquartered in the United States, with operations and support services performed in geographies including South Korea, Taiwan, Singapore, China, and India.


CPNG Description of Business

We completed our initial public offering (“IPO”) on March 15, 2021, in which we issued and sold 100 million shares of our Class A common stock at a price of $35.00 per share and received net proceeds of $3.4 billion. In connection with our IPO, 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”).


CPNG Farfetch Acquisition

In January 2024 we acquired the business and assets of Farfetch Holdings plc (“Farfetch”), a leading global marketplace for the luxury fashion industry (the “Farfetch Acquisition”). Refer to Note 15 — " Subsequent Event - Farfetch" for additional information.


CPNG Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Certain prior period amounts have been reclassified or combined to conform to current year presentation. Our fiscal year is consistent with the calendar year and ends on December 31. References to years relate to the fiscal year ended December 31.


CPNG Use of Estimates

The preparation of 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 liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates.


CPNG Segment Information

We have two reportable segments: Product Commerce and Developing Offerings. Refer to Note 3 — "Segment Reporting" for additional information.


CPNG Foreign Currency

Our functional currency, including that of the Parent, is the United States dollar (“U.S. dollar”). The Korean Won is the local and functional currency for our Korean subsidiary, Coupang Corp., which is our primary operating subsidiary. The other subsidiaries predominantly utilize their local currencies as their functional currencies. Assets and liabilities of each subsidiary are translated into U.S. dollars at the exchange rate in effect at the end of each period. Revenue and expenses for these subsidiaries are translated into U.S. dollars using average rates that approximate those in effect during the period. Translation adjustments are included in “Accumulated other comprehensive (loss) income,” a separate component of stockholders’ equity and in the “Effect of exchange rate changes on cash and cash equivalents, and restricted cash” in the consolidated statements of cash flows. Transaction gains and losses are included in “Other expense, net” in the consolidated statements of operations. Coupang, Inc.##2023 Form 10-K##65


CPNG Revenue Recognition

We recognize revenues on the amount of expected consideration it will receive, which incorporates reductions for estimated returns, promotional discounts, and earned loyalty rewards. Revenue excludes amounts collected on behalf of third parties, such as value added taxes. Historical experience is used to estimate returns at the time of sale at a portfolio level using the expected value method. We include these amounts in the transaction price to the extent it is probable that a significant reversal of revenue will not occur and updates as additional information becomes available. For revenue contracts with multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. We primarily determine stand-alone selling prices based on the prices charged to customers.


CPNG Net Retail Sales

Retail sales are earned from our online product sales to consumers. Retail revenue is recognized when control of the goods is transferred to the customer, which occurs upon delivery to the customer.


CPNG Net Other Revenue

Net other revenue includes commissions and logistics and fulfillment fees earned from merchants that sell their products through our online business. We are not the seller of record in these transactions, nor do we take control of the related inventory. Although we process and collect the entire amount of these transactions, we record revenue on the net commission because we are acting as an agent. Commission revenue is recognized when the order is completed and transmitted to the third-party merchant. Logistics and fulfillment fees are recognized as the services are rendered.


CPNG Net Other Revenue

Net other revenue also includes consideration from our online restaurant ordering and delivery services, performed by us, as well as advertising services provided on our website and mobile applications. Revenues from online restaurant ordering and delivery are recognized when we deliver the order. Advertising revenue is recognized as ads are delivered over a period of time or based on number of clicks and impressions.


CPNG Net Other Revenue

We offer a subscription service to our Rocket WOW membership program, which provides customers with access to benefits such as access to Rocket Fresh, no minimum spend for Rocket Delivery, Dawn Delivery, product discounts, free shipping on returns, discounts on restaurant orders via Coupang Eats, and access to content streaming. Subscription benefits represent a single, stand-ready obligation and revenue from subscription fees are recognized over the subscription period.


CPNG Deferred Revenue

Deferred revenue primarily relates to retail sales and is recorded when payments are received in advance of delivery to customers. Deferred revenue is generally recognized as revenue in the following month when delivery is made to customers.


CPNG Discount Coupons and Loyalty Rewards

For discount coupons or loyalty rewards offered as part of revenue transactions, we defer a portion of the revenue based on the estimated standalone selling price of the discount coupons or loyalty rewards earned and recognize the revenue as they are redeemed in future transactions or when they expire. Discount coupons and loyalty rewards expire after six months and are generally redeemed within six months from issuance and therefore, breakage is not significant. We also issue discount coupons or loyalty rewards that are not earned in conjunction with the purchase of a product as part of our marketing activities. This is not a performance obligation and is recognized as a reduction of the transaction price when rendered by the customer.


CPNG Cost of Sales

Cost of sales are primarily comprised of the purchase price of products sold to customers where we record revenue gross, and includes logistics center 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. Additionally, cost of sales includes outbound shipping and logistics related expenses, and delivery service costs from our restaurant delivery business, primarily where we are the delivery service provider, as well as depreciation and amortization.


CPNG Payments from Suppliers

We receive consideration from suppliers for various programs, including rebates, incentives, and discounts, as well as advertising services provided on our website and mobile applications. We generally record these amounts received from suppliers to be a reduction of the prices we pay for their goods, and a subsequent reduction in cost of sales as the inventory is sold.


Operating, general and administrative expenses include all our operating costs, excluding cost of sales, as described above. More specifically, these expenses include costs incurred in operating and staffing our fulfillment centers (including costs attributable to Coupang, Inc.##2023 Form 10-K##66


receiving, inspecting, picking, packaging, and preparing customer orders), customer service related costs, payment processing fees, costs related to the design, execution and maintenance of our technology infrastructure and online offerings, advertising costs, general corporate function costs, and depreciation and amortization. Advertising expenses, which are expensed as incurred, were $711 million, $605 million, and $433 million for 2023, 2022 and 2021, respectively.


CPNG Equity-Based Compensation

We account for equity-based employee compensation arrangements in accordance with U.S. GAAP, which requires compensation expense for the grant-date fair value of equity-based awards to be recognized over the requisite service period. We determine the fair value of equity-based awards granted or modified on the grant date or modification date using appropriate valuation techniques. Forfeitures are estimated using historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates.


CPNG Restricted Stock Units

We previously granted restricted equity units (“REUs”) under our 2011 Equity Incentive Plan (“2011 Plan”), which vest upon the satisfaction of both a service-based condition and a performance-based condition. The performance condition was satisfied at the time of the IPO, and we recorded cumulative equity-based compensation expense for the awards based on the service-based conditions. The fair value of the REUs were estimated based on the fair market value of our common units on the date of grant. In connection with our Corporate Conversion, the outstanding awards were converted into restricted stock units (“RSUs”). We have subsequently granted RSUs that generally vest upon the satisfaction of a service-based condition as defined in our 2021 Equity Incentive Plan (“2021 Plan”). The grant-date fair value of each RSU, net of estimated forfeitures, is recognized as expense over the requisite service period on a straight-line basis for RSUs with service only vesting conditions.


CPNG Stock Options

We previously granted unit options under the 2011 Plan, which vest over a service period of generally four years. In connection with our Corporate Conversion, the outstanding awards were converted into stock options. The grant-date fair value of each stock option award, net of estimated forfeitures, is recognized as expense over the requisite service period on a straight-line basis. We estimate the fair value of stock options granted using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the expected stock price volatility over the expected term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate for the expected term of the award, and expected dividends. Expected volatility is based on historical volatility of the stock of industry peers. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.


CPNG Defined Severance Benefits

We accrue severance benefits for employees of our Korean subsidiaries. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees with one or more years of service are entitled to severance payments upon the termination of their employment based on their length of service and pay rate.


CPNG Defined Severance Benefits

We recognize the defined severance benefits obligation in the consolidated balance sheets with a corresponding adjustment to operating expenses and “Accumulated other comprehensive (loss) income”. The obligations are measured annually, or more frequently if there is a remeasurement event, based on our measurement date utilizing various actuarial assumptions and methodologies. We use certain assumptions including, but not limited to, the selection of the: (i) discount rates; (ii) salary growth rates; and (iii) certain employee-related factors, such as turnover, retirement age and mortality. We review our actuarial assumptions and make modifications to the assumptions based on current rates and trends when appropriate.


CPNG Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based upon the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.


CPNG Income Taxes

Our deferred tax assets are recorded 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 our deferred tax assets is dependent on the generation of future taxable income. In considering the need for a valuation allowance, we consider our historical, as well as future projected taxable income, along with other positive and negative evidence in assessing the realizability of our deferred tax assets. Decreases to valuation allowances are recorded as reductions to our income tax expense and increases to valuation allowances result in additional expense for income taxes. Global Intangible Low-taxed Income (“GILTI”) Coupang, Inc.##2023 Form 10-K##67


CPNG Income Taxes

provisions are applied, providing for incremental tax on foreign income. We have made the policy election to record any liability associated with GILTI in the period in which it is incurred.


CPNG Income Taxes

We 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. 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.


CPNG Earnings per Share

Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock and potentially dilutive common stock outstanding during the period.


CPNG Earnings per Share

We have two classes of common stock outstanding, Class A common stock and Class B common stock (collectively “common stock”), with equal rights to dividends and income. Earnings per share are therefore the same for Class A and Class B common stock, both on an individual and combined basis.


CPNG Cash and Cash Equivalents

Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less from the date of purchase, or deposit accounts that can be withdrawn at any time without significant penalty.


CPNG Restricted Cash

Restricted cash primarily consists of certain cash pledged as collateral for loan facility agreements, cash on deposit designated for interest and principal debt repayments, as well as cash on deposit pledged as collateral for potential refunds on transactions with customers or future payments to suppliers. Restricted cash with remaining restrictions of one year or less are classified as current on the consolidated balance sheets.


CPNG Accounts Receivable, Net

Accounts receivable, net are stated at their carrying value, net of allowance for credit losses based on lifetime expected losses. Accounts receivable balances are primarily trade receivables due from payment gateway providers, customers, suppliers and sellers, net of estimated allowances for credit losses. Amounts included in accounts receivable, or collected from payment gateway providers, to be remitted to merchants are included in accounts payable. Receivables from suppliers and sellers primarily relate to advertising activities. We estimate the allowance for credit losses based upon historical experience, the age and delinquency rates of receivables and credit quality, as well as economic and regulatory conditions combined with reasonable and supportable management forecasts of collectability and other economic factors over the lifetime of the receivables. We write off accounts against the allowance for credit losses when they are deemed to be uncollectible. As of December 31, 2023 and 2022, net receivables from customers and sellers were $71 million and $64 million, respectively. The allowance amounts were immaterial for all periods presented.


CPNG Inventories

Our inventories, which consist of products available for sale, are accounted for using the weighted average cost method, and are stated at the lower of cost or net realizable value. 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.


CPNG Property and Equipment, Net

Property and equipment, net are stated at historical cost, less accumulated depreciation and amortization. Property and equipment primarily includes buildings and structures, land, leasehold improvements, furniture, internal-use software, vehicles, information technology equipment, heavy equipment, and other fulfillment equipment. Depreciation and amortization is calculated on a straight-line basis over the estimated useful lives of the respective asset categories.


CPNG Property and Equipment, Net

Depreciation and amortization expense is classified within the corresponding operating expense categories on the consolidated statements of operations. Maintenance and repairs are charged to operating expenses as incurred. Coupang, Inc.##2023 Form 10-K##68


CPNG 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. 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.


CPNG Fulfillment Center Fire

While we are insured on property losses from the FC Fire, investigations surrounding the fire continue. In December 2022 and September 2023, we received refundable insurance cash advance payments of $79 million and $59 million, respectively, which are included within other current liabilities. We have not recognized any insurance benefit in our consolidated statements of operations to date. Whether and to what extent the advances will become non-refundable or additional proceeds will be received is currently unknown.


CPNG Leases

We determine if an arrangement is or contains a lease at contract inception. Leases are classified as either operating or finance.


CPNG Leases

Lease obligations and right-of-use (“ROU”) assets are recognized at the present value of the fixed lease payments. We only consider options to extend or terminate a lease if it is reasonably certain that we will exercise the option. We determine our discount rate at lease inception using our incremental borrowing rate. For operating leases, expense is recognized on a straight-line basis over the lease term.


CPNG Leases

Leases with an initial contractual term of twelve months or less are expensed on a straight-line basis over the lease term and we do not recognize lease liabilities and ROU assets.


CPNG Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that may necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Impairment losses are recorded if the asset’s carrying value is not recoverable through its undiscounted future cash flows. Impairment losses are measured based upon the difference between the carrying amount and estimated fair value of the related asset or asset group. No impairment losses were recorded for 2023, 2022, and 2021.


CPNG Fair Value of Financial Instruments

Our primary financial instruments include cash equivalents, restricted cash, accounts receivable, accounts payable, short-term borrowings, and long-term debt. The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, other assets, accounts payable, short-term borrowings, and accrued expenses approximate fair value due to their short maturities. Refer to Note 8 — "Fair Value Measurement" for further information.


CPNG Concentration of Credit Risk

Cash and cash equivalents, restricted cash and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents, and restricted cash are placed with several financial institutions and money market funds that management believes are of high credit quality, of which 47% and 70% were held at two and three financial institutions as of December 31, 2023 and 2022, respectively. Our gross accounts receivable includes amounts concentrated with three payment processing companies representing 51% and 41% of gross accounts receivable as of December 31, 2023 and 2022, respectively.


CPNG Recent Accounting Pronouncements Adopted

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, “Supplier Finance Programs (Subtopic 405-50) - Disclosure of Supplier Finance Program Obligations.” The standard requires entities that use supplier finance programs to make disclosures about the key terms of the program, the balance sheet presentation of the related amounts and disclose the amounts outstanding, including providing a rollforward of such amounts. The adoption of the ASU in the first quarter resulted in incremental disclosures in our consolidated financial statements, with the exception of the rollforward disclosure which will be effective prospectively for fiscal years beginning after December 15, 2023. Coupang, Inc.##2023 Form 10-K##69


CPNG Recent Accounting Pronouncements Yet To Be Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The standard requires additional disclosures about an entities segments, primarily about significant segment expenses that are reported to the Chief Operating Decision Maker. Early adoption is allowed under the standard. We are evaluating the effect of adopting the ASU on our disclosures, which is effective beginning with the fiscal year ended December 31, 2024, and interim reporting beginning with the period ended March 31, 2025.


In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” The standard requires disclosure of specific categories of an entities income tax expenses and income taxes paid among other disclosures. Early adoption is allowed under the standard. We are evaluating the effect of adopting the ASU on our disclosures, which is effective beginning with the fiscal year ended December 31, 2025.


CPNG 2. Net Revenues

Details of total net revenues were as follows: (in millions)####2023####2022####2021 Net retail sales##$##21,223##$##18,338##$##16,488 Third-party merchant services####2,576####1,870####1,695 Other revenue####584####375####223 Total net revenues##$##24,383##$##20,583##$##18,406


CPNG 2. Net Revenues

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 our online business. Other revenue includes revenue earned from our Rocket WOW membership program and various other offerings.


CPNG 2. Net Revenues

Contract liabilities consist of payments in advance of delivery and customer loyalty credits, which are included in deferred revenue on the consolidated balance sheets. We recognized revenue of $89 million, $86 million, and $60 million for 2023, 2022, and 2021 respectively, primarily related to payments in advance of delivery which were included in deferred revenue on the consolidated balance sheets as of the beginning of the respective years.


CPNG 3. Segment Reporting

We own and operate a retail business that primarily serves the Korean retail market. The Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. We have two operating and reportable segments: Product Commerce and Developing Offerings. These segments are based on how the CODM manages the business, allocates resources, makes operating decisions and evaluates operating performance.


CPNG 3. Segment Reporting

Product Commerce primarily includes our core Korean retail (owned inventory) and marketplace offerings (third-party merchants) and Rocket Fresh, our fresh grocery category offering, as well as advertising products associated with these offerings. Revenues from Product Commerce are derived primarily from online product sales of owned inventory to customers in Korea, commissions, and logistics and fulfillment fees earned from merchants that sell products through our mobile application and website, and from Rocket WOW membership.


CPNG 3. Segment Reporting

Developing Offerings primarily includes our 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. Revenues from Developing Offerings are primarily generated from online restaurant ordering and delivery services in Korea and retail operations in Taiwan.


CPNG 3. Segment Reporting

Our segment operating performance measure is segment adjusted EBITDA. Segment adjusted EBITDA is defined as income (loss) before income taxes for a period before depreciation and amortization, equity-based compensation expense, interest expense, interest income, and other income (expense), net. Segment adjusted EBITDA also excludes impairments and other items that we do not believe are reflective of our ongoing operations.


CPNG 3. Segment Reporting

We generally allocate operating expenses to the respective segments based on usage. The CODM does not evaluate segments using asset information and, accordingly, we do not report asset information by segment. Coupang, Inc.##2023 Form 10-K##70


CPNG 3. Segment Reporting

Results of operations for the reportable segments and reconciliation to loss before income taxes is as follows: (in millions)####2023####2022####2021 Net revenues############ Product Commerce##$##23,594##$##19,955##$##17,838 Developing Offerings####789####628####568 Total net revenues##$##24,383##$##20,583##$##18,406 Segment adjusted EBITDA############ Product Commerce##$##1,540##$##606##$##(361) Developing Offerings####(466)####(225)####(387) Total segment adjusted EBITDA##$##1,074##$##381##$##(748) Reconciling items:############ Depreciation and amortization####(275)####(231)####(201) Equity-based compensation####(326)####(262)####(249) Interest expense####(48)####(27)####(45) Interest income####178####53####9 Other expense, net####(19)####(7)####(12) Fulfillment center fire losses####—####—####(296) Income (loss) before income taxes##$##584##$##(93)##$##(1,542)


CPNG 4. Equity-based Compensation Plans

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. Prior to the IPO, awards were provided for under the 2011 Plan, and the vesting or exercise of those awards were issued and continue to be issued from the 2011 Plan. Upon formation of the 2021 Plan, no further awards are to be granted under the 2011 Plan, and any forfeitures of awards previously granted under the 2011 Plan will add to the amount available to grant under the 2021 Plan. The number of shares of our 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 our 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 our board of directors. Following the increase, the maximum number of shares of our common stock that may be issued under the Plans is 391,444,232 shares. As of December 31, 2023, we have 262,172,909 shares of common stock available for future grants to employees.


CPNG 4. Equity-based Compensation Plans

Shares subject to stock awards granted under the 2021 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the 2021 Plan. Additionally, shares become available for future grant under the 2021 Plan if they were issued under stock awards under the 2021 Plan and we repurchase them or they are forfeited.


CPNG RSUs

RSUs generally vest over 2 to 4 years from the vesting start date, subject to the recipient remaining an employee at each vesting date.


CPNG RSUs

For the RSUs with the performance condition satisfied upon the completion of our IPO, we recorded $41 million in equity-based compensation expense for 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 recognized over the remaining requisite service periods.


CPNG RSUs

As of December 31, 2023, we had $601 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 2.4 years, net of estimated forfeitures. Coupang, Inc.##2023 Form 10-K##71


CPNG RSUs

The table below summarizes our RSU activity: ####Outstanding RSUs#### (in millions, except unit price)##Number of RSUs######Weighted Average Grant-Date Fair Value December 31, 2022##35####$##19.29 Granted##30######16.31 Vested##(14)######19.63 Forfeited / cancelled##(5)######19.71 December 31, 2023##46####$##17.25


CPNG RSUs

The following information is provided for our RSUs: (in millions, except unit price)####2023####2022####2021 Weighted average grant-date fair value of RSUs granted##$##16.31##$##17.24##$##32.17 Fair value of RSUs at vesting##$##223##$##181##$##413


CPNG Stock Options

Our stock options are granted with exercise prices equal to the estimated fair value of the common shares at the date of grant. Stock options generally expire ten years from the grant date.


CPNG Stock Options

The total unrecognized compensation expense related to unvested stock options was $1 million, which will be recognized over the weighted-average remaining service period of approximately 0.8 years, net of estimated forfeitures.


CPNG Stock Options

The table below summarizes our stock option activity: ########Outstanding Options###### (in millions, except unit price)##Number of Options####Weighted Average Exercise Price####Weighted-Average Remaining Contractual Term (in years)####Aggregate Intrinsic Value December 31, 2022##22##$##6.50####5.90##$##192 Forfeited / cancelled##(1)##$##2.38######## Exercised##(4)##$##2.28######## Exercised Withheld##—##$##2.12######## December 31, 2023##17##$##7.60####4.90##$##152 Exercisable as of December 31, 2023##15##$##7.80####4.85##$##131 Expected to vest as of December 31, 2023##2##$##6.40####5.28##$##19


CPNG Stock Options

The fair value of stock options is estimated on the grant date with the following assumptions: ##2021 Weighted-average expected term (years)##4.27 Weighted-average expected volatility##70% Expected dividend yield##— Risk-free interest rate##0.62%


CPNG Stock Options

The following information is provided for our stock options: (in millions, except unit price)####2023####2022####2021 Weighted average grant-date fair value of stock options granted##$##—##$##—##$##16.46 Intrinsic fair value of stock options exercised##$##57##$##131##$##676 Coupang, Inc.##2023 Form 10-K##72


CPNG Equity-based Compensation Expense

The following table presents the effects of equity-based compensation in the consolidated statements of operations: (in millions)####2023####2022####2021 Cost of sales##$##14##$##16##$##11 Operating, general and administrative####312####246####238 Total##$##326##$##262##$##249


CPNG 5. Defined Severance Benefits

Changes in defined severance benefits obligation were as follows: (in millions)####2023####2022 Beginning balance, January 1##$##304##$##283 Current service cost####141####143 Interest cost####14####9 Actuarial losses (gains)####22####(32) Payments from plans####(84)####(81) Cumulative effects of foreign currency translation####(1)####(18) Ending balance, December 31##$##396##$##304 Current##$##82##$##78 Noncurrent##$##314##$##226


CPNG 5. Defined Severance Benefits

The accumulated benefit obligation for all defined severance benefits was $288 million and $225 million as of December 31, 2023 and 2022, respectively.


CPNG 5. Defined Severance Benefits

Net periodic cost consists of the following: (in millions)####2023####2022####2021 Current service costs##$##141##$##143##$##121 Interest cost####14####9####3 Amortization of:############ Prior service cost####3####3####— Net actuarial loss####1####6####4 Net periodic benefit cost##$##159##$##161##$##128


CPNG 5. Defined Severance Benefits

The principal actuarial assumptions used to determine defined severance benefits obligation were as follows: ####December 31, 2023######December 31, 2022## Discount rates##4.30%##–##4.80%##5.10%##–##5.30% Salary growth rates##5.00%##–##7.00%##5.00%##–##8.00%


CPNG 5. Defined Severance Benefits

The principal actuarial assumptions used to determine the net periodic cost were as follows: ######2023##########2022##########2021#### Discount rates##5.10##%##–##5.30##%##2.70##%##–##3.00##%##1.73##%##–##2.57##% Salary growth rates##5.00##%##–##8.00##%##5.00##%##–##5.24##%##1.48##%##–##5.00##%


CPNG 5. Defined Severance Benefits

The expected maturity analysis of undiscounted defined severance benefits as of December 31, 2023 was as follows: (in millions)####Less than 1 year####Between 1-2 years####Between 2-5 years####Over 5 years####Total Defined severance benefits##$##87##$##90##$##275##$##437##$##889


CPNG s

Coupang, Inc.##2023 Form 10-K##73


CPNG 6. Income Taxes

We are subject to income taxation through certain of our subsidiaries primarily in the United States, South Korea and other jurisdictions in Asia.


CPNG 6. Income Taxes

The components of income tax (benefit) expense were as follows: (in millions of US dollars)####2023####2022####2021 Current taxes############ United States##$##62##$##—##$##— Foreign####46####39####1 Current taxes####108####39####1 Deferred taxes############ United States####21####(40)####— Foreign####(905)####—####— Deferred taxes####(884)####(40)####— Income tax (benefit) expense##$##(776)##$##(1)##$##1


CPNG 6. Income Taxes

The components of income (loss) before income taxes are as follows: (in millions of US dollars)####2023####2022####2021 United States##$##(217)##$##(232)##$##(297) Foreign####801####139####(1,245) Income (loss) before income taxes##$##584##$##(93)##$##(1,542)


CPNG 6. Income Taxes

Differences between the provision at the federal statutory rate and the provision recorded at the consolidated level are as follows: (in millions of US dollars)####2023####2022####2021 Taxes computed at the federal statutory rate##$##122##$##(20)##$##(324) Differences resulting from:############ Statutory rate difference####28####51####(44) Change in valuation allowances####(1,031)####(144)####393 GILTI####91####93####— Stock compensation####44####37####(20) Tax credit####(47)####(35)####(5) Other nondeductible expense####17####15####— Other####—####2####1 Income tax (benefit) expense##$##(776)##$##(1)##$##1


CPNG 6. Income Taxes

Our resulting effective tax rate differs from the applicable statutory rate primarily due to changes in the valuation allowance against our deferred tax assets, impacts from GILTI, tax credits and equity-based compensation. Coupang, Inc.##2023 Form 10-K##74


CPNG 6. Income Taxes

The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities were as follows: (in millions of US dollars)####December 31, 2023####December 31, 2022 Deferred tax assets######## Provision and allowances##$##69##$##57 Depreciation####8####7 Accrued expenses####69####52 Amortization####21####32 Defined severance benefits####84####71 Lease liabilities####409####353 Net operating loss carryforwards####643####790 Tax credits####33####55 Other####49####28 Total deferred tax assets####1,385####1,445 Less: valuation allowances####(82)####(1,085) Total deferred tax assets net of valuation allowance##$##1,303##$##360 Deferred tax liabilities######## Lease asset####(371)####(317) Other####(7)####(3) Total deferred tax liabilities####(378)####(320) Net deferred tax assets##$##925##$##40