Q4 2024 Coupang Inc Earnings Call
Chrissa: Hello, everyone. My name is Chrissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coupon 2024 Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 5 on your telephone keypad. If you would like to withdraw your question, press star and the number 5 once again. Now I'd like to turn the call over to Mike Parker, Vice President of Investor Relations. You may begin your conference.
Speaker Change: I'm pleased to be joined on the call today by our founder and CEO, Bom Kim, and our CFO, Gaurav Anand.
Speaker Change: The following discussion, including responses to your questions, reflects management's views as of today's date only.
Speaker Change: We do not undertake any obligation to update or revise this information except as required by law. Certain statements made on today's call include forward-looking statements. Actual results may differ materially.
Speaker Change: Additional information about factors that could potentially impact our financial results is included in today's press release and in our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings.
Speaker Change: As we share our fourth quarter 2024 results on today's call, the comparisons we make to prior periods will be on a year-over-year basis, unless otherwise noted.
We may also present both GAAP and non-GAAP financial measures.
And now I'll turn the call over to Bom.
Bom Kim: Thanks everyone for joining us today. A few highlights to begin. Over the past 12 months we grew net revenues by nearly six billion dollars or 23% in constant currency excluding far-fetched.
Bom Kim: Gross profit grew an even stronger 29% excluding far fetch and the FC fire insurance gain We recorded in Q4 and we generated 1.4 billion dollars in adjusted EBITDA Expanding margins to four and a half percent while also delivering over a billion dollars in free cash flow
Bom Kim: As we close out 2024, I'd like to share how this year's achievements reflect the core principles that drive us.
At Coupon, everything begins and ends with the customer.
Bom Kim: This orientation is our most important advantage. We work backwards from a vision of a world where our customers have it all. The best experience at the lowest price.
Bom Kim: We believe it's only when we provide both in harmony that we deliver a true wow experience.
Bom Kim: our ability to break that traditional trade-off between experience and price relies on a relentless focus on innovation and operational excellence.
Bom Kim: And our mission to continue transforming customers lives through innovation and operational excellence was at work again this past year.
Bom Kim: We made significant changes to upgrade our fulfillment and logistics processes, which enabled us this quarter to increase by 45% the deliveries that were either same day or dawn. Shipments ordered by midnight and delivered just hours later by 7 a.m.
Bom Kim: We've also been able to extend the order cutoff for same-day delivery by two hours.
Bom Kim: We've expanded our next-day rocket delivery to now provide customers with next-day installation services on thousands of items.
from Large Appliances.
furniture, electronics.
Bom Kim: to even tires for automobiles. Now, a customer who realizes that she needs new tires on her car can purchase them online from home and have them delivered and installed the very next day.
Bom Kim: We've increased our fresh assortment by over 30% this quarter which now includes fresh flower delivery to customers across the market.
Bom Kim: 100% of our fresh selection comes with the promise of free same-day and dawn delivery, which ensures that their orders are delivered within hours.
Now a customer who forgets an important birthday.
Bom Kim: can order with a few clicks on his phone just before midnight and have fresh flowers, ice cream, and a cake waiting at the door for his significant other when they wake up the next morning.
Bom Kim: We're also working to bring dawn and fresh delivery to more remote areas in the market. This includes Jeju Island, where we recently announced that customers can now get free overnight rocket delivery by 7 a.m. for orders placed as late as midnight.
Bom Kim: Our culture of relentless innovation fuels not only growth, but also continuous improvements in our processes and margins.
Bom Kim: We have always believed that customer experience and operational excellence can advance hand-in-hand.
Better processes lead to better outcomes for customers.
Bom Kim: By innovating tirelessly on behalf of customers, we're simultaneously driving down costs and raising the bar on service quality.
Bom Kim: In the process of upgrading our fulfillment logistics network this year, we were able to eliminate waste in our processes and improve line haul costs by 16%.
Bom Kim: A key driver of our efficiency improvements is robotics and automation.
Bom Kim: We've made significant investments to streamline operations, nearly doubling the portion of our fulfillment and logistics infrastructure that is highly automated in the past year alone.
Bom Kim: This helps make jobs easier for our workforce while also increasing productivity.
Bom Kim: Just as our past innovations have unlocked new levels of performance, the next wave, from robotics in our network to AI and the trillions of predictions we make daily, promises to drive even higher levels of growth and margin expansion in the quarters and years to come.
Bom Kim: Another pillar of our strategy has been our long view and willingness to make bold decisions and disciplined investments.
Bom Kim: We spent years building an end-to-end integrated technology and logistics infrastructure that allows us to deliver customer experience that we believe to be unmatched in global commerce today. That investment, though capital-intensive, has put us at the frontier of innovation and drives our engine of compounding growth and expanding margins.
Bom Kim: We're still in the early innings of that growth and margin expansion.
Bom Kim: Importantly, our growth story extends far beyond Korea. We believe the playbook we pioneered in Korea can be applied in other markets with equal success.
Bom Kim: Our first international market, Taiwan, is a great example. We launched our full-stack e-commerce service, Rocket Delivery, in Taiwan in late 2022, and the customer response has been impressive.
Bom Kim: We closed out 2024 with significant momentum, with net revenues in the fourth quarter growing 23% quarter over quarter, operating at substantial scale.
Bom Kim: and the vast majority of that growth was organic, a testament to the differentiated customer experience that we're building.
Bom Kim: We're also delighted to share that we recently launched our WOW membership program in the market. We have an exciting journey ahead in Taiwan, and 2025 is off to a strong start.
Forfetch is another compelling story to highlight.
Bom Kim: When we acquired Farfetch at the beginning of 2024, it was losing hundreds of millions of dollars annually and facing declining growth metrics.
Bom Kim: Yet within this challenge, we saw a rare opportunity. Farfetch was a sector leader with roughly $4 billion in annual transaction volume and a global brand in luxury fashion.
Bom Kim: In the year since the acquisition, our team applied the same relentless, disciplined execution that defines Coupang's operations. We made tough decisions with the aim of simplifying operations and refocusing the teams on the only two things that truly matter, customer experience and operational excellence.
The results speak volumes.
Bom Kim: Farfetch's losses have shrunk dramatically to a break-even run rate today and this significant turnaround was achieved with minimal loss of scale.
Bom Kim: Farfetch continues to attract 49 million monthly visitors in over 190 countries around the world.
Bom Kim: While we're proud of what the Farfetch team has accomplished so far, we're even more excited about the potential for the team to build on this promising foundation to deliver innovations that will transform the customer experience in global luxury commerce.
Bom Kim: Looking to 2025 and beyond, our strategy is simple. We'll continue to put our customers first.
Bom Kim: will continue to innovate relentlessly and will continue to invest in big opportunities with discipline and a long-term horizon.
Bom Kim: We expect to expand margins in 2025 to greater utilization of automation and technology, further supply chain optimization, and the scaling of margin accretive offerings.
Bom Kim: In our established and newer markets, we see tremendous opportunities to expand selection through both our first and third party selection, including FLC, that will in turn drive growth. We're confident that if we keep delivering more value to customers,
They will reward us with their enduring trust and loyalty.
Bom Kim: We're still in the early stages of capturing the full growth and potential of our core offerings.
Bom Kim: And as we pursue new opportunities, we will maintain a disciplined capital allocation and operational approach.
Bom Kim: We have a robust pipeline of initiatives, but we carefully prioritize those that we believe can meet our high bar for customer impact and long-term returns.
Bom Kim: We've shown that we can launch and scale new offerings in a way that complements our existing business and shared assets.
Bom Kim: We'll apply the same discipline as we expand into new segments and geographies. Our approach, obsess over customers, invest for the long term, and drive operational excellence, remains unchanged.
Bom Kim: None of our 2024 success would have been possible without our incredible teams.
Bom Kim: They have embraced the mission wholeheartedly. I want to thank each of them for their passion and dedication to exceed the expectations of our customers.
Bom Kim: I also want to thank our shareholders for their continued support and belief in our long-term vision and our customers for inspiring us to be better every day. Their trust is our most precious asset and we do not take it for granted.
Bom Kim: With that, I'll turn the call over to our CFO, Gaurav Anand, who will walk you through the financial details of the quarter and year.
Gaurav Anand: Thanks Bom. Q4 was another strong quarter across our business as we again delivered sustained growth in revenues, active customers and profitability.
Gaurav Anand: As I walk through the numbers for the quarter in detail, I need to remind everyone that our Farfetch acquisition completed earlier in Q1 of 2024, impacting comparability.
Gaurav Anand: Additionally, this quarter we recognized a non-recurring insurance gain of $175 million related to the fire that damaged one of our fulfillment centers in 2021 and a loss of inventory and fixed assets recorded in the P&L in 2021.
Gaurav Anand: This quarter, we agreed to a settlement on a portion of the related insurance claim, resulting in the $116 million gain recorded in gross profit and $59 million gain recorded in OG&A expenses. Where possible, we will continue to work on the settlement.
Gaurav Anand: I will provide results with and without Farfetch and the non-recurring insurance gains to provide better comparability.
between periods
Gaurav Anand: Total net revenues this quarter grew 21% year-over-year or 14% excluding the impact of far-fetch.
Gaurav Anand: It's worth highlighting that we have seen a significant weakening of the Korean won versus the U.S. dollar, reaching its lowest levels in over 10 years.
Gaurav Anand: As a result, it is especially important to review our results on a constant currency basis this quarter.
Gaurav Anand: Adjusting for the impacts of these foreign currency changes, we grew 28% or 21% excluding far-fetch.
Gaurav Anand: Consolidated gross profit this quarter grew 48% or 29% excluding far fetch and the fire insurance gain.
Gaurav Anand: We are seeing significantly higher growth rates in our FLC offering where revenue is reported on a net basis.
Gaurav Anand: This will naturally compress our revenue growth rates as FLC becomes a more significant part of our overall volumes.
Gaurav Anand: As a result, we believe a more meaningful indication of the overall growth of our business going forward will be the growth in gross profit.
Gaurav Anand: We are seeing deeper levels of spend across all our customer cohorts as they respond to the value of coupons.
Gaurav Anand: of each of the customer cohorts, even our oldest, grew by more than 20%. And while our newest cohorts follow a similar trend as our oldest cohorts, their spend level is just a fraction of the spend of our oldest cohorts.
Gaurav Anand: Our oldest cohorts are still increasing their spend and that shows that we have yet to realize the full wallet share potential of our cohorts.
Gaurav Anand: We also represent a small percentage of the market's total retail spend, which highlights the significant growth opportunity ahead.
Gaurav Anand: Our product commerce segment saw revenue growth of 9% year-over-year, in constant currency that growth rate was 16%, reflecting the notable impact from the weakening Korean won in Q4.
Gaurav Anand: Gross profit this quarter grew 31% or 24% excluding the impacts of the fire insurance game.
Our Product Commerce active customers grew 10% year-over-year.
We also saw growth in Vav members this year.
Gaurav Anand: Excluding Farfetch, developing offerings segment revenues grew 124% or 136% year-over-year in constant currency.
Gaurav Anand: We are especially encouraged by the growth momentum we saw this quarter in both EATS and Taiwan, and expect that momentum to continue throughout 2025.
Gaurav Anand: This quarter represented another record quarter in gross profit, where we generated $2.5 billion in gross profit. This represents a 48% year-over-year growth and a gross profit margin of 31.3%.
Gaurav Anand: Excluding both Farfetch and the $116 million dollar insurance gain, adjusted gross profit in Q4 was $2.2 billion, growing 29% year-over-year, with a gross profit margin of 29%.
Gaurav Anand: This represents a margin improvement of over 330 basis points versus last year and 90 basis points over the last quarter.
Gaurav Anand: For our product commerce segment, we generated growth in gross profit this quarter of 31% year-over-year to $2.3 billion and a gross profit margin of 32.7%.
Gaurav Anand: Adjusted for the effects of the insurance game recorded, gross profit was $2.1 billion, growing 24% year-over-year with a margin of 31%.
Gaurav Anand: including benefits from greater utilization of automation and technology, further supply chain optimization, and the scaling of margin accretive offerings.
Gaurav Anand: On a quarter-over-quarter basis, the adjusted product-commerce cross-profit margin improved 100 basis points versus Q3.
Gaurav Anand: OG&A expense as a percentage of revenue increased over 370 basis points versus last year.
Gaurav Anand: or over 440 basis points, excluding the $59 million insurance gain recorded within OG&A.
Gaurav Anand: This increase is primarily due to the inclusion of Farfetch and its related acquisition and restructuring costs.
Gaurav Anand: As we discussed last quarter, we have also increased our technology and infrastructure expense to build a stronger foundation for future scalability.
Gaurav Anand: We are excited about the potential we are seeing to drive significant growth in revenues and margins through these increased tech investments into areas like AI and automation.
Gaurav Anand: We also expect ODNA expenses will decline over time as a percentage of revenue in the near to medium term.
Gaurav Anand: On a consolidated basis, we reported $421 million of adjusted EBITDA this quarter, which, among other things, excludes the fire insurance gain and the non-recurring acquisition and restructuring costs at Farfetch.
Gaurav Anand: This resulted in an adjusted EBITDA margin for the quarter of 5.3% up 80 basis points over the last year.
Gaurav Anand: For the full year, we generated adjusted EBITDA of $1.4 billion with a margin of 4.5%. This represents an expansion of adjusted EBITDA margins on an annual basis.
Gaurav Anand: Excluding Farfetch, we reported $391 million of consolidated adjusted EBITDA this quarter and $1.4 billion for the full year, with a full year adjusted EBITDA margin of 4.9%.
Gaurav Anand: A product commerce segment delivered $539 million of adjusted EBITDA in Q4 with a margin of 7.8%. This consists of margin expansion of over 70 basis points year over year and over 100 basis points quarter over quarter.
Gaurav Anand: For developing offerings, our Q4 segment adjusted EBITDA loss was $118 million.
improving $32 million year-over-year and $9 million quarter-over-quarter.
Gaurav Anand: The progress we saw this quarter were primarily driven by improvement in both EATS and FARFETCH. We also note that FARFETCH benefited this quarter from recurring seasonality in profitability typically seen in Q4 each year as well as certain one-time adjustments.
Gaurav Anand: of free cash flow. This represents a decrease in free cash flow of $759 million versus last year and a $81 million quarter over quarter improvement over the Q3 TTM free cash flow.
Gaurav Anand: As we noted last quarter, we do not believe there has been a structural change in our free cash flow generation, as a decrease over the prior year is driven primarily by certain non-recurring working capital benefits that we previously communicated were in the prior year.
Gaurav Anand: This quarter, we reported an effective income tax rate of 53%, driven by consolidation of pre-tax losses in far-fetch and certain non-deductible expenses.
Gaurav Anand: As a reminder, this is just an accounting tax rate as our cash tax obligation in 2024 is closer to 20% excluding far-fetched losses.
Gaurav Anand: Now, a few comments on our outlook for 2025. We anticipate our constant currency consolidated growth rates for the full year to be about 20% year-over-year, within the range of our 2024 Q4 constant currency growth rate, excluding far-fetched.
Gaurav Anand: We also expect the Q1 Consent Currency growth rate to be about 20%.
Gaurav Anand: As we have discussed, FLC continues to grow at a faster rate than our overall product commerce revenue growth, which is not fully reflected in the revenue growth rates.
Gaurav Anand: As a result, we expect product commerce gross profit to grow faster than the related constant currency revenues.
Gaurav Anand: And while overall margins may be uneven quarter to quarter, we expect to deliver adjusted EBITDA margin expansion on an annual basis.
Gaurav Anand: For developing offerings, we anticipate incurring adjusted EBITDA losses between $650 million to $750 million in 2025.
Gaurav Anand: Regarding income tax expense, we anticipate we will continue to experience a temporarily high effective tax rate between 50% to 55% in 2025.
Gaurav Anand: As a reminder, this is just an accounting effective tax rate. We expect our cash tax obligation to be closer to 40 percent.
operator. We are now ready to begin the Q&A.
Speaker Change: At this time, I would like to remind everyone in order to ask a question, press star then the number five on your telephone keypad.
Gaurav Anand: If you would like to withdraw your question, press star and the number 5 once again. Please limit your questions to two per person. We'll pause for just a moment to compile the Q&A roster.
Speaker Change: The first question is from Stanley Yang with JP Morgan. Your line is now open.
Thank you for the opportunity to ask the questions.
Speaker Change: First question is, over the past several months, both government data and third-party data,
have indicated an elevated slowdown of domestic e-commerce market growth.
Speaker Change: since fourth quarter. Have you seen the similar trend in your product commerce GMB growth year-to-date?
Speaker Change: I would appreciate if you share a bit more color on the macro impact on your top line growth outlook in 2025.
Speaker Change: and I appreciate your guidance of 20% top-line growth, but I just wonder between the breakdown between the product commerce versus developer offering revenue growth.
Speaker Change: And my second question is about your FSC business, which has emerged as a strong growth driver. Management-guided FSC is margin-accurate, but can you please give a bit more color?
on the FSC margin profile trend going into 2025.
Thank you.
Speaker Change: Hi Stanley, thanks for your question. I think with macro, we understand that there is some uncertainty in the macro environment.
Speaker Change: We've seen cycles like this before, including a couple of years ago when we were coming out of COVID. I think our outlook for growth continues to remain strong.
Speaker Change: Keep in mind, we're still a relatively small share of the overall retail market, just a small fraction.
Speaker Change: And what's driving our expansion is not a one-time bump or cycle.
Speaker Change: But deep and increasing engagement from our customers the spend of every single quarter of our customers even our oldest
Speaker Change: continues to compound each year and that's driven by our continuous improvement of selection, service, and price. We expect that our focus on these four value proposition drivers
Speaker Change: will support our growth, continue to support our growth, and as we've mentioned, we expect our Q1 growth to remain consistent relatively.
Speaker Change: to the growth that you've seen in Q4, to be in line with Q4, excluding FAR-FETCH.
Speaker Change: You know, our strategy remains the same through any phase of these cycles.
Speaker Change: We provide customers with the best experience at the lowest price.
Speaker Change: whatever the macroeconomic environment may be, and we've seen uncertainty like this before, as long as we deliver that, we're confident we can continue to outpace the market's growth significantly for years to come.
Speaker Change: On FLC, our focus right now is on optimizing the service levels for our customers and our merchants.
Speaker Change: We continue to see strong momentum in FLC. The trends that we've shared over the past few quarters have only continued. And FLC is still growing at a high multiple of our overall business.
We're all encouraged by the...
Strong rate of adoption that we're seeing from merchants.
Speaker Change: who are increasingly recognizing the benefits of leveraging our operational capabilities to serve customers better, and that in turn helps their business thrive.
Speaker Change: is to invest in enhancing that service. There's still a lot more to build out to improve the selection and convenience for our customers, which will in turn drive higher levels of engagement and lead to even greater growth opportunities for merchants and suppliers.
Speaker Change: The next question is from Eric Cha with Golden Insects. Your line is now open.
Eric Cha: Could you help us quantify the impact of coming from these changes and is that included in your, reflected on your developing offering guidance or just to be the last guidance range? The 2nd question is on tech spending.
Eric Cha: Obviously, we're continuing to see a rise in OGNA driven by these drivers.
Thank you for your time, and have a great day.
Speaker Change: Could you explain to us what the specific benefits that the consumers or the merchants may have coming from these investments? Thank you.
and Gaurav Anand. Thank you. Thank you.
Thanks Vivek, I'll take that.
Eric Cha: So, Eric, we believe, you know, we partner really well with all our stakeholders in EATS – the restaurants, drivers, and customers. As a general practice, we don't comment on the individual profitability, you know, of each of these components in our segment.
Speaker Change: But in Eats, we see many opportunities to continue improving the customer's offering as we have done, as well as improving our operations.
Speaker Change: So in Eats we provide free delivery with zero additional fees, you know in any form to our customers We offer merchants what we believe to be the lowest fees and commission
of any food delivery service in the world.
Speaker Change: With that, we are committed, you know, to build a strong partnership with our restaurant and delivery partners.
and striving to improve the experience for our customers.
welcome to the
Eric Cha: Moving on to your next question, Eric, on the overhead expense.
Eric Cha: So the OG&A expense as a percentage of revenue has increased versus last year, but this increase is primarily driven due to the inclusion of Part H.
Eric Cha: and the related acquisition and restructuring costs. But as we discussed last quarter, we also increased the tech and infrastructure expenses to build a stronger foundation for future scalability.
Eric Cha: So we are excited about potential and the potential that we are seeing to drive significant growth in revenues and margins.
Eric Cha: to these increased investments in AI and automation, primarily supporting upper commerce business.
Eric Cha: So we do expect OGN expenses will decline over time as a percentage of revenue.
Eric Cha: I think the guidance you are giving is in near to medium term right now.
Eric Cha: investments here in machine learning and generative AI in particular continue to be a core part of our strategy. They have contributed some of the results that you've seen in the past, and we're deploying them throughout our business. We expect them to have an impact.
Eric Cha: on the trillions of predictions we make every day from search, ads, catalog, our engineering, operations, among many others. And we're already seeing benefits.
Eric Cha: and even greater potential for improvements to come. So we'll continue to invest to leverage AI to enhance the customer experience.
and improve
Eric Cha: operational efficiencies. And as always, as with all of our investments, we continue to test and iterate and invest only where we're convinced of the potential for attractive returns.
Sayon Park: Our next question comes from Sayon Park with Morgan Stanley. Your line is now open.
Sayon Park: Hi, good morning. Thank you for the opportunity. I also have two questions. The first is on BarFetch.
If maybe Manu can share what.
Now that the restructuring phase appears to be done,
Sayon Park: The second question is just kind of on the CapEx investment outlook.
I'm assuming that the increase in coverage in Korea is...
Sayon Park: not as fast as it was in the past given that we already have
Sayon Park: nationwide coverage. And hence, you know, should we expect the same cadence of tax expending going forward? Or is there a chance that that could be adjusted or a shift to
investment outside of just pure coverage. Thank you.
So let me start with Farfetch.
Sayon Park: We're pleased with the early progress we've seen at Farfetch. We focused on operational improvements that, as you point out, have helped turn Lawrence losses at the time of our acquisition to profitability today.
Sayon Park: We'll continue to leverage resources and capabilities across the company when helpful, and also explore synergies. But most of all, we want to finish the job of streamlining our operations and sharpening Farfetch's execution around customer experience.
Sayon Park: Boutiques and Brands. That and operational rigor will start set Farfetch on the path to sustainable growth and leadership in the global luxury retail market. It won't happen overnight, but we're excited about what's ahead there.
I'll take the CAPEX question. On levels of CAPEX...
Sayon Park: as percentage of revenue has historically remained relatively consistent over time, you know, and leveraging as we scale.
Sayon Park: and we are very disciplined on how and where we invest our capex into.
Sayon Park: The majority of our CapEx investment is related to building our capacity to support our growth in both Korea and now Taiwan.
Sayon Park: and that's why we measure it as a percentage of revenue, you know, indicating the growth. The inherent peaks and lead times naturally create some unevenness in the timing, but overall, you know, we continue and expect to continue to leverage.
gov, www.memoryseek.org or 1-800-858-4700.
Sayon Park: We will now take our last question from the line of Jiang Xiao with Barclays. Your line is now open.
Jiang Xiao: Thank you very much for taking my questions. I have two as well. First is on your developing offering guide. I was hoping you could elaborate a bit on your guide of 650 to 750 million investments.
Speaker Change: I want to be clear, I suspect you have far-fetched in it, just roughly, the far-fetched run rate is about $120 million profit.
Speaker Change: Does that mean the rest of the old kind of core developing offering, the loss should be?
Speaker Change: 750 to 850. I want to make sure my math or my understanding
is correct.
Speaker Change: And it would be helpful to all of us if you can talk about like what are you thinking about investment directionally for Taiwan, for Eats and for Play in 2025, vis-à-vis 2024.
Speaker Change: And recently, you entered into Japan food delivery as well, according to some media reports.
Could you talk about...
the rationale there.
Speaker Change: especially when you exited Japan a couple years ago and the level of investment
you are looking to do.
Speaker Change: for the Japanese food delivery market. Sorry for the long-winded question. Second question, it's a quick one, at least a shorter one. Your investment intensity last year was
Speaker Change: was very good. As a result, the you more than Sorry, the year before last year, for example, you more than doubled your EBITDA margin. But last year the EBITDA margin went up only slightly because of the intensive intense investment. I was
are wondering for 25...
Speaker Change: Do you feel like, because these investment cycles, they come in kind of different magnitudes from year to year, I was just wondering for 2025, do you think the investment intensity is going to be similar to 2024, or is it going to be less or more? Thank you so much.
Speaker Change: Hi John, thanks for the question. I think there's a lot of things in your question to unpack. I'll try to address as many of it as I can. You know, I think it's important to remember that developing offerings
is really a collection of investment.
Speaker Change: We are investing in services and offerings that we believe strengthen our customer value proposition.
and also generate attractive return.
Speaker Change: returns for our shareholders in the long term. Many of these initiatives are gaining solid momentum and already contributing to our long term strategy.
Speaker Change: I think to your specific question about Farfetch, I think I would point out that there are some one-off benefits in Q4. So I think Q4 generally is easily a high profit.
Speaker Change: whether it's Farfetch or Japan, which you mentioned, I think that's one of several investment opportunities that we have in our developing offerings. We evaluate a lot of opportunities and the select few cases that we do make an investment.
and across all of these initiatives, our approach is consistent.
You know, really, it's one of disciplined execution.
Speaker Change: We're focusing on ensuring that these investments are driven by two things. One, a clear customer demand for our differentiation.
and two, a strong path to operational excellence.
when the evidence doesn't meet our expectations.
Speaker Change: will be disciplined and re-evaluate as we have in the past.
And when we do invest more,
And I want to emphasize and rest.
Speaker Change: we hope our shareholders are excited, because it's a reflection of our growing confidence from what we're seeing on the ground that will deliver a wow experience for customers and an attractive return for our shareholders.
Speaker Change: Our investments for developing offerings across all of these initiatives in 2025 is expected to be about between 650 and 750.
Speaker Change: There's still a lot to learn across each of these initiatives, and they're all at various stages, but where we're investing
Speaker Change: more. We hope it's a reflection of the confidence. I hope you see it as a reflection of our growing conviction that we are delivering. We have a line of sight to delivering a clear wow experience.
and attractive returns for our shareholders.
Speaker Change: And on your third question on EBITDA margin expansion, I believe you are referring to the OPEX investment.
Speaker Change: and we have discussed that a few minutes ago. We, you know, we continue to be disciplined. We made decisions to invest and we do expect OG&A expenses
will decline over time in the near to medium term.
Okay, thank you guys
Thank you.
Speaker Change: This concludes today's conference call. Thank you and you may now disconnect.