SEC Info - Coupang, Inc. - ‘10-K’ for 12/31/21

We have served as the Company's auditor since 2014.


Table of Contents

COUPANG, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except shares/units)


	December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	i 3,487,708	$	i 1,251,455
Restricted cash	i 319,800		i 144,949
Accounts receivable, net	i 175,350		i 71,257
Inventories	i 1,421,501		i 1,161,205
Other current assets	i 232,447		i 211,848
Total current assets	i 5,636,806		i 2,840,714

Long-term restricted cash	i 2,839		i 4,898
Property and equipment, net	i 1,347,531		i 1,017,947
Operating lease right-of-use assets	i 1,374,629		i 1,011,255
Goodwill	i 9,739		i 4,247
Long-term lease deposits and other	i 270,290		i 188,271
Total assets	$	i 8,641,834	$	i 5,067,332
Liabilities, redeemable convertible preferred units and stockholders'/members’ equity (deficit)
Current liabilities:
Accounts payable	$	i 3,442,720	$	i 2,907,918
Accrued expenses	i 304,293		i 115,606
Deferred revenue	i 93,972		i 65,259
Short-term borrowings	i 7,811		i 156,678
Current portion of long-term debt	i 341,717		i 67,576
Current portion of long-term operating lease obligations	i 287,066		i 207,196
Other current liabilities	i 266,709		i 212,477
Total current liabilities	i 4,744,288		i 3,732,710

Long-term debt	i 283,190		i 353,342
Long-term operating lease obligations	i 1,201,277		i 859,477
Convertible notes	i —		i 589,851
Defined severance benefits and other	i 237,122		i 135,203
Total liabilities	i 6,465,877		i 5,670,583

Commitments and contingencies (Note 10)	i		i
Redeemable convertible preferred units, i i no / par value; i i i no / / units authorized, issued or outstanding, and i no liquidation preference as of December 31, 2021; i 1,448,632,049 units authorized, i 1,372,898,443 units issued, i 1,329,464,982 units outstanding, and aggregate liquidation preference of $ i 3,584,028 as of December 31, 2020	i —		i 3,465,611
Stockholders'/members’ equity (deficit)
Common units, i i no / par value; i i i no / / units authorized, issued or outstanding as of December 31, 2021; i 264,166,544 units authorized, i 114,566,705 units issued, and i 105,822,205 units outstanding as of December 31, 2020	i —		i 45,122
Class A common stock, $ i i 0.0001 / par value, i 10,000,000,000 shares authorized and i i 1,579,399,667 / shares issued and outstanding as of December 31, 2021; Class B common stock, $ i i 0.0001 / par value, i 250,000,000 shares authorized and i i 174,802,990 / shares issued and outstanding as of December 31, 2021; i i i i i i no / / / / / shares of Class A and Class B common stock authorized, issued and outstanding as of December 31, 2020	i 175		i —
Additional paid-in capital	i 7,874,038		i 25,036
Accumulated other comprehensive loss	( i 47,739)		( i 31,093)
Accumulated deficit	( i 5,650,517)		( i 4,107,927)
Total stockholders'/members' equity (deficit)	i 2,175,957		( i 4,068,862)
Total liabilities, redeemable convertible preferred units and stockholders'/members' equity (deficit)	$	i 8,641,834	$	i 5,067,332

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


Table of Contents

COUPANG, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

Year Ended December 31,

2021

2020

2019

Net retail sales

i 16,487,975

i 11,045,096

i 5,787,090

Net other revenue

i 1,918,397

i 922,243

i 486,173

Total net revenues

i 18,406,372

i 11,967,339

i 6,273,263

Cost of sales

i 15,455,244

i 9,981,102

i 5,240,041

Operating, general and administrative

i 4,445,090

i 2,502,231

i 1,675,145

Total operating cost and expenses

i 19,900,334

i 12,483,333

i 6,915,186

Operating loss

( i 1,493,962)

( i 515,994)

( i 641,923)

Interest income

i 8,645

i 10,991

i 19,135

Interest expense

( i 45,358)

( i 107,762)

( i 96,907)

Other (expense) income, net

( i 10,913)

i 149,900

i 22,569

Loss before income taxes

( i 1,541,588)

( i 462,865)

( i 697,126)

Income tax expense (benefit)

i 1,002

i 292

( i 241)

Net loss

( i 1,542,590)

( i 463,157)

( i 696,885)

Less: premium on repurchase of redeemable convertible preferred units

i —

( i 92,734)

( i 71,415)

Net loss attributable to Class A and Class B common stockholders

( i 1,542,590)

( i 555,891)

( i 768,300)

Net loss attributable to Class A and Class B common stockholders per share, basic and diluted

( i i 1.08 / )

( i i 19.16 / )

( i i 39.48 / )

Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted

i i 1,423,887 /

i i 29,012 /

i i 19,463 /

Other comprehensive income (loss):

Foreign currency translation adjustments, net of tax

i 40,844

( i 20,730)

i 3,299

Actuarial loss on defined severance benefits, net of tax

( i 57,490)

( i 18,005)

( i 9,011)

Total other comprehensive loss

( i 16,646)

( i 38,735)

( i 5,712)

Comprehensive loss

( i 1,559,236)

( i 501,892)

( i 702,597)

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


Table of Contents

COUPANG, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED UNITS AND STOCKHOLDERS’/MEMBERS’ EQUITY (DEFICIT)

(in thousands)

Redeemable Convertible Preferred Units

Common Units

Class A and Class B Common Stock

Additional
Paid-in
Capital

Accumulated Other Comprehensive
Loss

Accumulated
Deficit

Total Stockholders'/Members' Equity (Deficit)

Units

Amount

Units

Amount

Balance as of December 31, 2018

i 1,108,023

i 2,019,716

i 69,893

i 54,377

i —

i 25,036

i 13,354

( i 2,865,093)

( i 2,772,326)

Cumulative effect from change in accounting principle

—

( i 16,801)

—

i 16,801

i —

Net loss

—

( i 696,885)

Foreign currency translation adjustments, net of tax

—

i 3,299

—

i 3,299

Actuarial loss on defined severance benefits, net of tax

—

( i 9,011)

—

( i 9,011)

Issuance of common units, equity-based compensation plans

—

i 8,609

i 7,133

—

i 7,133

Issuance of preferred units, net of issuance costs

i 264,875

i 1,509,245

—

Forward sale contract on preferred units

—

( i 31,820)

—

Repurchase of common units

—

( i 7,800)

( i 14,610)

—

( i 14,610)

Repurchase of preferred units

( i 24,585)

( i 28,587)

—

( i 51,002)

—

( i 20,413)

( i 71,415)

Equity-based compensation

—

i 20,903

—

i 20,903

Balance as of December 31, 2019

i 1,348,313

i 3,468,554

i 70,702

i —

i 25,036

i 7,642

( i 3,565,590)

( i 3,532,912)

Net loss

—

( i 463,157)

Foreign currency translation adjustments, net of tax

—

( i 20,730)

—

( i 20,730)

Actuarial loss on defined severance benefits, net of tax

—

( i 18,005)

—

( i 18,005)

Issuance of common units, equity-based compensation plans

—

i 35,800

i 28,613

—

i 28,613

Repurchase of common units

—

( i 680)

( i 1,366)

—

( i 1,366)

Repurchase of preferred units

( i 18,848)

( i 2,943)

—

( i 13,554)

—

( i 79,180)

( i 92,734)

Equity-based compensation

—

i 31,429

—

i 31,429

Balance as of December 31, 2020

i 1,329,465

i 3,465,611

i 105,822

i 45,122

i —

i 25,036

( i 31,093)

( i 4,107,927)

( i 4,068,862)

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


Table of Contents

Redeemable Convertible Preferred Units

Common Units

Class A and Class B Common Stock

Additional
Paid-in
Capital

Accumulated Other Comprehensive
Loss

Accumulated
Deficit

Total Stockholders'/Members' Equity (Deficit)

Units

Amount

Units

Amount

Balance as of December 31, 2020

i 1,329,465

i 3,465,611

i 105,822

i 45,122

i —

i 25,036

( i 31,093)

( i 4,107,927)

( i 4,068,862)

Net loss

—

( i 1,542,590)

Foreign currency translation adjustments, net of tax

—

i 40,844

—

i 40,844

Actuarial loss on defined severance benefits, net of tax

—

( i 57,490)

—

( i 57,490)

Issuance of common units, equity-based compensation plans

—

i 22,901

i 38,968

i —

—

i 38,968

Equity-based compensation

—

i 2,974

—

i —

—

i 2,974

Impact of Corporate Conversion and IPO

Conversion of common units into Class A and Class B common stock

—

( i 128,723)

( i 87,064)

i 128,648

i 13

i 87,051

—

i —

Conversion of redeemable convertible preferred units into Class A and Class B common stock

( i 1,329,465)

( i 3,465,611)

—

i 1,329,465

i 133

i 3,465,478

—

i 3,465,611

Issuance of Class A common stock, net of underwriting discounts and offering costs

—

i 100,000

i 10

i 3,416,809

—

i 3,416,819

Conversion of convertible notes into Class A common stock

—

i 171,750

i 17

i 609,982

—

i 609,999

Issuance of common stock upon exercise of stock options subsequent to Corporate Conversion and IPO

—

i 11,861

i 1

i 23,312

—

i 23,313

Issuance of common stock upon settlement of RSUs subsequent to Corporate Conversion and IPO

—

i 12,479

i 1

( i 1)

—

i —

Equity-based compensation subsequent to Corporate Conversion and IPO

—

i 246,371

—

i 246,371

Balance as of December 31, 2021

i —

i 1,754,203

i 175

i 7,874,038

( i 47,739)

( i 5,650,517)

i 2,175,957

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


Table of Contents

COUPANG, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2021

2020

2019

Operating activities:

Net loss

( i 1,542,590)

( i 463,157)

( i 696,885)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

i 201,480

i 127,519

i 70,908

Provision for severance benefits

i 128,214

i 71,328

i 43,159

Equity-based compensation

i 249,345

i 31,331

i 20,823

Paid-in-kind interest and accretion of discount on convertible notes

i 20,148

i 91,035

i 75,946

Revaluation of derivative instrument

i —

( i 149,830)

i 36,782

Inventory and fixed asset losses due to fulfillment center fire

i 284,825

i —

Non-cash operating lease expense

i 258,965

i 154,739

i 84,559

Non-cash others

i 57,978

i 55,176

( i 4,437)

Change in operating assets and liabilities:

Accounts receivable, net

( i 120,206)

( i 4,312)

( i 39,976)

Inventories

( i 527,959)

( i 504,294)

( i 279,015)

Other assets

( i 178,383)

( i 172,576)

( i 40,361)

Accounts payable

i 728,488

i 1,065,850

i 416,507

Accrued expenses

i 206,597

i 50,835

i 18,202

Deferred revenue

i 14,024

i 31,887

i 7,753

Other liabilities

( i 191,504)

( i 83,977)

( i 25,808)

Net cash (used in) provided by operating activities

( i 410,578)

i 301,554

( i 311,843)

Investing activities:

Purchases of property and equipment

( i 673,663)

( i 484,630)

( i 217,823)

Proceeds from sale of property and equipment

i 1,864

i 507

i 3,543

Other investing activities

( i 3,726)

( i 36,531)

( i 3,944)

Net cash used in investing activities

( i 675,525)

( i 520,654)

( i 218,224)

Financing activities:

Repurchase of common units and preferred units

i —

( i 97,043)

( i 114,610)

Proceeds from issuance of Class A common stock upon initial public offering, net of underwriting discounts

i 3,431,277

i —

Deferred offering costs paid

( i 11,618)

i —

Proceeds from issuance of common stock/units, equity-based compensation plan

i 62,281

i 28,613

i 1,516,378

Proceeds from short-term borrowings

i 24,722

i 144,740

i 103,628

Proceeds from long-term debt, net of issuance costs

i 408,932

i 142,170

i 28,771

Repayment of short-term borrowings

( i 166,023)

( i 2,983)

( i 346,349)

Repayment of long-term debt

( i 169,575)

( i 35,141)

( i 1,882)

Other financing activities

( i 3,146)

( i 1,854)

( i 1,832)

Net cash provided by financing activities

i 3,576,850

i 178,502

i 1,184,104

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

( i 81,702)

i 70,365

( i 22,412)

Net increase in cash and cash equivalents, and restricted cash

i 2,409,045

i 29,767

i 631,625

Cash and cash equivalents, and restricted cash, as of beginning of period

i 1,401,302

i 1,371,535

i 739,910

Cash and cash equivalents, and restricted cash, as of end of period

i 3,810,347

i 1,401,302

i 1,371,535

Supplemental disclosure of cash-flow information:

Cash paid for income taxes, net of refunds

i 2,588

i 857

i 2,540

Cash paid for interest

i 21,465

i 23,658

i 19,064

Non-cash investing and financing activities:

Increase in property and equipment-related accounts payable

i 45,205

i 48,236

i 28,785

Conversion of common units into Class A and Class B common stock

i 87,064

i —

Conversion of redeemable convertible preferred units into Class A and Class B common stock

i 3,465,611

i —

Conversion of convertible notes into Class A common stock

i 609,999

i —

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


Table of Contents

COUPANG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. i Description of Business and Summary of Significant Accounting Policies

Description of Business

Coupang, Inc. (“Coupang” or the “Parent”), together with its wholly-owned subsidiaries (collectively, the “Company,” “we,” “us,” or “our”), is a Delaware corporation, which owns and operates an e-commerce business that primarily serves the Korean retail market. Through the Company’s mobile applications and Internet websites, the Company offers products and services that span a wide range of categories, including home goods and décor, apparel and beauty products, fresh food and grocery, sporting goods, electronics, restaurant order and delivery, travel, content streaming, and everyday consumables, which are offered through a fully integrated technology, fulfillment and logistics infrastructure. The Company’s main operations, including procurement, marketing, technology, administrative functions, and fulfillment and logistics infrastructure, are predominantly located in South Korea, with operations and support services performed in China, Singapore, Japan, Taiwan, and the United States.

Initial Public Offering

On March 15, 2021, the Company completed its initial public offering (“IPO”) in which it issued and sold i 100,000,000 shares of its Class A common stock at a price of $ i 35.00 per share. The Company received net proceeds of approximately $ i 3.4 billion from the IPO after deducting underwriting discounts of $ i 69 million and other offering costs.

Immediately prior to effectiveness of the Company’s IPO registration statement on Form S-1, Coupang, LLC, a Delaware limited liability company, converted into a Delaware corporation pursuant to a statutory conversion, which changed the Company’s name to Coupang, Inc. (“Corporate Conversion”).

As a result of the Corporate Conversion and IPO, the Company’s redeemable convertible preferred units (“preferred units”) and common units (which included common units designated as profits interests (“PIUs”)), in each case, automatically converted into an equal number of shares of Class A or Class B common stock, except with respect to a conversion adjustment to certain PIUs, which reduced the outstanding common units designated as PIUs that were converted into shares of Class A common stock. Also, the Company’s convertible notes were automatically converted into shares of Class A common stock. For additional information related to the Company’s Corporate Conversion and IPO, see Note 11 — "Redeemable Convertible Preferred Units and Stockholders'/Members' Equity (Deficit)" and Note 9 — "Convertible Notes and Derivative Instrument."

Fulfillment Center Fire

On June 17, 2021, a fire extensively damaged the Company’s 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 $ i 158 million and $ i 127 million were recognized in “Cost of sales” and “Operating, general and administrative”, respectively, during the second quarter of 2021. The Company is insured on property losses from the FC Fire, however, whether and to what extent the Company may recover insurance proceeds on these losses is currently unknown, and as such, no insurance recoveries have been recognized. During the second quarter of 2021, the Company also incurred or accrued other costs directly related to the FC Fire of $ i 11 million. The FC Fire resulted in an increase to our net loss of $ i 296 million for the year ended December 31, 2021.

Basis of Presentation and Principles of Consolidation

i i 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 the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. /

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 assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates, which include, but are not limited to, equity-based compensation, inventory valuation, income taxes, defined severance benefits, and revenue recognition. Actual results could differ materially from those estimates. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Given the global economic climate and additional or unforeseen direct and


Table of Contents

indirect effects from the COVID-19 pandemic, these estimates become more challenging, and actual results could differ materially from these estimates.

Segment Information

The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The Company has determined that it operates in i one operating segment and i one reportable segment. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

•Product Commerce, including the Company’s core retail and marketplace offering and Rocket Fresh, as well as advertising products associated with these offerings; and

•Growth Initiatives, including the Company’s nascent offerings and services, including Coupang Eats, Coupang Play, international and fintech initiatives.

We will report our financial results consistent with this new segment reporting structure beginning with the quarter ending March 31, 2022.

Foreign Currency Translation

The functional currency of the Parent and reporting currency for the Company is the United States dollar (“U.S. dollar”). The Korean Won is the local and functional currency for the Company’s Korean subsidiary, Coupang Corp., which is the primary operating subsidiary of the Company. 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,” a separate component of stockholders’/members’ equity (deficit) 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) income, net” in the consolidated statements of operations and comprehensive loss.

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 and are mainly comprised of bank deposits.

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.

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, vendors 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 vendors and sellers primarily relate to advertising activities. The Company estimates 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. The Company writes off accounts against the allowance for credit losses when they are deemed to be uncollectible. As of December 31, 2021 and 2020, customer receivables, net, were $ i 90 million and $ i 12 million, respectively. The allowance amounts were immaterial for all periods presented.


Table of Contents

Inventories

The Company’s 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.

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. Finance leases, which are immaterial, are also included in property and equipment. i Depreciation and amortization is calculated on a straight-line basis over the estimated useful lives of the following asset categories:


Asset Category						Useful life
Buildings						i 40 years
Equipment and furniture						i 2 - i 8 years
Vehicles						i 4 - i 6 years
Software						i 4 years
Leasehold improvements						Lesser of useful life or remaining lease term

Depreciation and amortization expense is classified within the corresponding operating expense categories on the consolidated statements of operations and comprehensive loss. Maintenance and repairs are charged to operating expenses as incurred.

Software Development Costs

Software costs are attributable to the development, maintenance and enhancement of the infrastructure, applications, and other systems that relate to the Company’s ordinary course of business. The Company does not have software related to products to be sold, leased, or marketed to external users. The Company expenses all costs incurred in connection with the preliminary phases of development and costs associated with the maintenance of existing websites, applications, and other internal-use software. Costs incurred in the development phase are capitalized and amortized on a straight-line basis over the estimated product life. Software costs capitalized were not significant for the periods presented.

In addition, the Company enters into arrangements to access software, hosted by third parties, through the cloud. The Company applies the requirements for capitalizing costs to develop or obtain internal-use software for capitalizing implementation costs incurred in cloud computing arrangements.

Leases

The Company determines if an arrangement is or contains a lease at contract inception. Leases with contractual terms greater than twelve months are classified as either operating or finance. Leases with an initial contractual term of twelve months or less are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term. When the Company has the option to extend the term or terminate the lease before the contractual expiration date, and it is reasonably certain that it will exercise the option, the Company considers these options in determining the lease term.

For operating leases, expense is recognized on a straight-line basis over the lease term. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the right-of-use (“ROU”) asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. The Company’s leases may include variable payments based on measures that include, but are not limited to, changes in price indices or market rates, which are expensed as incurred. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate to discount the lease payments based on information available at lease commencement. The Company’s incremental borrowing rate is based on a credit-adjusted risk-free rate at commencement date, which best approximates a secured rate over a similar term of lease.

Lease obligations are recognized at the present value of the fixed lease payments, reduced by landlord incentives using a discount rate based on the Company’s incremental borrowing rate. Lease ROU assets are recognized based on the initial present


Table of Contents

value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the leases or lease prepayments.

Operating lease ROU assets are presented as “Operating lease right-of-use assets” on the consolidated balance sheets. The current portion of operating lease liabilities is presented as “Current portion of long-term operating lease obligations” and the long-term portion is presented separately as “Long-term operating lease obligations” on the consolidated balance sheets. Finance lease ROU assets are included in “Property and equipment, net” on the consolidated balance sheets. The current portion of finance lease liabilities is included in “Other current liabilities” and the long-term portion is included in “Defined severance benefits and other” on the consolidated balance sheets.

Goodwill

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The Company tests goodwill for impairment annually, or when indications of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiscal year.

In testing goodwill for impairment, the Company may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, then a quantitative goodwill impairment test is performed. The quantitative goodwill testing involves comparing the reporting unit’s fair value to the carrying value. If the carrying value amount of the reporting unit exceeds the fair value an impairment is recorded equal to the amount of the excess not to exceed the amount of reporting unit goodwill. i i i No / / goodwill impairment was recorded for the years ended December 31, 2021, 2020 and 2019, and the Company has not recognized any prior goodwill impairment charges. Changes in the goodwill balance relate to immaterial acquisitions that occurred during the fourth quarter of 2021 of $ i 6 million and foreign currency translation adjustments.

i 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. i i i No / / impairment losses were recorded for the years ended December 31, 2021, 2020 and 2019.

Fair Value of Financial Instruments

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP established a hierarchy framework to classify the fair value based on the observability of significant inputs to the measurement. The levels of the fair value hierarchy are as follows:

Level 1: Observable inputs such as quoted prices in an active market for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of the assets or liabilities.

Level 3: Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.

The Company’s primary financial instruments include cash equivalents, restricted cash, accounts receivable, accounts payable, short-term borrowings, long-term debt, and its derivative instrument. The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, short-term borrowings, and accrued expenses approximate fair value due to their short maturities. Refer to Note 7 — "Fair Value Measurement" for further information.


Table of Contents

Defined Severance Benefits

The Company accrues severance benefits for employees of its 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.

The Company recognizes the defined severance benefits obligation in the consolidated balance sheets with a corresponding adjustment to operating expenses and “Accumulated other comprehensive loss”. The obligations are measured annually, or more frequently if there is a remeasurement event, based on the Company’s measurement date utilizing various actuarial assumptions and methodologies. The Company uses 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. The Company reviews its actuarial assumptions and makes modifications to the assumptions based on current rates and trends when appropriate.

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.

The Company’s deferred tax assets are recorded net of a valuation allowance 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. Decreases to the valuation allowance are recorded as reductions to the Company’s income tax expense and increases to the valuation allowance result in additional expense for income taxes.

The Company recognizes and measures uncertain tax positions taken or expected to be taken in a tax return utilizing a two-step process. In the first step, recognition, the Company determines 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.

Revenue Recognition

The Company recognizes revenue 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. The Company includes these amounts in its 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. The Company primarily determines stand-alone selling prices based on the prices charged to customers.

Net Retail Sales

Retail sales are earned from the Company’s 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.

Net Other Revenue

Net other revenue includes commissions earned from merchants that sell their products through the Company’s online business. The Company is not the seller of record in these transactions, nor does it take possession or control of the related inventory. Although the Company processes and collects the entire amount of these transactions, it records revenue on the net commission because it is acting as an agent. The revenue is recognized when the order is completed and transmitted to the third-party merchant.

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


Table of Contents

The Company offers a subscription service to its Rocket WOW membership program, which provides customers with access to benefits such as access to Rocket Fresh, no minimum spend for Rocket Delivery, free shipping on returns and access to content streaming. Subscription benefits represent a single, stand-ready obligation and revenue from subscription fees are recognized over the subscription period.

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.

Discount Coupons and Loyalty Rewards

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

Cost of Sales

Cost of sales are primarily comprised of the purchase price of products sold to customers where the Company records 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 the Company is the delivery service provider, as well as depreciation and amortization.

i Operating, General and Administrative Expenses

Operating, general and administrative expenses include all operating costs of the Company, excluding cost of sales, as described above. More specifically, these expenses include costs incurred in operating and staffing the Company’s fulfillment centers (including costs attributable 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 the Company’s technology infrastructure and online offerings, advertising costs, general corporate function costs, and depreciation and amortization. Advertising expenses, which are expensed as incurred, were $ i 433 million, $ i 128 million, and $ i 252 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Payments from Suppliers

The Company receives consideration from suppliers for various programs, including rebates, incentives, and discounts, as well as advertising services provided on its website and mobile applications. The Company generally records these amounts received from suppliers to be a reduction of the prices the Company pays for their goods, and a subsequent reduction in cost of sales as the inventory is sold.

Equity-Based Compensation

The Company accounts 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. The Company determines 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.

During the first quarter of 2021, the Company changed its policy for recognizing equity-based compensation expense from the graded vesting attribution method of accounting to the straight-line attribution method of accounting for its equity-based compensation arrangements with service only vesting conditions. For additional information, see Note 2 — "Change in Accounting Principle."


Table of Contents

Restricted Stock Units

The Company had previously granted restricted equity units (“REUs”) under its 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 of the REUs was to be satisfied upon the earlier of six months following the effective date of an initial public offering or a change in control, as defined in the Company’s Third Amended and Restated 2011 Equity Incentive Plan. As of December 31, 2020, the Company had not recognized equity-based compensation expense for its REUs as the satisfaction of the performance condition was not probable. Upon satisfaction of the performance condition at the time of the IPO, the Company immediately 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 the Company’s common units on the date of grant. In connection with the Company’s Corporate Conversion, the outstanding awards were converted into restricted stock units (“RSUs”). Following the IPO and Corporate Conversion, the Company has granted RSUs that vest upon the satisfaction of a service-based condition as defined in the Company’s 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.

Stock Options

The Company had previously granted unit options under the 2011 Plan, which vest over a service period of generally i four years. In connection with the Company’s 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. The Company estimates 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. 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. The assumptions used to determine the fair value of the option awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.

Profits Interests

Prior to the IPO, the Company granted common units designated as PIUs that vested upon the satisfaction of a service-based condition and with respect to certain awards, which vesting accelerated upon the occurrence of the IPO. The fair value of the PIUs was primarily estimated based on the fair market value of the Company’s common units on the date of grant. The grant-date fair value of the PIUs, net of estimated forfeitures, were recognized as expense over the requisite service period.

Fair value of common units

Prior to the IPO, the fair value of the Company’s common units were estimated as there was not an active market for these units. Factors taken into consideration in assessing the fair value of the Company’s common units included: the sale of the Company’s shares to investors in private offerings, the preferences held by redeemable convertible preferred unit classes in favor of common units, the Company’s historical operating performance, the lack of liquidity of common units, market and economic trends, and valuations from an independent third-party valuation firm, amongst other factors. Subsequent to the IPO, the Company determines the fair value of its Class A common stock using the market closing price on the grant date.

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 that management believes are of high credit quality, of which i 77% and i 89% were held at four and five financial institutions as of December 31, 2021 and 2020, respectively. The Company’s gross accounts receivable include amounts concentrated with one and three payment processing companies representing i 14% and i 56% of gross accounts receivable at December 31, 2021 and 2020, respectively.

/ i

Derivative Instrument

The Company previously had convertible notes which contained certain embedded features that met the requirements for separate accounting, which were accounted for as a single, compound derivative instrument (the “derivative instrument”). The derivative instrument was recorded at fair value at inception and remeasured to fair value at each consolidated balance sheet date, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss within “Other (expense) income, net.”


Table of Contents

Net Loss Attributable to Common Stockholders

In periods when we have net income, we compute basic and diluted net loss per share in conformity with the two-class method required for participating securities. As the liquidation and dividend rights are identical, the undistributed earnings or loss are allocated on a proportionate basis to each class of common stock, and the resulting basic and diluted net loss per share attributable to common stockholders are therefore the same for Class A and Class B common stock on both an individual and a combined basis. Basic net loss per share is computed using the weighted-average number of shares of Class A and Class B common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of Class A and Class B common stock and potentially dilutive Class A and Class B potential common shares outstanding during the period. The Company's basic and diluted net loss per share are the same because the Company has generated net loss to common stockholders. During the years ended December 31, 2020 and 2019, the Company repurchased certain preferred units at a premium over the carrying values, which increased net loss attributable to common stockholders.

Basic net loss attributable to common stockholders per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common stock outstanding for the period. Diluted net loss attributable to common stockholders per share is the same as basic loss attributable to common stockholders per share since dilutive common stocks are not assumed to have been issued if their effect is anti-dilutive.

As discussed above, immediately prior to the IPO, the Company completed the Corporate Conversion. The Corporate Conversion resulted in a change of equity interests from common units to shares of common stock, but no change in relative shareholder rights, rank, or value before and after this reorganization transaction. As such, the Corporate Conversion of common units was considered equivalent to a stock split and requires retrospective treatment for net loss per share purposes. All share and per share information has been retroactively adjusted to reflect the Corporate Conversion for all periods presented. PIUs outstanding prior to the Corporate Conversion were considered compensatory arrangements that were settled with shares of Class A or Class B common stock at the time of the Corporate Conversion and have been included as outstanding shares subsequent to that date. Similarly, any preferred units that were converted in accordance with their terms into shares of Class A or Class B common stock at the time of the Corporate Conversion have also been included as outstanding shares subsequent to that date.

Reclassification

Certain prior period amounts have been reclassified to conform to current year presentation. The Company previously separately presented finance lease right-of-use assets which are now presented within “property and equipment, net.” Finance lease obligations are now presented within “other current liabilities” and “defined severance benefits and other.” The reclassification had no impact on previously reported net loss or accumulated deficit.

Recent Accounting Pronouncements Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions for performing intraperiod allocation, recognizes deferred taxes for investments, and calculates income taxes in interim periods. The standard reduces complexity in certain areas, including franchise taxes that are partially based on income and accounting for tax law changes in interim periods. The ASU is effective for public companies for fiscal years beginning after December 15, 2020, with early adoption permitted. We adopted this ASU effective January 1, 2021. The adoption of the ASU did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements Yet To Be Adopted

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40).” The standard reduces the number of models used to account for convertible instruments, amends diluted earnings per share (“EPS”) calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity. The amendments add certain disclosure requirements to increase transparency and decision-usefulness about a convertible instrument's terms and features. Under the amendment, the Company must use the if-converted method for including convertible instruments in diluted EPS as opposed to the treasury stock method. The ASU is effective for public companies for fiscal years beginning after December 15, 2021. Early adoption is allowed under the standard with either a modified retrospective or full retrospective method. The Company does not expect a material impact from the adoption of the ASU on our consolidated financial statements.


Table of Contents

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB clarified the scope of this guidance with the issuance of ASU 2021-01, “Reference Rate Reform: Scope.” ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate if certain criteria are met. ASU 2020-04 may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We expect to elect the optional expedients for eligible contract modifications, if any, as they occur through December 31, 2022. The application of these expedients is not expected to have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). The ASU is expected to reduce diversity in practice and increase comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The ASU is effective for public companies for fiscal years beginning after December 15, 2022. The Company is evaluating the effect of adopting the ASU on our consolidated financial statements.

2. i Change in Accounting Principle

In the first quarter of 2021, the Company changed its policy for recognizing equity-based compensation expense from the graded vesting attribution method of accounting to the straight-line attribution method of accounting for its equity-based compensation arrangements with service only vesting conditions.

The Company believes the straight-line attribution method of accounting for equity-based compensation expense for awards with service only vesting conditions is preferable because it more appropriately reflects how awards are earned over an employee’s service period and is the predominant method used in its industry.

Comparative financial statements for prior periods have been adjusted to apply the straight-line attribution method retrospectively. i The following table presents the comparative effect of the change in accounting method and its impact on the Company’s consolidated statements of operations and comprehensive loss:

Year Ended December 31, 2020

Year Ended December 31, 2019

(in thousands, except for per share amounts)

As Reported

As Adjusted

As Reported

As Adjusted

Total net revenues

i 11,967,339

i 6,273,263

Cost of sales

i 9,981,159

i 9,981,102

i 5,240,159

i 5,240,041

Operating, general and administrative

i 2,513,912

i 2,502,231

i 1,676,941

i 1,675,145

Total operating cost and expenses

i 12,495,071

i 12,483,333

i 6,917,100

i 6,915,186

Operating loss

( i 527,732)

( i 515,994)

( i 643,837)

( i 641,923)

Loss before income taxes

( i 474,603)

( i 462,865)

( i 699,040)

( i 697,126)

Income tax expense (benefit)

i 292

( i 241)

Net loss

( i 474,895)

( i 463,157)

( i 698,799)

( i 696,885)

Net loss attributable to Class A and Class B common stockholders

( i 567,629)

( i 555,891)

( i 770,214)

( i 768,300)

Net loss attributable to Class A and Class B common stockholders per share, basic and diluted(1)

( i i 19.57 / )

( i i 19.16 / )

( i i 39.57 / )

( i i 39.48 / )

Weighted-average number of Class A and Class B common shares outstanding used in computing per share amounts, basic and diluted(1)

i i 29,012 /

i i 19,463 /

Comprehensive loss

( i 513,630)

( i 501,892)

( i 704,511)

( i 702,597)

____________

(1)As reported net loss per share reflects the retrospective adjustments from the Corporate Conversion described in Note 15 — "Net Loss per Share."


Table of Contents

The following table presents the comparative effect of the change in accounting method and its impact on the Company’s consolidated balance sheets:


	December 31, 2020
(in thousands)	As Reported		As Adjusted
Stockholders'/members’ equity (deficit)
Common units	$	i 54,950	$	i 45,122
Additional paid-in capital	i 25,036		i 25,036
Accumulated other comprehensive loss	( i 31,093)		( i 31,093)
Accumulated deficit	( i 4,117,755)		( i 4,107,927)
Total stockholders'/members' equity (deficit)	$	( i 4,068,862)	$	( i 4,068,862)

There was no net impact to the amounts reported for net cash used in/provided by operating, investing or financing activities in the consolidated statements of cash flows for prior periods as a result of the change in accounting method. However, for the years ended December 31, 2020 and 2019, net loss and equity-based compensation expense in cash flows from operating activities each decreased $ i i 12 / million and $ i i 2 / million, respectively, to reflect the change in accounting method. The cumulative effect of the change in accounting method had no net impact on stockholders’/members’ equity (deficit) as of January 1, 2019, the beginning of the earliest year presented in the consolidated financial statements.

3. i Net Revenues

Details of total net revenues were as follows:

Year Ended December 31,

(in thousands)

2021

2020

2019

Net retail sales

i 16,487,975

i 11,045,096

i 5,787,090

Third-party merchant services

i 1,695,422

i 789,557

i 440,845

Other revenue

i 222,975

i 132,686

i 45,328

Total net revenues

i 18,406,372

i 11,967,339

i 6,273,263

This level of revenue disaggregation takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Net retail sales are recognized from online product sales to consumers. Third-party merchant services represent commissions, advertising, and delivery fees earned from merchants and restaurants that sell their products through the Company’s online business. Other revenue includes revenue earned from our various other offerings.

Contract liabilities consist of payments in advance of delivery and customer loyalty credits, which are included in deferred revenue on the consolidated balance sheets. The Company recognized revenue of $ i 60 million, $ i 29 million and $ i 23 million for the years ended December 31, 2021 and 2020, and 2019 respectively, related to payments in advance of delivery as of the beginning of the respective years. Revenue recognized for the years ended December 31, 2021, 2020 and 2019 from our customer loyalty program as of the beginning of the respective years was not material.


Table of Contents

4. i Property and Equipment, net

The following summarizes the Company’s property and equipment, net:


(in thousands)	December 31, 2021		December 31, 2020
Land	$	i 140,786	$	i 142,403
Buildings	i 320,059		i 181,529
Equipment and furniture	i 551,304		i 473,775
Leasehold improvements	i 340,468		i 172,864
Vehicles	i 168,585		i 165,073
Software	i 34,582		i 48,136
Construction in progress	i 200,735		i 169,789
Property and equipment, gross	i 1,756,519		i 1,353,569
Less: Accumulated depreciation and amortization	( i 408,988)		( i 335,622)
Property and equipment, net	$	i 1,347,531	$	i 1,017,947

For the years ended December 31, 2021, 2020 and 2019, depreciation and amortization expense on property and equipment was $ i 200 million, $ i 128 million, and $ i 71 million, respectively.

Property and equipment under construction, which primarily consists of fulfillment centers, is recorded as construction in progress until it is ready for its intended use; thereafter, it is transferred to the related class of property and equipment and depreciated over its estimated useful life.

5. i Leases

The Company is obligated under operating leases primarily for vehicles, equipment, warehouses, and facilities that expire over the next i ten years. These leases generally contain renewal options. Because the Company is not reasonably certain to exercise these renewal options, or the renewal options are not solely within the Company’s discretion, the options are not considered in determining the lease term, and the associated potential option payments are excluded from expected minimum lease payments. The Company’s leases generally do not include termination options for either party or restrictive financial or other covenants.

The Company’s finance leases as of December 31, 2021 and 2020 were not material and are included in property and equipment, net, on the Company's consolidated balance sheets.

The components of operating lease cost were as follows:

Year Ended December 31,

(in thousands)

2021

2020

2019

Operating lease cost

i 340,565

i 196,936

i 103,413

Variable and short-term lease cost

i 38,089

i 24,157

i 28,280

Total operating lease cost

i 378,654

i 221,093

i 131,693

Supplemental disclosure of cash flow information related to operating leases were as follows:


	Year Ended December 31,
(in thousands)	2021		2020		2019
Cash paid for the amount used to measure the operating lease liabilities	$	i 288,099	$	i 156,675	$	i 84,305
Operating lease assets obtained in exchange for lease obligations	$	i 599,170	$	i 613,517	$	i 407,503
Net increase (decrease) to operating lease ROU assets resulting from remeasurements of lease obligations	$	i 109,430	$	( i 7,793)	$	( i 7,455)


Table of Contents

Amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments, and new leases.

The assumptions used to value operating leases for the periods presented were as follows:


	December 31, 2021		December 31, 2020
Weighted-average remaining lease term	i 5.8 years		i 6.2 years
Weighted-average discount rate	i 6.17	%	i 5.88	%

As of December 31, 2021, the Company had entered into operating leases that have not commenced with future minimum lease payments of $ i 315 million, that have not been recognized on the Company's consolidated balance sheets. These leases have non-cancellable lease terms of i 2 to i 10 years.

6. i Other (Expense) Income, net

Other (expense) income, net consists of the following:

Year Ended December 31,

(in thousands)

2021

2020

2019

Revaluation of derivative instrument gain (loss)

i —

i 149,830

( i 36,782)

Foreign currency (loss) gain

( i 2,933)

i 2,442

i 23,283

Gain on forward sale contract

i —

i 35,670

Other non-operating (expense) income

( i 7,980)

( i 2,372)

i 398

Total other (expense) income, net

( i 10,913)

i 149,900

i 22,569

7. i Fair Value Measurement

The following tables summarize the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis:

(in thousands)

Level 1

Level 2

Level 3

Total

Financial assets:

Cash and cash equivalents

Money market trust

i 421,943

i —

i 421,943

Money market fund

i 35,297

i —

i 35,297

Restricted cash

Time deposit

i 250,839

i —

i 250,839

Money market trust

i 68,961

i —

i 68,961

Long-term restricted cash

Time deposit

i 2,839

i —

i 2,839

Total financial assets

i 779,879

i —

i 779,879


Table of Contents

(in thousands)

Level 1

Level 2

Level 3

Total

Financial assets:

Cash and cash equivalents

Money market trust

i 629,393

i —

i 629,393

Money market fund

i 35,641

i —

i 35,641

Restricted cash

Time deposit

i 144,949

i —

i 144,949

Other current assets

Time deposit

i 18,382

i —

i 18,382

Long-term restricted cash

Time deposit

i 4,898

i —

i 4,898

Total financial assets

i 833,263

i —

i 833,263

Financial liabilities:

Derivative instrument

i —

Total financial liabilities

i —

The following table summarizes information about the significant unobservable inputs used in the fair value measurement of the Company’s derivative instrument:

Fair Value

Valuation Technique

Unobservable Inputs

Input Amount

Derivative instrument

i —

Valuation of convertible notes with and without the derivative instrument. Incorporates a discounted cash flow model and option pricing model.

Discount rate

i 14

Equity value: Long-term revenue growth rate

i 3.5

Equity value: Revenue market multiple

i 1.3x - i 1.5x

8. i Short-Term Borrowings and Long-Term Debt

Details of carrying amounts of short-term borrowings were as follows:

(in thousands)

Borrowing Limit

Maturity Date

Interest rate (%)

January 2022

CD interest rate (91 days) + i 3.25

i 126,529

i —

i 137,868

June 2022

i 3.20

i 7,887

i 19,117

Total principal short-term borrowings

i 134,416

i 7,887

i 156,985

Less: unamortized discounts

( i 76)

( i 307)

Total short-term borrowings

i 7,811

i 156,678

The Company’s short-term borrowings generally include lines of credit with financial institutions to be drawn upon for general operating purposes.


Table of Contents

In December 2019, the Company entered into a i one-year revolving facility agreement, secured by the Company’s inventories. As of December 31, 2021, this revolving facility was secured by $ i 1.3 billion of the Company’s inventories. Prior to the expiration of the original term of the revolving facility in January 2021, the Company exercised an option that allowed it to extend the maturity of the borrowing facility for an additional i 364 days from the expiration date. The revolving facility bears interest at the average of final quotation yield rates for i 91-day KRW-denominated bank certificate of deposit (“CD interest rate”) plus i 3.25%, and has a commitment fee of i 0.75% on the undrawn portion. In January 2022, the agreement was amended to bring the borrowing limit to $ i 1 million and bears interest at the average of i 91-day CD interest rate plus i 1.80%.

Details of carrying amounts of long-term debt were as follows:

(in thousands)

Maturity Date

Interest rate (%)

Borrowing Limit

February 2024(1)

(5)

i 1,000,000

i —

January 2022 – October 2023(2)

i 2.65

–

i 5.10

i 30,460

i 20,952

i 50,713

November 2021(3)

i 5.20

i —

i 19,199

March 2022 – November 2026(4)

i 2.87

–

i 8.50

i 867,818

i 605,229

i 354,963

Total principal long-term debt

i 1,898,278

i 626,181

i 424,875

Less: current portion of long-term debt

( i 341,717)

( i 67,576)

Less: unamortized discounts

( i 1,274)

( i 3,957)

Total long-term debt

i 283,190

i 353,342

_____________

(1)Relates to the Company’s new revolving credit facility as described below.

(2)The Company entered into various loan agreements with fixed interest rates for general operating purposes.

(3)In November 2019, the Company entered into a fixed-rate term loan facility agreement, secured by certain of the Company’s accounts receivable. As of December 31, 2021, there was no outstanding balance on the fixed-rate term loan facility and the agreement was terminated.

(4)Relates to the Company’s term loan facility agreements as described below.

(5)Borrowings under the new revolving credit facility bear interest, at the Company’s option, at a rate per annum equal to (i) a base rate equal to the highest of (A) the prime rate, (B) the higher of the federal funds rate or a composite overnight bank borrowing rate plus i 0.50%, or (C) an adjusted LIBOR for a one-month interest period plus i 1.00% or (ii) an adjusted LIBOR plus a margin equal to i 1.00%.

New Revolving Credit Facility

In February 2021, the Company entered into a new i three-year senior unsecured credit facility (the “new revolving credit facility”) providing for revolving loans in an aggregate principal amount of up to $ i 475 million (which automatically increased to an aggregate principal amount of $ i 950 million based on the Company receiving at least $ i 2.0 billion in net proceeds from its IPO). The new revolving credit facility provides the Company the right to request incremental commitments up to $ i 1.25 billion, subject to customary conditions. In March 2021, the aggregate principal amount of the Company’s new revolving credit facility increased to an aggregate principal amount of $ i 1.0 billion as a result of its IPO. As of December 31, 2021, there was i no balance outstanding on the new revolving credit facility.

The new revolving credit facility contains customary affirmative and negative covenants, including certain financial covenants. The new revolving credit facility is guaranteed on a senior unsecured basis by all material restricted subsidiaries of the Company, subject to customary exceptions. Borrowings under the new revolving credit facility are not permitted to the extent any amounts are drawn under our existing revolving credit facility.

The new revolving credit facility requires us to (i) maintain a ratio of secured indebtedness to total consolidated tangible assets of less than i 35%, if we have $ i 1 or more of revolving loans or any unreimbursed drawn letters of credit outstanding under the new revolving credit facility at the end of each fiscal quarter and (ii) maintain a minimum amount of liquidity of at least $ i 625.0 million (or $ i 312.5 million to the extent the aggregate commitment of the new revolving credit facility is $ i 500 million).


Table of Contents

Term Loan Facility Agreements

In March 2017, the Company entered into a term loan facility agreement. The Company was required to pledge certain land, building, inventories, and short-term financial instruments as collateral. However, as a result of the FC Fire, the building and inventories were extensively damaged, and on August 4, 2021, the term loan facility agreement was amended to replace the original collateral with $ i 194 million in cash secured as collateral, to repay $ i 70 million of the outstanding principal balance and bring the borrowing limit to $ i 186 million which is due in April 2022. The amendment, which took place within the cure period, subsequently resulted in the Company being in compliance with its term loan facility agreement. Principal is to be paid at maturity and interest is paid on a quarterly basis.

In August 2020, the Company entered into a i 19-month term loan facility agreement to borrow up to $ i 152 million to finance the construction of a fulfillment center. The Company pledged up to $ i 182 million of certain existing land and buildings. The loan bears interest at a fixed rate of i 3.67%.

In August 2021, the Company entered into a new $ i 169 million i three-year term loan agreement. The Company pledged $ i 202 million of certain land and buildings as collateral. The loan bears interest at a fixed rate of i 3.155%. Principal is to be paid at maturity and interest is paid on a monthly basis.

In October 2021, the Company entered into a new i two-year loan agreement to borrow up to $ i 139 million to finance the construction of a fulfillment center. The Company pledged up to $ i 167 million of certain existing land and a building to be constructed as collateral. The loan bears interest at a fixed rate of i 3.45%.

In November 2021, the Company entered into a new i five-year term loan facility agreement to borrow up to $ i 47 million to finance the construction of a fulfillment center and a new i three-year term loan facility agreement to borrow up to $ i 23 million for general operating purposes. The Company pledged up to $ i 85 million of certain existing land and buildings. The loans bear interest at a fixed rate of i 3.78% and i 3.68%, respectively.

In December 2021, the Company entered into a new i two-year loan agreement to borrow up to $ i 152 million to finance the construction of a fulfillment center. The Company pledged up to $ i 182 million of certain existing land and a building to be constructed as collateral. The loan bears interest at a fixed rate of i 3.87%.

The Company was in compliance with the covenants for each of its borrowings and debt agreements as of December 31, 2021 and 2020.

The Company’s long-term debt is recorded at amortized cost. The fair value is estimated using Level 2 inputs based on the Company’s current interest rate for similar types of borrowing arrangements. The carrying amount of the long-term debt approximates its fair value as of December 31, 2021 and 2020, due primarily to the interest rates approximating market interest rates.

Future principal payments for long-term debt as of December 31, 2021 were as follows:


(in thousands)	Long-term debt
2022	$	i 342,202
2023	i 44,586
2024	i 191,902
2025	i —
2026	i 47,491
Thereafter	i —
Total	$	i 626,181


Table of Contents

9. i Convertible Notes and Derivative Instrument

Details of the carrying amount of convertible notes were as follows:


(in thousands)	December 31, 2021		December 31, 2020
Principal	$	i —	$	i 501,500
Add: Accrued and unpaid interest	i —		i 119,378
Less: Unamortized discount	i —		( i 31,027)
Total	$	i —	$	i 589,851

From February 23, 2018 to May 16, 2018, the Company issued convertible notes in an aggregate principal amount of $ i 502 million (total proceeds of $ i 507 million, which included a total net funding premium at issuance), the majority of which were purchased by existing unitholders of the Company’s preferred units, with a maturity equal to the earlier of (a) the fourth anniversary from the first issuance date, (b) the consummation of a liquidity event, or (c) upon an event of default, as defined in the LLC Agreement. In connection with the Company’s IPO in March 2021, the principal balance and the accrued interest on the convertible notes were automatically converted into i 171,750,446 shares of the Company’s Class A common stock.

The convertible notes had an annual effective interest rate of i 16.99%. The Company recorded interest expense from its convertible notes for the years ended December 31, 2021, 2020, and 2019 of $ i 20 million, $ i 91 million, and $ i 76 million respectively, consisting of $ i 15 million, $ i 59 million, and $ i 38 million of contractual interest expense and $ i 5 million, $ i 32 million, and $ i 38 million of debt discount amortization, respectively.

The convertible notes contained embedded derivatives that allowed or required the holders of the convertible notes to convert them into a variable number of the Company’s equity securities for a value equal to a significant premium over the then principal and accrued interest balance. These embedded derivatives were bifurcated and accounted for separately as a single, compound derivative instrument. The convertible notes did not convert to common shares based on this embedded feature, rather they converted based on a price calculated by dividing $ i 6.3 billion with the number of common equity securities, on an as-converted and as-exercised basis, outstanding on the closing of the IPO. Following the convertible notes conversion to shares of Class A common stock, the embedded derivatives no longer exist. There was i no change in fair value of the derivative instrument during the year ended December 31, 2021. The change in fair value of the derivative instrument resulted in a gain of $ i 150 million and a loss of $( i 37) million for the years ended December 31, 2020 and 2019, respectively, which was recognized in the consolidated statements of operations and comprehensive loss within “Other (expense) income, net.”

10. i Commitments and Contingencies

Commitments

The following summarizes the Company’s minimum contractual commitments as of December 31, 2021:

(in thousands)

Unconditional purchase obligations (unrecognized)

Long-term debt (including interest)

Operating leases

Total

2022

i 263,565

i 358,906

i 368,631

i 991,102

2023

i 195,448

i 54,034

i 347,391

i 596,873

2024

i 96,014

i 198,039

i 297,985

i 592,038

2025

i 80,288

i 1,795

i 241,229

i 323,312

2026

i 26,763

i 49,138

i 173,350

i 249,251

Thereafter

i —

i 366,430

Total undiscounted payments

i 662,078

i 661,912

i 1,795,016

i 3,119,006

Less: lease imputed interest

( i 306,673)

Total lease commitments

i 1,488,343


Table of Contents

Unconditional purchase obligations include legally binding contracts with terms in excess of one year that are not reflected on the consolidated balance sheets. These contractual commitments primarily relate to technology related service contracts, fulfillment center construction contracts, and software licenses. For contracts with variable terms, we do not estimate the total obligation beyond any minimum pricing as of the reporting date.

Legal Matters

From time to time, the Company may become party to litigation incidents and other legal proceedings, including regulatory proceedings, in the ordinary course of business. The Company assesses the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, the Company considers other relevant factors that could impact its ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. The Company's reserves may change in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of currently pending legal matters will not have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

11. i Redeemable Convertible Preferred Units and Stockholders'/Members' Equity (Deficit)

Prior to the Corporate Conversion, the Company’s Limited Liability Company Agreement (“LLC Agreement”), as amended and restated on April 11, 2019, authorized the issuance of i 1,448,632,049 preferred units, which were convertible into the same number of common voting units issued upon conversion of the preferred units, as well as the issuance of i 264,166,544 common units.

In December 2018, the Company entered into an agreement with SVF Investment (UK) Ltd. (“SVF”) to sell i 350,827,953 Class J preferred units for $ i 2.0 billion at i three separate closing dates. In December 2018, SVF acquired i 87,706,988 Class J preferred units for $ i 500 million, in March 2019 SVF acquired i 87,706,988 Class J preferred units for $ i 500 million, and in June 2019 SVF acquired i 175,413,977 Class J preferred units for $ i 1.0 billion. The agreement with SVF to sell preferred units is considered a forward sale contract recognized at fair value and was settled during the year ended December 31, 2019 with a resulting gain of $ i 36 million within “Other (expense) income, net.”

In April 2019, the Company sold i 1,754,139 Class J preferred units to one of its preferred unitholders for $ i 10 million.

In 2019, the Company repurchased from unitholders i 24,585,447 preferred units for $ i 100 million. In 2020, the Company repurchased from unitholders i 18,848,015 preferred units for $ i 96 million. A total of i 43,433,462 preferred units that were issued have subsequently been repurchased and retired as of December 31, 2020.


Table of Contents

Below are the details for the Company’s preferred units:

(in thousands, except units and conversion price)

Class

Units Authorized

Units Outstanding

Per Unit Original Issue Price
Per Share

Liquidation
Preference

Carrying Value,
Net of Issuance
Costs

Class A

i 150,000,000

i 0.020

i 3,000

i —

Class B

i 70,000,000

i 63,679,618

i 0.020

i 1,274

i 713

Class C

i 138,914,150

i 131,200,516

i 0.032

i 4,198

i 3,017

Class D

i 120,729,910

i 119,683,169

i 0.163

i 19,508

i 18,477

Class E

i 126,530,590

i 107,540,155

i 0.245

i 26,347

i 24,900

Class F

i 65,023,740

i 64,684,888

i 1.845

i 119,344

i 118,691

Class G

i 107,063,000

i 98,119,859

i 2.830

i 277,691

i 277,354

Class H

i 217,328,460

i 4.601

i 1,000,000

i 933,389

Class I

i 100,460,107

i 24,646,225

i 4.977

i 122,666

i 115,671

Class J

i 352,582,092

i 5.700

i 2,010,000

i 1,973,399

Total

i 1,448,632,049

i 1,329,464,982

i 3,584,028

i 3,465,611

Conversion and Voting Rights

Each preferred unitholder had the right at any time to convert all or any portion of their preferred units into common voting units without additional consideration. Additionally, upon either i) the receipt by the Company of written notice of the election (A) by the holders of two-thirds of the preferred units then issued and outstanding, voting together as a single class, (B) approval of the Class F preferred holders, voting as a separate class, (C) approval of the Class G preferred holders, voting as a separate class, and (D) approval of the Class H preferred holders, voting as a separate class, and (E) approval of the Class I preferred holders, voting as a separate class (F) approval of the Class J preferred holders, voting as a separate class to cause the conversion of all preferred units or ii) a qualified public offering, as defined in the LLC Agreement, all preferred units automatically converted into common voting units without additional consideration. Each preferred unit was convertible into a number of common voting units determined by dividing the applicable preferred original issue price by the corresponding class’ conversion price then in effect, all as defined in the LLC Agreement. The initial conversion price per share of the redeemable convertible preferred units was the original issue price per share. The conversion price was subject to adjustments as specified in the LLC Agreement.

Each common voting unit was entitled to cast i one vote, and each preferred unit was entitled to cast the number of votes equal to the number of whole common voting units into which each preferred unit held by such holder was convertible. Common units conferred no voting rights, except with respect to matters on which the holder was expressly granted voting rights under the Delaware Limited Liability Company Act.

Liquidation Event and Distributions

No preferred units were unilaterally redeemable by either the unitholder or the Company; however, the Company’s LLC Agreement provided that upon any liquidation event (as defined in the LLC Agreement) such units would be entitled to receive cash and/or property to all members pro rata in proportion to their percentage units. In the event of a liquidation event, all distributions were made in the following order: Class J preferred units, Class I preferred units, Class H preferred units, Class G preferred units, Class F preferred units, Class E preferred units, Class D preferred units, Class C preferred units, Class B preferred units, and Class A preferred units. As long as amounts remain for distribution, each class of preferred units received distributions in proportion to their capital contribution amounts until each class had received an amount equal to its aggregate total capital contributions amount. The remaining balance, if any, were distributed to all holders of common voting units and common units on a pro rata basis in proportion to their percentage units, as defined in the LLC Agreement.

The liquidation event provisions caused preferred units to be redeemable on occurrence of an event that is not solely in the control of the Company. Therefore, all classes of preferred units (i.e. Class J, Class I, Class H, Class G, Class F, Class E, Class D, Class C, Class B and Class A) were classified as mezzanine equity rather than as a component of members’ deficit.


Table of Contents

Conversion to Corporation

Prior to the corporate conversion and IPO, the Company’s management committee (“Management Committee”) could have proposed that the Company directly or indirectly convert to a corporation by incorporation, merger, contribution or other permissible manner, or to engage in a similar restructuring for the purpose of employing the corporate form in the capital structure of the Company in connection with a qualified public offering, as defined in the LLC Agreement, or otherwise with the prior written consent of the requisite preferred holders, as defined in the LLC Agreement. Upon a conversion in connection with a qualified public offering, as defined in the LLC Agreement, all units would be converted into a number of shares of common stock of the successor corporation determined by dividing (i) the amount that would be distributed in respect of such unit upon a liquidity event, based on the price per share at which shares of common stock of the successor corporation would be sold to the public in such offering (the “Per Share Offering Price”), by (ii) the Per Share Offering Price. If the foregoing determination is reasonably required to be made prior to the determination of the actual Per Share Offering Price, the mid-point of the underwriters’ proposed range of offering prices would be used as the Per Share Offering Price. In the event of conversion, the founder and CEO would receive only high vote Class B common stock in the successor corporation and all other members would receive only low vote Class A common stock. Class B common stock entitles the holder to i 29 votes for each share held and Class A common stock entitles i one vote for each share held.

If a conversion would have occurred not in connection with a qualified public offering, the then outstanding units would have been converted into, or would otherwise entitle the holders thereof to, corporate stock or other securities having substantially the same terms and conditions as such units.

Pursuant to the Corporate Conversion and IPO:

• i 1,196,605,432 preferred units and i 85,579,584 common units (which include i 22,443,220 PIUs), in each case, automatically converted into an equal number of shares of Class A common stock, except with respect to a conversion adjustment which reduced the outstanding common units designated as PIUs by i 75,862 common units, and excluding any such preferred units and common units held by Mr. Bom Kim; and

• i 132,859,550 preferred units held by Mr. Kim and i 43,143,440 common units held by Mr. Kim, in each case, converted into an equal number of shares of Class B common stock.

On March 15, 2021, the Company completed its IPO, in which it issued and sold i 100,000,000 shares of its Class A common stock at a price of $ i 35.00 per share. The Company received net proceeds of approximately $ i 3.4 billion from its IPO after deducting underwriting discounts of $ i 69 million and other offering costs. Also, the owner of our Class B common stock converted i i 1,200,000 / shares of Class B common stock into Class A common stock, which were sold in the IPO.

Our certificate of incorporation provides for two classes of common stock, and authorizes shares of undesignated preferred stock, the rights, preferences, and privileges of which may be designated from time to time by our board of directors. Our authorized capital stock consists of i 10,000,000,000 shares of Class A common stock, par value $ i 0.0001 per share; i 250,000,000 shares of Class B common stock, par value $ i 0.0001 per share; and i 2,000,000,000 shares of undesignated preferred stock, par value $ i 0.0001 per share. i i i i No / / / preferred stock was issued and outstanding as of December 31, 2021 and 2020.

The shares of Class A common stock and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to i one vote. Each share of Class B common stock is entitled to i twenty-nine votes. In addition, each share of our Class B common stock will convert automatically into i one share of our Class A common stock upon any transfer, whether or not for value, except certain transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss includes all changes in equity during a period that have yet to be recognized in income. The major components are foreign currency translation adjustments and actuarial gains (losses) on the Company’s defined severance benefits. As of December 31, 2021 and 2020, the ending balance in accumulated other comprehensive loss related to foreign currency translation adjustments was $ i 36 million and $( i 4) million, respectively, and the amount related to actuarial losses on defined severance benefits was $( i 84) million and $( i 27) million, respectively.


Table of Contents

12. i Equity-based Compensation Plans

Our board of directors adopted the 2021 Plan in February 2021, which was subsequently approved by our stockholders in February 2021. The 2021 Plan provides for the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other equity-based awards (or the cash equivalent thereof). Initially, the maximum number of shares of the Company’s Class A common stock that may be issued under the 2021 Plan is i 215,103,732 shares. In addition, the number of shares of the Company’s Class A common stock reserved for issuance under the 2021 Plan will be increased on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to i 5% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors.

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 the Company repurchases them or they are forfeited.

RSUs

The Company had previously granted REUs under the 2011 Plan, which vest upon the satisfaction of both a service-based condition and a performance-based condition. In connection with the Company’s Corporate Conversion and IPO, the outstanding awards were converted into RSUs. RSUs generally vest over i 2 to i 4 years from the vesting start date, subject to the recipient remaining an employee of the Company at each vesting date.

For the RSUs with the performance condition satisfied upon the completion of the Company’s IPO, the Company recorded $ i 41 million in equity-based compensation expense for the year ended December 31, 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 will be recorded over the remaining requisite service period.

As of December 31, 2021, the Company had $ i 441 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 i 2.9 years, net of estimated forfeitures.

Stock Options

The Company had previously granted unit options under the 2011 Plan, which vest upon the satisfaction of a service-based condition. In connection with the Company’s Corporate Conversion and IPO, the outstanding awards were converted into stock options.

The Company’s stock options are granted with exercise prices equal to the estimated fair value of the common shares at the date of grant. The stock options generally expire i ten years from the grant date.

The total unrecognized compensation expense related to unvested stock options was $ i 37 million, which will be recognized over the weighted-average remaining service period of approximately i 2.0 years, net of estimated forfeitures.

PIUs

Prior to the IPO, the Company granted common units designated as PIUs that vested upon the satisfaction of a service-based condition and with respect to certain awards, vesting accelerates upon the occurrence of an IPO. Holders of vested PIUs had similar rights to those of common unit holders. The PIUs (with the exception of those granted to the Company’s Chief Executive Officer, which convert into an equal number of shares of Class B common stock) converted to shares of Class A common stock at a ratio based on the excess of the per common unit value of the Company at the time of a Corporate Conversion over the per common unit value designated at the grant date of the PIUs (the participation threshold), as specified in the underlying award agreements. All outstanding PIUs automatically converted into i 22,367,358 shares of Class A common stock and i 43,143,440 shares of Class B common stock at the time of the Corporate Conversion. Furthermore, the accelerated vesting condition of i 13 million unvested PIUs, with a weighted average grant-date fair value of $ i 1.95, were satisfied upon the completion of the Company's IPO and thus, the Company recorded $ i 25 million in equity-based compensation related to the accelerated vesting of PIUs for the year ended December 31, 2021. The Company had i no PIUs granted during 2021 and i no outstanding PIUs as of December 31, 2021. The weighted-average grant-date fair value of PIUs granted during 2020 was $ i 2.44 and i no PIUs were granted during 2019.


Table of Contents

As of December 31, 2021, the Company has i 153 million shares of common stock available for future issuance to employees.

The tables below summarize the Company’s stock option and RSU activity:

Outstanding Options

(in thousands, except unit price)

Number
of
Options

Weighted
Average Exercise
Price

Weighted-Average
Remaining Contractual
Term (in years)

Aggregate Intrinsic Value

December 31, 2018

i 68,836

i 1.71

i 8.20

i 26,976

Granted

i 30,917

i 2.03

Forfeited / cancelled

( i 12,401)

i 1.95

Exercised

( i 5,077)

i 1.34

December 31, 2019

i 82,275

i 1.81

i 7.95

i 34,636

Granted

i 9,834

i 2.59

Forfeited / cancelled

( i 8,190)

i 2.06

Exercised

( i 18,215)

i 1.59

i 65,704

i 1.95

i 7.40

i 401,846

Granted

i 6,608

i 16.46

Forfeited / cancelled

( i 5,910)

i 2.02

Exercised

( i 34,767)

i 1.79

i 31,635

i 5.15

i 6.94

i 766,531

Exercisable as of December 31, 2021

i 12,134

i 4.02

i 6.53

i 307,704

Expected to vest as of December 31, 2021

i 17,261

i 6.31

i 7.12

i 398,165

i i

Outstanding RSUs

(in thousands, except unit price)

Number of RSUs

Weighted Average Grant-Date Fair Value

December 31, 2018

i 261

i 1.97

Granted

i 7,929

i 2.10

Vested

i —

Forfeited / cancelled

( i 725)

i 2.10

December 31, 2019

i 7,465

i 2.09

Granted

i 14,011

i 7.06

Vested

( i 53)

i 2.06

Forfeited / cancelled

( i 658)

i 4.58

i 20,765

i 4.80

Granted

i 17,646

i 32.17

Vested

( i 12,478)

i 3.97

Forfeited / cancelled

( i 2,422)

i 25.64

i 23,511

i 23.80

/ /


Table of Contents

Equity-based Compensation Expense

Stock options and RSUs are measured at the estimated fair value on the measurement date, which is typically the grant date. In the first quarter of 2021, the Company changed its policy for recognizing equity-based compensation expense from the graded vesting attribution method of accounting to the straight-line attribution method of accounting for its equity-based compensation arrangements with service only vesting conditions. For additional information, see Note 2 — "Change in Accounting Principle."

The fair value of stock options is estimated on the grant date with the following assumptions:

December 31,

2021

2020

2019

Weighted-average expected term (years)

i 4.27

i 6.15

i 6.00

Weighted-average expected volatility

i 70%

i 66%

i 60%

Expected dividend yield

i —

Risk-free interest rate

i 0.62%

i 0.34%

i 1.68%

i 1.59%

i 2.98%

The following information is provided for our stock options:


(in thousands, except per unit amounts)	December 31,
	2021		2020		2019
Weighted average grant-date fair value of stock options granted	$	i 16.46	$	i 1.57	$	i 1.15
Intrinsic fair value of stock options exercised	$	i 675,935	$	i 44,076	$	i 3,823

•Expected Term - The expected term represents the period that the Company’s equity-based awards are expected to be outstanding, which is determined based on the contractual terms, vesting schedules and expectations of future option holder behavior.

•Expected Volatility - As the Company’s option grants occurred prior to the IPO, and the Company had no trading history for the Company’s common units, the expected price volatility for the Company’s common units was estimated by taking the average historical price volatility for industry peers, which the Company had designated, based on daily price observations over a period equivalent to the expected term of the unit option grants. Industry peers, which the Company had designated, consisted of several public companies in the industry similar in size, stage of life cycle and financial leverage. These industry peers were also utilized in the Company’s common unit valuations.

•Expected Dividend Yield - The Company has never declared or paid any cash dividends to holders of common shares and does not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of i zero.

•Risk-free Interest Rate - 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.

The following table presents the effects of equity-based compensation, as retrospectively adjusted for the change in accounting principle described above, in the consolidated statements of operations and comprehensive loss:

Year Ended December 31,

(in thousands)

2021

2020

2019

Cost of sales

i 10,981

i 620

i 365

Operating, general and administrative

i 238,364

i 30,711

i 20,458

Total

i 249,345

i 31,331

i 20,823


Table of Contents

13. i Income Taxes

The Company is subject to income taxation through certain of its subsidiaries primarily in the United States, China, South Korea and throughout other Asian countries.

The components of income tax expense (benefit) were as follows:

Year Ended December 31,

(in thousands of US dollars)

2021

2020

2019

Current taxes:

United States

i 2

i 1

i 144

Foreign - Korea

i 5

i —

( i 641)

Foreign - Other

i 995

i 291

i 256

Current taxes

i 1,002

i 292

( i 241)

Deferred taxes:

United States

i —

Foreign - Korea

i —

Foreign - Other

i —

Deferred taxes

i —

Income tax expense (benefit)

i 1,002

i 292

( i 241)

/ i

The components of loss before income taxes are as follows:

Year Ended December 31,

(in thousands of US dollars)

2021

2020

2019

United States

( i 296,529)

( i 8,771)

( i 109,109)

Foreign - Korea

( i 1,226,675)

( i 455,683)

( i 589,358)

Foreign - Other

( i 18,384)

i 1,589

i 1,341

Loss before income taxes

( i 1,541,588)

( i 462,865)

( i 697,126)

/ i

The reconciliation of federal statutory income tax rate to our effective income tax rate was as follows:


	Year Ended December 31,
	2021		2020		2019
Tax calculated at statutory tax rate	i 21.00	%	i 21.00	%	i 21.00	%
Statutory rate difference	i 2.83	%	i 3.01	%	( i 2.40	%)
Change in valuation allowances	( i 25.83	%)	( i 24.97	%)	( i 20.18	%)

Consolidated eliminations	i —	%	i —	%	i 1.27	%
Other	i 1.94	%	i 0.90	%	i 0.34	%
Effective tax rate expressed in %	( i 0.06	%)	( i 0.06	%)	i 0.03	%

The Company’s resulting effective tax rate differs from the applicable statutory rate primarily due to the valuation allowance against its deferred tax assets.


Table of Contents

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 thousands of US dollars)	December 31, 2021		December 31, 2020
Deferred tax assets
Provision and allowances	$	i 43,156	$	i 48,162
Depreciation	i 5,212		i —
Accrued expenses	i 43,223		i 19,936
Amortization	i 49,529		i 69,437
Defined severance benefits	i 68,421		i 39,827
Lease liabilities	i 361,420		i 257,855
Net operating loss carryforwards	i 1,019,583		i 767,740
Tax credits	i 23,066		i 15,079
Other	i 6,795		i 275
Total deferred tax assets	i 1,620,405		i 1,218,311
Less: valuation allowance	( i 1,284,380)		( i 975,187)
Total deferred tax assets net of valuation allowance	$	i 336,025	$	i 243,124

Deferred tax liabilities
Prepaid expenses	$	( i 88)	$	( i 438)
Accrued income	( i 1,745)		( i 422)
Depreciation	i —		( i 1,860)
Leasehold improvements	i —		( i 2,973)

Lease asset	( i 333,965)		( i 237,131)
Loan payable	( i 89)		( i 277)
Other	( i 138)		( i 23)
Total deferred liabilities	( i 336,025)		( i 243,124)
Net deferred tax assets/(liabilities)	$	i —	$	i —

The Company evaluates its deferred tax assets to determine if a valuation allowance is required to reduce its deferred tax assets to an amount expected to be realized. Realization of the Company’s deferred tax assets is dependent on the generation of future taxable income. In considering the need for a valuation allowance, the Company considers its historical, as well as future projected taxable income, along with other positive and negative evidence in assessing the realizability of its deferred tax assets. The Company’s valuation allowance was $ i 1.3 billion and $ i 975 million as of December 31, 2021 and 2020, respectively. The net change in the total valuation allowance was an increase of $ i 309 million and $ i 253 million in 2021 and 2020, respectively, primarily due to increased net operating loss carryforwards and lease liabilities.

At December 31, 2021, the Company has net operating loss carryforwards for corporate income tax purposes of $ i 3.9 billion in Korea, which are available to offset future corporate taxable income, if any, and expire between 2024 and 2036. The Company has net operating loss carryforwards for corporate income tax purposes of $ i 373 million in the United States, of which $ i 18 million expires between 2034 and 2037 and the remaining $ i 355 million that can be carried over indefinitely. In addition, the Company has corporate tax credit carryforwards of $ i 23 million in Korea which are available to reduce future corporate regular income taxes and expires between 2025 and 2031.

Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The impacts of uncertain tax positions are recognized only after determining a more-likely-than-not probability that the uncertain tax positions will not withstand challenge, if any, from the relevant taxing authorities. The Company did i i no / t have any material uncertain tax positions as of December 31, 2021 and 2020.

The open tax years for the Company’s major tax jurisdictions are 2018 - 2021 for the United States and 2016 - 2021 for Korea.


Table of Contents

14. i Defined Severance Benefits

Defined severance benefits are for employees of the Company’s Korean subsidiaries. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees of the Korean subsidiaries receive defined benefits as severance payments upon leaving the Company based on employment length and pay rate.

Changes in defined severance benefits obligation were as follows:


(in thousands)	December 31, 2021		December 31, 2020
Beginning balance	$	i 164,573	$	i 87,206
Current service cost	i 120,784		i 70,019
Interest expense	i 2,869		i 1,310
Actuarial losses arising from experience adjustments, demographic assumptions, and changes in financial assumptions	i 52,528		i 18,005
Payments from plans	( i 49,712)		( i 23,159)
Plan changes/amendments	i 10,263		i —
Cumulative effects of foreign currency translation	( i 18,273)		i 11,192
Ending balance	$	i 283,032	$	i 164,573

Amounts recognized in the consolidated balance sheets consist of $ i 76 million and $ i 58 million of current liabilities and $ i 207 million and $ i 107 million of noncurrent liabilities as of December 31, 2021 and 2020, respectively.

The accumulated benefit obligation for all defined severance benefits was $ i 210 million and $ i 147 million at December 31, 2021 and 2020, respectively.

Net periodic cost consists of the following:

Year Ended December 31,

(in thousands)

2021

2020

2019

Current service costs

i 120,784

i 70,019

i 42,097

Interest expense

i 2,869

i 1,310

i 1,061

Amortization of:

Prior service cost

i 90

i —

Net actuarial loss

i 4,471

i 140

i —

Curtailments/Settlements

i —

i 97

Net periodic benefit cost

i 128,214

i 71,469

i 43,255

/ i

The principal actuarial assumptions used to determine defined severance benefits obligation were as follows:

Incorporated by Reference

Discount rates

i 2.70%

–

i 3.00%

i 1.73%

–

i 2.57%

Salary growth rates

i 5.00%

–

i 5.24%

i 1.48%

–

i 5.00%

The principal actuarial assumptions used to determine the net periodic cost were as follows:

Year Ended December 31,

2021

2020

2019

Discount rates

i 1.73%

–

i 2.57%

i 1.74%

–

i 2.45%

i 2.30%

–

i 2.74%

Salary growth rates

i 1.48%

–

i 5.00%

i 1.51%

–

i 5.00%

i 1.49%

–

i 5.00%


Table of Contents

The expected maturity analysis of undiscounted defined severance benefits as of December 31, 2021 was as follows:

(in thousands)

Less than 1 year

Between 1-2 years

Between 2-5 years

Over 5 years

Total

Defined severance benefits

i 80,455

i 90,854

i 210,581

i 256,755

i 638,645

15. i Net Loss per Share

The Company computes net loss per share using the two-class method required for multiple classes of common stock and participating securities. As the liquidation and dividend rights are identical, the undistributed earnings or loss are allocated on a proportionate basis to each class of common stock, and the resulting basic and diluted net loss per share attributable to common stockholders are therefore the same for Class A and Class B common stock on both an individual and a combined basis. Basic net loss per share is computed using the weighted-average number of shares of Class A and Class B common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of Class A and Class B common stock and potentially dilutive Class A and Class B potential common shares outstanding during the period. The Company's basic and diluted net loss per share are the same because the Company has generated net loss to common stockholders. During the years ended December 31, 2020 and 2019 the Company repurchased certain preferred units at a premium over the carrying values, which increased net loss attributable to common stockholders.

As discussed in Note 1 — "Basis of Presentation and Summary of Significant Accounting Policies," immediately prior to the IPO, the Company completed the Corporate Conversion. The Corporate Conversion resulted in a change of equity interests from common units to shares of common stock, but no change in relative shareholder rights, rank, or value before and after this reorganization transaction. As such, the Corporate Conversion of common units was considered equivalent to a stock split and requires retrospective treatment for net loss per share purposes. All share and per share information has been retroactively adjusted to reflect the Corporate Conversion for all periods presented. PIUs outstanding prior to the Corporate Conversion were considered compensatory arrangements that were settled with shares of Class A or Class B common stock at the time of the Corporate Conversion and have been included as outstanding shares subsequent to that date. Similarly, any preferred units that were converted in accordance with their terms into shares of Class A or Class B common stock at the time of the Corporate Conversion have also been included as outstanding shares subsequent to that date.

The following table presents the calculation of basic and diluted net loss per share:

Year Ended December 31,

(in thousands, except per share amounts)

2021

2020

2019

Numerator:

Net loss

( i 1,542,590)

( i 463,157)

( i 696,885)

Less: premium on repurchase of redeemable convertible preferred units

i —

( i 92,734)

( i 71,415)

Net loss attributable to Class A and Class B common stockholders

( i 1,542,590)

( i 555,891)

( i 768,300)

Denominator:

Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted

i i 1,423,887 /

i i 29,012 /

i i 19,463 /

Net loss attributable to Class A and Class B common stockholders per share, basic and diluted

( i i 1.08 / )

( i i 19.16 / )

( i i 39.48 / )

100


Table of Contents

The following have been excluded from the computation of basic and diluted net loss per share attributable to Class A and Class B common stockholders as their effect would have been anti-dilutive:

Year Ended December 31,

(in thousands of equivalent common shares)

2021

2020

2019

Convertible debt

i —

i 178,567

i 148,942

Redeemable convertible preferred units

i —

i 1,329,465

i 1,348,313

Equity compensation awards

i 46,228

i 79,747

i 58,645

101


Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2021, our disclosure controls and procedures were evaluated, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to assess whether they are effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of December 31, 2021, due to the material weaknesses in our internal control over financial reporting, as further described below. As a result, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, our consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Management’s Annual Report on Internal Control Over Financial Reporting

This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the company's registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Previously Reported Material Weakness

As disclosed in Part I—Item 1A. "Risk Factors" contained elsewhere in this Annual Report on Form 10-K, we previously identified material weaknesses in our internal control over financial reporting related to (i) the design and effectiveness of information technology general controls, (ii) inadequate segregation of duties, and (iii) inadequate internal control over the timely preparation and review of account reconciliations. We have concluded that these material weaknesses arose because we did not have sufficient qualified accounting resources, formalized processes, and policies necessary to satisfy the accounting and financial reporting requirements of a public company. We have determined that these control deficiencies constituted material weaknesses in our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in our internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis. These deficiencies could result in additional misstatements to our consolidated financial statements that would be material and would not be prevented or detected on a timely basis.

Remediation Plan

Management has developed and continues to execute a remediation plan to address the previously disclosed material weaknesses. We are actively engaged in the remediation of each of the outstanding material weaknesses, including utilizing the assistance of outside advisors where appropriate.

To remediate the existing material weaknesses, additional time is required to demonstrate the effectiveness of the remediation efforts. The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Other than the actions we are taking to remediate the material weaknesses relating to our internal control over financial reporting, there was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

102


Table of Contents

Limitations on Effectiveness of Controls and Procedures

Our management, including our CEO and CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information

Disclosure Pursuant to Section 13(r) of the Exchange Act

Since becoming an issuer in 2021, we processed seven orders with a total value of approximately $230 for delivery to the Iranian Embassy in Seoul, South Korea that were successfully blocked from delivery and refunded, and we processed and delivered eight orders with a total value of approximately $360 to certain Korean individuals at the same address. The shipments consisted of food items, health, beauty, and paper products. We are unable to accurately calculate the net profit attributable to these transactions. There were no transactions identified for disclosure pursuant to Section 13(r) of the Exchange Act for the fourth quarter of 2021. We do not plan to sell to individuals at this address in the future, and continue to take steps to prevent and block such sales and to enhance our policies and procedures to identify transactions associated with persons subject to U.S. sanctions against Iran.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

103


Table of Contents

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item, including information about our Directors, Executive Officers and Audit Committee and Code of Business Conduct and Ethics, is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the SEC, no later than 120 days after December 31, 2021. To the extent permissible under applicable rules, we intend to disclose amendments to our Code of Business Conduct and Ethics, as well as waivers of the provisions thereof granted to executive officers and directors, on our investor relations website under the heading “Corporate Governance” at www.ir.aboutcoupang.com.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Our independent registered public accounting firm is i Samil PricewaterhouseCoopers, i Seoul, Republic of Korea (PCAOB ID: i 1103).

104


Table of Contents

PART IV

Item 15. Exhibits and Financial Statement Schedules

a) Documents filed as part of this report:

1) Financial Statements (Item 8);

2) Financial Statement Schedules. Financial Statement Schedules of the Company, as required for the years ended December 31, 2021, 2020, and 2019, consist of Schedule I - Condensed Financial Information of Coupang, Inc. Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial statements, including the notes thereto

Exhibit Number

Description of Exhibit

Provided Herewith

Form

File No.

Exhibit

Filing Date

3.1

Certificate of Incorporation of the Registrant.

10-Q

Bylaws of the Registrant.

3.1

November 12, 2021

3.2

10-Q

Sixth Amended and Restated Registration Rights Agreement, by and among the Registrant and certain of its stockholders, dated December 21, 2018.

3.2

November 12, 2021

4.1

S-1

4.1

Description of Securities.

4.2

10.1

English Translation of Lease Agreement, dated September 13, 2016, by and among Hana Bank, Hyundai Investments Asset Management Co., Ltd. and Coupang Corp.

S-1

10.1

English Translation of First Amendment to Lease Agreement, by and among Hana Bank, Hyundai Investments Asset Management Co., Ltd., and Coupang Corp.

10.2

S-1

10.1

Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.

10.3

S-1

10.1

Coupang, LLC Third Amended and Restated 2011 Equity Incentive Plan, as amended, and related form agreements.

10.4+

S-8

333-254117

99.1

March 11, 2021

10.5+

Coupang, Inc. 2021 Equity Incentive Plan, and related form agreements.

S-1/A

Amended Executive Severance Policy.

10.5

March 1, 2021

10.6+

10-Q

Employment Agreement, by and between the Registrant and Bom Kim .

10.1

August 16, 2021

10.6+

10-Q

10.6

Employment Agreement, by and between the Registrant and Gaurav Anand.

10.7+

10-Q

10.7

Employment Agreement, by and between the Registrant and Hanseung Kang.

10.8+

10-Q

10.8

Employment Agreement, by and between Coupang Global, LLC and Thuan Pham.

10.9+

10-Q

10.10

Employment Agreement, by and between the Registrant and Harold Rogers.

10.10+

10-Q

10.11

Revolving Credit and Guaranty Agreement, dated as of February 27, 2021, among Coupang, Inc. as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

10.11

10-Q

10.12

First Amendment to Revolving Credit and Guaranty Agreement, dated as of August 3 , 2021, among the Registrant, as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative age nt.

10.12

10.13

Second Amendment to Revolving Credit and Guaranty Agreement, dated as of December 2, 2021, among the Registrant, as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

10.14+

Form of Non -Employee Director Compensation Policy .

10.15

Third Amendment to Revolving Credit and Guaranty Agreement, dated as of March 1 , 2022, among the Registrant, as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

21.1

List of Significant Subsidiaries of the Registrant.

23.1

Consent of Samil PricewaterhouseCoopers, independent registered public accounting firm.

105


Table of Contents

31.1

Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certifications of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certifications of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

_____________


+			Indicates management contract or compensatory plan
*			The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Coupang, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

106


Table of Contents

COUPANG, INC.

Schedule I - Condensed Financial Information of Parent (COUPANG, INC.)

Condensed Balance Sheets

(in thousands)


	December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	i 2,358,035	$	i 6,336
Other current assets	i 46,386		i 527
Total current assets	i 2,404,421		i 6,863

Other long-term assets	i 1,426		i —
Investment in subsidiaries	( i 145,577)		( i 7,245)
Total assets	$	i 2,260,270	$	( i 382)

Liabilities, redeemable convertible preferred units and stockholders'/members' equity (deficit)
Current liabilities:

Other current liabilities	$	i 84,313	$	i 13,018
Total current liabilities	i 84,313		i 13,018

Convertible notes	i —		i 589,851

Total liabilities	i 84,313		i 602,869

Redeemable convertible preferred units	i —		i 3,465,611
Stockholders'/members' equity (deficit)
Common units	i —		i 45,122
Class A and Class B common stock	i 175		i —
Additional paid-in capital	i 7,874,038		i 25,036
Accumulated other comprehensive loss	( i 47,739)		( i 31,093)
Accumulated deficit	( i 5,650,517)		( i 4,107,927)
Total stockholders'/members' equity (deficit)	i 2,175,957		( i 4,068,862)
Total liabilities, redeemable convertible preferred units and stockholders'/members' equity (deficit)	$	i 2,260,270	$	( i 382)

See accompanying notes to condensed financial statements.

107


Table of Contents

COUPANG, INC.

Schedule I - Condensed Financial Information of Parent (COUPANG, INC.)

Condensed Statements of Operations and Comprehensive Loss

(in thousands)

Year Ended December 31,

2021

2020

2019

Management service fee revenues

i 17,003

i —

Operating cost and expenses

( i 349,439)

( i 52,067)

( i 21,966)

Interest expense

( i 21,580)

( i 91,035)

( i 79,738)

Other (expense) income, net

i 2,575

i 149,835

( i 1,110)

Loss before equity in losses of subsidiaries

( i 351,441)

i 6,733

( i 102,814)

Equity in losses of subsidiaries

( i 1,191,149)

( i 469,890)

( i 594,071)

Net loss

( i 1,542,590)

( i 463,157)

( i 696,885)

Less: premium on repurchase of redeemable convertible preferred units

i —

( i 92,734)

( i 71,415)

Net loss attributable to Class A and Class B common stockholders

( i 1,542,590)

( i 555,891)

( i 768,300)

Other comprehensive income (loss):

Foreign currency translation adjustments, net of tax

i 40,844

( i 20,730)

i 3,299

Actuarial loss on defined severance benefits, net of tax

( i 57,490)

( i 18,005)

( i 9,011)

Total other comprehensive loss

( i 16,646)

( i 38,735)

( i 5,712)

Comprehensive loss

( i 1,559,236)

( i 501,892)

( i 702,597)

See accompanying notes to condensed financial statements.

108


Table of Contents

COUPANG, INC.

Schedule I - Condensed Financial Information of Parent (COUPANG, INC.)

Condensed Statements of Cash Flows

(in thousands)

Year Ended December 31,

2021

2020

2019

Operating activities:

Net cash (used in) provided by operating activities

( i 57,783)

( i 7,587)

i 7,429

Investing activities:

Capital contribution to subsidiaries

( i 1,273,629)

( i 184,490)

( i 2,044,205)

Return of capital contribution from subsidiaries

i 202,834

i 253,921

i 817,977

Net cash (used in) provided by investing activities

( i 1,070,795)

i 69,431

( i 1,226,228)

Financing activities:

Repurchase of common units and preferred units

i —

( i 97,043)

( i 114,610)

Proceeds from issuance of common units and preferred units, net of issuance costs

i 3,431,277

i 28,613

i 1,516,378

Deferred offering costs paid

( i 11,618)

i —

Proceeds from issuance of common stock/units, equity-based compensation plan

i 62,281

i —

Repayment of short-term borrowings

i —

( i 200,000)

Other, net

( i 1,663)

i —

Net cash provided by (used in) financing activities

i 3,480,277

( i 68,430)

i 1,201,768

Cash and cash equivalents:

Net increase (decrease) in cash and cash equivalents

i 2,351,699

( i 6,586)

( i 17,031)

Cash and cash equivalents as of beginning of the period

i 6,336

i 12,922

i 29,953

Cash and cash equivalents as of end of the period

i 2,358,035

i 6,336

i 12,922

See accompanying notes to condensed financial statements.

109


Table of Contents

Coupang, Inc.

Schedule I - Condensed Financial Information of Parent (Coupang, Inc.)

Notes to Condensed Financial Statements

1.Basis of Presentation

These condensed Parent company-only financial statements have been derived from its consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto of Coupang, Inc. and subsidiaries included in Part II, Item 8 of this Form 10-K. The Parent’s significant accounting policies are consistent with those described in Note 1 — "Description of Business and Summary of Significant Accounting Policies" in Part II, Item 8, except that all subsidiaries are accounted for as equity method investments.

Certain subsidiaries in Korea hold various licenses and/or are regulated by governmental requirements. As a result, the ability of these subsidiaries to pay dividends or loan money to our Parent company is restricted due to terms which require the subsidiaries to meet certain financial covenants, including maintaining a positive net equity balance; having a minimum percentage of its total assets in low-risk, cash-like assets; and maintaining a minimum current asset to current liability ratio. In addition, the Parent has certain regulatory restrictions that only allow dividend payments to be made while maintaining a positive net equity balance or if dividends are paid out of the current years' income, if any.

2.Revolving Credit Facility

In February 2021, the Parent entered into a new i three-year senior unsecured credit facility (the “new revolving credit facility”) providing for revolving loans in an aggregate principal amount of up to $ i 475 million (which automatically increased to an aggregate principal amount of $ i 950 million based on the Parent receiving at least $ i 2.0 billion in net proceeds from its IPO). The new revolving credit facility provides the Parent the right to request incremental commitments up to $ i 1.25 billion, subject to customary conditions. In March 2021, the aggregate principal amount of the Parent’s new revolving credit facility increased to an aggregate principal amount of $ i 1.0 billion as a result of its IPO. As of December 31, 2021, there was i no balance outstanding on the new revolving credit facility.

The new revolving credit facility contains customary affirmative and negative covenants, including certain financial covenants. The Parent was in compliance with the covenants as of December 31, 2021. The new revolving credit facility is guaranteed on a senior unsecured basis by all material restricted subsidiaries of the Parent, subject to customary exceptions. Borrowings under the new revolving credit facility are not permitted to the extent any amounts are drawn under our existing revolving credit facility.

110


Table of Contents

Item 16. Form 10-K Summary

None.

111


Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


COUPANG, INC.

By:			/s/ *Bom Kim*
			Bom Kim
			Chief Executive Officer and Chairman of the Board

Dated: March 3, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Bom Kim

Chief Executive Officer and Chairman of the Board

Bom Kim

(Principal Executive Officer)

/s/ Gaurav Anand

Chief Financial Officer

Gaurav Anand

(Principal Financial Officer)

/s/ Michael Parker

Chief Accounting Officer

Michael Parker

(Principal Accounting Officer)

/s/ Neil Mehta

Director

Neil Mehta

/s/ Benjamin Sun

Director

Benjamin Sun

/s/ Kevin Warsh

Director

Kevin Warsh

/s/ Harry You

Director