Coupang Inc., the U.S.-headquartered holding company of Korea’s e-commerce giant Coupang, swung to its largest first-half operating loss on record due to fines stemming from last year's massive data breach involving 33.7 million customers.

Despite the setback, Coupang said customer spending has largely recovered and expects to return to its previous growth and margin trajectory next year, once it overcomes the impact of the data breach.

The New York-listed company reported on Tuesday (local time) a first-half operating loss of $798 million and a net loss of $836 million after booking customer compensation costs and regulatory fines related to the breach. The losses wiped out nearly all of the operating profit it generated over the previous two years, marking its worst first-half performance since the company was founded in 2010.

Along with customer compensation costs related to the data breach, about $410 million in administrative fines imposed by local regulators drove the first-half losses.

The bulk of the losses came in the second quarter. The company’s second-quarter revenue rose 4 percent year-on-year to $8.86 billion, while it posted an operating loss of $556 million, compared with operating income of $149 million a year earlier. Net loss reached $570 million.

Excluding the fines, Coupang said the quarter’s operating loss would have been $146 million. The Personal Information Protection Commission imposed a 624.68 billion won ($410 million) fine and an additional 16.8 million won penalty on Coupang over its customers’ personal data breach in June. The company said it disagreed with the regulator’s decision and plans to pursue legal action.

The company’s founder and CEO Bom Kim, however, expressed confidence in the recovery of customer spending following the incident, saying that customers who remained with Coupang continued to increase their spending at record levels.

"The vast majority of our customer spending never moved. That group is spending at the highest levels in our history and compounding similarly to before last year's data incident," Kim said during an earnings call following the release of the results.

The portion of customers "that did leave was a minority of the total, and most of it has already returned" he added.

Kim said the company is continuing efforts to win back remaining customers while expanding its selection and services.

The recovery was also reflected in key operating metrics. Its product commerce revenue rose 8 percent year-on-year to $7.4 billion, while active customers increased 3 percent to 24.7 million this quarter, returning to prebreach levels. Developing offerings, including Taiwan, Eats, Rocket Now and Farfetch, grew 20 percent to $1.43 billion.

"We run this business with precision on capacity utilization and volume economics — that’s what allows us to deliver double-digit growth along with expanding margins in normal times, and it’s also why a sudden shock is more visible in our numbers than it might be somewhere else,” Kim said.

“And the same discipline that makes the disruption more visible is what will enable us to reverse it."

However, he also noted the profitability remains under pressure as Coupang continues to carry logistics capacity and higher marketing costs to support customer recovery, but said the company is maintaining those investments for long-term growth.

"We could cut them significantly, but we've chosen not to, because the right long-term decision is to grow into the capacity and support our customer experience that has always been our North Star," Kim said.

The company expects the impact of the breach to fade from year-over-year comparisons next year.

"After we lap the affected period next year, we expect to work our way back to the growth and margin structure that Product Commerce ran at before," Kim said.