Sea posts wider loss for third quarter as it continues to spend on Shopee

The New York Stock Exchange-listed Singaporean tech company posted a net loss of US$218.02 million for the third quarter, extending from the US$132.83 million loss a year ago.

Sea Limited
Source: Sea Limited

Singapore-based Sea Limited, the owner of flagship products e-commerce app Shopee and gaming platform Garena reported deeper losses for the third quarter on a year-on-year basis, as it continues to inject funds to build up its e-commerce business.

The New York Stock Exchange-listed tech company posted a net loss of US$218.02 million for the third quarter, extending from the US$132.83 million loss a year ago.

But the group’s revenue proved to show progress, with total revenue up 117.80% to US$204.92 million, compared to US$94.09 million a year ago.

The group’s digital entertainment revenue gained 41.00% from a year ago to US$112.52 million, while its other business segments gained 546.40% year-on-year to US$92.40 million, helped by its e-commerce segment.

Turnover for the firm’s e-commerce business soared to US$65.92 million, a steep increase compared to US$2.79 million a year ago, primarily helped by growth of Shopee sellers’ use of the app’s services and product offerings such as “Services by Shopee”, and “Shopee Logistics Service”.

“Shopee posted its best ever quarterly gross merchandise value and number of orders as it extended its lead as the largest e-commerce platform in our region,” commented Sea’s Chairman and Group Chief Executive Forrest Li.

Shopee platform
Source: Shopee.com

Mr Li claimed that the group’s most recent annual “Shopee 11.11 Big Sale” had set a historical high record for the app, without providing details.

On the gaming front, the group’s self-developed game Free Fire continues to generate results according to Mr Li, as it recently achieved a record high peak daily active user count of over 27 million and has surpassed 200 million registered users globally.

Sea, previously known as Garena, had gone public in October 2017, with an initial public offering price of US$15.00 per share. It is seen as one of Southeast Asia’s most valuable and crown tech startup who has “made it”.

It now trades at US$12.11. Year-to-date, Sea shares have fallen 9.2% and on Tuesday in New York before the earnings results were released, the stock closed lower by 4.72%.

C-level departures and changes

The group has seen several C-level executives who have either departed from the firm or will be leaving by the end of this year. Former Chief Executive of Garena Jin Oh left the firm on August 31, while Group Chief Strategy Officer Alan Hellawell will be leaving the firm this Friday. Sea’s Group President Nick Nash, who announced his retirement in February, will retire by the end of this year.

Mr Terry Zhao, will be appointed the new President of Garena, the company said in today’s filing. According to Sea, Mr Zhao has been with the firm since its inception in 2009 and has served several senior roles in the group’s digital entertainment business.

Sea has raised its forecast for this year’s total adjusted revenue to between US$930.00 million and US$970.00 million. The previous forecast it gave was between US$780.00 million and US$820.00 million.

The group’s e-commerce gross merchandise value for this year has also been revised higher, at between US$9.20 billion and US$9.70 billion, from the earlier estimate of between US$8.20 billion and US$8.70 billion.

Tencent headquarters
Source: AP

Sea strikes deal with Tencent

Earlier this week, the group’s gaming platform Garena announced a deal with Tencent Holdings to publish and distribute Tencent’s online games in Southeast Asia. The countries listed in the signed letter of intent are Indonesia, Taiwan, Thailand, Malaysia, the Philippines, and Singapore.

The deal allows Garena to have a right of first refusal to publish Tencent’s mobile and PC games for five years.

Garena is already known to publish Tencent’s games on its platform, such as the League of Legends and Arena of Valor.

According to Tencent’s President Martin Lau, Garena has a vast coverage and understanding of the markets in Southeast Asia and Taiwan.

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