Singapore's Sea Misses Quarterly Revenue Estimates

Reuters2023-08-15

Aug 15 (Reuters) - Technology firm Sea Ltd signaled on Tuesday it will boost investments in its core e-commerce business which may lead to losses in some quarters, pivoting its strategy after months of cost cuts and weak performance in the second quarter.

U.S.-listed shares of Sea tanked 14% in trading before the bell.

Southeast Asia's biggest listed technology firm began a major overhaul last year involving cutting its workforce by 10% and lowering marketing spends, which helped Sea deliver its first-ever quarterly net profit in December.

However, the rapid rise in digital services has largely tapered from the boom seen during the peak pandemic period, with Sea's top-line growth dropping to single-digits in the past three quarters from over 100% seen in some quarters of 2021.

"We have started, and will continue, to ramp up our investments in growing the e-commerce business across our markets. Such investments will have impact on our bottom-line and may result in losses for Shopee and our group as a whole in certain periods," said Forrest Li, chairman and group CEO at Sea.

Sea posted mixed results in the three months ended June 30, as tepid consumer spending amid a challenging macroeconomic outlook pressured its e-commerce business and caused a steep decline in its mobile gaming unit.

Revenue grew 5.2% from a year earlier to $3.10 billion, below Refinitiv estimates of $3.20 billion. However, per share earnings were a comfortable 12 cents higher than expectations at 54 cents, signaling gains from the cost measures.

Sea's e-commerce business Shopee, which contributes about two-thirds to the group's top-line, grew about nearly 21% to $2.1 billion. It was below consensus estimate of $2.25 billion, despite Sea posting 10% sequential growth in active buyers in the second quarter and raising platform commissions earlier this year.

Sales from the digital entertainment segment, which includes gaming platform Garena, fell over 41%, declining for the fifth quarter in a row. Sales from the financial services business were up over 53%.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Max87
    2023-08-15
    Max87
    Priced for perfection
  • LionelSeng
    2023-08-15
    LionelSeng
    Core business is gaining and turning more profitable but still sold down. Ridiculous mr market
  • romanc9
    2023-08-15
    romanc9
    Shortist and fund mgrs, always take the slightest issue to short the market and frightened the retailers. Then when retailers sold everything or almost everything, they start to buy back. You can't fight the big boys bcos the regulators are also involved in order to make money as well. So I'd you have weak hand or don't have extra cash, just becareful. 
  • Sporeshare
    2023-08-15
    Sporeshare
    Sold down for no valid reason! The numbers came in better than expectations of 0.55 versus 0.47 EPS . She is back into Net profit of 550m. I think positive Net income should give them a heads up! Pls dyodd.  
    • Sporeshare: 
      quote: the edgesingapore. Sea recorded a total net income of US$331.0 million ($449.19 million) for 2QFY2023, its third straight consecutive quarter of earnings. Following that, the group said that it will focus on prioritising market share over profits in e-commerce.

      For this reason, analysts at CGS-CIMB and PhillipCapital have reiterated their “add” and “buy” calls, but with a lower target price of US$65 and US$87 respectively. Analysts at DBS have maintained its “buy” with an unchanged target price of US$90, and Citi has a “buy” call with a target price of US$98.


    • Sporeshare: 
      B of A Securities cut the price target on Sea from $73 to $53. B of A Securities analyst Sachin Salgaonkar maintained a Neutral rating.


      Bernstein slashed the price target on Sea from $90 to $70. Bernstein analyst Venugopal Garre maintained an Outperform rating.


      Citigroup analyst Alicia Yap downgraded Sea from Buy to Neutral and announced a $50 price target.


    • Sporeshare: 
      quote:(yahoo)  Sea Limited  performed  reported quarter in terms of the metrics most widely monitored and projected by analysts:

      Revenue- E-Commerce: $2.32 billion versus the two-analyst average estimate of $2.15 billion.


      Revenue- Other Services: $27.77 million versus the two-analyst average estimate of $18.50 million.


      Revenue- Digital Financial Services: $427.94 million versus the two-analyst average estimate of $419.83 million. The reported number represents a year-over-year change of +53.4%.


      Adjusted EBITDA- Digital Entertainment: $239.46 million versus the two-analyst average estimate of $216.09 million.


      Adjusted EBITDA- Other Services: -$7.19 million versus the two-analyst average estimate of -$29.50 million.


      Adjusted EBITDA- Digital Financial Services: $136.96 million versus $109.05 million estimated by two analysts on average.
      E-commerce: $150.34 million compared to the $243.59 million avg estimate based on two analall Key  Metrics for Sea e>>>

  • StockMaskter
    2023-08-15
    StockMaskter
    Stock market is shit ain't it?
  • BillionaireN
    2023-08-15
    BillionaireN
    Results not bad but drop so much ... hmm why?
Leave a comment
6
5