Sea (NYSE:SE) reported quarterly losses of $(1.03) per share which beat the analyst consensus estimate of $(1.21) by 14.88 percent. This is a 68.85 percent decrease over losses of $(0.61) per share from the same period last year. The company reported quarterly sales of $2.90 billion which missed the analyst consensus estimate of $2.97 billion by 2.36 percent. This is a 27.14 percent increase over sales of $2.28 billion the same period last year.
Sea shares dropped 7% in premarket trading after reporting quarterly results.
Sea Limited today announced its financial results for the second quarter ended June 30, 2022.
“Our solid results for the quarter reflect our continued progress in enhancing efficiency and strengthening our ecosystem,” said Forrest Li, Sea’s Chairman and Group Chief Executive Officer. “Shopee’s unit economics improved significantly driven by gains in both monetization and efficiency across our markets, even as we sustained a healthy growth rate against tough comparisons. At Garena, we saw positive outcomes from our focus on user retention and efforts to bring more engaging experiences to our large global games community, with quarterly active users stable quarter-on-quarter. We also benefited from expanding synergies between Shopee and SeaMoney as our underserved user base adopted more of our financial products and services, resulting in strong growth and narrowing losses at SeaMoney.”
“Our success has always been defined by our ability to focus on the right thing at the right time, quickly make the right strategic decisions, and remain agile and adaptable in our execution. During the pandemic lockdowns, we rapidly scaled our businesses to answer to the fast-rising market demand for online consumption and services. That allowed us to significantly expand our businesses and total addressable markets, strengthen our market leadership, and scale up more efficiently.”
“As we navigate the current environment of increased macro uncertainty with that same nimble and decisive approach, we believe it is vital to be thoughtful, prudent, and disciplined. While we have strong resources and are well on-track to achieve our self-sufficiency targets, we are nevertheless rapidly prioritizing profitability and cash flow management. We are confident that this focus, combined with our demonstrated ability to execute, our scale and leadership, and our proven business models, will position us for long-term sustained success.”
Second Quarter 2022 Highlights
Group
o Total GAAP revenue was US$2.9 billion, up 29.0% year-on-year.
o Total gross profit was US$1.1 billion, up 17.1% year-on-year.
o Total net loss was US$(931.2) million compared to US$(433.7) million for the second quarter of 2021. Total net loss excluding share-based compensation and impairment of goodwill1 was US$(569.8) million compared to US$(321.2) million for the second quarter of 2021.
o Total adjusted EBITDA was US$(506.3) million compared to US$(24.1) million for the second quarter of 2021.
E-commerce
o GAAP revenue was US$1.7 billion, up 51.4% year-on-year. Based on constant currency assumptions3 , GAAP revenue was up 56.2% year-on-year.
o GAAP revenue included US$1.5 billion of GAAP marketplace revenue4 , up 61.9% year-on-year, and US$0.3 billion of GAAP product revenue4 , up 13.6% year-onyear. GAAP revenue and GAAP marketplace revenue as % of total gross merchandise value (“GMV”) increased from 7.7% and 6.1% a year ago to 9.2% and 7.7%, respectively.
o Gross orders totaled 2.0 billion, an increase of 41.6% year-on-year.
o GMV was US$19.0 billion, an increase of 27.2% year-on-year. Based on constant currency assumptions , GMV was up 31.4% year-on-year.
o Gross profit margin for e-commerce continued to improve sequentially quarteron-quarter, as we have seen faster growth of transaction-based fees and advertising income, which have higher profit margin compared to product revenue and revenue generated from other value-added services.
o Adjusted EBITDAfor Shopee overall was US$(648.1) million compared to US$(579.8) million for the second quarter of 2021. Adjusted EBITDA loss per order improved by 21% to reach US$0.33 in the second quarter of 2022, compared to US$0.41 for the same period in 2021.
▪ In Southeast Asia and Taiwan, adjusted EBITDA loss per order before allocation of headquarters’ common expenses (“HQ costs”) was less than 1 cent in the second quarter of 2022, representing 95% improvement yearon-year.
▪ In Brazil, such losses also continued to improve by more than 35% yearon-year to reach US$1.42 in the second quarter of 2022.
▪ HQ costs sequentially increased by US$27.5 million quarter-on-quarter, which was at a slower pace compared to the first quarter of 2022. The increase was predominantly driven by increase in research and development staff and server hosting cost, as we expanded our technological capabilities and service offerings.
o In Southeast Asia overall, Indonesia and Taiwan respectively, Shopee continued to rank first in the Shopping category by average monthly active users and total time spent in app for the second quarter of 2022, according to data.ai.
o In Brazil, Shopee continued to see strong performance with GAAP revenue increasing by more than 270% year-on-year in the second quarter of 2022. In the same quarter, Shopee also became first by average monthly active users in the shopping category in Brazil, while maintaining its top ranking by total time spent in app, according to data.ai.
o Globally, Shopee was the top ranked app on Google Play in the Shopping category by total time spent in app and second by average monthly active users in the second quarter of 2022, according to data.ai.
Digital Entertainment
o GAAP revenue was US$900.3 million, compared to US$1.0 billion for the second quarter of 2021.
o Bookings6 were US$717.4 million, compared to US$1.2 billion for the second quarter of 2021.
o Adjusted EBITDA2 was US$333.6 million, compared to US$740.9 million for the second quarter of 2021.
o Adjusted EBITDA represented 46.5% of bookings for the second quarter of 2022, compared to 62.8% for the second quarter of 2021.
o Quarterly active users were 619.3 million, compared to 725.2 million for the second quarter of 2021 and 615.9 million for the first quarter of 2022.
o Quarterly paying users were 56.1 million, representing paying user ratio of 9.1% for the second quarter compared to 12.7% for the same period in 2021.
o Average bookings per user were US$1.2, compared to US$1.6 for the second quarter of 2021.
o Their self-developed global hit game, Free Fire, continued to maintain top global rankings in user and grossing metrics. Free Fire was the most downloaded mobile game globally in the second quarter of 2022, and ranked third highest by average monthly active users on Google Play in the same quarter, according to data.ai.
o Free Fire also continued to be the highest grossing mobile game in Southeast Asia and Latin America for the second quarter of 2022, according to data.ai5 . Free Fire has maintained this leading position for the past 12 consecutive quarters.
Digital Financial Services
o GAAP revenue was US$279.0 million, up 214.4% year-on-year.
o Adjusted EBITDA was US$(111.5) million, compared to US$(155.0) million for the second quarter of 2021.
o Quarterly active users across our SeaMoney products and services reached 52.7million, up 53.3% year-on-year.
o The company continued to roll out more SeaMoney offerings across more markets, and have expanded synergies between Shopee and SeaMoney. Close to 40% of the quarterly active buyers on Shopee in Southeast Asia have used SeaMoney products or services in the second quarter of 2022.
o Total payment volume for the mobile wallet was US$5.7 billion, up 35.7% yearon-year.
E-commerce Full Year 2022 Guidance Update
In our efforts to adapt to increasing macro uncertainties, Sea are proactively shifting our strategies to further focus on efficiency and optimization for the long-term strength and profitability of the e-commerce business. Given this strategic shift, Sea will be suspending e-commerce GAAP revenue guidance for the full year 2022. The company believe such efforts will further strengthen our ability to better capture the long-term growth opportunities in our markets, which they remain highly positive about.