Sea narrows losses for Q3

Sea Group, a Southeast Asian internet powerhouse, posted a net loss of US$206 million for the three months that ended September 30, faring a little bit better compared to the US$218 million loss it reported in the same period last year.

Much like the previous quarters, the Q3 performance of Tencent-backed Sea was weighed down by its ecommerce segment, but was slightly offset by gains in its digital entertainment business.

Forrest Li, founder and group CEO, Sea / Photo credit: Sea

The company’s total adjusted EBITDA for the quarter was at a negative US$31 million, which narrowed from the US$184 million loss it recorded in the same period the prior year.

The increase was mainly driven by the company’s digital entertainment segment, which houses its gaming and esports division. The section recorded a 395% increase in adjusted EBITDA, reaching US$266 million this quarter from US$54 million in the same year-ago quarter.

According to the company, quarterly active users (QAU) in the segment reached 321.1 million in Q3 this year, up 82.3% year on year from 176.1 million. Quarterly paying users also increased and accounted for 9.1% of QAUs, increasing from 4.1% in the same period in 2018.

Sea said it plans to continue focusing on esports and community building activities, indicating that its largest global esports tournament for mobile game Free Fire, the Free Fire World Series 2019, has achieved over 100 million cumulative online views to date.

The increase was pulled down by the company’s ecommerce segment. Adjusted EBITDA losses for Shopee widened to US$253.7 million in the quarter compared to the US$214.9 million loss it recorded in the three months that ended September 30, 2018.

Through the losses, Sea claimed that Shopee registered over 138 million orders for the market in Indonesia (its biggest market) during the quarter, making it the leading ecommerce platform in the country by that metric. Shopee was also the top platform in terms of average monthly active users and downloads in the shopping category in the Google Play Store and App Store combined for the quarter, according to data from App Annie.

To get there, however, Shopee’s sales and marketing expenses went up to US$199.2 million, a 30.2% increase compared to US$152.9 million for the third quarter of 2018.

All in all, Sea posted revenue of US$610.1 million for the quarter, climbing from US$204.9 million during the same quarter a year ago.

It also adjusted its guidance for both its digital entertainment and ecommerce businesses for the full year. The firm increased its expected adjusted revenue for digital entertainment to between US$1.7 billion and US$1.8 billion. The previous guidance was somewhere between US$1.6 billion and US$1.7 billion.

For Shopee, it now expects to report adjusted revenue between US$880 million and US$920 million for the full year, up from its previous guidance of between US$780 million and US$820 million.