With upcoming IPO, Sea reveals net loss of $196m and revenue of $345m

Nick Nash, group president of Sea, at Tech in Asia Singapore 2016.

Sea, one of Southeast Asia’s largest internet companies, has released its full IPO prospectus containing a treasure trove of previously private information. The company is looking to raise up to US$800 million, lower than its earlier reported target of US$1 billion.

Among the highlights in its financial statement: dramatically increasing revenue, but an equally dramatic widening in its net loss.

The bottom line comparison between H1 2016 and H1 2017 hints at what is to come. Sea’s net loss doubled to US$154 million during that time period, while revenue only grew 17 percent.

It’s a familiar pattern seen in most nascent, fast-growing internet companies in Southeast Asia who spend cash at a rapid clip to gain market share, in the hopes of achieving dominance which will then translate to profitability.

Sea had US$651 million in cash and cash equivalents on June 30, 2017.

Sea acknowledges that there’s a risk of “not achieving profitability in the future.” It attributes its rising net loss to sales and marketing costs, which include promotions and shipping subsidies for the users of Shopee, its ecommerce business.

Its challenge will be to lower customer acquisition costs against better-funded competitors, and keep users once its subsidies stop.