Sea Group logs 2nd straight profitable quarter (update)

Photo credit: Sea Group

Sea Group CEO Forrest Li’s remarks after the company’s strong results in the previous quarter still rang true in the first quarter of 2023.

The turnaround wasn’t “a momentary blip” at least, as Sea recorded US$87.3 million in net income in Q1.

This marks a significant recovery from US$580.1 million in net losses during the same quarter last year. However, this represents a 80% drop compared to Q4 2022, suggesting that Sea needs to take more substantial measures to be truly out of the woods.

Sea stocks ended the May 16 trading day down 17.74% at US$72.45.

The company posted a 5% year-on-year increase in revenue in Q1 2023, topping US$3 billion. The main contributor to this growth is its ecommerce unit Shopee, which raked in US$2.1 billion in revenue alone.

Shopee continued to be a bright spot for Sea, logging US$207.7 million in adjusted earnings, marking its second straight quarter in the green and representing a small 6% quarter-on-quarter increase. Sales and marketing expenses for Shopee dropped almost 11% from the previous quarter.

Starting from this quarter, the company will no longer disclose quarter-on-quarter GMV numbers. Yanjun Wang, Sea’s group chief corporate officer, only said during the latest earnings call that GMV growth was still “in line” with previous quarters.

Meanwhile, Sea’s digital entertainment segment – which houses Garena – raked in US$539.7 million in revenue. This marks a 43% slide compared to Q4 2022. Bookings were also down 15% to US$462.3 million during the same period.

Notably, in Q1 2023, the percentage of quarterly paying users slid to 7.7% of its total users, compared to 9% in the previous quarter. According to Wang, efforts are being made to “stabilize” its gaming active user base as soon as possible.

The firm’s digital financial services, which has SeaMoney under its umbrella, posted US$412.8 million in revenue, up 75% year on year.

The company also announced that David Ma will no longer serve as chief investment officer of Sea Capital. He is expected to join Sea’s board of directors.

Last week, Li announced a 5% salary increase to all full-time staff.

See also: SEA’s listed tech majors in 11 charts: Bukalapak, GoTo post improved margins