Sea Group returns to net loss in Q3, posts 4.9% revenue uptick

Photo credit: Sea Group

Singapore-based Sea Group returned to net loss in the third quarter of 2023 at US$144 million. While still a year-on-year improvement, this comes after the company generated net profit for three straight quarters.

One factor that drove this reversal is Sea’s sales and marketing expenses, which almost doubled to US$918 million compared to Q2.

The tech giant also posted a slightly lower total cost of revenue for Q3 compared to the same period in 2022.

At the same time, Sea’s adjusted EBITDA fell significantly to US$35.3 million compared to an average of roughly US$500 million in the last few quarters.

The company’s revenue for the quarter was US$3.3 billion, logging a 4.9% increase from 2022 and beating analyst estimates. Most of it came from its ecommerce arm Shopee, which contributed US$2.2 billion.

“Our strategy for ecommerce is driven by the principle that maximizing the long-term profitability of the business will generate the greatest returns to our shareholders in the long run,” said Forrest Li, Sea’s chairman and group CEO.

Notably, the percentage of quarterly paying users for its digital entertainment unit slid to 7.4% of its total users in Q3 2023 compared to 7.9% in the previous quarter. This segment operates Garena, the publisher of popular games like Free Fire.

Sea’s digital financial services, which has SeaMoney under its umbrella, logged US$446.2 million in revenue, up 36.5% year on year.

Recently, Sea invested US$172.5 million into its MariBank unit, signaling a bigger push into Singapore’s digibanking space. Competitors GXS Bank and Trust Bank already have a head start against Sea, with both launching in late 2022.

See also: Sea Group’s financial health in 7 charts