Sea’s revenue improves, but net loss widens

Sea, a major games publisher and ecommerce operator in Southeast Asia, is continuing its streak of improving revenues and widening net losses.

It saw a revenue of US$243 million in 3Q18, up 60.1 percent year-on-year and 10.6 percent quarter-on-quarter.

On the flipside, its negative EBITDA (earnings before interest, tax, depreciation, and amortization) for the same period fell to US$184 million – almost double of the previous year and down 13 percent from the previous quarter.

A lot of this can be attributed to Shopee, Sea’s ecommerce bet. While the mobile marketplace’s gross merchandise value and revenue have grown despite a reduction in its shipping subsidies, its sales and marketing expenses also went up.

As a result, Shopee is seeing an adjusted negative EBITDA of US$215 million, compared to US$130 million in the same period last year and US$189 million in the previous quarter.

Sea’s adjusted ecommerce revenue for 3Q stood at US$71.2 million, a 21.1 percent improvement from the previous quarter.

At the end of 3Q, Sea is holding on to US$1.21 billion in cash and cash equivalents.

Meanwhile, Sea’s gaming business Garena continues to be a stable cash cow, with an adjusted EBITDA of US$53.7 million, a 19.2 percent growth over the previous year and 10.5 percent over the previous quarter.

Garena makes money from the sale of games and in-game microtransactions.

Garena’s position as the dominant game publisher in Southeast Asia is set to continue. It reached a deal with Chinese gaming giant Tencent to have the right of first refusal to publish Tencent’s mobile and PC games in the region. Notable games published by Tencent include PUBG Mobile and FIFA Online 3.

The agreement means Garena won’t need to negotiate publishing deals with Tencent on a game-by-game basis. This will allow the company to publish Tencent titles faster with fewer overheads.