Sea nearly doubles revenue, offers $1b in convertible notes

Regional internet giant Sea Group has reported its total adjusted revenue for the first quarter of the year at US$914 million, a 57.9% increase compared to US$579 million it recorded in the same period in 2019.

It has also announced a US$1 billion convertible note offering due 2025. Sea plans to use the proceeds from the offering for the cost of the capped call transactions, business expansion, and potential strategic investments and acquisitions, according to its statement.

Sea chairman and group CEO Forrest Li / Photo credit: Sea Group

The jump was mainly driven by the Singapore-based company’s digital entertainment segment, which grew its revenue 30.3% year on year to US$512 million.

The gaming and esports unit also saw its quarterly paying users balloon by 72.5% year on year to 35.7 million. The number already accounts for 8.9% of the segment’s overall quarterly users for the first quarter of 2020.

Sea said its self-developed game Free Fire, published by its gaming platform Garena, has also recently hit a new record of over 80 million peak daily active users. It also reached a record high in monthly paying users in April this year.

Meanwhile, the company’s ecommerce segment drew in US$314 million in revenues for the quarter, up 111% year on year from US$149 million. The unit houses its online shopping platform Shopee.

Of this result, US$236.7 million came from marketplace revenue, or revenue generated from transaction-based fees, advertising, and other value-added services. The rest came from product revenue, which mainly consists of revenue from direct sales.

Sea also said the gross merchandise value for Shopee went up by 74.3% to US$6.2 billion for the first quarter of this year, compared to 64.8% in the fourth quarter of 2019.

In Southeast Asia and Taiwan, Shopee ranked first in the shopping category by average monthly active users and total time spent in-app on Android, according to data from App Annie. Shopee also led the category in average monthly active users, downloads, and total time spent in-app on Android in Indonesia, its largest market.

Sea also said that it has been steadily growing its digital financial services arm SeaMoney, which recorded total payment volumes of over US$1 billion for the first quarter. Sea attributed this growth to the accelerating adoption of digital options as well as SeaMoney’s deepening integration with Shopee.

Overall, the company narrowed its net losses for the quarter to US$281 million compared to the US$689.6 million net loss it recorded in the same period last year. Its adjusted earnings, however, fell to a loss of nearly US$70 million compared to its US$32 million loss in the first quarter of 2019.

“The coronavirus crisis is driving a step-change in the growth of the digital economy globally, materially accelerating a shift to online lifestyles that is broad, deep, and, in our view, irreversible,” said Sea chairman and group CEO Forrest Li.

Li added that as Sea continues to respond to increased consumer demand and navigate disruptions to its businesses, it will be able to capitalize on expanded growth opportunities across its multiple fronts in the long run.