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Sea's Q3 loss widens, but revenue up

Sea

Singapore

GAMING and e-commerce firm Sea on Wednesday delivered its first earnings report since its rocky public debut in October, which broadly met with analysts' expectations.

Although Tencent-backed Sea saw its net loss double to US$132.7 million in the third quarter from US$64.9 million in the same period a year earlier, revenue grew 3.9 per cent to US$94.1 million.

A US$34.3 million investment gain from the disposal of an equity investee in Vietnam as well as a net gain on the remeasurement of investments from other holdings also helped improve the net loss figure.

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Most analysts that cover Sea had been bullish on the firm, calling it a key beneficiary of the internet wave in South-east Asia and Taiwan.

Sea has not disappointed, with takings in the three months ended Sept 30 broadly matching up with street estimates on a cash revenue basis.

Cash revenue was US$151.7 million, up 73 per cent from the third quarter last year. This is the sum of GAAP (generally accepted accounting principles) revenue plus the change in digital entertainment deferred revenue and e-commerce commission income.

Unlike GAAP revenue, cash revenue is more aligned with Sea's actual cash flows, it said. For example, the group's revenue recognition policy requires revenue from the recently launched Arena of Valor game to be recognised over a long period of time although cost is expensed immediately.

Sea's gaming platform, Garena, saw digital entertainment gross billings grow to US$134.5 million, up 62 per cent from the third quarter last year.

Sea

Shopee, Sea's mobile e-commerce portal which went online in 2015, reported a gross merchandise value (GMV) of US$1.06 billion, up 219 per cent from a year earlier, in line with consensus forecasts.

Shopee has 1.9 million monthly active sellers. Monthly active buyers was 5.9 million, up from 1.7 million in the third quarter last year. Sea attributed buyer growth to word-of-mouth and social media outreach. It has 3.7 monthly orders per active buyer and an average order value of US$16.2.

Shopee said its buyer base is "disproportionately female", and that repurchase rates are higher for this group. It aims to be a market leader in the female-centric categories of fashion, beauty and baby products, which it said offer better margins than computers, cellphones, and cameras.

Sea's American depositary receipts fell US$0.71 or 4.58 per cent to US$14.78 on Monday in New York before results were announced after trading hours. The IPO price was US$15.00.

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