Sea Ltd's Q1 loss narrows to US$280.8m as revenue doubles

Singapore

SINGAPORE-based Sea Ltd on Monday posted a net loss of US$280.8 million for the first quarter to March, after chalking up US$689.6 million of losses a year ago.

The company, which operates gaming arm Garena and e-commerce platform Shopee, managed to narrow its losses in the first quarter as revenue more than doubled to US$714.9 million from US$351.9 million the year before.

Sea Ltd's jump in revenue was mainly due to an increase in revenue for both its digital entertainment arm, as well as for e-commerce and other services.

Its digital entertainment arm recorded a 113.2 per cent rise in revenue to US$369.7 million for the first quarter, primarily due to the increase in its active user base, more paying users, and the continued success of its self-developed game Free Fire, it said.

Free Fire recently hit a new record of over 80 million peak daily active users, said the company.

According to data analytics company App Annie, it was also the highest grossing mobile game in Latin America and South-east Asia for the first quarter of 2020.

E-commerce and other services chalked up a 104 per cent rise in revenue to US$266.5 million in the three months ended March 31, driven by the growth of its e-commerce marketplace Shopee, as well as positive developments in each of its marketplace revenue streams - transaction-based fees, value-added services, and advertising, the company noted.

Gross orders for the platform totalled 429.8 million, an increase of 111.2 per cent year-on-year from 203.5 million for the first quarter of 2019, it said.

However, its sales and marketing expense ballooned by 633.2 per cent year-on-year to US$25.3 million in the first quarter, which the company says is due to increased engagement activities for an enlarged gaming user base. The company also attributes this to the ramping up of brand marketing costs for its e-commerce arm, as well as higher staff compensation and benefit costs.

Its cost of revenue also increased by 62.6 per cent to US$508.1 million for the three months ending March 31, which it said is "in line with revenue growth".

"We believe that Sea, as a market leader in some of the key sectors of the digital economy, is gaining and will continue to gain a disproportionate share of the resulting growth in our markets.

"Like all businesses, Sea has been stress-tested by the crisis. Our robust performance through the first quarter and beyond ... underlines the fundamental strength, resilience, and adaptability of our business," said Forrest Li, Sea's chairman and group chief executive.