Sea's Q3 loss widens to US$132.7m, but revenue on rise

SEA Limited, the Singapore-based Internet company once known as Garena, said on Wednesday that net loss attributable to shareholders doubled to US$132.7 million for the third quarter ended Sept 30 from a year-ago loss of US$65.6 million.

Adjusted net loss, which is net loss adjusted to remove share-based compensation expense, would be US$127.1 million, said Sea in its first earnings report since listing in October.Loss per share for the period was 0.75 US cent, versus 0.38 cent a year ago.

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

Sea has not disappointed, beating 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.

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.

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 that 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 offers 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.