Sea’s Q2 2022 revenue growth fails to stem widening losses

NEW York stock exchange-listed Sea reported a 29 per cent jump in second quarter 2022 revenue from US$2.3 billion to US$2.9 billion, mainly driven by revenue contribution from e-commerce arm Shopee and digital financial services.

However, losses for the period have widened, up 114.7 per cent to US$931.2 million from US$433.7 million. Losses were driven by increasing cost of revenue for the e-commerce and other services segment, which rose 62.8 per cent to US$1.3 billion in Q2 2022 from US$816.7 million in Q2 2021 due to higher costs of logistics from order growth and costs driven by growth of Shopee. This was partially mitigated by the 11 per cent decrease in cost of revenue for the digital entertainment segment, dropping to US$260.5 million from US$292.7 million.

Also driving losses in a 95.9 per cent increase in general and administrative expenses to US$476 million in Q2 2022 from US$243 million in Q2 2021, due to increase in allowances for credit losses from the digital financial services business from loan receivables growth, higher staff costs and office facilities and related expenses to support business growth. Research and development for Q2 2022 also saw a 115 per cent increase from US$172.6 million to US$370.9 million. This was due to higher staff cost from headcount growth.