SINGAPORE–(BUSINESS WIRE)–Sea Limited (NYSE: SE) (�Sea or the Company) today announced its financial results for the first quarter ended March 31, 2021.
First Quarter 2021 Highlights
Digital Financial Services Update
We continued to see strong growth in the adoption of SeaMoneys offerings. Our mobile wallet total payment volume exceeded US$3.4 billion for the first quarter of 2021, more than tripled that of the first quarter of 2020. Moreover, quarterly paying users for our mobile wallet services surpassed 26.1 million in the first quarter.
Conversions of Convertible Notes
Between March 5, 2021 (the date we last disclosed the outstanding principal amount of our convertible notes) and May 10, 2021, we issued an aggregate of approximately 4.8 million shares to settle conversions of our outstanding convertible notes, namely our 2.25% convertible senior notes due 2023 (the 2023 notes) and our 1.00% convertible senior notes due 2024 (the 2024 notes). In aggregate, such conversions are estimated to result in more than US$8.3 million of saving to us in future interest payments.
As of May 10, 2021, we had 524,433,502 ordinary shares issued and outstanding and approximately US$33.5 million, US$825.1 million and US$1.15 billion principal amount of the 2023 notes, 2024 notes and 2.375% convertible senior notes due 2025 remaining outstanding, respectively.
1 For definitions of total adjusted EBITDA and adjusted EBITDA for digital entertainment and e-commerce segments, please refer to the Non-GAAP Financial Measures section.
2 GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue. This operating metric is used as an approximation of cash spent by our users in the applicable period that is attributable to our digital entertainment segment.
3 Rankings data for App Annie is based on combined data from the Google Play and iOS App Stores, unless otherwise stated. Southeast Asia rankings are based on Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Latin America rankings are based on Argentina, Brazil, Chile, Colombia, Mexico, and Uruguay.
4 GAAP marketplace revenue mainly consists of transaction-based fees and advertising income and revenue generated from other value-added services.
5 GAAP product revenue mainly consists of revenue generated from direct sales.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars $ except for per share data)
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For the Three Months |
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| 2020 | 2021 |
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| $ | $ | YOY% | |||||
| Revenue |
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| Service revenue |
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| Digital Entertainment | 369,683 |
| 781,335 |
| 111.4% | |||
| E-commerce and other services | 266,545 |
| 772,382 |
| 189.8% | |||
| Sales of goods | 78,692 |
| 209,927 |
| 166.8% | |||
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| 714,920 |
| 1,763,644 |
| 146.7% | |||
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| Cost of revenue |
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| Cost of service |
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| Digital Entertainment | (142,692 | ) | (248,240 | ) | 74.0% | |||
| E-commerce and other services | (285,524 | ) | (674,538 | ) | 136.2% | |||
| Cost of goods sold | (79,904 | ) | (195,457 | ) | 144.6% | |||
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| (508,120 | ) | (1,118,235 | ) | 120.1% | |||
| Gross profit | 206,800 |
| 645,409 |
| 212.1% | |||
| Other operating income | 25,316 |
| 75,088 |
| 196.6% | |||
| Sales and marketing expenses | (308,316 | ) | (678,922 | ) | 120.2% | |||
| General and administrative expenses | (126,933 | ) | (248,858)(3 | ) | 96.1% | |||
| Research and development expenses | (64,586 | ) | (141,130 | ) | 118.5% | |||
| Total operating expenses | (474,519 | ) | (993,822 | ) | 109.4% | |||
| Operating loss | (267,719 | ) | (348,413 | ) | 30.1% | |||
| Non-operating income (loss), net | 11,235 |
| (23,252 | ) | (307.0)% | |||
| Income tax expense | (23,237 | ) | (51,025 | ) | 119.6% | |||
| Share of results of equity investees | (1,070 | ) | 599 |
| (156.0)% | |||
| Net loss | (280,791 | ) | (422,091 | ) | 50.3% | |||
| Net loss excluding share-based compensation (1) | (239,475 | ) | (320,016 | ) | 33.6% | |||
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Basic and diluted loss per share based on | (0.52 | ) | (0.62 | ) | 19.2% | |||
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| Change in deferred revenue of Digital Entertainment | 142,741 |
| 332,483 |
| 132.9% | |||
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| Adjusted EBITDA for Digital Entertainment (1) | 298,435 |
| 717,309 |
| 140.4% | |||
| Adjusted EBITDA for E-commerce (1) | (264,116 | ) | (412,897 | ) | 56.3% | |||
| Adjusted EBITDA for Digital Financial Services (1) | (93,069 | ) | (153,088 | ) | 64.5% | |||
| Adjusted EBITDA for Other Services (1) | (6,999 | ) | (58,157)(3 | ) | 730.9% | |||
| Unallocated expenses (2) | (4,117 | ) | (5,057 | ) | 22.8% | |||
| Total adjusted EBITDA (1) | (69,866 | ) | 88,110 | (226.1)% | ||||
(1) For a discussion of the use of non-GAAP financial measures, see Non-GAAP Financial Measures.
(2) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed by the Chief Operating Decision Maker (CODM) as part of segment performance.
(3) Includes a one-time corporate donation of S$50 million (US$37.9 million) to the National University of Singapore (NUS).
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Revenue
Our total GAAP revenue increased by 146.7% to US$1.8 billion in the first quarter of 2021 from US$714.9 million in the first quarter of 2020. The increase was mainly driven by the growth in each of the segments detailed as follows:
Cost of Revenue
Our total cost of revenue increased by 120.1% to US$1.1 billion in the first quarter of 2021 from US$508.1 million in the first quarter of 2020.
Other Operating Income
Our other operating income increased by 196.6% to US$75.1 million in the first quarter of 2021 from US$25.3 million in the first quarter of 2020. The increase was mainly attributable to the rebates from e-commerce related logistics services providers.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 120.2% to US$678.9 million in the first quarter of 2021 from US$308.3 million in the first quarter of 2020. The table below sets forth breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars ($).
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For the Three Months |
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| 2020 |
| 2021 | YOY% | ||
| Sales and Marketing Expenses | $ |
| $ |
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| Digital Entertainment | 26,815 |
| 56,812 | 111.9% | ||
| E-commerce | 206,044 |
| 451,554 | 119.2% | ||
| Digital Financial Services | 71,331 |
| 151,909 | 113.0% | ||
General and Administrative Expenses
Our general and administrative expenses increased by 96.1% to US$248.9 million in the first quarter of 2021 from US$126.9 million in the first quarter of 2020. This increase was primarily due to higher staff compensation-related expenses and benefit costs as well as a one-time corporate donation of S$50 million (US$37.9 million) to the National University of Singapore (NUS) to support research and education in the field of computing.
Research and Development Expenses
Our research and development expenses increased by 118.5% to US$141.1 million in the first quarter of 2021 from US$64.6 million in the first quarter of 2020, primarily due to the increase in research and development staff force.
Non-operating Income or Losses, Net
Non-operating income or losses mainly consist of interest income, interest expense, investment gain (loss) and foreign exchange gain (loss). We recorded a net non-operating loss of US$23.3 million in the first quarter of 2021, compared to a net non-operating income of US$11.2 million in the first quarter of 2020. Our non-operating loss in the first quarter of 2021 was primarily due to interest expenses on our outstanding convertible notes.
Income Tax Expense
We had a net income tax expense of US$51.0 million and US$23.2 million in the first quarter of 2021 and 2020, respectively. The income tax expense in the first quarter of 2021 was primarily due to corporate income tax and withholding tax expenses incurred by our digital entertainment segment.
Net Loss
As a result of the foregoing, we had net losses of US$422.1 million and US$280.8 million in the first quarter of 2021 and 2020, respectively.
Net Loss Excluding Share-based Compensation
Net loss excluding share-based compensation, was US$320.0 million and US$239.5 million in the first quarter of 2021 and 2020, respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding Share-based Compensation Attributable to Sea Limiteds Ordinary Shareholders
Basic and diluted loss per share based on net loss excluding share-based compensation, was US$0.62 and US$0.52 in the first quarter of 2021 and 2020, respectively.
Webcast and Conference Call Information
The Companys management will host a conference call today to review Seas business and financial performance.
Details of the conference call and webcast are as follows:
| Date and time: | 7:30 AM U.S. Eastern Time on May 18, 2021 |
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| 7:30 PM Singapore / Hong Kong Time on May 18, 2021 |
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| Webcast link: | |
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| Dial in numbers: | US Toll Free: 1-888-317-6003 Hong Kong: 800-963-976 |
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| International: 1-412-317-6061 Singapore: 800-120-5863 |
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| United Kingdom: 08-082-389-063 |
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| Passcode for Participants: | 3605660 |
A replay of the conference call will be available at the Companys investor relations website (www.sea.com/investor/home). An archived webcast will be available at the same link above.
About Sea Limited
Sea Limited (NYSE: SE) is a leading global consumer internet company founded in Singapore in 2009. Our mission is to better the lives of consumers and small businesses with technology. We operate three core businesses across digital entertainment, e-commerce, as well as digital payments and financial services, known as Garena, Shopee, and SeaMoney, respectively. Garena is a leading global online games developer and publisher. Shopee is the largest pan-regional e-commerce platform in Southeast Asia and Taiwan. SeaMoney is a leading digital payments and financial services provider in Southeast Asia.
Forward-Looking Statements
This announcement contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as may, could, will, expect, anticipate, aim, future, intend, plan, believe, estimate, likely to, potential, confident, guidance, and similar statements. Among other things, statements that are not historical facts, including statements about Seas beliefs and expectations, the business, financial and market outlook, and projections from its management in this announcement, as well as Seas strategic and operational plans, contain forward-looking statements. Sea may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the SEC), in its annual report to shareholders, in press releases, and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Seas goals and strategies; its future business development, financial condition, financial results, and results of operations; the growth in, and market size of, the digital entertainment, e-commerce and digital financial services industries in the markets where it operates, including segments within those industries; expected changes in its revenue, costs or expenditures; its ability to continue to source, develop and offer new and attractive online games and to offer other engaging digital entertainment content; the growth of its digital entertainment, e-commerce and digital financial services businesses; its expectations regarding growth in its user base, level of engagement, and monetization; its ability to continue to develop new technologies and/or upgrade its existing technologies; its expectations regarding the use of proceeds from its financing activities, including its follow-on offerings and convertible notes offerings; growth and trends of its markets and competition in its industries; government policies and regulations relating to its industries; general economic and business conditions in its markets; and the impact of widespread health developments, including the COVID-19 pandemic, and the responses thereto (such as voluntary and in some cases, mandatory quarantines as well as shut downs and other restrictions on travel and commercial, social and other activities, and the availability of effective vaccines and treatments) which could, among other things, impact the business and manufacturing activities of its ecosystem participants, disrupt the global supply chain including those of its sellers on its platforms and merchant partners, and negatively affect consumer discretionary spending. Further information regarding these and other risks is included in Seas filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Sea undertakes no obligation to update any forward-looking statement, except as required under applicable law.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP financial measures to help evaluate our operating performance:
These non-GAAP financial measures have limitations as analytical tools. None of the above financial measures should be considered in isolation or construed as an alternative to revenue, net loss/income, or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to Seas data. We compensate for these limitations by reconciling the non-GAAP financial measures to their nearest U.S. GAAP financial measures, all of which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on any single financial measure.
The tables below present selected financial information of our reporting segments, the non-GAAP financial measures that are most directly comparable to GAAP financial measures, and the related reconciliations between the financial measures. Amounts are expressed in thousands of US dollars ($) except for number of shares & per share data.
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| For the Three Months ended March 31, 2021 | ||||||||||||
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Digital |
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E- |
Digital |
Other |
Unallocated | Consolidated | ||||||
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| $ |
| $ | $ | $ | $ | $ | ||||||
| Operating income (loss) | 431,864 |
| (456,630 | ) | (156,827 | ) | (59,688)(4 | ) | (107,132 | ) | (348,413 | ) | |
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Net effect of changes in deferred | 277,539 | – |
| – |
| – |
| – |
| 277,539 |
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| Depreciation and Amortization | 7,906 | 43,733 |
| 3,739 |
| 1,531 |
| – |
| 56,909 |
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| Share-based compensation | – | – |
| – |
| – |
| 102,075 |
| 102,075 |
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| Adjusted EBITDA(3) | 717,309 |
| (412,897 | ) | (153,088 | ) | (58,157)(4 | ) | (5,057 | ) | 88,110 |
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| For the Three Months ended March 31, 2020 | ||||||||||||
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Digital |
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E- |
Digital |
Other |
Unallocated | Consolidated
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| $ |
| $ | $ | $ | $ | $ | ||||||
| Operating income (loss) | 174,037 | (291,699 | ) | (94,385 | ) | (10,239 | ) | (45,433 | ) | (267,719 | ) | ||
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Net effect of changes in deferred | 118,543 | – |
| – |
| – |
| – |
| 118,543 |
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| Depreciation and Amortization | 5,855 | 27,583 |
| 1,316 |
| 3,240 |
| – |
| 37,994 |
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| Share-based compensation | – | – |
| – |
| – |
| 41,316 |
| 41,316 |
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| Adjusted EBITDA(3) | 298,435 | (264,116 | ) | (93,069 | ) | (6,999 | ) | (4,117 | ) | (69,866 | ) | ||
Contacts
For enquiries:
Investors / analysts: ir@sea.com
Media: Martin Reidy, media@sea.com
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