SINGAPORE–(BUSINESS WIRE)–Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced its financial results for the first quarter ended March 31, 2024.
“I am pleased to share that we are kicking off 2024 with a strong quarter. All our three businesses have delivered strong growth with an improved profit profile,” said Forrest Li, Sea’s Chairman and Chief Executive Officer. Referring to the macro environment challenges in the past few years, he said, “Going through this period has made us leaner, fitter, and savvier. We are now much more confident of our ability to weather headwinds well, and adapt quickly to changing environments.”
On the e-commerce front, Mr Li said, “Shopee delivered strong growth this quarter, achieving its highest ever quarterly orders, GMV, and revenue.” He pointed to Shopee’s integrated logistics capability as a key differentiating factor of service quality, saying SPX Express had become “one of the fastest and most extensive logistics operators in our markets today, greatly enhancing our customer experience.”
On digital financial services, Mr Li said, “SeaMoney has continued its strong growth momentum and profitability into 2024 while maintaining prudent risk management.” Commenting on future growth, Mr Li said, “We anticipate further growth for our digital financial services business throughout the year. As we healthily grow our user base, we will be able to offer a broader set of financial services to meet our users’ needs in the future.”
On digital entertainment, Mr Li said, “We are pleased to share that Garena is back to positive growth, led by Free Fire’s strong performance across markets.” Specifically on Free Fire, Mr Li commented, “In its 7th year, Free Fire is still one of the largest mobile games in the world by user scale, and remains highly effective in attracting new users. We are confident of building Free Fire into an evergreen franchise.”
In conclusion, Mr Li said, “We have a clear roadmap for profitable growth. Our results in the first quarter have given us a strong start to 2024, and we are well on-track to deliver our full-year guidance.”
First Quarter 2024 Highlights
| 1 | For a discussion of the use of non-GAAP financial measures, see “Non-GAAP Financial Measures”. | |
| 2 | Other treasury investments currently consist of group treasury related investments, such as available-for-sale sovereign bonds and corporate bonds, classified as part of long-term investments and securities purchased under agreements to resell relating to our banking operations. | |
| 3 | Contribution margin refers to adjusted EBITDA before allocation of HQ costs. | |
| 4 | Off-book loans principal outstanding mainly refers to channeling arrangements, which is lending by other financial institutions on our platform. | |
| 5 | 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. |
| Unaudited Summary of Financial Results | |||||||||
| (Amounts are expressed in thousands of US dollars “$” except for per share data) | |||||||||
|
|
For the Three Months |
| |||||||
|
| 2023 | 2024 |
| ||||||
|
| $ | $ | YOY% | ||||||
| Revenue |
|
|
| ||||||
| Service revenue |
|
|
| ||||||
| Digital Entertainment | 539,686 |
| 458,119 |
| (15.1 | )% | |||
| E-commerce and other services | 2,259,577 |
| 2,950,020 |
| 30.6 | % | |||
| Sales of goods | 241,841 |
| 326,190 |
| 34.9 | % | |||
|
| 3,041,104 |
| 3,734,329 |
| 22.8 | % | |||
|
|
|
|
| ||||||
| Cost of revenue |
|
|
| ||||||
| Cost of service |
|
|
| ||||||
| Digital Entertainment | (173,366 | ) | (155,977 | ) | (10.0 | )% | |||
| E-commerce and other services | (1,241,328 | ) | (1,715,054 | ) | 38.2 | % | |||
| Cost of goods sold | (209,720 | ) | (309,548 | ) | 47.6 | % | |||
|
| (1,624,414 | ) | (2,180,579 | ) | 34.2 | % | |||
| Gross profit | 1,416,690 |
| 1,553,750 |
| 9.7 | % | |||
| Other operating income | 57,880 |
| 43,977 |
| (24.0 | )% | |||
| Sales and marketing expenses | (400,143 | ) | (769,635 | ) | 92.3 | % | |||
| General and administrative expenses | (333,377 | ) | (290,854 | ) | (12.8 | )% | |||
| Provision for credit losses | (177,439 | ) | (161,767 | ) | (8.8 | )% | |||
| Research and development expenses | (320,512 | ) | (304,379 | ) | (5.0 | )% | |||
| Impairment of goodwill | (117,875 | ) | – |
| – |
| |||
| Total operating expenses | (1,291,466 | ) | (1,482,658 | ) | 14.8 | % | |||
| Operating income | 125,224 |
| 71,092 |
| (43.2 | )% | |||
| Non-operating income (loss), net | 22,522 |
| (17,541 | ) | (177.9 | )% | |||
| Income tax expense | (61,898 | ) | (78,760 | ) | 27.2 | % | |||
| Share of results of equity investees | 1,444 |
| 2,209 |
| 53.0 | % | |||
| Net income (loss) | 87,292 |
| (23,000 | ) | (126.3 | )% | |||
|
Earnings (Loss) per share |
|
|
| ||||||
| Basic | 0.16 |
| (0.04 | ) | (125.0 | )% | |||
| Diluted | 0.15 |
| (0.04 | ) | (126.7 | )% | |||
|
|
|
|
| ||||||
| Change in deferred revenue of Digital Entertainment | (77,431 | ) | 54,029 |
| (169.8 | )% | |||
|
|
|
|
| ||||||
| Adjusted EBITDA for Digital Entertainment (1) | 230,055 |
| 292,208 |
| 27.0 | % | |||
| Adjusted EBITDA for E-commerce (1) | 207,714 |
| (21,700 | ) | (110.4 | )% | |||
| Adjusted EBITDA for Digital Financial Services (1) | 98,938 |
| 148,658 |
| 50.3 | % | |||
| Adjusted EBITDA for Other Services (1) | (21,941 | ) | (10,671 | ) | (51.4 | )% | |||
| Unallocated expenses (2) | (7,594 | ) | (7,346 | ) | (3.3 | )% | |||
| Total adjusted EBITDA (1) | 507,172 |
| 401,149 |
| (20.9 | )% | |||
| (1) | For a discussion of the use of non-GAAP financial measures, see “Non-GAAP Financial Measures”. | |
| (2) | Unallocated expenses within total adjusted EBITDA are mainly related to 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. |
Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023
Revenue
Our total GAAP revenue increased by 22.8% to US$3.7 billion in the first quarter of 2024 from US$3.0 billion in the first quarter of 2023.
Cost of Revenue
Our total cost of revenue was US$2.2 billion in the first quarter of 2024, as compared to US$1.6 billion in the first quarter of 2023.
Other Operating Income
Our other operating income was US$44.0 million and US$57.9 million in the first quarter of 2024 and 2023, respectively. Other operating income mainly consists of rebates from e-commerce related logistics services providers.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 92.3% to US$769.6 million in the first quarter of 2024 from US$400.1 million in the first quarter of 2023. The table below sets forth breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).
|
|
For the Three Months |
| |||||
|
| 2023 | 2024 | YOY% | ||||
| Sales and Marketing Expenses | $ | $ |
| ||||
| E-commerce | 338,189 | 675,881 | 99.9 | % | |||
| Digital Financial Services | 20,159 | 56,768 | 181.6 | % | |||
| Digital Entertainment | 23,447 | 19,376 | (17.4 | )% | |||
General and Administrative Expenses
Our general and administrative expenses decreased by 12.8% to US$290.9 million in the first quarter of 2024 from US$333.4 million in the first quarter of 2023.
Provision for Credit Losses
Our provision for credit losses decreased by 8.8% to US$161.8 million in the first quarter of 2024 from US$177.4 million in the first quarter of 2023.
Research and Development Expenses
Our research and development expenses decreased by 5.0% to US$304.4 million in the first quarter of 2024 from US$320.5 million in the first quarter of 2023.
Impairment of Goodwill
We recorded nil impairment of goodwill in the first quarter of 2024, compared to US$117.9 million in the first quarter of 2023.
Non-operating Income or Losses, Net
Non-operating income or losses mainly consist of interest income, interest expense, investment gain (loss), foreign exchange gain (loss) and gain (loss) on debt extinguishment. We recorded a net non-operating loss of US$(17.5) million in the first quarter of 2024, as compared to a net non-operating income of US$22.5 million in the first quarter of 2023. The non-operating loss in the first quarter of 2024 was primarily due to investment losses of US$(111.2) million recognized, partially offset by interest income of US$87.1 million and a US$27.1 million net gain from debt extinguishment.
We recognized a gain on debt extinguishment of US$27.1 million in the first quarter of 2024 as the Company repurchased US$171.9 million aggregate principal amount of the 0.25% convertible senior notes due 2026 (the “2026 CB”), for a cash consideration of US$143.9 million. As of March 31, 2024, approximately US$1.6 billion aggregate principal amount of the 2026 CB remained outstanding.
Income Tax Expense
We had a net income tax expense of US$78.8 million and US$61.9 million in the first quarter of 2024 and 2023, respectively.
Net Loss or Income
As a result of the foregoing, we had net loss of US$(23.0) million in the first quarter of 2024, as compared to net income of US$87.3 million in the first quarter of 2023.
Basic and Diluted Loss or Earnings Per Share Attributable to Sea Limited’s Ordinary Shareholders
Basic loss per share attributable to Sea Limited’s ordinary shareholders was US$(0.04) in the first quarter of 2024, compared to basic earnings per share attributable to Sea Limited’s ordinary shareholders of US$0.16 in the first quarter of 2023.
Diluted loss per share attributable to Sea Limited’s ordinary shareholders was US$(0.04) in the first quarter of 2024, compared to basic earnings per share attributable to Sea Limited’s ordinary shareholders of US$0.15 in the first quarter of 2023.
Webcast and Conference Call Information
The Company’s management will host a conference call today to review Sea’s 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 14, 2024 | |
| Webcast link: |
A replay of the conference call will be available at the Company’s 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. Its mission is to better the lives of consumers and small businesses with technology. Sea operates three core businesses across digital entertainment, e-commerce, as well as digital 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 and has a significant presence in Latin America. SeaMoney is a leading digital financial services provider in Southeast Asia and is growing its presence in Brazil.
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 Sea’s beliefs and expectations, the business, financial and market outlook, and projections from its management in this announcement, as well as Sea’s 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: Sea’s goals and strategies; its future business development, financial condition, financial results, and results of operations; the expected 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 or guidance 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 expected 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; growth and trends of its markets and competition in its industries; government policies and regulations relating to its industries, including the effects of any government orders or actions on its businesses; general economic, political, social and business conditions in its markets; and the impact of widespread health developments. Further information regarding these and other risks is included in Sea’s 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 Sea’s 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.
|
| For the Three Months ended March 31, 2024 | ||||||||||||||||
|
|
E- |
Digital |
Digital |
Other |
Unallocated | Consolidated | |||||||||||
|
| $ | $ | $ | $ | $ | $ | |||||||||||
| Operating (loss) income | (97,335 | ) | 134,443 | 236,198 |
| (13,787 | ) | (188,427 | ) | 71,092 |
| ||||||
|
Net effect of changes in deferred | – |
| – | 46,701 |
| – |
| – |
| 46,701 |
| ||||||
| Depreciation and Amortization | 75,635 |
| 14,215 | 9,309 |
| 3,116 |
| – |
| 102,275 |
| ||||||
| Share-based compensation | – |
| – | – |
| – |
| 181,081 |
| 181,081 |
| ||||||
| Adjusted EBITDA | (21,700 | ) | 148,658 | 292,208 |
| (10,671 | ) | (7,346 | ) | 401,149 |
| ||||||
|
| |||||||||||||||||
|
| For the Three Months ended March 31, 2023 | ||||||||||||||||
|
|
E- |
Digital |
Digital |
Other |
Unallocated | Consolidated | |||||||||||
|
| $ | $ | $ | $ | $ | $ | |||||||||||
| Operating income (loss) | 115,844 |
| 84,568 | 274,594 |
| (25,432 | ) | (324,350 | ) | 125,224 |
| ||||||
|
Net effect of changes in deferred | – |
| – | (55,003 | ) | – |
| – |
| (55,003 | ) | ||||||
| Depreciation and Amortization | 91,870 |
| 14,370 | 10,464 |
| 3,491 |
| – |
| 120,195 |
| ||||||
| Share-based compensation | – |
| – | – |
| – |
| 198,881 |
| 198,881 |
| ||||||
| Impairment of goodwill | – |
| – | – |
| – |
| 117,875 |
| 117,875 |
| ||||||
| Adjusted EBITDA | 207,714 |
| 98,938 | 230,055 |
| (21,941 | ) | (7,594 | ) | 507,172 |
| ||||||
| (1) | A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as “Other Services”. | |
| (2) | Unallocated expenses are mainly related to share-based compensation, impairment of goodwill of prior acquisition that are not under our reportable segments, 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 CODM as part of segment performance. |
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||
| Amounts expressed in thousands of US dollars (“$”) except for number of shares & per share data | ||||||
|
|
For the Three Months | |||||
|
| 2023 | 2024 | ||||
|
| $ | $ | ||||
| Revenue |
|
| ||||
| Service revenue |
|
| ||||
| Digital Entertainment | 539,686 |
| 458,119 |
| ||
| E-commerce and other services | 2,259,577 |
| 2,950,020 |
| ||
| Sales of goods | 241,841 |
| 326,190 |
| ||
|
|
|
| ||||
|
|
|
| ||||
| Total revenue | 3,041,104 |
| 3,734,329 |
| ||
|
|
|
| ||||
| Cost of revenue |
|
| ||||
| Cost of service |
|
| ||||
| Digital Entertainment | (173,366 | ) | (155,977 | ) | ||
| E-commerce and other services | (1,241,328 | ) | (1,715,054 | ) | ||
| Cost of goods sold | (209,720 | ) | (309,548 | ) | ||
|
|
|
| ||||
|
|
|
| ||||
| Total cost of revenue | (1,624,414 | ) | (2,180,579 | ) | ||
|
|
|
| ||||
|
|
|
| ||||
| Gross profit | 1,416,690 |
| 1,553,750 |
| ||
|
|
|
| ||||
|
|
|
| ||||
| Operating income (expenses): |
|
| ||||
| Other operating income | 57,880 |
| 43,977 |
| ||
| Sales and marketing expenses | (400,143 | ) | (769,635 | ) | ||
| General and administrative expenses | (333,377 | ) | (290,854 | ) | ||
| Provision for credit losses | (177,439 | ) | (161,767 | ) | ||
| Research and development expenses | (320,512 | ) | (304,379 | ) | ||
| Impairment of goodwill | (117,875 | ) | – |
| ||
|
|
|
| ||||
|
|
|
| ||||
| Total operating expenses | (1,291,466 | ) | (1,482,658 | ) | ||
|
|
|
| ||||
|
|
|
| ||||
| Operating income | 125,224 |
| 71,092 |
| ||
| Interest income | 68,798 |
| 87,115 |
| ||
| Interest expense | (10,389 | ) | (9,718 | ) | ||
| Investment loss, net | (27,743 | ) | (111,244 | ) | ||
| Net gain on debt extinguishment | – |
| 27,112 |
| ||
| Foreign exchange loss | (8,144 | ) | (10,806 | ) | ||
|
|
|
| ||||
| Income before income tax and share of results of equity investees | 147,746 |
| 53,551 |
| ||
| Income tax expense | (61,898 | ) | (78,760 | ) | ||
| Share of results of equity investees | 1,444 |
| 2,209 |
| ||
|
|
|
| ||||
| Net income (loss) | 87,292 |
| (23,000 | ) | ||
|
|
|
| ||||
| Net loss (income) attributable to non-controlling interests | 783 |
| (663 | ) | ||
|
|
|
| ||||
| Net income (loss) attributable to Sea Limited’s ordinary shareholders | 88,075 |
| (23,663 | ) | ||
|
|
|
| ||||
| Earnings (Loss) per share: |
|
| ||||
| Basic | 0.16 |
| (0.04 | ) | ||
| Diluted | 0.15 |
| (0.04 | ) | ||
|
|
|
| ||||
| Weighted average shares used in earnings (loss) per share computation: |
|
| ||||
| Basic | 563,558,642 |
| 570,937,761 |
| ||
| Diluted | 598,691,484 |
| 570,937,761 |
| ||
Contacts
For enquiries:
Investors / analysts: ir@sea.com
Media: media@sea.com
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