Singapores Sea Reports Higher Adjusted Revenue, Narrowing EBITDA Losses In Q1

New York Stock Exchange-listed online gaming and e-commerce firm Sea Limited (Sea) has reported that its total adjusted EBITDA losses narrowed to $32 million in 1QFY2019, compared to losses of $144.7 million in 1QFY2018 and $203.6 million in 4QFY2018.

In its first quarter FY19 results release, the company said its total adjusted revenue stood at $578.8 million, up 193.8 per cent year-on-year (YoY) from $197  million in 1QFY2018, and up 48.7 per cent quarter-on-quarter (QoQ) from $389.3 million in 4QFY2018.

Sea defines ‘Total Adjusted Revenue’ as the sum of adjusted revenue for its various business segments including digital entertainment, e-commerce, digital financial services and others. The company maintains that this financial measure enables investors to follow trends in its overall group monetisation capability over time.

The main driver for the narrowed adjusted EBITDA losses is the rise in digital entertainment (Garena) adjusted EBITDA. Garena has historically been the main driver for the overall business, both in adjusted revenues and EBITDA.

Garena (Digital Entertainment) Division

Adjusted revenue was $393.3 million in 1QFY2019, up 169.3 per cent YoY from $146.0 million in 1QFY2018 and an increase of 70.0 per cent QoQ from $231.4 million for the fourth quarter of 2018.

Adjusted EBITDA was $225.8 million in 1QFY2019, up 310.5 per cent YoY from $55.0 million for the 1QFY2018 and an increase of 114.7 per cent QoQ from $105.2 million for 4QFY2018.

Quarterly active users (QAUs) reached 271.6 million in 1QFY2019, an increase of 114.4 per cent YoY from 126.7 million for 1QFY2018 and up 25.6 per cent QoQ from 216.2 million for the 4QFY2018.

Quarterly paying users (QPU) grew strongly, accounting for 7.6 per cent of QAUs for 1QFY2019, increasing from 5.7 per cent for the same period in 2018, and 5.5 per cent in the 4QFY2018.

Average revenue per user (ARPU) was $1.40 in 1QFY2019, compared to $1.20 in 1QFY2018 and $1.10 for the 4QFY2018.

Free Fire continued to grow and recently achieved more than 450 million registered users and more than 50 million peak daily active users from over 130 markets worldwide. According to App Annie, in 1QFY2019, Free Fire was the second most downloaded mobile game globally across the Apple App Store and Google Play Store combined and the top mobile game in Latin America by monthly active users and downloads.

Shopee (E-commerce)

Adjusted revenue was $149.2 million in 1QFY2019, up 342.1 per cent YoY from $33.7 million for 1QFY2018. It was also up 17.6 per cent QoQ from $126.9 million for the fourth quarter of 2018.

Adjusted revenue in 1QFY2019 included $102.0 million of marketplace revenue, up 362.6 per cent YoY from $22.0 million in 1QFY2018 and up 16.4 per cent QoQ from $87.6 million 4QFY2018. Product revenue stands at $47.2 million in 1QFY2019, up 303.6 per cent YoY from $11.7 million in 1QFY2018 and up 20.2 per cent QoQ from $39.3 million in 4QFY2018.

Gross merchandise value (GMV) was $3.5 billion in 1QFY2019, an increase of 81.8 per cent YoY from $1.9 billion in 1QFY2018 and up 3.0 per cent QoQ from $3.4 billion in 4QFY2018.

Adjusted revenue as a percentage of GMV increased to 4.2 per cent in the 1QFY2019, up from 3.7 per cent in the previous quarter and 1.7 per cent for the same period a year ago.

Gross orders for the quarter totalled 203.5 million in 1QFY2019, an increase of 82.7 per cent YoY from 111.4 million 1QFY2018 and on par with the 206.9 million for the 4QFY2018.

Sales and marketing as a percentage of GMV further decreased to 4.2 per cent in 1QFY2019, down from 5.4 per cent in the previous quarter and 6.6 per cent for the same period a year ago. Sales and marketing expenses in absolute dollar terms decreased QoQ in 1QFY2019 to $147.9 million compared to $184.5 million in 4QFY2018.

Adjusted EBITDA was minus $235.3 million, compared to minus $179.6 million 1QFY2018 and minus $277.5 million in 4QFY2018.

In Taiwan, Shopee recorded a positive quarterly adjusted EBITDA before allocation of the headquarters’ common expenses in the 1QFY2019.

In Indonesia, Shopee’s largest market, Shopee recorded 83.5 million orders 1QFY2019, or a daily average of 0.9 million orders.

According to App Annie, in 1QFY2019, Shopee was the most downloaded app in the Shopping Category in Southeast Asia and in Taiwan.