Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced
its financial results for the third quarter ended September 30,
2021.
Third Quarter 2021 Highlights
- Group
- Total GAAP revenue was US$2.7 billion, up 121.8%
year-on-year.
- Total gross profit was US$1.0 billion, up 147.5%
year-on-year.
- Total adjusted EBITDA1 was US$(165.5) million compared to
US$120.4 million for the third quarter of 2020.
- Digital Entertainment
- Bookings2 were US$1.2 billion, up 29.2% year-on-year.
- Adjusted EBITDA1 was US$715.1 million, up 22.3%
year-on-year.
- Adjusted EBITDA represented 58.6% of bookings for the third
quarter of 2021, compared to 61.9% for the third quarter of
2020.
- GAAP revenue was US$1.1 billion, up 93.2% year-on-year.
- Quarterly active users (“QAUs”) reached 729.0 million, an
increase of 27.4% year-on-year.
- Quarterly paying users grew by 42.7% year-on-year to 93.2
million, and represented 12.8% of QAUs for the third quarter
compared to 11.4% for the same period in 2020.
- Average bookings per user were US$1.7, in line with that for
the third quarter of 2020.
- Our self-developed global hit game, Free Fire, continued to see
strong user engagement, ranking second globally by average monthly
active users for all mobile games on Google Play in the third
quarter of 2021, according to App Annie3.
- Free Fire continued to be the highest grossing mobile game in
Southeast Asia, Latin America and India for the third quarter of
2021, according to App Annie3. Free Fire has maintained this
leading position for the past nine consecutive quarters in
Southeast Asia and in Latin America, and four consecutive quarters
in India.
- In the United States, Free Fire was also the highest grossing
mobile battle royale game for three consecutive quarters, and was
the second highest grossing mobile game on Google Play for the
third quarter of 2021, according to App Annie3.
- In late September, we launched Free Fire MAX globally to
continue to drive high quality engagement and immersive experiences
across our large and diverse user base. Free Fire MAX is a new
standalone version of Free Fire with enhanced specifications that
is completely interoperable with Free Fire, allowing users of both
versions to play together.
- During the quarter, Free Fire also celebrated its fourth
anniversary, during which we launched Lone Wolf mode, a new mode
for 1vs1 or 2vs2 gameplay, introduced new characters, and worked
with global artists to produce a theme song which was streamed over
60 million times across various online platforms to date.
- E-commerce
- GAAP revenue was US$1.5 billion, up 134.4% year-on-year.
- GAAP revenue included US$1.2 billion of GAAP marketplace
revenue4, up 151.4% year-on-year, and US$0.3 billion of GAAP
product revenue5, up 82.2% year-on-year.
- Gross orders totaled 1.7 billion, an increase of 123.2%
year-on-year. This represents nine consecutive quarters of triple
digit year-on-year order growth.
- Gross merchandise value (“GMV”) was US$16.8 billion, an
increase of 80.6% year-on-year.
- Adjusted EBITDA1 was US$(683.8) million compared to US$(301.6)
million for the third quarter of 2020.
- Adjusted EBITDA loss per order was US$0.41, in line with that
for the third quarter of 2020. Adjusted EBITDA loss per order6 for
Southeast Asia and Taiwan and that for Shopee’s other markets
respectively improved in the third quarter of 2021, both
quarter-on-quarter and year-on-year.
- Globally, Shopee was the top ranked app in the Shopping
category on Google Play by total time spent in app, and ranked
second by downloads and average monthly active users in the third
quarter of 2021, according to App Annie3.
- In Southeast Asia and in Taiwan respectively, Shopee continued
to rank first in the Shopping category by average monthly active
users and total time spent in app for the third quarter of 2021,
according to App Annie3. In Indonesia specifically, Shopee also
ranked first by these metrics.
- In Brazil, where Shopee was launched in late 2019, it continued
to rank first in the Shopping category by downloads and total time
spent in app, and continued to rank second by average monthly
active users for the third quarter of 2021, according to App
Annie3.
Digital Financial Services Update
We continued to see strong growth in the adoption of SeaMoney’s
offerings. The total payment volume for our mobile wallet was
US$4.6 billion for the third quarter of 2021, an increase of 111%
year-on-year. Moreover, quarterly paying users for our mobile
wallet services increased to 39.3 million in the third quarter.
Appointment of Group President
Chris Feng will be appointed as Sea’s Group President, effective
January 1, 2022.
In this capacity, Chris will continue to directly report to
Sea’s Chairman and Group Chief Executive Officer, Forrest Li, and
continue to operate Sea’s Shopee and SeaMoney businesses. In
addition, as Group President, Chris will work closely with Forrest
and the rest of the group leadership team on Sea’s long term
strategic initiatives, with an increasing focus on synergy creation
across Sea’s various businesses.
Raising Guidance
We are for the second time raising the guidance for e-commerce
for the full year of 2021. We expect GAAP revenue for e-commerce to
be between US$5.0 billion and US$5.2 billion, representing 135.3%
growth from 2020 at the midpoint of the revised guidance, compared
to the previous guidance of between US$4.7 billion to US$4.9
billion.
Conversions of Convertible Notes
Since our last update as of July 31, 2021, up until October 31,
2021, there have been further conversions of more than US$196.0
million aggregate principal amount of our convertible notes
outstanding. Such conversions are estimated to result in more than
US$6.3 million of savings to us in future interest payments. As of
October 31, more than 94% of our 2.25% convertible senior notes due
2023 (the “2023 notes”) and more than 81% of our 1.00% convertible
senior notes due 2024 (the “2024 notes”), respectively, have been
converted or exchanged.
As of October 31, 2021, we had 554,625,132 ordinary shares
issued and outstanding, and approximately US$31.3 million and
US$207.8 million principal amount of the 2023 notes and 2024 notes
remaining outstanding, respectively.
1 For definitions of total adjusted EBITDA and adjusted EBITDA
for digital entertainment and e-commerce segments, please refer to
the “Non-GAAP Financial Measures” section. 2 GAAP revenue for the
digital entertainment segment plus change in digital entertainment
deferred revenue. This operating metric is used as an approximation
of cash spent by our users in the applicable period that is
attributable to our digital entertainment segment. 3 Rankings data
for App Annie is based on combined data from the Google Play and
iOS App Stores, unless otherwise stated. Southeast Asia rankings
are based on Indonesia, Malaysia, Philippines, Singapore, Thailand,
and Vietnam. Latin America rankings are based on Argentina, Brazil,
Chile, Colombia, Mexico, and Uruguay. 4 GAAP marketplace revenue
mainly consists of transaction-based fees and advertising income
and revenue generated from other value-added services. 5 GAAP
product revenue mainly consists of revenue generated from direct
sales. 6 Adjusted EBITDA loss per order by region refers to both
before and after the allocation of the headquarters’ common
expenses.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars “$” except for
per share data)
For the Three Months ended
September 30,
2020
2021
$
$
YOY%
Revenue
Service revenue
Digital Entertainment
568,981
1,099,367
93.2
%
E-commerce and other services
489,500
1,309,912
167.6
%
Sales of goods
153,679
279,605
81.9
%
1,212,160
2,688,884
121.8
%
Cost of revenue
Cost of service
Digital Entertainment
(194,738
)
(314,363
)
61.4
%
E-commerce and other services
(458,321
)
(1,099,189
)
139.8
%
Cost of goods sold
(151,534
)
(266,628
)
76.0
%
(804,593
)
(1,680,180
)
108.8
%
Gross profit
407,567
1,008,704
147.5
%
Other operating income
59,023
68,557
16.2
%
Sales and marketing expenses
(470,988
)
(1,009,601
)
114.4
%
General and administrative expenses
(196,730
)
(294,848
)
49.9
%
Research and development expenses
(104,345
)
(231,368
)
121.7
%
Total operating expenses
(713,040
)
(1,467,260
)
105.8
%
Operating loss
(305,473
)
(458,556
)
50.1
%
Non-operating loss, net
(74,301
)
(12,816
)
(82.8
)%
Income tax expense
(46,416
)
(101,040
)
117.7
%
Share of results of equity investees
928
1,431
54.2
%
Net loss
(425,262
)
(570,981
)
34.3
%
Net loss excluding share-based
compensation (1)
(346,049
)
(448,014
)
29.5
%
Basic and diluted loss per share based on
net loss excluding share-based compensation
attributable to Sea Limited’s ordinary
shareholders (1)
(0.69
)
(0.84
)
21.7
%
Change in deferred revenue of Digital
Entertainment
375,674
121,306
(67.7
)%
Adjusted EBITDA for Digital Entertainment
(1)
584,525
715,139
22.3
%
Adjusted EBITDA for E-commerce (1)
(301,590
)
(683,813
)
126.7
%
Adjusted EBITDA for Digital Financial
Services (1)
(149,263
)
(159,037
)
6.5
%
Adjusted EBITDA for Other Services (1)
(9,115
)
(31,920
)
250.2
%
Unallocated expenses (2)
(4,171
)
(5,823
)
39.6
%
Total adjusted EBITDA (1)
120,386
(165,454
)
(237.4
)%
(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.
Three Months Ended September 30, 2021 Compared to Three
Months Ended September 30, 2020
Revenue
Our total GAAP revenue increased by 121.8% to US$2.7 billion in
the third quarter of 2021 from US$1.2 billion in the third quarter
of 2020. The increase was mainly driven by the growth in each of
the segments detailed as follows:
- Digital Entertainment: GAAP revenue increased by 93.2% to
US$1.1 billion in the third quarter of 2021 from US$569.0 million
in the third quarter of 2020. This increase was primarily due to
the increase in our active user base as well as the deepened paying
user penetration.
- E-commerce and other services: GAAP revenue increased by 167.6%
to US$1.3 billion in the third quarter of 2021 from US$489.5
million in the third quarter of 2020. This increase was primarily
driven by the growth in the scale of our e-commerce marketplace and
the increase in value-added services revenue. Transaction-based
fees and advertising income also contributed to the growth. The
result reflects our efforts to continuously enhance our service
offerings as we strive to create greater value for our platform
users.
- Sales of goods: GAAP revenue increased by 81.9% to US$279.6
million in the third quarter of 2021 from US$153.7 million in the
third quarter of 2020, primarily due to the increase in our product
offerings.
Cost of Revenue
Our total cost of revenue increased by 108.8% to US$1.7 billion
in the third quarter of 2021 from US$804.6 million in the third
quarter of 2020.
- Digital Entertainment: Cost of revenue increased by 61.4% to
US$314.4 million in the third quarter of 2021 from US$194.7 million
in the third quarter of 2020. The increase was largely in line with
the increase in our digital entertainment revenue. Improvement in
gross profit margins was largely due to higher revenue contribution
from our self-developed game.
- E-commerce and other services: Cost of revenue for our
e-commerce and other services segment combined increased by 139.8%
to US$1.1 billion in the third quarter of 2021 from US$458.3
million in the third quarter of 2020. The increase was primarily
due to higher total costs of the logistics with order growth, costs
of other value-added services that we provide to our users, and
other costs incurred, in each case driven by the growth of our
e-commerce marketplace. Improvement in gross profit margins was
mainly due to improvement in our marketplace take-rate and our cost
efficiency as we continue to enhance our service offerings.
- Cost of goods sold: Cost of goods sold increased by 76.0% to
US$266.6 million in the third quarter of 2021 from US$151.5 million
in the third quarter of 2020. The increase was largely in line with
the increase in our revenue from sales of goods.
Other Operating Income
Our other operating income increased by 16.2% to US$68.6 million
in the third quarter of 2021 from US$59.0 million in the third
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 114.4% to
US$1.0 billion in the third quarter of 2021 from US$471.0 million
in the third quarter of 2020. The table below sets forth breakdown
of the sales and marketing expenses of our major reporting
segments. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
September 30,
2020
2021
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
45,797
108,631
137.2
%
E-commerce
306,680
688,924
124.6
%
Digital Financial Services
109,319
195,794
79.1
%
- Digital Entertainment: Sales and marketing expenses increased
by 137.2% to US$108.6 million in the third quarter of 2021 from
US$45.8 million in the third quarter of 2020. The increase was
primarily due to higher online marketing and content costs as we
continue to deepen the engagement with our gamers’ community and
deepen investment in long-term brand building.
- E-commerce: Sales and marketing expenses increased by 124.6% to
US$688.9 million in the third quarter of 2021 from US$306.7 million
in the third quarter of 2020. The increase was primarily
attributable to the ramping up of marketing incentives and online
marketing efforts, as we continue investing in capturing market
opportunities and expanding across markets.
- Digital Financial Services: Sales and marketing expenses
increased by 79.1% to US$195.8 million in the third quarter of 2021
from US$109.3 million in the third quarter of 2020. The increase
was mainly due to our efforts to promote adoption of our mobile
wallet services.
General and Administrative Expenses
Our general and administrative expenses increased by 49.9% to
US$294.8 million in the third quarter of 2021 from US$196.7 million
in the third quarter of 2020. This increase was primarily due to
higher staff compensation and benefit costs from increased staff to
support the business growth, office facilities and related
expenses.
Research and Development Expenses
Our research and development expenses increased by 121.7% to
US$231.4 million in the third quarter of 2021 from US$104.3 million
in the third 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$12.8 million in the third quarter of 2021, compared to a net
non-operating loss of US$74.3 million in the third quarter of 2020.
Our non-operating loss in the third quarter of 2021 was primarily
due to interest expenses on our outstanding convertible notes,
partially offset by foreign exchange gain.
Income Tax Expense
We had a net income tax expense of US$101.0 million and US$46.4
million in the third quarter of 2021 and 2020, respectively. The
income tax expense in the third 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$571.0
million and US$425.3 million in the third quarter of 2021 and 2020,
respectively.
Net Loss Excluding Share-based Compensation
Net loss excluding share-based compensation, was US$448.0
million and US$346.0 million in the third quarter of 2021 and 2020,
respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding
Share-based Compensation Attributable to Sea Limited’s Ordinary
Shareholders
Basic and diluted loss per share based on net loss excluding
share-based compensation, was US$0.84 and US$0.69 in the third
quarter of 2021 and 2020, respectively.
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 November 16,
2021
8:30 PM Singapore / Hong Kong Time on
November 16, 2021
Webcast link:
https://services.choruscall.com/links/se211116.html
Dial in numbers:
US Toll Free:
1-888-317-6003 Hong Kong:
800-963-976
International:
1-412-317-6061 Singapore:
800-120-5863
United Kingdom: 08-082-389-063
Passcode for Participants: 6244725
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. 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 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 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 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:
- “Net loss excluding share-based compensation” represents net
loss before share-based compensation. This financial measure helps
to identify underlying trends in our business that could otherwise
be distorted by the effect of certain expenses that are included in
net loss. The use of this measure has its limitations in that it
does not include all items that impact the net loss or income for
the period, and share-based compensation are significant
expenses.
- “Net loss excluding share-based compensation attributable to
Sea Limited’s ordinary shareholders” represents net loss
attributable to Sea Limited’s ordinary shareholders before
share-based compensation. This financial measure helps to identify
underlying trends in our business that could otherwise be distorted
by the effect of certain expenses that are included in net loss.
The use of this measure has its limitations in that it does not
include all items that impact the net loss or income for the
period, and share-based compensation are significant expenses.
- “Basic and diluted loss per share based on net loss excluding
share-based compensation attributable to Sea Limited’s ordinary
shareholders” represents net loss excluding share-based
compensation attributable to Sea Limited’s ordinary shareholders
divided by the weighted average number of shares outstanding during
the period.
- “Adjusted EBITDA” for our digital entertainment segment
represents operating income (loss) before share-based compensation
plus (a) depreciation and amortization expenses, and (b) the net
effect of changes in deferred revenue and its related cost for our
digital entertainment segment. We believe that the segment adjusted
EBITDA helps to identify underlying trends in our operating
results, enhancing their understanding of the past performance and
future prospects.
- “Adjusted EBITDA” for our e-commerce segment, digital financial
services segment and other services segment represents operating
income (loss) before share-based compensation plus depreciation and
amortization expenses. We believe that the segment adjusted EBITDA
helps to identify underlying trends in our operating results,
enhancing their understanding of the past performance and future
prospects.
- “Total adjusted EBITDA” represents the sum of adjusted EBITDA
of all our segments combined, plus unallocated expenses. We believe
that the total adjusted EBITDA helps to identify underlying trends
in our operating results, enhancing their understanding of the past
performance and future prospects.
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
September 30, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
611,673
(741,399)
(166,127)
(33,913)
(128,790)
(458,556)
Net effect of changes in deferred
revenue and its related cost
93,707
-
-
-
-
93,707
Depreciation and Amortization
9,759
57,586
7,090
1,993
-
76,428
Share-based compensation
-
-
-
-
122,967
122,967
Adjusted EBITDA(3)
715,139
(683,813)
(159,037)
(31,920)
(5,823)
(165,454)
For the Three Months ended
September 30, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
278,614
(338,097)
(151,567)
(11,039)
(83,384)
(305,473)
Net effect of changes in deferred
revenue and its related cost
299,200
-
-
-
-
299,200
Depreciation and Amortization
6,711
36,507
2,304
1,924
-
47,446
Share-based compensation
-
-
-
-
79,213
79,213
Adjusted EBITDA(3)
584,525
(301,590)
(149,263)
(9,115)
(4,171)
120,386
(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 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. (3) Intersegment sales
incentives are not included in the adjusted EBITDA calculation for
e-commerce, digital financial services and other services
segments.
For the Three Months ended
September 30,
2020
2021
$
$
Net loss
(425,262
)
(570,981
)
Share-based compensation
79,213
122,967
Net loss excluding share-based
compensation
(346,049
)
(448,014
)
Net loss (profit) attributable to
non-controlling interests
5,272
(2,038
)
Net loss excluding share-based
compensation attributable to Sea Limited’s
ordinary shareholders
(340,777
)
(450,052
)
Weighted average shares used in loss per
share computation:
Basic and diluted
491,139,720
538,666,684
Basic and diluted loss per share based on
net loss excluding share-based compensation
attributable to Sea Limited’s ordinary
shareholders
(0.69
)
(0.84
)
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS Amounts expressed in thousands
of US dollars (“$”) except for number of shares & per share
data
For the Nine Months ended
September 30,
2020
2021
$
$
Revenue
Service revenue
Digital Entertainment
1,322,610
2,904,969
E-commerce and other services
1,120,764
3,081,952
Sales of goods
365,740
746,155
Total revenue
2,809,114
6,733,076
Cost of revenue
Cost of service
Digital Entertainment
(493,969
)
(855,299
)
E-commerce and other services
(1,132,136
)
(2,590,475
)
Cost of goods sold
(367,816
)
(702,295
)
Total cost of revenue
(1,993,921
)
(4,148,069
)
Gross profit
815,193
2,585,007
Operating income (expenses):
Other operating income
116,948
215,652
Sales and marketing expenses
(1,165,653
)
(2,609,885
)
General and administrative expenses
(468,210
)
(786,698
)
Research and development expenses
(244,278
)
(545,061
)
Total operating expenses
(1,761,193
)
(3,725,992
)
Operating loss
(946,000
)
(1,140,985
)
Interest income
20,529
25,158
Interest expense
(113,354
)
(86,653
)
Investment gain (loss), net
45,253
(24,585
)
Changes in fair value of convertible
notes
(87
)
–
Foreign exchange (loss) gain
(7,795
)
24,951
Loss before income tax and share of
results of equity investees
(1,001,454
)
(1,202,114
)
Income tax expense
(97,474
)
(227,256
)
Share of results of equity investees
(660
)
2,629
Net loss
(1,099,588
)
(1,426,741
)
Net loss (profit) attributable to
non-controlling interests
5,124
(2,410
)
Net loss attributable to Sea Limited’s
ordinary shareholders
(1,094,464
)
(1,429,151
)
Loss per share:
Basic and diluted
(2.32
)
(2.72
)
Weighted average shares used in loss per
share computation:
471,375,477
525,652,569
Basic and diluted
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of September 30,
2020
2021
$
$
ASSETS
Current assets
Cash and cash equivalents
6,166,880
11,126,238
Restricted cash
859,192
1,365,740
Accounts receivable, net of allowance for
credit losses of $7,978 and $5,459, as of
December 31, 2020 and September 30, 2021
respectively
362,999
373,644
Prepaid expenses and other assets
1,054,229
1,243,362
Loans receivable, net of allowance for
credit losses of $20,872 and $78,058, as of
December 31, 2020 and September 30, 2021
respectively
285,937
1,049,703
Inventories, net
64,219
128,688
Short-term investments
126,099
706,012
Amounts due from related parties
19,449
10,313
Total current assets
8,939,004
16,003,700
Non-current assets
Property and equipment, net
386,401
765,030
Operating lease right-of-use assets,
net
234,555
588,260
Intangible assets, net
39,773
48,723
Long-term investments
190,482
334,127
Prepaid expenses and other assets
204,804
150,754
Loans receivable, net of allowance for
credit losses of $19,612 and $16,316, as of
December 31, 2020 and September 30, 2021
respectively
117,149
36,494
Restricted cash
27,321
33,994
Deferred tax assets
99,904
110,980
Goodwill
216,278
476,662
Total non-current assets
1,516,667
2,545,024
Total assets
10,455,671
18,548,724
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of September 30,
2020
2021
$
$
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
121,637
232,707
Accrued expenses and other payables
2,033,461
2,848,063
Advances from customers
161,379
233,287
Amounts due to related parties
42,613
66,514
Operating lease liabilities
74,506
164,414
Deferred revenue
2,150,165
2,743,969
Income tax payable
52,306
132,032
Total current liabilities
4,636,067
6,420,986
Non-current liabilities
Accrued expenses and other payables
36,159
66,104
Operating lease liabilities
177,870
450,306
Deferred revenue
343,297
292,389
Convertible notes
1,840,406
3,503,456
Deferred tax liabilities
1,526
4,844
Unrecognized tax benefits
107
107
Total non-current liabilities
2,399,365
4,317,206
Total liabilities
7,035,432
10,738,192
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of September 30,
2020
2021
$
$
Shareholders’ equity
Class A Ordinary shares
179
200
Class B Ordinary shares
76
76
Additional paid-in capital
8,526,571
14,400,961
Accumulated other comprehensive income
(loss)
4,681
(36,234
)
Statutory reserves
2,363
1,733
Accumulated deficit
(5,150,958
)
(6,579,479
)
Total Sea Limited shareholders’
equity
3,382,912
7,787,257
Non-controlling interests
37,327
23,275
Total shareholders’ equity
3,420,239
7,810,532
Total liabilities and shareholders’
equity
10,455,671
18,548,724
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts expressed in
thousands of US dollars (“$”)
For the Nine Months ended
September 30,
2020
2021
$
$
Net cash generated from operating
activities
370,424
513,473
Net cash used in investing activities
(519,976
)
(1,991,763
)
Net cash generated from financing
activities
784,031
7,015,596
Effect of foreign exchange rate changes on
cash, cash equivalents and restricted cash
21,695
(64,727
)
Net increase in cash, cash equivalents and
restricted cash
656,174
5,472,579
Cash, cash equivalents and restricted cash
at beginning of the period
3,570,578
7,053,393
Cash, cash equivalents and restricted cash
at end of the period
4,226,752
12,525,972
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operating Decision Maker (“CODM”) reviews the performance of each
segment based on revenue and certain key operating metrics of the
operations and uses these results for the purposes of allocating
resources to and evaluating the financial performance of each
segment. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
September 30, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
1,099,367
1,450,397
132,204
6,916
-
2,688,884
Operating income (loss)
611,673
(741,399
)
(166,127
)
(33,913
)
(128,790
)
(458,556
)
Non-operating loss, net
(12,816
)
Income tax expense
(101,040
)
Share of results of equity investees
1,431
Net loss
(570,981
)
For the Three Months ended
September 30, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
568,981
618,704
14,400
10,075
-
1,212,160
Operating income (loss)
278,614
(338,097
)
(151,567
)
(11,039
)
(83,384
)
(305,473
)
Non-operating loss, net
(74,301
)
Income tax expense
(46,416
)
Share of results of equity investees
928
Net loss
(425,262
)
(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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211116005699/en/
For enquiries: Investors / analysts: ir@sea.com Media:
Martin Reidy, media@sea.com
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