Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced
its financial results for the first quarter ended March 31,
2022.
“We recorded solid results across our business in the first
quarter of 2022, despite challenging comparisons to the same period
last year during heightened COVID-related restrictions. As a
result, we are well on track to achieve our previously shared
projections of profitability in our Asia markets, while continuing
to scale our businesses and capture market share globally,” said
Forrest Li, Sea’s Chairman and Group Chief Executive Officer.
“Shopee and SeaMoney continued to enjoy operating leverage and
efficiency gain as they scale and strengthen their market
leadership positions. With the significant scale, strong leadership
and clear synergies achieved by both businesses in Southeast Asia
and Taiwan, our consumer internet ecosystem in the region is
naturally approaching a stage of long-term profitable growth.”
“While Garena experienced headwinds in its growth post-COVID, we
saw some preliminary positive effects from our efforts to improve
user engagement in Free Fire. In particular, the monthly user
trends for Free Fire began to show some early signs of stabilizing
toward the end of the first quarter. While this is encouraging, the
longer-term impact of reopening around Free Fire remains to be seen
and we will continue to focus on user engagement and user base
stabilization.”
“In the past two years, we successfully navigated the major
uncertainties brought by the pandemic to capture the significant
growth opportunities presented to us across all businesses. As we
enter a new period, we recognize that the current macro trends and
uncertainties could affect our region and the world in the near to
mid-term. The experiences, capabilities, resources and strong
leadership positions we managed to accumulate and achieve during
the past period position us well to navigate such uncertainties
and, more importantly, capture opportunities that may also arise in
our regions. And as always, we will continue to focus on being
humble, pragmatic, and agile while consistently driving strong
execution in serving the large, underserved communities in our
regions.”
First Quarter 2022 Highlights
- Group
- Total GAAP revenue was US$2.9 billion, up 64.4%
year-on-year.
- Total gross profit was US$1.2 billion, up 81.3%
year-on-year.
- Total net loss was US$(580.1) million compared to US$(422.1)
million for the first quarter of 2021. Total net loss excluding
share-based compensation was US$(445.1) million compared to
US$(320.0) million for the first quarter of 2021.
- Total adjusted EBITDA1 was US$(509.9) million compared to
US$88.1 million for the first quarter of 2021.
- E-commerce
- GAAP revenue was US$1.5 billion, up 64.4% year-on-year.
- GAAP revenue included US$1.3 billion of GAAP marketplace
revenue2, up 75.3% year-on-year, and US$0.3 billion of GAAP product
revenue2, up 26.8% year-on-year. GAAP revenue and GAAP marketplace
revenue as % of total gross merchandise value (“GMV”) increased
from 7.3% and 5.7% a year ago to 8.7% and 7.2%, respectively.
- Gross orders totaled 1.9 billion, an increase of 71.3%
year-on-year.
- GMV was US$17.4 billion, an increase of 38.7%
year-on-year.
- Gross profit margin for e-commerce improved year-on-year as we
have seen faster growth of transaction-based fees and advertising
income, which have higher profit margin compared to revenue
generated from other value-added services. At the same time, gross
profit margin of revenue generated from other value-added services
also improved quarter-on-quarter.
- Adjusted EBITDA1 loss per order before headquarters’ common
expenses (“HQ costs”) improved year-on-year and quarter-on-quarter
for Shopee overall. Shopee is on track to achieve positive adjusted
EBITDA before allocation of HQ costs in Southeast Asia and Taiwan
by this year as we shared previously. In Southeast Asia and Taiwan,
such loss was 4 cents in the first quarter of 2022, a more than 70%
improvement from 12 cents for the same period in 2021.
- In Brazil, such loss also improved by more than 45%
year-on-year to US$1.52 in the first quarter of 2022.
- After HQ costs allocation, we currently expect Shopee to
achieve positive adjusted EBITDA in Southeast Asia and Taiwan by
the end of next year.
- Adjusted EBITDA for Shopee overall was US$(742.8) million
compared to US$(412.9) million for the first quarter of 2021.
Adjusted EBITDA loss per order was US$0.40 in the first quarter of
2022, compared to US$0.38 for the same period in 2021, which was
mainly attributable to HQ costs increase.
- HQ costs increased by US$162.1 million year-on-year, which
accounted for close to 50% of the total year-on-year increase in
adjusted EBITDA loss. HQ costs consisted mainly of staff cost,
general and administrative expenses such as building facilities and
server hosting expenses.
- The increase in HQ costs was mostly attributable to staff cost
increase, which grew by US$113.3 million. This was mainly because
of headcount increase, and in particular, research and development
staff increase, which cost grew by US$86.0 million, as we invested
in our technological capabilities and expanded our service
offerings.
- 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 first quarter of 2022,
according to data.ai3.
- In Indonesia, where Shopee is the largest e-commerce platform,
gross orders grew by around 77% year-on-year. Shopee also continued
to rank first in the Shopping category by average monthly active
users and total time spent in app for the first quarter of 2022,
according to data.ai3.
- Shopee Brazil continued to rank first in the Shopping category
by downloads and total time spent in app and second by average
monthly active users for the first quarter of 2022, according to
data.ai3. Shopee Brazil also ranked first in the Shopping category
by monthly active users in March and April 2022, according to
data.ai3.
- Globally, Shopee was the top ranked app in the Shopping
category by downloads in the first quarter of 2022, according to
data.ai3. In the same category, for Google Play, Shopee also ranked
first globally by total time spent in app and second by average
monthly active users in the first quarter of 2022, according to
data.ai3.
- Digital Entertainment
- GAAP revenue was US$1.1 billion, up 45.3% year-on-year.
- Bookings4 were US$0.8 billion, compared to US$ 1.1 billion for
the first quarter of 2021. This represents compounded annual growth
of 27% from the first quarter of 2020.
- Adjusted EBITDA1 was US$431.4 million, compared to US$717.3
million for the first quarter of 2021.
- Adjusted EBITDA represented 52.2% of bookings for the first
quarter of 2022, compared to 64.4% for the first quarter of
2021.
- Quarterly active users were 615.9 million, compared to 648.8
million for the first quarter of 2021. This represents compounded
annual growth of almost 24% from the first quarter of 2020.
- Quarterly paying users were 61.4 million, representing paying
user ratio of 10.0% for the first quarter compared to 12.3% for the
same period in 2021. Meanwhile, this represents increase from
paying user ratio of 8.9% in the first quarter of 2020.
- Average bookings per user were US$1.3, compared to US$1.7 for
the first quarter of 2021.
- Our self-developed global hit game, Free Fire, continued to
maintain top global rankings in user and grossing metrics. It
remained the most downloaded mobile game globally in the first
quarter of 2022, according to data.ai3. In the same category, for
Google Play, Free Fire also ranked third globally by average
monthly active users in the first quarter of 2022, according to
data.ai3.
- Free Fire continued to be the highest grossing mobile game in
Southeast Asia and Latin America for the first quarter of 2022,
according to data.ai3. Free Fire has maintained this leading
position for the past 11 consecutive quarters in Southeast Asia and
in Latin America.
- In the United States, Free Fire was the highest grossing mobile
battle royale game for 5 consecutive quarters for the first quarter
of 2022, according to data.ai3.
- Digital Financial Services
- GAAP revenue was US$236.0 million, up 359.9% year-on-year.
- Adjusted EBITDA1 was US$(124.9) million, compared to US$(153.1)
million for the first quarter of 2021.
- Quarterly active users5 across our SeaMoney products and
services reached 49.0 million, up 78.2% year-on-year.
- In Indonesia, which has the most comprehensive set of products
and services among our markets, over 30% of the quarterly active
users have used multiple SeaMoney products or services in the first
quarter of 2022.
- Total payment volume for the mobile wallet was US$5.1 billion,
up 48.5% year-on-year.
- In April, application for digital bank license by a consortium
led by Sea and YTL Digital Capital Sdn Bhd. was approved by the
Minister of Finance Malaysia.
Full Year 2022 Guidance Update
Given the elevated macro uncertainties, we now see a wider
dispersion of potential scenarios for Shopee for the full year of
2022 and hence are revising our e-commerce guidance to
correspondingly reflect this view. We now expect GAAP revenue for
e-commerce to be between US$8.5 billion and US$9.1 billion,
representing 71.8% growth from 2021 at the midpoint of the broader
guidance, compared to the previous guidance of between US$8.9
billion and US$9.1 billion.
1 For definitions of total adjusted EBITDA
and adjusted EBITDA for digital entertainment, e-commerce and
digital financial services segments, please refer to the “Non-GAAP
Financial Measures” section.
2 GAAP marketplace revenue mainly consists
of transaction-based fees and advertising income and revenue
generated from other value-added services. GAAP product revenue
mainly consists of revenue generated from direct sales.
3 Rankings data for data.ai is based on
combined data from the Google Play and iOS App Stores, unless
otherwise stated. Southeast Asia rankings are based on Indonesia,
Malaysia, Philippines, Singapore, Thailand, and Vietnam. Latin
America rankings are based on Argentina, Brazil, Chile, Colombia,
Mexico, and Uruguay. Rankings data for Free Fire includes both Free
Fire and Free Fire MAX.
4 GAAP revenue for the digital
entertainment segment plus change in digital entertainment deferred
revenue. This operating metric is used as an approximation of cash
spent by our users in the applicable period that is attributable to
our digital entertainment segment.
5 Quarterly active users for digital
financial services segment are defined as users who had at least
one financial transaction with SeaMoney products and services
during the quarter. Transactions include payments or receipts with
our mobile wallet, loan disbursements, maintenance of balance in
our banks or purchase of insurance policies on the Shopee
platform.
Unaudited Summary of Financial
Results
(Amounts are expressed in thousands of US
dollars “$” except for per share data)
For the Three Months ended
March 31,
2021
2022
$
$
YOY%
Revenue
Service revenue
Digital Entertainment
781,335
1,135,169
45.3
%
E-commerce and other services
772,382
1,499,611
94.2
%
Sales of goods
209,927
264,791
26.1
%
1,763,644
2,899,571
64.4
%
Cost of revenue
Cost of service
Digital Entertainment
(248,240
)
(309,185
)
24.6
%
E-commerce and other services
(674,538
)
(1,176,477
)
74.4
%
Cost of goods sold
(195,457
)
(243,881
)
24.8
%
(1,118,235
)
(1,729,543
)
54.7
%
Gross profit
645,409
1,170,028
81.3
%
Other operating income
75,088
73,655
(1.9
)%
Sales and marketing expenses
(678,922
)
(1,005,174
)
48.1
%
General and administrative expenses
(248,858
)
(396,133
)
59.2
%
Research and development expenses
(141,130
)
(340,408
)
141.2
%
Total operating expenses
(993,822
)
(1,668,060
)
67.8
%
Operating loss
(348,413
)
(498,032
)
42.9
%
Non-operating loss, net
(23,252
)
(6,060
)
(73.9
)%
Income tax expense
(51,025
)
(81,806
)
60.3
%
Share of results of equity investees
599
5,762
861.9
%
Net loss
(422,091
)
(580,136
)
37.4
%
Net loss excluding share-based
compensation (1)
(320,016
)
(445,130
)
39.1
%
Basic and diluted loss per share based
on
net loss excluding share-based
compensation attributable
to Sea Limited’s ordinary shareholders
(1)
(0.62
)
(0.80
)
29.0
%
Change in deferred revenue of Digital
Entertainment
332,483
(308,921
)
(192.9
)%
Adjusted EBITDA for Digital Entertainment
(1)
717,309
431,360
(39.9
)%
Adjusted EBITDA for E-commerce (1)
(412,897
)
(742,820
)
79.9
%
Adjusted EBITDA for Digital Financial
Services (1)
(153,088
)
(124,898
)
(18.4
)%
Adjusted EBITDA for Other Services (1)
(58,157
)
(64,627
)
11.1
%
Unallocated expenses (2)
(5,057
)
(8,902
)
76.0
%
Total adjusted EBITDA (1)
88,110
(509,887
)
(678.7
)%
(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 March 31, 2022 Compared to Three Months
Ended March 31, 2021
Revenue
Our total GAAP revenue increased by 64.4% to US$2.9 billion in
the first quarter of 2022 from US$1.8 billion in the first quarter
of 2021. The increase was mainly driven by the growth in each of
the segments detailed as follows:
- Digital Entertainment: GAAP revenue increased by 45.3% to
US$1.1 billion in the first quarter of 2022 from US$781.3 million
in the first quarter of 2021. This increase was primarily due to
recognition of accumulated deferred revenue from previous
quarters.
- E-commerce and other services: GAAP revenue increased by 94.2%
to US$1.5 billion in the first quarter of 2022 from US$772.4
million in the first quarter of 2021. This increase was primarily
driven by the growing adoption of products and services across our
e-commerce and digital financial services businesses.
- Sales of goods: GAAP revenue increased by 26.1% to US$264.8
million in the first quarter of 2022 from US$209.9 million in the
first quarter of 2021, primarily due to the increase in our product
offerings.
Cost of Revenue
Our total cost of revenue increased by 54.7% to US$1.7 billion
in the first quarter of 2022 from US$1.1 billion in the first
quarter of 2021.
- Digital Entertainment: Cost of revenue increased by 24.6% to
US$309.2 million in the first quarter of 2022 from US$248.2 million
in the first quarter of 2021. The increase was largely in line with
the increase in our digital entertainment revenue.
- E-commerce and other services: Cost of revenue for our
e-commerce and other services segment combined increased by 74.4%
to US$1.2 billion in the first quarter of 2022 from US$674.5
million in the first quarter of 2021. The increase was primarily
due to higher costs of logistics from order growth, and other costs
driven by the growth of our e-commerce marketplace.
- Cost of goods sold: Cost of goods sold increased by 24.8% to
US$243.9 million in the first quarter of 2022 from US$195.5 million
in the first quarter of 2021. The increase was largely in line with
the increase in our revenue from sales of goods.
Other Operating Income
Our other operating income was US$73.7 million and US$75.1
million in the first quarter of 2022 and 2021, 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 48.1% to
US$1.0 billion in the first quarter of 2022 from US$678.9 million
in the first quarter of 2021. The table below sets forth breakdown
of the sales and marketing expenses of our major reporting
segments. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
March 31,
2021
2022
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
56,812
77,178
35.8%
E-commerce
451,554
699,471
54.9%
Digital Financial Services
151,909
184,881
21.7%
- Digital Entertainment: Sales and marketing expenses increased
by 35.8% to US$77.2 million in the first quarter of 2022 from
US$56.8 million in the first quarter of 2021. The increase was
primarily due to higher content and online marketing 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 54.9% to
US$699.5 million in the first quarter of 2022 from US$451.6 million
in the first quarter of 2021. 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 21.7% to US$184.9 million in the first quarter of 2022
from US$151.9 million in the first quarter of 2021. 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 59.2% to
US$396.1 million in the first quarter of 2022 from US$248.9 million
in the first quarter of 2021. This increase was primarily due
to credit losses from our digital financial services business,
higher office facilities and related expenses, as well as higher
staff cost from increased headcount to support the business
growth.
Research and Development Expenses
Our research and development expenses increased by 141.2% to
US$340.4 million in the first quarter of 2022 from US$141.1 million
in the first quarter of 2021, primarily attributable to higher
staff cost from increased headcount, as we invested in our
technological capabilities and expanded our service offerings.
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$6.1 million in the first quarter of 2022, compared to a net
non-operating loss of US$23.3 million in the first quarter of
2021.
Our interest expense was lower by US$15.3 million in the first
quarter of 2022, as compared to the first quarter of 2021,
primarily due to our adoption of an accounting standard update, ASU
2020-06, which simplifies the accounting for our convertible notes,
from beginning of 2022. As a result of this adoption, our
convertible notes balances have increased and additional paid-in
capital and accumulated deficit have decreased accordingly. The
adoption also resulted in reduction in interest expense in the
first quarter of 2022 and will result in reduction in interest
expenses in subsequent periods until the convertible notes are
settled.
Income Tax Expense
We had a net income tax expense of US$81.8 million and US$51.0
million in the first quarter of 2022 and 2021, respectively. The
income tax expense in the first quarter of 2022 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$580.1
million and US$422.1 million in the first quarter of 2022 and 2021,
respectively.
Net Loss Excluding Share-based Compensation
Net loss excluding share-based compensation, was US$445.1
million and US$320.0 million in the first quarter of 2022 and 2021,
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$0.80 and US$0.62 in the first
quarter of 2022 and 2021, 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 May 17, 2022
7:30 PM Singapore / Hong Kong Time on May 17, 2022
Webcast link:
https://services.choruscall.com/mediaframe/webcast.html?webcastid=HsBL2mVc
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:
4420440
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 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 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;
its expectations regarding the use of proceeds from its financing
activities, including its follow-on equity offerings and
convertible notes offerings; 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, 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 or treatments) and the impact of
economies reopening further to the COVID-19 pandemic. 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 is a significant
expense.
- “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 is a significant expense.
- “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
March 31, 2022
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
657,488
(810,571
)
(133,908
)
(67,133
)
(143,908
)
(498,032
)
Net effect of changes in deferred
revenue and its related cost
(236,514
)
-
-
-
-
(236,514
)
Depreciation and Amortization
10,386
67,751
9,010
2,506
-
89,653
Share-based compensation
-
-
-
-
135,006
135,006
Adjusted EBITDA
431,360
(742,820
)
(124,898
)
(64,627
)
(8,902
)
(509,887
)
For the Three Months ended
March 31, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
431,864
(456,630
)
(156,827
)
(59,688
)
(107,132
)
(348,413
)
Net effect of changes in deferred
revenue and its related cost
277,539
-
-
-
-
277,539
Depreciation and Amortization
7,906
43,733
3,739
1,531
-
56,909
Share-based compensation
-
-
-
-
102,075
102,075
Adjusted EBITDA
717,309
(412,897
)
(153,088
)
(58,157
)
(5,057
)
88,110
(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.
For the Three Months ended
March 31,
2021
2022
$
$
Net loss
(422,091
)
(580,136
)
Share-based compensation
102,075
135,006
Net loss excluding share-based
compensation
(320,016
)
(445,130
)
Net (profit) loss attributable to
non-controlling interests
(599
)
327
Net loss excluding share-based
compensation attributable
to Sea Limited’s ordinary
shareholders
(320,615
)
(444,803
)
Weighted average shares used in loss per
share computation:
Basic and diluted
514,780,897
556,217,418
Basic and diluted loss per share based on
net loss excluding
share-based compensation attributable to
Sea Limited’s
ordinary shareholders
(0.62
)
(0.80
)
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 ended
March 31,
2021
2022
$
$
Revenue
Service revenue
Digital Entertainment
781,335
1,135,169
E-commerce and other services
772,382
1,499,611
Sales of goods
209,927
264,791
Total revenue
1,763,644
2,899,571
Cost of revenue
Cost of service
Digital Entertainment
(248,240
)
(309,185
)
E-commerce and other services
(674,538
)
(1,176,477
)
Cost of goods sold
(195,457
)
(243,881
)
Total cost of revenue
(1,118,235
)
(1,729,543
)
Gross profit
645,409
1,170,028
Operating income (expenses):
Other operating income
75,088
73,655
Sales and marketing expenses
(678,922
)
(1,005,174
)
General and administrative expenses
(248,858
)
(396,133
)
Research and development expenses
(141,130
)
(340,408
)
Total operating expenses
(993,822
)
(1,668,060
)
Operating loss
(348,413
)
(498,032
)
Interest income
7,518
10,781
Interest expense
(26,939
)
(11,617
)
Investment loss, net
(9,462
)
(235
)
Foreign exchange gain (loss)
5,631
(4,989
)
Loss before income tax and share of
results of equity investees
(371,665
)
(504,092
)
Income tax expense
(51,025
)
(81,806
)
Share of results of equity investees
599
5,762
Net loss
(422,091
)
(580,136
)
Net (profit) loss attributable to
non-controlling interests
(599
)
327
Net loss attributable to Sea Limited’s
ordinary shareholders
(422,690
)
(579,809
)
Loss per share:
Basic and diluted
(0.82
)
(1.04
)
Weighted average shares used in loss per
share computation:
514,780,897
556,217,418
Basic and diluted
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of March 31,
2021
2022
$
$
ASSETS
Current assets
Cash and cash equivalents
9,247,762
7,683,666
Restricted cash
1,551,635
1,386,066
Accounts receivable, net of allowance for
credit losses of $5,772 and $4,582, as of
December 31, 2021 and March 31, 2022
respectively
388,308
280,115
Prepaid expenses and other assets
1,401,863
1,379,069
Loans receivable, net of allowance for
credit losses of $91,504 and $144,312, as of
December 31, 2021 and March 31, 2022
respectively
1,500,954
1,827,831
Inventories, net
117,499
139,690
Short-term investments
911,281
1,116,851
Amounts due from related parties
16,095
16,608
Total current assets
15,135,397
13,829,896
Non-current assets
Property and equipment, net
1,029,963
1,184,399
Operating lease right-of-use assets,
net
649,680
917,138
Intangible assets, net
52,517
61,266
Long-term investments
1,052,861
1,418,955
Prepaid expenses and other assets
124,521
166,046
Loans receivable, net of allowance for
credit losses of $6,172 and $5,057, as of
December 31, 2021 and March 31, 2022
respectively
28,964
36,902
Restricted cash
38,743
48,404
Deferred tax assets
103,755
108,936
Goodwill
539,624
562,697
Total non-current assets
3,620,628
4,504,743
Total assets
18,756,025
18,334,639
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of March 31,
2021
2022
$
$
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
213,580
287,087
Accrued expenses and other payables
3,531,187
3,519,048
Advances from customers
244,574
247,912
Amounts due to related parties
74,738
73,647
Bank borrowings
100,000
–
Operating lease liabilities
186,494
228,862
Deferred revenue
2,644,463
2,259,390
Income tax payable
181,400
238,139
Total current liabilities
7,176,436
6,854,085
Non-current liabilities
Accrued expenses and other payables
76,234
90,023
Operating lease liabilities
491,313
725,287
Deferred revenue
104,826
191,072
Convertible notes (1)
3,475,708
4,175,377
Deferred tax liabilities
6,992
7,292
Unrecognized tax benefits
107
107
Total non-current liabilities
4,155,180
5,189,158
Total liabilities
11,331,616
12,043,243
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of March 31,
2021
2022
$
$
Shareholders’ equity
Class A Ordinary shares
204
255
Class B Ordinary shares
74
23
Additional paid-in capital (1)
14,622,292
13,955,746
Accumulated other comprehensive loss
(28,519)
(33,365)
Statutory reserves
6,144
6,144
Accumulated deficit (1)
(7,201,498)
(7,667,583)
Total Sea Limited shareholders’
equity
7,398,697
6,261,220
Non-controlling interests
25,712
30,176
Total shareholders’ equity
7,424,409
6,291,396
Total liabilities and shareholders’
equity
18,756,025
18,334,639
(1) The Company adopted ASU 2020-06 on January 1, 2022 using
modified retrospective method and the cumulative effects have been
adjusted via retained earnings opening balance. As a result of
adoption, our convertible notes balances have increased and
additional paid-in capital and accumulated deficit have decreased
accordingly.
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands of US
dollars (“$”)
For the Three Months ended
March 31,
2021
2022
$
$
Net cash generated from (used in)
operating activities
318,279
(723,651
)
Net cash used in investing activities
(504,313
)
(1,130,683
)
Net cash generated from financing
activities
41,562
142,381
Effect of foreign exchange rate changes on
cash, cash equivalents and restricted cash
(46,289
)
(8,051
)
Net decrease in cash, cash equivalents and
restricted cash
(190,761
)
(1,720,004
)
Cash, cash equivalents and restricted cash
at beginning of the period
7,053,393
10,838,140
Cash, cash equivalents and restricted cash
at end of the period
6,862,632
9,118,136
Net cash used in investing activities amounted to US$1.1 billion
for the first quarter of 2022.
This was primarily attributable to an increase in loans
receivable of US$410 million to support the growth of digital
financial services businesses, as well as net placement of US$333
million into time deposits and liquid investment products for
better cash yield management.
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operating Decision Maker (“CODM”) reviews the performance of each
segment based on revenue and certain key operating metrics of the
operations and uses these results for the purposes of allocating
resources to and evaluating the financial performance of each
segment. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
March 31, 2022
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
1,135,169
1,516,461
235,951
11,990
-
2,899,571
Operating income (loss)
657,488
(810,571)
(133,908)
(67,133)
(143,908)
(498,032)
Non-operating loss, net
(6,060)
Income tax expense
(81,806)
Share of results of equity investees
5,762
Net loss
(580,136)
For the Three Months ended
March 31, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
781,335
922,294
51,302
8,713
-
1,763,644
Operating income (loss)
431,864
(456,630)
(156,827)
(59,688)
(107,132)
(348,413)
Non-operating loss, net
(23,252)
Income tax expense
(51,025)
Share of results of equity investees
599
Net loss
(422,091)
(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/20220516006121/en/
For enquiries:
Investors / analysts: ir@sea.com Media: Martin Reidy,
media@sea.com
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