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Name | Symbol | Market | Type |
---|---|---|---|
Sea Limited | NYSE:SE | NYSE | Depository Receipt |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.37 | 0.55% | 67.52 | 67.67 | 65.73 | 66.87 | 3,874,326 | 01:00:00 |
Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced its financial results for the second quarter ended June 30, 2023.
“In the second quarter of 2023, we delivered strong results, building upon many of the key initiatives we shared previously,” said Forrest Li, Sea’s Chairman and Group Chief Executive Officer. “In the past couple of quarters, we have not only achieved self-sufficiency, but also demonstrated the profitability of our model and our ability to manage fast and significant shifts in operational focus as we see fit. Given this, we have strengthened our execution capabilities and increased the stickiness of our ecosystem. We believe we are now on firmer footing to better serve our communities.”
“Meanwhile, the economies of our region have remained resilient, and we are excited to see recent ecosystem developments in the growth of diversified user engagement through live streaming, short form videos, and affiliate programs. Such developments offer us further opportunities to grow and expand our long-term profitable addressable market. Given these positive developments and trends, we have started, and will continue, to ramp up our investments in growing the e-commerce business across our markets. We believe that the efficiency gains and stronger footing we have achieved through our past efforts have further strengthened our ability to invest efficiently in growth. As we reaccelerate investments in growth, our strategic focus to build cost leadership and continually improve user experience remains key to our long-term success.”
Second Quarter 2023 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 available-for-sale sovereign and corporate bonds excluding those at our banking entities, with maturities over one year, classified as part of long-term investments.
3
Current and comparative prior period local currency amounts are converted into United States dollars using the same exchange rates, rather than the actual exchange rates during the respective periods.
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.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars “$” except for per share data)
For the Three Months ended June 30,
2022
2023
$
$
YOY%
Revenue
Service revenue
Digital Entertainment
900,258
529,397
(41.2
)%
E-commerce and other services
1,755,686
2,322,496
32.3
%
Sales of goods
286,655
243,767
(15.0
)%
2,942,599
3,095,660
5.2
%
Cost of revenue
Cost of service
Digital Entertainment
(260,529
)
(160,669
)
(38.3
)%
E-commerce and other services
(1,329,665
)
(1,263,522
)
(5.0
)%
Cost of goods sold
(262,187
)
(220,591
)
(15.9
)%
(1,852,381
)
(1,644,782
)
(11.2
)%
Gross profit
1,090,218
1,450,878
33.1
%
Other operating income
71,104
58,003
(18.4
)%
Sales and marketing expenses
(973,767
)
(493,601
)
(49.3
)%
General and administrative expenses
(364,447
)
(295,169
)
(19.0
)%
Provision for credit losses
(111,598
)
(153,001
)
37.1
%
Research and development expenses
(370,926
)
(283,297
)
(23.6
)%
Impairment of goodwill
(177,280
)
-
-
Total operating expenses
(1,926,914
)
(1,167,065
)
(39.4
)%
Operating (loss) income
(836,696
)
283,813
(133.9
)%
Non-operating (loss) income, net
(32,765
)
107,565
(428.3
)%
Income tax expense
(64,771
)
(62,212
)
(4.0
)%
Share of results of equity investees
3,033
1,817
(40.1
)%
Net (loss) income
(931,199
)
330,983
(135.5
)%
(Loss) Earnings per share attributable to Sea Limited’s ordinary shareholders:
Basic
(1.67
)
0.57
(134.1
)%
Diluted
(1.67
)
0.54
(132.3
)%
Change in deferred revenue of Digital Entertainment
(182,904
)
(86,254
)
(52.8
)%
Adjusted EBITDA for Digital Entertainment (1)
333,619
239,459
(28.2
)%
Adjusted EBITDA for E-commerce (1)
(648,145
)
150,339
(123.2
)%
Adjusted EBITDA for Digital Financial Services (1)
(111,517
)
136,961
(222.8
)%
Adjusted EBITDA for Other Services (1)
(72,555
)
(7,189
)
(90.1
)%
Unallocated expenses (2)
(7,653
)
(9,549
)
24.8
%
Total adjusted EBITDA (1)
(506,251
)
510,021
(200.7
)%
(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 June 30, 2023 Compared to Three Months Ended June 30, 2022
Revenue
Our total GAAP revenue increased by 5.2% to US$3.1 billion in the second quarter of 2023 from US$2.9 billion in the second quarter of 2022.
Cost of Revenue
Our total cost of revenue decreased by 11.2% to US$1.6 billion in the second quarter of 2023 from US$1.9 billion in the second quarter of 2022.
Other Operating Income
Our other operating income was US$58.0 million and US$71.1 million in the second quarter of 2023 and 2022, 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 decreased by 49.3% to US$493.6 million in the second quarter of 2023 from US$1.0 billion in the second quarter of 2022. The table below sets forth breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).
For the Three Months ended June 30,
2022
2023
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
87,100
26,636
(69.4)%
E-commerce
674,120
431,979
(35.9)%
Digital Financial Services
162,466
19,207
(88.2)%
General and Administrative Expenses
Our general and administrative expenses decreased by 19.0% to US$295.2 million in the second quarter of 2023 from US$364.4 million in the second quarter of 2022.
Provision for Credit Losses
Our provision for credit losses increased by 37.1% to US$153.0 million in the second quarter of 2023 from US$111.6 million in the second quarter of 2022.
Research and Development Expenses
Our research and development expenses decreased by 23.6% to US$283.3 million in the second quarter of 2023 from US$370.9 million in the second quarter of 2022.
Impairment of Goodwill
We recorded nil impairment of goodwill in the second quarter of 2023, compared to US$177.3 million in the second quarter of 2022.
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 income of US$107.6 million in the second quarter of 2023, as compared to a net non-operating loss of US$32.8 million in the second quarter of 2022. The year-on-year increase was mainly due to higher interest income in the second quarter of 2023 and investment losses recognized in the second quarter of 2022.
Income Tax Expense
We had a net income tax expense of US$62.2 million and US$64.8 million in the second quarter of 2023 and 2022, respectively.
Net Income or Loss
As a result of the foregoing, we had net income of US$331.0 million in the second quarter of 2023, as compared to net loss of US$931.2 million in the second quarter of 2022.
Basic and Diluted Earnings or Loss Per Share Attributable to Sea Limited’s Ordinary Shareholders
Basic earnings per share attributable to Sea Limited’s ordinary shareholders was US$0.57 in the second quarter of 2023, as compared to basic loss per share attributable to Sea Limited’s ordinary shareholders of US$1.67 in the second quarter of 2022.
Diluted earnings per share attributable to Sea Limited’s ordinary shareholders was US$0.54 in the second 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 webcast are as follows:
Date and time:
7:30 AM U.S. Eastern Time on August 15, 2023 7:30 PM Singapore / Hong Kong Time on August 15, 2023
Webcast link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=qkaSw13n
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:
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 June 30, 2023
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
296,457
65,550
120,966
(10,034
)
(189,126
)
283,813
Net effect of changes in deferred revenue and its related cost
(65,360
)
-
-
-
-
(65,360
)
Depreciation and Amortization
8,362
84,789
15,995
2,845
-
111,991
Share-based compensation
-
-
-
-
179,577
179,577
Adjusted EBITDA
239,459
150,339
136,961
(7,189
)
(9,549
)
510,021
For the Three Months ended June 30, 2022
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
456,811
(726,127
)
(122,735
)
(75,604
)
(369,041
)
(836,696
)
Net effect of changes in deferred revenue and its related cost
(134,100
)
-
-
-
-
(134,100
)
Depreciation and Amortization
10,908
77,982
11,218
3,049
-
103,157
Share-based compensation
-
-
-
-
184,108
184,108
Impairment of goodwill
-
-
-
-
177,280
177,280
Adjusted EBITDA
333,619
(648,145
)
(111,517
)
(72,555
)
(7,653
)
(506,251
)
(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 Six Months ended June 30,
2022
2023
$
$
Revenue
Service revenue
Digital Entertainment
2,035,427
1,069,083
E-commerce and other services
3,255,297
4,582,073
Sales of goods
551,446
485,608
Total revenue
5,842,170
6,136,764
Cost of revenue
Cost of service
Digital Entertainment
(569,714)
(334,035)
E-commerce and other services
(2,506,142)
(2,504,850)
Cost of goods sold
(506,068)
(430,311)
Total cost of revenue
(3,581,924)
(3,269,196)
Gross profit
2,260,246
2,867,568
Operating income (expenses)
Other operating income
144,759
115,883
Sales and marketing expenses
(1,978,941)
(893,744)
General and administrative expenses
(680,114)
(628,546)
Provision for credit losses
(192,064)
(330,440)
Research and development expenses
(711,334)
(603,809)
Impairment of goodwill
(177,280)
(117,875)
Total operating expenses
(3,594,974)
(2,458,531)
Operating (loss) income
(1,334,728)
409,037
Interest income
29,841
152,326
Interest expense
(23,029)
(20,773)
Investment loss, net
(59,036)
(28,815)
Foreign exchange gain
13,399
27,349
(Loss) Income before income tax and share of results of equity investees
(1,373,553)
539,124
Income tax expense
(146,577)
(124,110)
Share of results of equity investees
8,795
3,261
Net (loss) income
(1,511,335)
418,275
Net income attributable to non-controlling interests
(1,585)
(8,595)
Net (loss) income attributable to Sea Limited’s ordinary shareholders
(1,512,920)
409,680
(Loss) Earnings per share:
Basic
(2.72)
0.73
Diluted
(2.72)
0.69
Weighted average shares used in (loss) earnings per share computation:
Basic
556,834,663
564,261,877
Diluted
556,834,663
598,716,012
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars (“$”)
As of December 31,
As of June 30,
2022
2023
$
$
ASSETS
Current assets
Cash and cash equivalents
6,029,859
3,524,449
Restricted cash
1,549,574
1,427,561
Accounts receivable, net of allowance for credit losses of $12,818 and $7,735, as of December 31, 2022 and June 30, 2023 respectively
268,814
192,310
Prepaid expenses and other assets
1,798,651
2,051,618
Loans receivable, net of allowance for credit losses of $236,797 and $276,891, as of December 31, 2022 and June 30, 2023 respectively
2,053,767
1,999,544
Inventories, net
109,668
98,489
Short-term investments
864,258
2,174,887
Amounts due from related parties
13,421
6,969
Total current assets
12,688,012
11,475,827
Non-current assets
Property and equipment, net
1,387,895
1,307,463
Operating lease right-of-use assets, net
957,840
1,000,888
Intangible assets, net
65,019
61,326
Long-term investments
1,253,593
3,183,342
Prepaid expenses and other assets
135,616
136,826
Loans receivable, net of allowance for credit losses of $2,022 and $1,684, as of December 31, 2022 and June 30, 2023 respectively
21,663
18,797
Restricted cash
17,724
27,779
Deferred tax assets
245,226
325,051
Goodwill
230,208
115,017
Total non-current assets
4,314,784
6,176,489
Total assets
17,002,796
17,652,316
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars (“$”)
As of December 31,
As of June 30,
2022
2023
$
$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable
258,648
219,048
Accrued expenses and other payables
1,396,613
1,409,322
Deposits payable
1,316,395
1,350,555
Escrow payables and advances from customers
1,862,325
1,774,249
Amounts due to related parties
415
411
Borrowings
88,410
101,996
Operating lease liabilities
269,968
280,832
Convertible notes
31,237
–
Deferred revenue
1,535,083
1,251,736
Income tax payable
176,598
187,574
Total current liabilities
6,935,692
6,575,723
Non-current liabilities
Accrued expenses and other payables
87,072
82,503
Borrowings
–
50,000
Operating lease liabilities
756,818
786,961
Deferred revenue
63,566
194,449
Convertible notes
3,338,750
3,341,733
Deferred tax liabilities
9,967
603
Unrecognized tax benefits
107
107
Total non-current liabilities
4,256,280
4,456,356
Total liabilities
11,191,972
11,032,079
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars (“$”)
As of December 31,
As of June 30,
2022
2023
$
$
Shareholders’ equity
Class A Ordinary shares
258
260
Class B Ordinary shares
23
23
Additional paid-in capital
14,559,690
14,974,805
Accumulated other comprehensive loss
(111,215)
(140,189)
Statutory reserves
12,490
13,098
Accumulated deficit
(8,745,541)
(8,336,469)
Total Sea Limited shareholders’ equity
5,715,705
6,511,528
Non-controlling interests
95,119
108,709
Total shareholders’ equity
5,810,824
6,620,237
Total liabilities and shareholders’ equity
17,002,796
17,652,316
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands of US dollars (“$”)
For the Six Months ended June 30,
2022
2023
$
$
Net cash (used in) generated from operating activities
(1,209,121)
1,201,016
Net cash used in investing activities
(2,078,203)
(3,867,640)
Net cash generated from financing activities
439,937
58,143
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
(127,734)
(22,114)
Net decrease in cash, cash equivalents and restricted cash
(2,975,121)
(2,630,595)
Cash, cash equivalents and restricted cash at beginning of the period(1)
10,838,140
7,610,384
Cash, cash equivalents and restricted cash at end of the period
7,863,019
4,979,789
(1)
As of December 31, 2022, cash and cash equivalents of US$13,227 was included in assets held for sale within prepaid expenses and other assets.
Net cash used in investing activities amounted to US$3,868 million for the six months ended June 30, 2023. This was primarily attributable to net placement of US$3,461 million in securities purchased under agreements to resell, time deposits and liquid investment products, for better cash yield management, increase in loans receivable of US$242 million and purchase of property and equipment of US$133 million to support the existing operations.
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital entertainment, e-commerce and digital financial services. The Chief Operating Decision Maker (“CODM”) reviews the performance of each segment based on revenue and certain key operating metrics of the operations and uses these results for the purposes of allocating resources to and evaluating the financial performance of each segment. Amounts are expressed in thousands of US dollars (“$”).
For the Three Months ended June 30, 2023
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
529,397
2,110,551
427,940
27,772
-
3,095,660
Operating income (loss)
296,457
65,550
120,966
(10,034
)
(189,126
)
283,813
Non-operating income, net
107,565
Income tax expense
(62,212
)
Share of results of equity investees
1,817
Net income
330,983
For the Three Months ended June 30, 2022
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
900,258
1,749,350
279,020
13,971
-
2,942,599
Operating income (loss)
456,811
(726,127
)
(122,735)
(75,604
)
(369,041
)
(836,696
)
Non-operating loss, net
(32,765
)
Income tax expense
(64,771
)
Share of results of equity investees
3,033
Net loss
(931,199
)
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230814738285/en/
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