Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced
its financial results for the quarter ended September 30, 2019.
Third Quarter 2019 Highlights
- Group
- Total adjusted revenue was US$763.3 million, up 214.3%
year-on-year from US$242.8 million for the third quarter of
2018.
- Total adjusted EBITDA was US$(30.8) million compared to
US$(183.8) million for the third quarter of 2018.
- Digital Entertainment
- Adjusted revenue was US$451.0 million, up 212.0% year-on-year
from US$144.6 million for the third quarter of 2018.
- Adjusted EBITDA was US$266.0 million, up 395.0% year-on-year
from US$53.7 million for the third quarter of 2018.
- Adjusted EBITDA margin increased to 59.0% for the third quarter
of 2019 from 37.2% for the third quarter of 2018.
- Quarterly active users (“QAUs”) reached 321.1 million, an
increase of 82.3% year-on-year from 176.1 million for the third
quarter of 2018.
- Quarterly paying users continued to grow, accounting for 9.1%
of QAUs for the third quarter of 2019, increasing from 4.1% for the
same period in 2018.
- Average revenue per user was US$1.4 compared to US$0.8 for the
third quarter of 2018.
- Our self-developed global hit game, Free Fire, recently
celebrated its second anniversary and continues to grow across
different regions. Free Fire was the highest grossing mobile game
in Latin America1 and in Southeast Asia in the third quarter of
2019, and was ranked among the top five most downloaded mobile
games globally for the third straight quarter across the Google
Play and iOS App Stores combined, according to App Annie. In
October 2019, Free Fire was also the highest grossing mobile game
in India on the Google Play Store, according to App Annie. As of
the end of October 2019, Free Fire had recorded a total cumulative
adjusted revenue of over US$1 billion since launch.
- We launched Call of Duty®: Mobile, a mobile version of the
classic action game of Activision, in Indonesia, Taiwan, Thailand,
the Philippines, Malaysia, and Singapore on October 1. It was the
most downloaded mobile game on both the Google Play and iOS App
Stores in each of these markets for the month of October, according
to App Annie.
- We continue to focus on esports and community building
activities. Since September, we have been running national
qualifiers and regional leagues for our largest global esports
tournament for Free Fire, the Free Fire World Series 2019, which
has achieved over 100 million cumulative online views to date. For
the final match of the Brazil qualifiers alone, we recorded over 1
million concurrent viewers online.
- E-commerce
- Adjusted revenue was US$257.2 million, up 261.1% year-on-year
from US$71.2 million for the third quarter of 2018.
- Adjusted revenue included US$208.1 million of marketplace
revenue2, up 313.6% year-on-year from US$50.3 million for the third
quarter of 2018, and US$49.2 million of product revenue3, up 134.9%
year-on-year from US$20.9 million for the third quarter of
2018.
- Gross orders for the quarter totaled 321.4 million, an increase
of 102.8% year-on-year from 158.5 million for the third quarter of
2018.
- Gross merchandise value (“GMV”) was US$4.6 billion, an increase
of 69.9% year-on-year from US$2.7 billion for the third quarter of
2018.
- Adjusted revenue as a percentage of total GMV increased to 5.6%
in the third quarter of 2019, up from 2.6% for the same period a
year ago. Adjusted marketplace revenue as a percentage of total GMV
was 4.5% in the third quarter of 2019.
- Sales and marketing expenses were US$199.2 million, an increase
of 30.2% year-on-year from US$152.9 million for the third quarter
of 2018.
- Adjusted EBITDA was US$(253.7) million compared to US$(214.9)
million for the third quarter of 2018. Adjusted EBITDA loss per
order decreased by 41.9%, from US$1.36 to US$0.79 in the third
quarter of 2019, compared to the same period in 2018.
- In Indonesia, our largest market, Shopee further extended its
leadership as the largest e-commerce platform by orders. We
registered over 138 million orders for the market in the third
quarter, or a daily average of over 1.5 million orders, an increase
of 117.8% year-on-year. Shopee also ranked first by average monthly
active users and downloads in the Shopping category across the
Google Play and iOS App Stores combined in the third quarter of
2019, according to App Annie.
- In Taiwan, we recorded a positive quarterly adjusted EBITDA,
even after allocation of the headquarters’ common expenses in the
third quarter of 2019.
- Shopee ranked number one in the Shopping category by average
monthly active users and by downloads in both Southeast Asia and
Taiwan, and ranked number five worldwide by downloads in the same
category, across the Google Play and iOS App Stores combined in the
third quarter, according to App Annie.
- In Southeast Asia as a whole, and in each of our five largest
markets, Shopee ranked number one by total time spent in app on
Android in the third quarter, according to App Annie.
1 Latin America rankings data for App Annie is based on
Argentina, Brazil, Chile, Colombia, Mexico, and Uruguay.
2 Marketplace revenue mainly consists of transaction-based fees
and advertising income and revenue generated from other value-added
services.
3 Product revenue mainly consists of revenue generated from
direct sales.
Guidance
We are raising the guidance for both digital entertainment and
e-commerce for the full year of 2019.
We now expect adjusted revenue for digital entertainment to be
between US$1.7 billion and US$1.8 billion, representing 157.2% to
172.3% growth from 2018. This compares to the previously disclosed
guidance of between US$1.6 billion and US$1.7 billion, representing
142.0% to 157.2% growth.
We also expect adjusted revenue for e-commerce to be between
US$880 million and US$920 million, representing 202.7% to 216.5%
growth from 2018. This compares to the previously disclosed
guidance of between US$780 million and US$820 million, representing
168.3% to 182.1% growth.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars “$”)
For the Three Months
ended September 30,
2018
2019
$
$
YOY%
Revenue
Service revenue
Digital Entertainment
112,520
329,058
192.4%
E-commerce and other services
71,319
229,740
222.1%
Sales of goods
21,082
51,339
143.5%
204,921
610,137
197.7%
Cost of revenue
Cost of service
Digital Entertainment
(63,960)
(117,194)
83.2%
E-commerce and other services
(113,223)
(240,037)
112.0%
Cost of goods sold
(22,128)
(49,738)
124.8%
(199,311)
(406,969)
104.2%
Gross profit
5,610
203,168
3,521.5%
Other operating income
3,072
3,985
29.7%
Sales and marketing expenses
(180,304)
(251,751)
39.6%
General and administrative expenses
(57,285)
(99,265)
73.3%
Research and development expenses
(17,293)
(43,599)
152.1%
Total operating expenses
(251,810)
(390,630)
55.1%
Operating loss
(246,200)
(187,462)
(23.9)%
Non-operating income, net
30,903
9,786
(68.3)%
Income tax expense
(2,020)
(27,370)
1,255.0%
Share of results of equity investees
(702)
(1,051)
49.7%
Net loss
(218,019)
(206,097)
(5.5)%
Net loss excluding share-based
compensation and changes in fair value of the 2017 convertible
notes (1)
(237,568)
(175,162)
(26.3)%
Adjusted revenue of Digital Entertainment
(1)
144,558
451,004
212.0%
Adjusted revenue of E-commerce (1)
71,233
257,213
261.1%
Adjusted revenue of Digital Financial
Services (1)
3,113
2,019
(35.1)%
Revenue of Other Services
23,934
53,021
121.5%
Total adjusted revenue (1)
242,838
763,257
214.3%
Adjusted EBITDA for Digital Entertainment
(1)
53,724
265,958
395.0%
Adjusted EBITDA for E-commerce (1)
(214,861)
(253,712)
18.1%
Adjusted EBITDA for Digital Financial
Services (1)
(7,001)
(33,628)
380.3%
Adjusted EBITDA for Other Services (1)
(13,850)
(6,494)
(53.1)%
Unallocated expenses (2)
(1,764)
(2,921)
65.6%
Total adjusted EBITDA (1)
(183,752)
(30,797)
(83.2)%
(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 Operation Decision
Maker (“CODM”) as part of segment performance.
Three Months Ended September 30, 2019 Compared to Three
Months Ended September 30, 2018
Revenue
The table below sets forth revenue and adjusted revenue
generated from our reported segments. Amounts are expressed in
thousands of US dollars (“$”).
For the Three Months ended
September 30,
2018
2019
$
% of
revenue
$
% of
revenue
YOY%
Revenue
Service revenue
Digital Entertainment
112,520
54.9
329,058
53.9
192.4%
E-commerce and other services
71,319
34.8
229,740
37.7
222.1%
Sales of goods
21,082
10.3
51,339
8.4
143.5%
Total revenue
204,921
100.0
610,137
100.0
197.7%
2018
2019
$
% of total adjusted revenue
$
% of total adjusted revenue
YOY%
Adjusted revenue
Service revenue
Digital Entertainment
144,558
59.5
451,004
59.1
212.0%
E-commerce and other services
77,040
31.7
260,914
34.2
238.7%
Sales of goods
21,240
8.8
51,339
6.7
141.7%
Total adjusted revenue
242,838
100.0
763,257
100.0
214.3%
Our total revenue increased by 197.7% to US$610.1 million in the
third quarter of 2019 from US$204.9 million in the third quarter of
2018. Our total adjusted revenue increased by 214.3% to US$763.3
million in the third quarter of 2019 from US$242.8 million in the
third quarter of 2018. These increases were mainly driven by the
growth in each of the segments detailed as follows:
- Digital Entertainment: Revenue increased by 192.4% to US$329.1
million in the third quarter of 2019 from US$112.5 million in the
third quarter of 2018. Adjusted revenue increased by 212.0% to
US$451.0 million in the third quarter of 2019 from US$144.6 million
in the third quarter of 2018. This increase was primarily due to
the increase of our active user base as well as the deepened paying
user penetration as we continue to bring new and engaging content
to our users and enhance the game and monetization features based
on a deep understanding of local preferences and conditions as well
as our strong efforts in esports and community-building.
- E-commerce and other services: Revenue increased by 222.1% to
US$229.7 million in the third quarter of 2019 from US$71.3 million
in the third quarter of 2018. Adjusted revenue increased by 238.7%
to US$260.9 million in the third quarter of 2019 from US$77.0
million in the third quarter of 2018. This increase was primarily
driven by the growth of our e-commerce marketplace, and positive
development in each of our marketplace revenue streams
–transaction-based fees, value-added services, and
advertising.
- Sales of goods: Revenue and adjusted revenue increased by
143.5% and 141.7% respectively to US$51.3million in the third
quarter of 2019, primarily due to the increase in our product
offerings.
Cost of Revenue
Our total cost of revenue increased by 104.2% to US$407.0
million in the third quarter of 2019 from US$199.3 million in the
third quarter of 2018.
- Digital Entertainment: Cost of revenue increased by 83.2% to
US$117.2 million in the third quarter of 2019 from US$64.0 million
in the third quarter of 2018. The increase was largely in line with
revenue growth in our digital entertainment business. 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 combined increased by 112.0% to
US$240.0 million in the third quarter of 2019 from US$113.2 million
in the third quarter of 2018. The increase was primarily due to
costs incurred in line with growth of our e-commerce marketplace,
including, among other costs, higher bank transaction fees driven
by GMV growth, higher costs associated with value-added services
and other ancillary services we provided to our e-commerce platform
users, as well as higher staff compensation and benefit costs.
- Cost of goods sold: Cost of goods sold increased by 124.8% to
US$49.7 million in the third quarter of 2019 from US$22.1 million
in the third quarter of 2018. The increase was largely in line with
the increase in our product offerings.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 39.6% to
US$251.8 million in the third quarter of 2019 from US$180.3 million
in the third quarter of 2018. The table below sets forth the
breakdown of the sales and marketing expenses of our two major
reporting segments. Amounts are expressed in thousands of US
dollars (“$”).
For the Three Months
ended September 30,
2018
2019
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
19,046
24,750
29.9%
E-commerce
152,934
199,167
30.2%
- Digital Entertainment: Sales and marketing expenses increased
by 29.9% to US$24.8million in the third quarter of 2019 from
US$19.0 million in the third quarter of 2018. The increase was
primarily due to launch of new games and marketing, esports and
other user engagement activities for the existing games.
- E-commerce: Sales and marketing expenses increased by 30.2% to
US$199.2 million in the third quarter of 2019 from US$152.9 million
in the third quarter of 2018. The increase in marketing efforts was
aligned with our strategy to fully capture the market growth
opportunity and was primarily attributable to the ramping up of
brand marketing as well as higher staff compensation and benefit
costs.
General and Administrative Expenses
Our general and administrative expenses increased by 73.3% to
US$99.3 million in the third quarter of 2019 from US$57.3 million
in the third quarter of 2018. This increase was primarily due to
the expansion of our staff force and the increase in office
facilities and related expenses.
Research and Development Expenses
Our research and development expenses increased by 152.1% to
US$43.6 million in the third quarter of 2019 from US$17.3 million
in the third quarter of 2018, primarily due to the increase in
research and development staff force.
Non-operating Income or Losses, Net
Non-operating income or losses consist of interest income,
interest expense, investment gain (loss), fair value change for the
2017 convertible notes and foreign exchange gain (loss). We
recorded a net non-operating income of US$9.8 million in the third
quarter of 2019, compared to a net non-operating income of US$30.9
million in the third quarter of 2018.
Income Tax Expense
We had a net income tax expense of US$27.4 million in the third
quarter of 2019 and net income tax expense of US$2.0 million in the
third quarter of 2018. The income tax expense in the third quarter
of 2019 was primarily due to withholding tax and corporate income
tax expenses incurred by our digital entertainment segment,
partially offset by deferred tax assets recognized during the
period.
Net Loss
As a result of the foregoing, we had net losses of US$206.1
million and US$218.0 million in the third quarter of 2019 and 2018,
respectively.
Net Loss Excluding Share-based Compensation and Changes in
Fair Value of the 2017 Convertible Notes
Net loss excluding share-based compensation and changes in fair
value of the 2017 convertible notes, was US$175.2 million and
US$237.6 million in the third quarter of 2019 and 2018,
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 12,
2019
8:30 PM Singapore / Hong Kong Time on
November 12, 2019
Webcast link:
https://services.choruscall.com/links/se191112.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: 7282425
A replay of the conference call will be available at the
Company’s investor relations website
(https://www.seagroup.com/investor/financials). An archived webcast
will be available at the same link above.
About Sea Limited
Sea’s mission is to better the lives of the consumers and small
businesses of our region with technology. Our region includes the
key markets of Indonesia, Taiwan, Vietnam, Thailand, the
Philippines, Malaysia and Singapore. Sea operates three businesses
across digital entertainment, e-commerce, and digital financial
services, known as Garena, Shopee, and AirPay, respectively.
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
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “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 region, including segments within those
industries; 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 and platforms; the growth in
its user base, level of user engagement, and monetization; its
ability to continue to develop new technologies and/or upgrade its
existing technologies; growth and trends of its markets and
competition in its industries; government policies and regulations
relating to its industries; and general economic and business
conditions in the region. 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:
- “Adjusted revenue” of our digital entertainment segment
represents revenue of the digital entertainment segment plus change
in digital entertainment deferred revenue. This financial measure
is used as an approximation of cash spent by our users in the
applicable period that is attributable to our digital entertainment
segment. Although other companies may present such measures related
to gross billings differently or not at all, we believe that the
adjusted revenue of our digital entertainment segment provides
useful information to investors about the segment’s core operating
results, enhancing their understanding of our past performance and
future prospects.
- “Adjusted revenue” of our e-commerce segment represents revenue
of the e-commerce segment (currently consisting of marketplace
revenue and product revenue) plus certain revenues that were
net-off against their corresponding sales incentives. This
financial measure enables our investors to follow trends in our
e-commerce monetization capability over time and is a useful
performance measure.
- “Adjusted revenue” of our digital financial services segment
represents revenue of the digital financial services segment plus
certain revenues that were net-off against their corresponding
sales incentives.
- “Total adjusted revenue” represents the sum of the adjusted
revenue of our digital entertainment segment, the adjusted revenue
of our e-commerce segment, the adjusted revenue of our digital
financial services segment, and the revenue of our other services.
This financial measure enables our investors to follow trends in
our overall group monetization capability over time and is a useful
performance measure.
- “Net loss excluding share-based compensation and changes in
fair value of the 2017 convertible notes” represents net loss
before share-based compensation and changes in fair value of
convertible notes. 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 and changes in fair value of
convertible notes are significant expenses.
- “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. Although other companies may
calculate adjusted EBITDA differently or not present it at all, 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. Although other companies may calculate
adjusted EBITDA differently or not present it at all, 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. Although
other companies may calculate adjusted EBITDA differently or not
present it at all, 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 unaudited 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
(“$”).
For the Three Months ended
September 30, 2019
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(3)
Unallocated
expenses(4)
Consolidated
$
$
$
$
$
$
Revenue
329,058
226,396(1)
1,662
53,021
-
610,137
Changes in deferred revenue
121,946
-
-
-
-
121,946
Sales incentives net-off
-
30,817
357
-
-
31,174
Adjusted revenue
451,004
257,213(2)
2,019
53,021
-
763,257
Operating income (loss)
169,369
(277,219)
(34,553)
(9,429)
(35,630)
(187,462)
Net effect of changes in deferred revenue
and its related cost
91,654
-
-
-
-
91,654
Depreciation and Amortization
4,935
23,507
925
2,935
-
32,302
Share-based compensation
-
-
-
-
32,709
32,709
Adjusted EBITDA
265,958
(253,712)
(33,628)
(6,494)
(2,921)
(30,797)
For the Three Months ended
September 30, 2018
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(3)
Unallocated expenses(4)
Consolidated
$
$
$
$
$
$
Revenue
112,520
65,919(1)
2,548
23,934
-
204,921
Changes in deferred revenue
32,038
-
-
-
-
32,038
Sales incentives net-off
-
5,314
565
-
-
5,879
Adjusted revenue
144,558
71,233(2)
3,113
23,934
-
242,838
Operating income (loss)
19,403
(223,787)
(7,387)
(16,186)
(18,243)
(246,200)
Net effect of changes in deferred revenue
and its related cost
26,192
-
-
-
-
26,192
Depreciation and Amortization
8,129
8,926
386
2,336
-
19,777
Share-based compensation
-
-
-
-
16,479
16,479
Adjusted EBITDA
53,724
(214,861)
(7,001)
(13,850)
(1,764)
(183,752)
(1) For the third quarter of 2019, revenue of $226,396 included
marketplace revenue of $177,235 and product revenue of $49,161 net
of sales incentives. For the third quarter of 2018, revenue of
$65,919 included marketplace revenue of $45,147 and product revenue
of $20,772 net of sales incentives.
(2) For the third quarter of 2019, adjusted revenue of $257,213
included marketplace revenue of $208,052 and product revenue of
$49,161. For the third quarter of 2018, adjusted revenue of $71,233
included marketplace revenue of $50,303 and product revenue of
$20,930.
(3) A combination of multiple business activities that does not
meet the quantitative thresholds to qualify as reportable segments
are grouped together as “Other Services.”
(4) Unallocated expenses are mainly related to share-based
compensation and general and corporate administrative costs such as
professional fees and other miscellaneous items that are not
allocated to segments. The expenses are excluded from segment
results as they are not reviewed by the CODM as part of segment
performance.
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
Amounts expressed in thousands of US
dollars (“$”) except for number of shares & per share
data
For the Nine Months
ended September 30,
2018
2019
$
$
Revenue
Service revenue
Digital Entertainment
331,207
731,935
E-commerce and other services
157,693
526,144
Sales of goods
54,844
140,075
Total revenue
543,744
1,398,154
Cost of revenue
Cost of service
Digital Entertainment
(189,513)
(296,788)
E-commerce and other services
(275,052)
(612,833)
Cost of goods sold
(56,462)
(148,465)
Total cost of revenue
(521,027)
(1,058,086)
Gross profit
22,717
340,068
Operating income (expenses):
Other operating income
5,508
9,875
Sales and marketing expenses
(497,528)
(627,803)
General and administrative expenses
(153,621)
(276,160)
Research and development expenses
(40,887)
(107,167)
Total operating expenses
(686,528)
(1,001,255)
Operating loss
(663,811)
(661,187)
Interest income
8,567
24,539
Interest expense
(21,413)
(31,041)
Investment gain, net
9,374
4,817
Changes in fair value of the 2017
convertible notes
(19,928)
(466,102)(1)
Foreign exchange gain
5,304
5,583
Loss before income tax and share of
results of equity investees
(681,907)
(1,123,391)
Income tax expense
(1,095)
(49,853)
Share of results of equity investees
(1,974)
(2,558)
Net loss
(684,976)
(1,175,802)
Net loss (profit) attributable to
non-controlling interests
358
(3,208)
Net loss attributable to Sea Limited’s
ordinary shareholders
(684,618)
(1,179,010)
Net loss excluding share-based
compensation and changes in fair value of the 2017 convertible
notes (2)
(622,985)
(627,566)
Loss per share:
Basic and diluted
(2.03)
(2.75)
Shares used in loss per share
computation:
Basic and diluted
337,804,410
428,606,948
(1) Fair value loss of $466.1 million on the 2017 convertible
notes was recorded as our share prices significantly exceeded the
conversion prices of the 2017 convertible notes.
(2) For a discussion of the use of non-GAAP financial measures,
see “Non-GAAP Financial Measures.”
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of
December 31,
As of
September 30,
2018
2019
$
$
ASSETS
Current assets
Cash and cash equivalents
1,002,841
2,297,187
Restricted cash
254,100
360,065
Accounts receivable, net
97,782
138,198
Prepaid expenses and other assets
312,387
489,272
Inventories, net
37,689
21,372
Short-term investments
690
9,416
Amounts due from related parties
5,224
2,277
Total current assets
1,710,713
3,317,787
Non-current assets
Property and equipment, net
192,357
294,783
Operating lease right-of-use assets,
net
-
168,366
Intangible assets, net
12,887
14,914
Long-term investments
111,022
99,086
Prepaid expenses and other assets
69,065
66,330
Restricted cash
2,371
16,583
Deferred tax assets
63,302
73,100
Goodwill
30,952
30,952
Total non-current assets
481,956
764,114
Total assets
2,192,669
4,081,901
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of
December 31,
As of
September 30,
2018
2019
$
$
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
37,163
48,124
Accrued expenses and other payables
636,880
826,887
Advances from customers
29,355
50,203
Amount due to related parties
46,025
45,959
Short-term borrowings
856
1,307
Operating lease liabilities
-
49,729
Deferred revenue
426,675
990,677
Convertible notes
-
22,706
Income tax payable
9,539
16,138
Total current liabilities
1,186,493
2,051,730
Non-current liabilities
Accrued expenses and other payables
7,894
22,633
Long-term borrowings
1,026
633
Operating lease liabilities
-
134,293
Deferred revenue
171,262
164,976
Convertible notes
1,061,796
445,936
Deferred tax liabilities
679
791
Unrecognized tax benefits
2,974
1,409
Total non-current liabilities
1,245,631
770,671
Total liabilities
2,432,124
2,822,401
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of
December 31,
As of
September 30,
2018
2019
$
$
Shareholders’ equity
Class A Ordinary shares
94
154
Class B Ordinary shares
76
76
Additional paid-in capital
1,809,232
4,505,967
Accumulated other comprehensive income
15,199
(6,979)
Statutory reserves
46
46
Accumulated deficit
(2,067,786)
(3,246,796)
Total Sea Limited shareholders’
(deficit) equity
(243,139)
1,252,468
Non-controlling interests
3,684
7,032
Total shareholders’ (deficit)
equity
(239,455)
1,259,500
Total liabilities and shareholders’
(deficit) equity
2,192,669
4,081,901
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands of US
dollars (“$”)
For the Nine Months
ended
September 30,
2018
2019
$
$
Net cash (used in) generated from
operating activities
(357,029)
97,663
Net cash used in investing activities
(158,938)
(219,538)
Net cash generated from financing
activities
545,106
1,534,550
Effect of foreign exchange rate changes on
cash, cash equivalents and restricted cash
(14,739)
1,848
Net increase in cash, cash equivalents and
restricted cash
14,400
1,414,523
Cash, cash equivalents and restricted cash
at beginning of the period
1,444,978
1,259,312
Cash, cash equivalents and restricted cash
at end of the period
1,459,378
2,673,835
1 UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operation 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, 2019
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
329,058
226,396
1,662
53,021
-
610,137
Operating income (loss)
169,369
(277,219)
(34,553)
(9,429)
(35,630)
(187,462)
Non-operating income, net
9,786
Income tax expense
(27,370)
Share of results of equity investees
(1,051)
Net loss
(206,097)
For the Three Months ended
September 30, 2018
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
112,520
65,919
2,548
23,934
-
204,921
Operating income (loss)
19,403
(223,787)
(7,387)
(16,186)
(18,243)
(246,200)
Non-operating income, net
30,903
Income tax expense
(2,020)
Share of results of equity investees
(702)
Net loss
(218,019)
(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. The 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/20191112005556/en/
Martin Reidy Investors / analysts: ir@seagroup.com Media:
media@seagroup.com
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