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Sea Limited (NYSE: SE) posts a narrower loss in Q3 on higher revenue

The Singapore-based firm Sea Limited (NYSE: SE) reported a narrower loss in the third quarter of 2019 due to an increase in active user base, deepened paying user penetration, and growth of the e-commerce marketplace. The top line exceeded analysts’ expectations. Further, the company raised its segment revenue for fiscal 2019.

Net loss was $206.1 million compared to a loss of $218.02 million in the previous year quarter. Excluding share-based compensation and changes in the fair value of the 2017 convertible notes, net loss narrowed to $175.2 million from $237.6 million a year ago.

Sea Limited (SE) Q3 2019 Earnings Review

Revenue, on an unadjusted basis, jumped by 198% year-over-year to $610.14 million. Adjusted revenue increased by 214.3% to $763.3 million.

Looking ahead into fiscal 2019, the company now expects revenue for the digital entertainment segment to be between $1.7 billion and $1.8 billion, representing 157.2% to 172.3% growth from 2018. This compared to the previously disclosed guidance of between $1.6 billion and $1.7 billion, representing 142% to 157.2% growth.

Adjusted revenue for the e-commerce segment is now predicted to be between $880 million and $920 million, representing 202.7% to 216.5% growth from 2018. This compared to the previously disclosed guidance of between $780 million and $820 million, representing 168.3% to 182.1% growth.

For the third quarter, revenue from digital entertainment soared by 192.4% while adjusted revenue surged 212% year-over-year. This was primarily due to the increase of active user base as well as the deepened paying user penetration as it continues to bring new and engaging content to users and enhance the game and monetization features based on a deep understanding of local preferences and conditions as well as strong efforts in esports and community-building.

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Revenue from e-commerce and other services jumped by 222.1% while adjusted revenue soared by 238.7%. This increase was primarily driven by the growth of the e-commerce marketplace, and positive development in each marketplace revenue streams –transaction-based fees, value-added services, and advertising.

In the digital entertainment segment, quarterly active users (QAU) reached 321.1 million, an increase of 82.3% year-over-year from 176.1 million in the previous year quarter. The average revenue per user was $1.4 compared to $0.8 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.

In the e-commerce segment, gross orders jumped by 102.8% to 321.4 million from 158.5 million a year ago. Gross merchandise value was $4.6 billion, an increase of 69.9% year-on-year from $2.7 billion a year earlier.

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