Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced
its financial results for the third quarter ended September 30,
2020.
Third Quarter 2020 Highlights
- Group
- Total GAAP revenue was US$1.2 billion, up 98.7%
year-on-year.
- Total gross profit was US$407.6 million, up 100.6%
year-on-year.
- Total adjusted EBITDA1 was US$120.4 million compared to
US$(30.8) million for the third quarter of 2019.
- Digital Entertainment
- Bookings2 were US$944.7 million, up 109.5% year-on-year.
- Adjusted EBITDA1 was US$584.5 million, up 119.8%
year-on-year.
- Adjusted EBITDA represented 61.9% of bookings for the third
quarter of 2020, compared to 59.0% for the third quarter of
2019.
- GAAP Revenue was US$569.0 million, up 72.9% year-on-year from
US$329.1 million for the third quarter of 2019.
- Quarterly active users (“QAUs”) reached 572.4 million, an
increase of 78.3% year-on-year.
- Quarterly paying users grew by 123.6% year-on-year to 65.3
million, which represented 11.4% of QAUs for the third quarter
compared to 9.1% for the same period in 2019.
- Average bookings per user were US$1.7, compared to US$1.4 for
the third quarter of 2019.
- Our self-developed global hit game, Free Fire, continued to be
the highest grossing mobile game in Latin America and in Southeast
Asia in the third quarter, according to App Annie3.
- Our esports and community building efforts continued to attract
significant followings in the third quarter. Free Fire esports
tournaments hosted during the quarter have accumulated over 150
million online views to date.
- E-commerce
- GAAP Revenue was US$618.7 million, up 173.3% year-on-year.
- GAAP Revenue included US$467.1 million of GAAP marketplace
revenue4, up 163.5% year-on-year, and US$151.6 million of GAAP
product revenue5, up 208.4% year-on-year.
- Gross orders totaled 741.6 million, an increase of 130.7%
year-on-year.
- Gross merchandise value (“GMV”) was US$9.3 billion, an increase
of 102.7% year-on-year.
- Adjusted EBITDA1 was US$(301.6) million compared to US$(253.7)
million for the third quarter of 2019. Adjusted EBITDA loss per
order decreased by 48.1% year-on-year to US$0.41, compared to
US$0.79 for the third quarter of 2019.
- In Indonesia, where Shopee is the largest e-commerce platform,
it registered over 310 million orders for the market in the third
quarter, or a daily average of around 3.4 million orders, an
increase of over 124% year-on-year. Shopee also ranked first in
Indonesia by average monthly active users, downloads, and total
time spent in app on Android, in the Shopping category in the third
quarter, according to App Annie3.
- Both in Southeast Asia and in Taiwan, Shopee ranked number one
in the Shopping category by downloads, average monthly active
users, and total time spent in app on Android, for the third
quarter, according to App Annie3.
- Shopee was also the second most downloaded app globally in the
Shopping category in the third quarter, according to App
Annie3.
Digital Financial Services Update
In the third quarter, we continued to see strong growth in
adoption of SeaMoney offerings. Our mobile wallet total payment
volume for the quarter exceeded US$2.1 billion. Moreover, quarterly
paying users for our mobile wallet services surpassed 17.8
million.
Integration of mobile wallet services with Shopee deepened
further across our markets, as more users recognized the clear
benefit and convenience of using our mobile wallet services to pay.
In October, more than 30% of Shopee’s total gross orders across our
markets combined were paid using our mobile wallet. We also
continued to expand our suite of online and offline third-party use
cases and partnerships in the third quarter.
Guidance
We are raising the guidance for both digital entertainment and
e-commerce for the full year of 2020.
In digital entertainment, we expect our very strong performance
in the third quarter will sustain through the fourth quarter. As a
result, we expect bookings for digital entertainment6 to exceed
US$3.1 billion, representing over 75.4% growth from 2019. The
revised guidance represents an increase of more than 59.0% from the
midpoint of the previously disclosed guidance of between US$1.9
billion and US$2.0 billion.
We also expect GAAP revenue plus sales incentives net-off for
e-commerce7 to exceed US$2.3 billion. The revised guidance
represents a more than 144.1% increase from 2019, and a more than
31.4% increase from the midpoint of the previously disclosed
guidance of between US$1.7 billion and US$1.8 billion.
Exchanges and Conversions of 2023 Convertible Notes
In October 2020, we completed the exchanges of approximately
US$84.1 million principal amount of our 2.25% convertible senior
notes due 2023 (the “2023 notes”) for approximately 4.2 million
American Depositary Shares (“ADSs”) plus accrued and unpaid
interest, pursuant to privately negotiated agreements with certain
holders of the 2023 notes.
In addition, between August 1 and October 31, 2020, holders of
approximately US$39.1 million principal amount of our 2023 notes
elected to convert their notes. We issued approximately 2.0 million
ADSs to settle such conversions.
In aggregate, such exchanges and conversions are estimated to
result in more than US$7.5 million of saving to us in future
interest payments.
As of October 31, 2020, we had 493,963,765 ordinary shares
issued and outstanding, and approximately US$49.6 million principal
amount of the 2023 notes remaining outstanding.
1 For definitions of total adjusted EBITDA and adjusted EBITDA
for digital entertainment and e-commerce segments, please refer to
the “Non-GAAP Financial Measures” section. 2 GAAP revenue for the
digital entertainment segment plus change in digital entertainment
deferred revenue. This operating metric is used as an approximation
of cash spent by our users in the applicable period that is
attributable to our digital entertainment segment. 3 Rankings data
for App Annie is based on combined data from the Google Play and
iOS App Stores, unless otherwise stated. Southeast Asia rankings
are based on Indonesia, Malaysia, Philippines, Singapore, Thailand,
and Vietnam. Latin America rankings are based on Argentina, Brazil,
Chile, Colombia, Mexico, and Uruguay. 4 GAAP marketplace revenue
mainly consists of transaction-based fees and advertising income
and revenue generated from other value-added services. 5 GAAP
product revenue mainly consists of revenue generated from direct
sales. 6 Adjusted revenue for digital entertainment in the
previously disclosed guidance. 7 Adjusted revenue for e-commerce in
the previously disclosed guidance.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars “$” except for
per share data)
For the Three Months ended
September 30,
2019
2020
$
$
YOY%
Revenue
Service revenue
Digital Entertainment
329,058
568,981
72.9
%
E-commerce and other services
229,740
489,500
113.1
%
Sales of goods
51,339
153,679
199.3
%
610,137
1,212,160
98.7
%
Cost of revenue
Cost of service
Digital Entertainment
(117,194
)
(194,738
)
66.2
%
E-commerce and other services
(240,037
)
(458,321
)
90.9
%
Cost of goods sold
(49,738
)
(151,534
)
204.7
%
(406,969
)
(804,593
)
97.7
%
Gross profit
203,168
407,567
100.6
%
Other operating income
3,985
59,023
1,381.1
%
Sales and marketing expenses
(251,751
)
(470,988
)
87.1
%
General and administrative expenses
(99,265
)
(196,730
)
98.2
%
Research and development expenses
(43,599
)
(104,345
)
139.3
%
Total operating expenses
(390,630
)
(713,040
)
82.5
%
Operating loss
(187,462
)
(305,473
)
63.0
%
Non-operating income (loss), net
9,786
(74,301
)
(859.3
)%
Income tax expense
(27,370
)
(46,416
)
69.6
%
Share of results of equity investees
(1,051
)
928
(188.3
)%
Net loss
(206,097
)
(425,262
)
106.3
%
Net loss excluding share-based
compensation and changes in fair value of the 2017 convertible
notes (1)
(175,162
)
(346,049
)
97.6
%
Basic and diluted loss per share based on
net loss excluding share-based compensation and changes in fair
value of the 2017 convertible notes attributable to Sea Limited’s
ordinary shareholders (1)
(0.38
)
(0.69
)
81.6
%
Change in deferred revenue of Digital
Entertainment
121,946
375,674
208.1
%
E-commerce sales incentives
net-off
30,817
78,302
154.1
%
Adjusted EBITDA for Digital Entertainment
(1)
265,958
584,525
119.8
%
Adjusted EBITDA for E-commerce (1)
(253,712
)
(301,590
)
18.9
%
Adjusted EBITDA for Digital Financial
Services (1)
(33,628
)
(149,263
)
343.9
%
Adjusted EBITDA for Other Services (1)
(6,494
)
(9,115
)
40.4
%
Unallocated expenses (2)
(2,921
)
(4,171
)
42.8
%
Total adjusted EBITDA (1)
(30,797
)
120,386
(490.9
)%
(1) For a discussion of the use of non-GAAP financial measures,
see “Non-GAAP Financial Measures.” (2) Unallocated expenses are
mainly related to share-based compensation and general and
corporate administrative costs such as professional fees and other
miscellaneous items that are not allocated to segments. These
expenses are excluded from segment results as they are not reviewed
by the Chief Operating Decision Maker (“CODM”) as part of segment
performance.
Three Months Ended September 30, 2020 Compared to Three
Months Ended September 30, 2019
Revenue
Our total GAAP revenue increased by 98.7% to US$1,212.2 million
in the third quarter of 2020 from US$610.1 million in the third
quarter of 2019. The increase was mainly driven by the growth in
each of the segments detailed as follows:
- Digital Entertainment: GAAP revenue increased by 72.9% to
US$569.0 million in the third quarter of 2020 from US$329.1 million
in the third quarter of 2019. This increase was primarily due to
the increase in our active user base as well as the deepened paying
user penetration, and in particular, the continued success of our
self-developed game Free Fire.
- E-commerce and other services: GAAP revenue increased by 113.1%
to US$489.5 million in the third quarter of 2020 from US$229.7
million in the third quarter of 2019. This increase was primarily
driven by the growth of our e-commerce marketplace, and positive
developments in each of our marketplace revenue streams –
transaction-based fees, value-added services, and advertising. It
is a result of our commitment to continuously enhance our service
offerings as we seek to create greater value for our platform
users.
- Sales of goods: GAAP revenue increased by 199.3% to US$153.7
million in the third quarter of 2020 from US$51.3 million 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 97.7% to US$804.6 million
in the third quarter of 2020 from US$407.0 million in the third
quarter of 2019.
- Digital Entertainment: Cost of revenue increased by 66.2% to
US$194.7 million in the third quarter of 2020 from US$117.2 million
in the third quarter of 2019. 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 segment combined increased by 90.9%
to US$458.3 million in the third quarter of 2020 from US$240.0
million in the third quarter of 2019. The increase was primarily
due to higher costs of logistics, including expenses associated
with fulfilment services we provided to sellers as part of our
value-added services, and other costs incurred in line with growth
of our e-commerce marketplace, including, among other costs, higher
bank transaction fees driven by GMV growth, as well as higher staff
compensation and benefit costs.
- Cost of goods sold: Cost of goods sold increased by 204.7% to
US$151.5 million in the third quarter of 2020 from US$49.7 million
in the third quarter of 2019. The increase was largely in line with
the increase in our product offerings.
Other Operating Income
Our other operating income increased by 1,381.1% to US$59.0
million in the third quarter of 2020 from US$4.0 million in the
third quarter of 2019. The increase in our other operating income
was mainly due to the rebates from e-commerce related logistic
services provided by third parties.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 87.1% to
US$471.0 million in the third quarter of 2020 from US$251.8 million
in the third quarter of 2019. The table below sets forth the
breakdown of the sales and marketing expenses of our two major
reporting segments. Amounts are expressed in thousands of US
dollars (“$”).
For the Three Months ended
September 30,
2019
2020
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
24,750
45,797
85.0
%
E-commerce
199,167
306,680
54.0
%
- Digital Entertainment: Sales and marketing expenses increased
by 85.0% to US$45.8 million in the third quarter of 2020 from
US$24.8 million in the third quarter of 2019. The increase was
primarily due to higher online marketing costs.
- E-commerce: Sales and marketing expenses increased by 54.0% to
US$306.7 million in the third quarter of 2020 from US$199.2 million
in the third quarter of 2019. The increase in marketing expenses
was primarily attributable to the ramping up of brand marketing and
other marketing incentives as well as higher staff compensation and
benefit costs and showed our continued improvement in growth
efficiency as the market leader.
General and Administrative Expenses
Our general and administrative expenses increased by 98.2% to
US$196.7 million in the third quarter of 2020 from US$99.3 million
in the third quarter of 2019. This increase was primarily due to
higher staff compensation and benefit costs as well as provision
for credit losses for our digital financial services business.
Research and Development Expenses
Our research and development expenses increased by 139.3% to
US$104.3 million in the third quarter of 2020 from US$43.6 million
in the third quarter of 2019, 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 loss of US$74.3 million in the third
quarter of 2020, compared to a net non-operating income of US$9.8
million in the third quarter of 2019. Our non-operating loss in the
third quarter of 2020 was primarily due to higher interest expense
and foreign exchange loss.
Income Tax Expense
We had a net income tax expense of US$46.4 million and US$27.4
million in the third quarter of 2020 and 2019, respectively. The
income tax expense in the third quarter of 2020 was primarily due
to withholding tax and corporate income tax expenses incurred by
our digital entertainment segment.
Net Loss
As a result of the foregoing, we had net losses of US$425.3
million and US$206.1 million in the third quarter of 2020 and 2019,
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$346.0 million and
US$175.2 million in the third quarter of 2020 and 2019,
respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding
Share-based Compensation and Changes in Fair Value of the 2017
Convertible Notes Attributable to Sea Limited’s Ordinary
Shareholders
Basic and diluted loss per share based on net loss excluding
share-based compensation and changes in fair value of the 2017
convertible notes, was US$0.69 and US$0.38 in the third quarter of
2020 and 2019, 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 17,
2020
8:30 PM Singapore / Hong Kong Time on
November 17, 2020
Webcast link:
https://services.choruscall.com/links/se201117.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: 2277417
A replay of the conference call will be available at the
Company’s investor relations website
(https://www.seagroup.com/investor/home). An archived webcast will
be available at the same link above.
About Sea Limited
Sea Limited (NYSE: SE) is a leading global consumer internet
company founded in Singapore in 2009. Our mission is to better the
lives of consumers and small businesses with technology. We operate
three core businesses across digital entertainment, e-commerce, as
well as digital payments and financial services, known as Garena,
Shopee, and SeaMoney, respectively. Garena is a leading global
online games developer and publisher. Shopee is the largest
pan-regional e-commerce platform in Southeast Asia and Taiwan.
SeaMoney is a leading digital payments and financial services
provider in Southeast Asia.
Forward-Looking Statements
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“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 markets where it operates, 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; general economic and
business conditions in its markets; and the impact of widespread
health developments, including the recent global coronavirus
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)
which could materially and adversely affect, among other things,
the business and manufacturing activities of its sellers, merchants
and logistics providers, the global supply chain including those of
its sellers’ and merchants’, and consumer discretionary spending.
Further information regarding these and other risks is included in
Sea’s filings with the SEC. All information provided in this press
release and in the attachments is as of the date of this press
release, and Sea undertakes no obligation to update any
forward-looking statement, except as required under applicable
law.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with U.S. GAAP, we use the
following non-GAAP financial measures to help evaluate our
operating performance:
- “Net loss excluding share-based compensation 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.
- “Net loss excluding share-based compensation and changes in
fair value of the 2017 convertible notes attributable to Sea
Limited’s ordinary shareholders” represents net loss attributable
to Sea Limited’s ordinary shareholders 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.
- “Basic and diluted loss per share based on net loss excluding
share-based compensation and changes in fair value of the 2017
convertible notes attributable to Sea Limited’s ordinary
shareholders” represents net loss excluding share-based
compensation and changes in fair value of the 2017 convertible
notes attributable to Sea Limited’s ordinary shareholders divided
by the weighted average number of shares outstanding during the
period.
- “Adjusted EBITDA” for our digital entertainment segment
represents operating income (loss) before share-based compensation
plus (a) depreciation and amortization expenses, and (b) the net
effect of changes in deferred revenue and its related cost for our
digital entertainment segment. We believe that the segment adjusted
EBITDA helps to identify underlying trends in our operating
results, enhancing their understanding of the past performance and
future prospects.
- “Adjusted EBITDA” for our e-commerce segment, digital financial
services segment and other services segment represents operating
income (loss) before share-based compensation plus depreciation and
amortization expenses. We believe that the segment adjusted EBITDA
helps to identify underlying trends in our operating results,
enhancing their understanding of the past performance and future
prospects.
- “Total adjusted EBITDA” represents the sum of adjusted EBITDA
of all our segments combined, plus unallocated expenses. We believe
that the total adjusted EBITDA helps to identify underlying trends
in our operating results, enhancing their understanding of the past
performance and future prospects.
These non-GAAP financial measures have limitations as analytical
tools. None of the above financial measures should be considered in
isolation or construed as an alternative to revenue, net
loss/income, or any other measure of performance or as an indicator
of our operating performance. These non-GAAP financial measures
presented here may not be comparable to similarly titled measures
presented by other companies. Other companies may calculate
similarly titled measures differently, limiting their usefulness as
comparative measures to Sea’s data. We compensate for these
limitations by reconciling the non-GAAP financial measures to their
nearest U.S. GAAP financial measures, all of which should be
considered when evaluating our performance. We encourage you to
review our financial information in its entirety and not rely on
any single financial measure.
The tables below present selected financial information of our
reporting segments, the non-GAAP financial measures that are most
directly comparable to GAAP financial measures, and the related
reconciliations between the financial measures. Amounts are
expressed in thousands of US dollars (“$”) except for number of
shares & per share data.
For the Three Months ended
September 30, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
278,614
(338,097
)
(151,567
)
(11,039
)
(83,384
)
(305,473
)
Net effect of changes in deferred
revenue and its related cost
299,200
-
-
-
-
299,200
Depreciation and Amortization
6,711
36,507
2,304
1,924
-
47,446
Share-based compensation
-
-
-
-
79,213
79,213
Adjusted EBITDA
584,525
(301,590
)
(149,263
)
(9,115
)
(4,171
)
120,386
For the Three Months ended
September 30, 2019
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
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
)
(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
September 30,
2019
2020
$
$
Net loss
(206,097
)
(425,262
)
Share-based compensation
32,709
79,213
Changes in fair value of the 2017
convertible notes
(1,774
)
–
Net loss excluding share-based
compensation and
changes in fair value of the 2017
convertible notes
(175,162
)
(346,049
)
Net (profit) loss attributable to
non-controlling interests
(1,491
)
5,272
Net loss excluding share-based
compensation and
changes in fair value of the 2017
convertible notes attributable to Sea Limited’s ordinary
shareholders
(176,653
)
(340,777
)
Weighted average shares used in loss per
share computation:
Basic and diluted
459,592,639
491,139,720
Basic and diluted loss per share based on
net loss excluding
share-based compensation and changes in
fair value of the 2017 convertible notes attributable to Sea
Limited’s ordinary shareholders
(0.38
)
(0.69
)
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,
2019
2020
$
$
Revenue
Service revenue
Digital Entertainment
731,935
1,322,610
E-commerce and other services
526,144
1,120,764
Sales of goods
140,075
365,740
Total revenue
1,398,154
2,809,114
Cost of revenue
Cost of service
Digital Entertainment
(296,788
)
(493,969
)
E-commerce and other services
(612,833
)
(1,132,136
)
Cost of goods sold
(148,465
)
(367,816
)
Total cost of revenue
(1,058,086
)
(1,993,921
)
Gross profit
340,068
815,193
Operating income (expenses)
Other operating income
9,875
116,948
Sales and marketing expenses
(627,803
)
(1,165,653
)
General and administrative expenses
(276,160
)
(468,210
)
Research and development expenses
(107,167
)
(244,278
)
Total operating expenses
(1,001,255
)
(1,761,193
)
Operating loss
(661,187
)
(946,000
)
Interest income
24,539
20,529
Interest expense
(31,041
)
(113,354
)
Investment gain, net
4,817
45,253
Changes in fair value of convertible
notes
(466,102)(1
)
(87
)
Foreign exchange gain (loss)
5,583
(7,795
)
Loss before income tax and share of
results of equity investees
(1,123,391
)
(1,001,454
)
Income tax expense
(49,853
)
(97,474
)
Share of results of equity investees
(2,558
)
(660
)
Net loss
(1,175,802
)
(1,099,588
)
Net (profit) loss attributable to
non-controlling interests
(3,208
)
5,124
Net loss attributable to Sea Limited’s
ordinary shareholders
(1,179,010
)
(1,094,464
)
Loss per share:
Basic and diluted
(2.75
)
(2.32
)
Weighted average shares used in loss per
share computation:
Basic and diluted
428,606,948
471,375,477
(1) Fair value loss of $466.1 million on
the 2017 convertible notes was recorded as our share prices
significantly exceeded the conversion prices of the 2017
convertible notes.
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of September 30,
2019
2020
$
$
ASSETS
Current assets
Cash and cash equivalents
3,118,988
3,509,039
Restricted cash
434,938
692,843
Accounts receivable, net
187,035
289,158
Prepaid expenses and other assets
535,187
961,326
Inventories, net
26,932
61,676
Short-term investments
102,324
42,320
Amounts due from related parties
4,735
6,725
Total current assets
4,410,139
5,563,087
Non-current assets
Property and equipment, net
318,620
358,390
Operating lease right-of-use assets,
net
182,965
215,056
Intangible assets, net
15,020
35,882
Long-term investments
113,797
219,138
Prepaid expenses and other assets
65,684
246,617
Restricted cash
16,652
24,870
Deferred tax assets
70,340
89,441
Goodwill
30,952
208,095
Total non-current assets
814,030
1,397,489
Total assets
5,224,169
6,960,576
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of September 30,
2019
2020
$
$
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
69,370
118,433
Accrued expenses and other payables
980,805
1,545,039
Advances from customers
65,062
121,039
Amounts due to related parties
34,990
50,816
Short-term borrowings
1,258
-
Operating lease liabilities
56,320
69,714
Deferred revenue
1,097,868
1,811,414
Convertible notes
29,481
-
Income tax payable
27,212
56,084
Total current liabilities
2,362,366
3,772,539
Non-current liabilities
Accrued expenses and other payables
25,802
27,702
Long-term borrowings
358
-
Operating lease liabilities
144,000
160,703
Deferred revenue
160,708
304,148
Convertible notes
1,356,332
1,920,942
Deferred tax liabilities
975
1,701
Unrecognized tax benefits
976
107
Total non-current liabilities
1,689,151
2,415,303
Total liabilities
4,051,517
6,187,842
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of September 30,
2019
2020
$
$
Shareholders’ equity
Class A Ordinary shares
154
168
Class B Ordinary shares
76
76
Additional paid-in capital
4,687,284
5,374,184
Accumulated other comprehensive income
(loss)
5,449
(8,190
)
Statutory reserves
46
112
Accumulated deficit
(3,530,585
)
(4,625,115
)
Total Sea Limited shareholders’
equity
1,162,424
741,235
Non-controlling interests
10,228
31,499
Total shareholders’ equity
1,172,652
772,734
Total liabilities and shareholders’
equity
5,224,169
6,960,576
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands of US
dollars (“$”)
For the Nine Months ended
September 30,
2019
2020
$
$
Net cash generated from operating
activities
97,663
370,424
Net cash used in investing activities
(219,538)
(519,976)
Net cash generated from financing
activities
1,534,550
784,031
Effect of foreign exchange rate changes on
cash, cash equivalents and
restricted cash
1,848
21,695
Net increase in cash, cash equivalents and
restricted cash
1,414,523
656,174
Cash, cash equivalents and restricted cash
at beginning of the period
1,259,312
3,570,578
Cash, cash equivalents and restricted cash
at end of the period
2,673,835
4,226,752
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operating Decision Maker (“CODM”) reviews the performance of each
segment based on revenue and certain key operating metrics of the
operations and uses these results for the purposes of allocating
resources to and evaluating the financial performance of each
segment. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
September 30, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
568,981
618,704
14,400
10,075
-
1,212,160
Operating income (loss)
278,614
(338,097)
(151,567)
(11,039)
(83,384)
(305,473)
Non-operating income, net
(74,301)
Income tax expense
(46,416)
Share of results of equity investees
928
Net loss
(425,262)
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)
(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/20201117005660/en/
For enquiries: Investors / analysts: ir@seagroup.com
Media: media@seagroup.com
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