Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced
its financial results for the third quarter ended September 30,
2022.
“Given the significant uncertainties in the macro environment,
we have entirely shifted our mindset and focus from growth to
achieving self-sufficiency and profitability as soon as possible,
without relying on any external funding,” said Forrest Li, Sea’s
Chairman and Group Chief Executive Officer.
“We are adapting quickly to the changing climate. All our
efforts are directed to ensure that Sea not only survives the macro
storms but emerges stronger, more efficient, and more resilient –
and as a long-term winner in our markets. This positions us to
continue capturing the long-term potential of our businesses and
markets, and to deliver strong and sustained shareholder returns
over time. Over the last quarter, we took decisive actions to
improve margins, and set clear goals and priorities for the
quarters to come. We remain highly confident about the compelling
long-term growth prospects of our businesses and markets.”
Third Quarter 2022 Highlights
- Group
- Total GAAP revenue was US$3.2 billion, up 17.4%
year-on-year.
- Total gross profit was US$1.2 billion, up 21.7%
year-on-year.
- Total net loss was US$(569.3) million, flat year-on-year, and
improving by 38.9% quarter-on-quarter.
- Total net loss excluding share-based compensation was
US$(373.5) million, improving by 16.6% year-on-year and 34.4%
quarter-on-quarter1. After adjusting for US$85.4 million of
severance and early lease termination related costs for the
quarter, total net loss excluding share-based compensation improved
by 49.4% quarter-on-quarter1.
- Total adjusted EBITDA2 was US$(357.7) million, as compared to
US$(165.5) million for the third quarter of 2021, and improving by
29.4% quarter-on-quarter. After adjusting for US$77.4 million of
severance and early lease termination related costs for the
quarter, adjusted EBITDA improved by 44.7% quarter-on-quarter.
- As of September 30, 2022, cash, cash equivalents and short-term
investments was US$7.3 billion, representing a net change of
US$(485.1) million from June 30, 2022.
- E-commerce
- GAAP revenue was US$1.9 billion, up 32.4% year-on-year. Based
on constant currency assumptions3, GAAP revenue was up 38.8%
year-on-year.
- GAAP revenue included US$1.6 billion of GAAP marketplace
revenue, which consists of core marketplace revenue and value-added
services revenue and increased by 39.3% year-on-year.
- Core marketplace revenue, mainly consisting of
transaction-based fees and advertising revenues, was up 54.1%
year-on-year to US$1.0 billion. Faster growth of core marketplace
revenue was one of the factors contributing to the strong
improvement in Shopee’s profitability in the quarter.
- Value-added services revenue, mainly consisting of revenues
related to logistics services, was up 20.3% year-on-year to US$0.6
billion.
- Gross orders totaled 2.0 billion for the quarter, increasing by
19.2% year-on-year.
- GMV was US$19.1 billion for the quarter, increasing by 13.5%
year-on-year. Based on constant currency assumptions3, GMV was up
21.4% year-on-year.
- GAAP sales and marketing expenses were US$575.7 million,
decreasing by 16.4% year-on-year and 14.6% quarter-on-quarter.
- Adjusted EBITDA2 for Shopee overall was US$(495.7) million,
improving by 27.5% year-on-year and 23.5% quarter-on-quarter. For
the avoidance of doubt, going forward unless otherwise specified,
adjusted EBITDA is after allocation of headquarters’ common
expenses (“HQ costs”), and adjusted EBITDA before allocation of HQ
costs is referred to as contribution margin.
- The adjusted EBITDA improvement was driven by strong topline
growth, particularly in core marketplace revenue, and meaningful
efficiency improvements in operating costs across our markets. This
was partially offset by severance and early lease termination
related costs related to Shopee and increases in HQ costs for
Shopee such as shared R&D staffing and shared server hosting
expenses. As we began more focused efforts on optimizing HQ costs,
including R&D costs, from the later part of the third quarter,
we expect savings on shared costs to start to show in the following
quarters.
- Asia markets recorded adjusted EBITDA of US$(216.8) million in
the quarter, improving by 31.4% quarter-on-quarter as a result of
profitability improvements across all markets in the region. During
the quarter, our Asia markets combined recorded positive
contribution margin, in line with our previously shared
expectations. Specifically, most of the markets within Asia,
including our largest market Indonesia, achieved positive
contribution margin, and Malaysia and Taiwan recorded positive
adjusted EBITDA for the quarter.
- Other markets recorded adjusted EBITDA of US$(279.0) million in
the quarter, improving by 16.0% quarter-on-quarter as a result of
increased monetization and cost savings.
- In Brazil, unit economics continued to improve significantly,
with adjusted EBITDA loss per order before allocation of HQ costs
of US$1.03, improving by 27.4% from the previous quarter. GAAP
revenue grew by over 225% year-on-year.
- While our results may fluctuate and are subject to the macro
environment and many other factors, we are currently working
towards adjusted EBITDA breakeven for Shopee overall by the end of
2023.
- Digital Entertainment
- GAAP revenue was US$892.9 million, as compared to US$900.3
million for the previous quarter.
- Bookings4 were US$664.7 million, as compared to US$717.4
million for the previous quarter. Bookings declined roughly 4%
quarter-on-quarter based on constant currency assumptions3.
- Adjusted EBITDA2 was US$289.9 million, as compared to US$333.6
million for the previous quarter.
- Adjusted EBITDA represented 43.6% of bookings for the third
quarter of 2022, as compared to 46.5% for the previous
quarter.
- Quarterly active users were 568.2 million, as compared to 619.3
million for the previous quarter.
- Quarterly paying users were 51.5 million, representing a paying
user ratio of 9.1%, unchanged from the previous quarter.
- Average bookings per user were US$1.2, stable
quarter-on-quarter.
- Digital Financial Services
- GAAP revenue was US$326.9 million, up 147.2% year-on-year.
- Adjusted EBITDA2 was US$(67.7) million, improving by 57.4%
year-on-year and 39.3% quarter-on-quarter. The improvement was
predominantly driven by more targeted sales and marketing spending
for the mobile wallet business, and our credit business maintaining
its healthy profitability while generating cash for the group.
- As of the end of the third quarter 2022, total loans receivable
was US$2.2 billion, net of allowance for credit losses of US$253.4
million. Non-performing loans past due by more than 90 days
represented less than 4% of our total gross loans receivable. The
weighted average tenure of loans outstanding as of the end of the
quarter was approximately 4 months.
Outlook
Given rising macro uncertainties, and with reopening trends
having an ongoing effect on the business, we are revising the
guidance for digital entertainment. We now expect bookings for the
full year of 2022 to be between US$2.6 billion and US$2.8 billion,
as compared to the previous guidance of between US$2.9 billion to
US$3.1 billion.
In addition, given the ongoing macro uncertainties, we currently
do not intend to provide any guidance for 2023 for our
businesses.
1
Compared with total net loss excluding
share-based compensation and impairment of goodwill for the second
quarter of 2022.
2
For definitions of total adjusted EBITDA
and adjusted EBITDA for digital entertainment, e-commerce and
digital financial services segments, please refer to the “Non-GAAP
Financial Measures” section.
3
Current and comparative prior period local
currency amounts are converted into United States dollars using the
same exchange rates, rather than the actual exchange rates during
the respective periods.
4
GAAP revenue for the digital entertainment
segment plus change in digital entertainment deferred revenue. This
operating metric is used as an approximation of cash spent by our
users in the applicable period that is attributable to our digital
entertainment segment.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars “$” except for
per share data)
For the Three Months
ended September 30,
2021
2022
$
$
YOY%
Revenue
Service revenue
Digital Entertainment
1,099,367
892,879
(18.8)%
E-commerce and other services
1,309,912
1,976,743
50.9%
Sales of goods
279,605
286,329
2.4%
2,688,884
3,155,951
17.4%
Cost of revenue
Cost of service
Digital Entertainment
(314,363)
(264,833)
(15.8)%
E-commerce and other services
(1,099,189)
(1,405,749)
27.9%
Cost of goods sold
(266,628)
(257,651)
(3.4)%
(1,680,180)
(1,928,233)
14.8%
Gross profit
1,008,704
1,227,718
21.7%
Other operating income
68,557
65,972
(3.8)%
Sales and marketing expenses
(1,009,601)
(816,662)
(19.1)%
General and administrative expenses
(294,848)
(551,700)
87.1%
Research and development expenses
(231,368)
(420,972)
81.9%
Total operating expenses
(1,467,260)
(1,723,362)
17.5%
Operating loss
(458,556)
(495,644)
8.1%
Non-operating loss, net
(12,816)
(9,173)
(28.4)%
Income tax expense
(101,040)
(65,279)
(35.4)%
Share of results of equity investees
1,431
821
(42.6)%
Net loss
(570,981)
(569,275)
(0.3)%
Net loss excluding share-based
compensation (1)
(448,014)
(373,520)
(16.6)%
Basic and diluted loss per share based on
net loss excluding share-based compensation
attributable to Sea Limited’s ordinary
shareholders (1)
(0.84)
(0.66)
(21.4)%
Change in deferred revenue of Digital
Entertainment
121,306
(228,207)
(288.1)%
Adjusted EBITDA for Digital Entertainment
(1)
715,139
289,879
(59.5)%
Adjusted EBITDA for E-commerce (1)
(683,813)
(495,735)
(27.5)%
Adjusted EBITDA for Digital Financial
Services (1)
(159,037)
(67,746)
(57.4)%
Adjusted EBITDA for Other Services (1)
(31,920)
(76,530)
139.8%
Unallocated expenses (2)
(5,823)
(7,520)
29.1%
Total adjusted EBITDA (1)
(165,454)
(357,652)
116.2%
(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 Operating
Decision Maker (“CODM”) as part of segment performance.
Three Months Ended September 30, 2022 Compared to Three
Months Ended September 30, 2021
Revenue
Our total GAAP revenue increased by 17.4% to US$3.2 billion in
the third quarter of 2022 from US$2.7 billion in the third quarter
of 2021.
- Digital Entertainment: GAAP revenue was US$892.9 million, as
compared to US$1.1 billion in the third quarter of 2021, primarily
attributable to the softening of bookings due to the ongoing
moderation in user engagement and monetization.
- E-commerce and other services: GAAP revenue increased by 50.9%
to US$2.0 billion in the third quarter of 2022 from US$1.3 billion
in the third quarter of 2021, primarily driven by the increased
monetization in our e-commerce business and the growth of our
credit business.
- Sales of goods: GAAP revenue increased by 2.4% to US$286.3
million in the third quarter of 2022 from US$279.6 million in the
third quarter of 2021.
Cost of Revenue
Our total cost of revenue increased by 14.8% to US$1.9 billion
in the third quarter of 2022 from US$1.7 billion in the third
quarter of 2021.
- Digital Entertainment: Cost of revenue decreased by 15.8% to
US$264.8 million in the third quarter of 2022 from US$314.4 million
in the third quarter of 2021, which was largely in line with the
decrease in digital entertainment revenue.
- E-commerce and other services: Cost of revenue for e-commerce
and other services segment combined increased by 27.9% to US$1.4
billion in the third quarter of 2022 from US$1.1 billion in the
third quarter of 2021, primarily driven by higher costs of
logistics from order growth and other costs related to the growth
of e-commerce marketplace. Improvement in gross profit margins was
mainly due to the growth of core marketplace revenue with higher
gross profit margin.
- Cost of goods sold: Cost of goods sold decreased by 3.4% to
US$257.7 million in the third quarter of 2022 from US$266.6 million
in the third quarter of 2021.
Other Operating Income
Other operating income was US$66.0 million and US$68.6 million
in the third quarter of 2022 and 2021, respectively. Other
operating income mainly consists of rebates from e-commerce related
logistics services providers.
Sales and Marketing Expenses
Total sales and marketing expenses decreased by 19.1% to
US$816.7 million in the third quarter of 2022 from US$1.0 billion
in the third quarter of 2021. The table below sets forth breakdown
of the sales and marketing expenses of our major reporting
segments. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months
ended September 30,
2021
2022
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
108,631
60,521
(44.3)%
E-commerce
688,924
575,676
(16.4)%
Digital Financial Services
195,794
130,824
(33.2)%
The decrease in sales and marketing expenses across all major
reporting segments were mainly attributable to our efforts to
continue to reduce operating costs and achieve higher cost
efficiencies.
General and Administrative Expenses
Our general and administrative expenses increased by 87.1% to
US$551.7 million in the third quarter of 2022 from US$294.8 million
in the third quarter of 2021. This increase was primarily due to
the increase in credit loss expense related to loans receivable, in
addition to higher staff cost, including share-based compensation,
and higher office facilities and related expenses to support our
business growth. Credit loss expenses on loans receivable increased
to US$136.4 million in the third quarter of 2022 from US$33.2
million in the third quarter of 2021, primarily driven by the
growth in our loan book.
Research and Development Expenses
Research and development expenses increased by 81.9% to US$421.0
million in the third quarter of 2022 from US$231.4 million in the
third quarter of 2021, primarily attributable to higher staff cost
from the increase in headcount as we invested in our technological
capabilities and expanded our service offerings.
Non-operating Income or Losses, Net
Non-operating income or losses mainly consist of interest
income, interest expense, investment gain (loss) and foreign
exchange gain (loss). We recorded a net non-operating loss of
US$9.2 million in the third quarter of 2022, compared to a net
non-operating loss of US$12.8 million in the third quarter of
2021.
Income Tax Expense
We had a net income tax expense of US$65.3 million and US$101.0
million in the third quarter of 2022 and 2021, respectively.
Net Loss
As a result of the foregoing, we had net losses of US$569.3
million and US$571.0 million in the third quarter of 2022 and 2021,
respectively.
Net Loss Excluding Share-based Compensation
Net loss excluding share-based compensation, was US$373.5
million and US$448.0 million in the third quarter of 2022 and 2021,
respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding
Share-based Compensation Attributable to Sea Limited’s Ordinary
Shareholders
Basic and diluted loss per share based on net loss excluding
share-based compensation, was US$0.66 and US$0.84 in the third
quarter of 2022 and 2021, respectively.
Webcast and Conference Call Information
The Company’s management will host a conference call today to
review Sea’s business and financial performance.
Details of the conference call and webcast are as follows:
Date and time:
7:30 AM U.S. Eastern Time on November 15,
2022 8:30 PM Singapore / Hong Kong Time on November 15, 2022
Webcast link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=69JIbsbL
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:
5795737
A replay of the conference call will be available at the
Company’s investor relations website (www.sea.com/investor/home).
An archived webcast will be available at the same link above.
About Sea Limited
Sea Limited (NYSE: SE) is a leading global consumer internet
company founded in Singapore in 2009. Its mission is to better the
lives of consumers and small businesses with technology. Sea
operates three core businesses across digital entertainment,
e-commerce, as well as digital payments and financial services,
known as Garena, Shopee and SeaMoney, respectively. Garena is a
leading global online games developer and publisher. Shopee is the
largest pan-regional e-commerce platform in Southeast Asia and
Taiwan. SeaMoney is a leading digital payments and financial
services provider in Southeast Asia.
Forward-Looking Statements
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“may,” “could,” “will,” “expect,” “anticipate,” “aim,” “future,”
“intend,” “plan,” “believe,” “estimate,” “likely to,” “potential,”
“confident,” “guidance,” and similar statements. Among other
things, statements that are not historical facts, including
statements about Sea’s beliefs and expectations, the business,
financial and market outlook, and projections from its management
in this announcement, as well as Sea’s strategic and operational
plans, contain forward-looking statements. Sea may also make
written or oral forward-looking statements in its periodic reports
to the U.S. Securities and Exchange Commission (the “SEC”), in its
annual report to shareholders, in press releases, and other written
materials, and in oral statements made by its officers, directors,
or employees to third parties. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: Sea’s goals and strategies; its future business
development, financial condition, financial results, and results of
operations; the expected growth in, and market size of, the digital
entertainment, e-commerce and digital financial services industries
in the markets where it operates, including segments within those
industries; expected changes or guidance in its revenue, costs or
expenditures; its ability to continue to source, develop and offer
new and attractive online games and to offer other engaging digital
entertainment content; the expected growth of its digital
entertainment, e-commerce and digital financial services
businesses; its expectations regarding growth in its user base,
level of engagement, and monetization; its ability to continue to
develop new technologies and/or upgrade its existing technologies;
its expectations regarding the use of proceeds from its financing
activities, including its follow-on equity offerings and
convertible notes offerings; growth and trends of its markets and
competition in its industries; government policies and regulations
relating to its industries, including the effects of any government
orders or actions on its businesses; general economic, political,
social and business conditions in its markets; and the impact of
widespread health developments, including the COVID-19 pandemic,
and the responses thereto (such as voluntary and in some cases,
mandatory quarantines as well as shut downs and other restrictions
on travel and commercial, social and other activities, and the
availability of effective vaccines or treatments) and the impact of
economies reopening further to the COVID-19 pandemic. Further
information regarding these and other risks is included in Sea’s
filings with the SEC. All information provided in this press
release and in the attachments is as of the date of this press
release, and Sea undertakes no obligation to update any
forward-looking statement, except as required under applicable
law.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with U.S. GAAP, we use the
following non-GAAP financial measures to help evaluate our
operating performance:
- “Net loss excluding share-based compensation” represents net
loss before share-based compensation. This financial measure helps
to identify underlying trends in our business that could otherwise
be distorted by the effect of certain expenses that are included in
net loss. The use of this measure has its limitations in that it
does not include all items that impact the net loss or income for
the period, and share-based compensation is a significant
expense.
- “Net loss excluding share-based compensation attributable to
Sea Limited’s ordinary shareholders” represents net loss
attributable to Sea Limited’s ordinary shareholders before
share-based compensation. This financial measure helps to identify
underlying trends in our business that could otherwise be distorted
by the effect of certain expenses that are included in net loss.
The use of this measure has its limitations in that it does not
include all items that impact the net loss or income for the
period, and share-based compensation is a significant expense.
- “Basic and diluted loss per share based on net loss excluding
share-based compensation attributable to Sea Limited’s ordinary
shareholders” represents net loss excluding share-based
compensation attributable to Sea Limited’s ordinary shareholders
divided by the weighted average number of shares outstanding during
the period.
- “Adjusted EBITDA” for our digital entertainment segment
represents operating income (loss) before share-based compensation
plus (a) depreciation and amortization expenses, and (b) the net
effect of changes in deferred revenue and its related cost for our
digital entertainment segment. We believe that the segment adjusted
EBITDA helps to identify underlying trends in our operating
results, enhancing their understanding of the past performance and
future prospects.
- “Adjusted EBITDA” for our e-commerce segment, digital financial
services segment and other services segment represents operating
income (loss) before share-based compensation plus depreciation and
amortization expenses. We believe that the segment adjusted EBITDA
helps to identify underlying trends in our operating results,
enhancing their understanding of the past performance and future
prospects.
- “Total adjusted EBITDA” represents the sum of adjusted EBITDA
of all our segments combined, plus unallocated expenses. We believe
that the total adjusted EBITDA helps to identify underlying trends
in our operating results, enhancing their understanding of the past
performance and future prospects.
These non-GAAP financial measures have limitations as analytical
tools. None of the above financial measures should be considered in
isolation or construed as an alternative to revenue, net
loss/income, or any other measure of performance or as an indicator
of our operating performance. These non-GAAP financial measures
presented here may not be comparable to similarly titled measures
presented by other companies. Other companies may calculate
similarly titled measures differently, limiting their usefulness as
comparative measures to Sea’s data. We compensate for these
limitations by reconciling the non-GAAP financial measures to their
nearest U.S. GAAP financial measures, all of which should be
considered when evaluating our performance. We encourage you to
review our financial information in its entirety and not rely on
any single financial measure.
The tables below present selected financial information of our
reporting segments, the non-GAAP financial measures that are most
directly comparable to GAAP financial measures, and the related
reconciliations between the financial measures. Amounts are
expressed in thousands of US dollars (“$”) except for number of
shares & per share data.
For the Three Months ended
September 30, 2022
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
456,952
(586,148
)
(82,462
)
(80,711
)
(203,275
)
(495,644
)
Net effect of changes in deferred
revenue and its related cost
(177,874
)
-
-
-
-
(177,874
)
Depreciation and Amortization
10,801
90,413
14,716
4,181
-
120,111
Share-based compensation
-
-
-
-
195,755
195,755
Adjusted EBITDA
289,879
(495,735
)
(67,746
)
(76,530
)
(7,520
)
(357,652
)
For the Three Months ended
September 30, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
611,673
(741,399
)
(166,127
)
(33,913
)
(128,790
)
(458,556
)
Net effect of changes in deferred
revenue and its related cost
93,707
-
-
-
-
93,707
Depreciation and Amortization
9,759
57,586
7,090
1,993
-
76,428
Share-based compensation
-
-
-
-
122,967
122,967
Adjusted EBITDA
715,139
(683,813
)
(159,037
)
(31,920
)
(5,823
)
(165,454
)
(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,
2021
2022
$
$
Net loss
(570,981)
(569,275)
Share-based compensation
122,967
195,755
Net loss excluding share-based
compensation
(448,014)
(373,520)
Net (profit) loss attributable to
non-controlling interests
(2,038)
3,976
Net loss excluding share-based
compensation attributable to Sea Limited’s
ordinary shareholders
(450,052)
(369,544)
Weighted average shares used in loss per
share computation:
Basic and diluted
538,666,684
558,442,254
Basic and diluted loss per share based on
net loss excluding share-based compensation
attributable to Sea Limited’s ordinary
shareholders
(0.84)
(0.66)
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,
2021
2022
$
$
Revenue
Service revenue
Digital Entertainment
2,904,969
2,928,306
E-commerce and other services
3,081,952
5,232,040
Sales of goods
746,155
837,775
Total revenue
6,733,076
8,998,121
Cost of revenue
Cost of service
Digital Entertainment
(855,299)
(834,547)
E-commerce and other services
(2,590,475)
(3,911,891)
Cost of goods sold
(702,295)
(763,719)
Total cost of revenue
(4,148,069)
(5,510,157)
Gross profit
2,585,007
3,487,964
Operating income (expenses):
Other operating income
215,652
210,731
Sales and marketing expenses
(2,609,885)
(2,795,603)
General and administrative expenses
(786,698)
(1,423,878)
Research and development expenses
(545,061)
(1,132,306)
Impairment of goodwill
–
(177,280)
Total operating expenses
(3,725,992)
(5,318,336)
Operating loss
(1,140,985)
(1,830,372)
Interest income
25,158
61,179
Interest expense
(86,653)
(34,587)
Investment loss, net
(24,585)
(84,327)
Foreign exchange gain
24,951
9,737
Loss before income tax and share of
results of equity investees
(1,202,114)
(1,878,370)
Income tax expense
(227,256)
(211,856)
Share of results of equity investees
2,629
9,616
Net loss
(1,426,741)
(2,080,610)
Net (profit)/loss attributable to
non-controlling interests
(2,410)
2,391
Net loss attributable to Sea Limited’s
ordinary shareholders
(1,429,151)
(2,078,219)
Loss per share:
Basic and diluted
(2.72)
(3.73)
Weighted average shares used in loss per
share computation:
525,652,569
557,376,415
Basic and diluted
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of
December 31,
As of
September 30,
2021
2022
$
$
ASSETS
Current assets
Cash and cash equivalents
9,247,762
6,253,387
Restricted cash
1,551,635
1,336,839
Accounts receivable, net of allowance for
credit losses of $5,772 and $8,015 as of December
31, 2021 and September 30, 2022 respectively
388,308
235,932
Prepaid expenses and other assets
1,401,863
1,436,462
Loans receivable, net of allowance for
credit losses of $91,504 and $251,341, as of
December 31, 2021 and September 30, 2022
respectively
1,500,954
2,136,101
Inventories, net
117,499
122,391
Short-term investments
911,281
1,042,291
Amounts due from related parties
16,095
14,461
Total current assets
15,135,397
12,577,864
Non-current assets
Property and equipment, net
1,029,963
1,382,963
Operating lease right-of-use assets,
net
649,680
1,074,205
Intangible assets, net
52,517
74,114
Long-term investments
1,052,861
1,349,186
Prepaid expenses and other assets
124,521
236,228
Loans receivable, net of allowance for
credit losses of $6,172 and $2,012, as of
December 31, 2021 and September 30, 2022
respectively
28,964
22,804
Restricted cash
38,743
53,544
Deferred tax assets
103,755
103,386
Goodwill
539,624
407,994
Total non-current assets
3,620,628
4,704,424
Total assets
18,756,025
17,282,288
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of
December 31,
As of
September 30,
2021
2022
$
$
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
213,580
289,810
Accrued expenses and other payables
3,531,187
4,252,081
Advances from customers
244,574
242,685
Amounts due to related parties
74,738
370
Bank borrowings
100,000
49,000
Operating lease liabilities
186,494
269,858
Deferred revenue
2,644,463
1,763,837
Convertible notes (1)
–
31,208
Income tax payable
181,400
152,506
Total current liabilities
7,176,436
7,051,355
Non-current liabilities
Accrued expenses and other payables
76,234
94,750
Operating lease liabilities
491,313
861,664
Deferred revenue
104,826
161,357
Convertible notes (1)
3,475,708
4,148,004
Deferred tax liabilities
6,992
8,916
Unrecognized tax benefits
107
107
Total non-current liabilities
4,155,180
5,274,798
Total liabilities
11,331,616
12,326,153
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of
December 31,
As of
September 30,
2021
2022
$
$
Shareholders’ equity
Class A Ordinary shares
204
256
Class B Ordinary shares
74
23
Additional paid-in capital (1)
14,622,292
14,324,004
Accumulated other comprehensive loss
(28,519)
(267,223)
Statutory reserves
6,144
6,443
Accumulated deficit (1)
(7,201,498)
(9,166,292)
Total Sea Limited shareholders’
equity
7,398,697
4,897,211
Non-controlling interests
25,712
58,924
Total shareholders’ equity
7,424,409
4,956,135
Total liabilities and shareholders’
equity
18,756,025
17,282,288
(1)
The Company adopted ASU 2020-06 on January
1, 2022 using modified retrospective method and the cumulative
effects have been adjusted via retained earnings opening balance.
As a result of adoption, our Convertible Notes balances have
increased and additional paid-in capital and accumulated deficit
have decreased accordingly.
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands
of US dollars (“$”)
For the Nine Months
ended
September 30,
2021
2022
$
$
Net cash generated from (used in)
operating activities
513,473
(1,375,383)
Net cash used in investing activities
(1,991,763)
(2,480,331)
Net cash generated from financing
activities
7,015,596
913,967
Effect of foreign exchange rate changes on
cash, cash equivalents and restricted cash
(64,727)
(252,623)
Net increase (decrease) in cash, cash
equivalents and restricted cash
5,472,579
(3,194,370)
Cash, cash equivalents and restricted cash
at beginning of the period
7,053,393
10,838,140
Cash, cash equivalents and restricted cash
at end of the period
12,525,972
7,643,770
Net cash used in investing activities amounted to US$2.5 billion
for the nine months ended September 30, 2022. This was primarily
attributable to an increase in loans receivable of US$1.1 billion
and purchase of property and equipment of US$772 million to support
the growth of our businesses, as well as net placement of US$189
million into time deposits and liquid investment products for
better cash yield management. We aim to continue to maintain a net
cash position, after budgeting for the full retirement in cash of
the outstanding convertible bonds, and assuming no external
funding.
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operating Decision Maker (“CODM”) reviews the performance of each
segment based on revenue and certain key operating metrics of the
operations and uses these results for the purposes of allocating
resources to and evaluating the financial performance of each
segment. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
September 30, 2022
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
892,879
1,920,126
326,853
16,093
-
3,155,951
Operating income (loss)
456,952
(586,148
)
(82,462
)
(80,711
)
(203,275
)
(495,644
)
Non-operating loss, net
(9,173
)
Income tax expense
(65,279
)
Share of results of equity investees
821
Net loss
(569,275
)
For the Three Months ended
September 30, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
1,099,367
1,450,397
132,204
6,916
-
2,688,884
Operating income (loss)
611,673
(741,399
)
(166,127
)
(33,913
)
(128,790
)
(458,556
)
Non-operating loss, net
(12,816
)
Income tax expense
(101,040
)
Share of results of equity investees
1,431
Net loss
(570,981
)
(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/20221114006143/en/
For enquiries:
Investors / analysts: ir@sea.com
Media: Martin Reidy, media@sea.com
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