Technology firm Sea Group – which owns e-commerce platform Shopee and game developer Garena – logged net losses of US$425.6 million ($571.90 million) in 3QFY2020 ended Sep 30, up 106.3% from the US$206.1 million in losses posted a year ago.
On a fully diluted basis, this translates to losses per share of US$0.69, up 81.6% from US$0.38 in 3QFY2019.
In this time, the NYSE-listed, Singapore-based firm reported a total adjusted EBITDA (earnings before interest, taxes, depreciation and ammortisation) of US$120.4 million a 98.7% surge from the US$30.8 million in losses reported in the previous year.
Total adjusted revenue for the year was up 98.7% to US$1.2 billion thanks to improved performance across its segments.
Its digital entertainment segment, for one, reported a total revenue of US$569.0 million up 72.9% from the year before. This follows a 78.3% year-on-year increase in its quarterly active users to 572.4 million, as well as a 123.6% surge to quarterly paying users to 65.3 million.
“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 Annie,” the Sea Group notes in its results announcement.
Meanwhile, its bookings were up by 109.5% to US$944.7 million, with bookings per user averaging at US1.7
Overall, the segment registered an adjusted EBITDA of US$584.5 million – up 119.8% from the previous year.
This represents 61.9% of bookings for 3QFY2020, compared to 59.0% in 3QFY2019, the company notes.
Its other segment – the e-commerce platform – saw a significant 173.3% increase in revenue to US$618.7 million.
This incorporates takings of US$467.1 million from its marketplace and another US$151.6 million from its products.
The increase in the segment's overall revenue is the result of a 130.7% year-on-year increase in its gross orders to 741.6 million.
Sea Group notes this comes from a higher usage of Shopee, with the platform being the second most downloaded app globally in the shopping category in 3Q2020, according to findings from App Annie.
App Annie also found that the platform was number 1 in the shopping category in terms of downloads, average monthly active users and total time spent in app, on Android.
To this end, the platform reported a total adjusted EBITDA loss of US$301.6 million, compared to the US$253.7 million in losses in 3QFY2019.
Its final segment - SeaMoney, its digital financial services arm – saw strong growth with mobile wallet total payment volume exceeding US$2.1 billion in 3QFY2020.
This translates to over 17.8 million paying users, the company notes.
“Integration of mobile wallet services with Shopee deepened further across our markets, as more users recognised the clear benefit and convenience of using our mobile wallet services to pay,” it adds.
With the stronger total revenue came a 97.7% increase in Sea Group’s cost of sales to US$804.6 million.
The increase spreads across its segments – with that for digital entertainment rising in tandem with its higher revenue. Meanwhile its higher cost of sales from e-commerce and other services comes from the higher expenses such as from logistics and staff compensation.
As Sep 30, Sea Group’s cash and cash equivalents stood at US3.5 billion, up from US$3.2 billion at end 3QFY2019.
Looking ahead, the company is raising guidance for both digital entertainment and e-commerce for FY2020.
For digital entertainment, it’s looking at bookings exceeding by US$3.1 billion for FY2019, while sales from its e-commerce is slated to come in above US$2.3 billion.
