Sea Ltd (SE) Q3 2024 Earnings Call Highlights: Record Revenue and Profitability Surge

GuruFocus News
4 min read

In This Article:

  • Total GAAP Revenue: $4.3 billion, up 31% year-on-year.

  • Total Adjusted EBITDA: $521 million, compared to $35 million in Q3 2023.

  • E-commerce GAAP Revenue: $3.2 billion, with marketplace revenue of $2.8 billion, up 43% year-on-year.

  • E-commerce Adjusted EBITDA: $34 million, compared to a loss of $336 million in Q3 2023.

  • Digital Financial Services GAAP Revenue: $616 million, up 38% year-on-year.

  • Digital Financial Services Adjusted EBITDA: $188 million, up 13% year-on-year.

  • Consumer and SME Loans Principal Outstanding: $4.6 billion, up 73% year-on-year.

  • Digital Entertainment Bookings: $557 million, up 24% year-on-year.

  • Net Income: $153 million, compared to a net loss of $144 million in Q3 2023.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Sea Ltd (NYSE:SE) reported a strong quarter with total GAAP revenue increasing by 31% year-on-year to $4.3 billion, driven by growth in e-commerce and digital financial services.

  • Shopee achieved positive adjusted EBITDA in both Asia and Brazil, marking a significant improvement in profitability.

  • SeaMoney's loan book grew by over 70% year-on-year, with a stable non-performing loan ratio, indicating strong demand and effective risk management.

  • Garena's Free Fire bookings grew over 30% year-on-year, maintaining its position as one of the largest mobile games globally.

  • The company has improved its monetization strategies, with Shopee's ad rate improving by more than 30 basis points year-on-year, driven by ad tech improvements and increased seller adoption.

Negative Points

  • The competitive landscape in e-commerce remains challenging, with social commerce competitors increasing their take rates and cross-border competitors expanding their presence.

  • Sales and marketing expenses increased by 13% quarter-on-quarter, slightly impacting the percentage of GMV, despite stable competition.

  • The logistics investment, while necessary for growth, could impact EBITDA margins, although the company expects it to be manageable.

  • There is uncertainty regarding the potential ceiling for Shopee's ad take rate, with management unable to provide a specific timeline for further improvements.

  • Despite achieving profitability in Brazil, the market remains dynamic, and there may be fluctuations in margins as the company continues to invest in growth.

Q & A Highlights

Q: Could you provide insights into the competitive landscape in e-commerce for the fourth quarter and how it impacts growth projections? A: Forrest Li, Chairman and CEO, stated that the competitive landscape remains stable, and Sea Ltd is maintaining its mid-20s GMV growth guidance. The impact from cross-border competitors is relatively small, as most sellers are local. Improvements in ad take rates are attributed to technical revamps and better traffic utilization, with continued potential for growth.

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