NYSE-listed Sea Limited reported a year-on-year revenue growth of 23% during April-May 2024 (Q2) at $3.8 billion, beating analysts’ estimate of $3.71 billion. Revenue was up 2.7% compared with the previous quarter, according to quarterly results announced by the company on Tuesday.
The company booked a net income of $79.9 million during the reporting quarter, compared with a net loss of $23 million in the previous quarter. However, it declined 75% from $331 million in the year-ago period.
Sea’s adjusted EBITDA fell by 12% to $448.5 million in Q2 2024 from $510 million in Q2 2023, although it was 11.8% higher compared with the previous quarter.
Its gross profit stood at $1.6 billion, up 9.2% year-on-year. As of June 30, 2024, the company had cash, cash equivalents, short-term investments, and other treasury assets totalling $9 billion, reflecting a net increase of $364.7 million since March 31, 2024.
“With the strong results delivered in the first half and our outlook for the rest of the year, we expect that Shopee will become adjusted EBITDA positive from the third quarter. We are also revising up our guidance for Shopee’s 2024 full-year GMV growth to mid-20%,” said Forrest Li, Sea’s CEO and chairman.
The group saw an uptick in certain expenses during the quarter. This includes sales and marketing expenses that rose by 57% to $774.7 million, as well as research and development expenses that grew 5.4% to $298.4 million in Q2 2024.
Shopee, Garena put up strong show
Sea’s e-commerce arm, Shopee, remained the largest revenue driver, generating $2.8 billion in GAAP revenue in Q2 2024, a 33.7% year-on-year increase. The gross merchandise value (GMV) for the quarter was $23.3 billion, up 29.1% YoY.
Despite this growth, Shopee’s adjusted EBITDA turned negative, reporting a loss of $9.2 million, compared to a profit of $150.3 million in Q2 2023. However, this represents an improvement from the $21.7 million loss reported in the previous quarter.
For Garena, the company reported $536.8 million in bookings, a 21.1% year-on-year increase. Bookings reflect the estimated cash spent by users on gaming. GAAP revenue for the segment was $435.6 million, down from $529.4 million in the second quarter of 2023. However, adjusted EBITDA improved to $302.8 million, a 26.5% increase YoY.
“Garena delivered a strong quarter, with more than 20% year-on-year growth in bookings, mainly contributed by Free Fire,” said Li, adding that every single day throughout Q2, Free Fire had more than 100 million daily active players.
Sea also plans to launch a new game title, Need for Speed Mobile, in Taiwan, Hong Kong, and Macau later this year, in collaboration with Tencent and Electronic Arts.
For digital financial services, Sea reported a GAAP revenue of $519.3 million, a 21.4% increase YoY. Adjusted EBITDA also grew by 20.2% YoY, reaching $164.7 million. This growth is mainly driven by the consumer and SME credit businesses.
As of June 30, 2024, the principal outstanding for consumer and SME loans totalled $3.5 billion, marking a 39.5% increase from the previous year. This amount includes $2.9 billion in on-book loans and $0.7 billion in off-book loans.
SeaMoney is effectively deepening credit product penetration on and off Shopee, leveraging Shopee’s large user base for cost-efficient customer acquisition.
In Q2, SeaMoney added over 4 million first-time borrowers, doubling last year’s number. The company also expanded off-Shopee credit use in Indonesia, partnering with 1,000+ electronics stores to offer instant SPayLater loans for mobile phone sales. SeaMoney continues to explore more credit use cases across its markets.
“Both SeaMoney and Garena demonstrated promising growth. Garena has optimised its operating costs to maximize mobile gaming potential, particularly with Free Fire. Likewise, SeaMoney is effectively leveraging Shopee’s large user base to scale and capture a broader market efficiently,” said Jeffrey Bahar, Chief Operating Officer at Yamada Consulting & Spire.
