Singapore’s Sea Ltd posted a net profit of $153.3 million in July-September (Q3) 2024, compared with a loss of $144 million in the same period last year, as all of its businesses turned profitable, according to quarterly results announced Tuesday.
This marks its second consecutive quarterly profit after the company booked $79.9 million in net profit in Q2 this year, compared with a net loss of $23 million in Q1.
The NYSE-listed group’s GAAP revenue increased 31% year-on-year to $4.3 billion in Q3, according to the announcement. On a sequential basis, revenue was up by about 13% from $3.8 billion in Q2 2024.
The group’s adjusted EBITDA stood at $521.3 million in the July-September quarter compared to $35.3 million in the year-ago period. It also increased by about 16% from the previous quarter’s $448.5 million.
Its gross profit stood at $1.9 billion, up 29% year-on-year and about 19% from the previous quarter. As of September 30, 2024, the group had cash and cash equivalents of $9.9 billion, reflecting a net increase of $929.2 million since June 30, 2024. These included $429 million of cash proceeds received in Q3 upon settlement of capped calls for the 1% convertible senior notes due 2024.
“I am very proud that we also improved our profitability while getting back to high growth. This quarter, Shopee achieved positive adjusted EBITDA, in both Asia and Brazil. As we continue to focus on delivering growth, we expect Shopee to remain profitable going forward,” said Forrest Li, Sea’s CEO and Chairman.
The group’s operating expenses increased by 5.7% in Q3 2024 to $1.66 million, from $1.57 million a year earlier, as the group’s general and administrative expenses rose 12.1% to $0.31 million.
Sea Ltd’s solid growth in Q3 2024 came on the back of a strong financial performance by all its three businesses — e-commerce, financial services, and digital entertainment — that are now independently profitable.
Sea Ltd’s e-commerce arm, Shopee, continued to be the largest revenue driver for the group, generating $3.2 billion in GAAP revenue in Q3 2024, a 43% year-on-year increase.
The revenue rise was on the back of strong gross merchandise value (GMV) for the quarter, which registered at $25.1 billion, up 25% from a year earlier and nearly 8% from the previous quarter.
Shopee’s adjusted EBITDA also turned positive in Q3 2024 to $34.4 million from a loss of $346 million in Q3 2023. In the previous quarter, Shopee reported an EBITDA loss of $9.2 million.
Asia markets recorded positive adjusted EBITDA of $30.9 million compared to a negative $306.2 million for the third quarter of 2023. Other markets achieved positive adjusted EBITDA of $3.5 million from a negative $40.3 million a year earlier.
Sea’s digital financial services also posted strong performance in the July-September quarter, with GAAP revenue growing 38% year-on-year to $615.7 million. In Q2, GAAP revenue was $519.3 million.
Adjusted EBITDA also stood at $187.9 million, a 13% increase from the same period last year.
Digital financial services revenue and operating income are primarily attributed to the consumer and SME credit businesses. As of September 30, 2024, consumer and SME loans principal outstanding was $4.6 billion, up 73.2% year-on-year.
This consists of $3.8 billion on-book and $0.8 billion off-book loans principal outstanding.
For Garena, the company’s digital entertainment arm, bookings increased 24% year-on-year to $556.5 million. Bookings reflect the estimated cash spent by users on gaming.
GAAP revenue for the digital entertainment services stood at $497.8 million, down 17% from a year earlier but up 14% from the previous quarter. Adjusted EBITDA, however, increased 34% year-on-year to $314.4 million.
Garena had 628.5 million quarterly active users in Q3 2024, up 15.5% from a year earlier, while its quarterly paying users increased 23.9% year-on-year to 50.2 million.
“Shopee is on track to deliver our full-year guidance of mid-twenties year-on-year GMV growth. SeaMoney’s loan book grew by over 70% year-on-year this quarter while maintaining a stable NPL ratio. And for Garena, we now expect Free Fire’s full-year bookings to grow over 30% year-on-year,” Li said.
