Sea Ltd’s Latest Earnings: Solid Growth But Losses Remain High

Sea Ltd (NYSE: SE) is a technology company based out of Singapore. The company operates mainly in Southeast Asia and Taiwan markets. Its business activities span across three main areas – online gaming, e-commerce, and digital financial services.

Recently, the company reported its first-quarter results for 2020. Here are some highlights from the earnings announcement.

Key financials

We will start by looking at the key numbers for the quarter ended 31 March, 2020. Total adjusted revenue grew 57.9% year-on-year to US$578.8 million.

Total gross profit was US$206.8 million, up 424.1% year-on-year from US$39.5 million. Total adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) worsened slightly from a loss of US$32.0 million last year to a loss of US$69.9 million this quarter.

Overall, revenue continued to rise at a rapid pace while losses prevailed in the latest quarter.

Digital entertainment

Garena, Sea Ltd’s gaming company, delivered a solid performance with growth across its key metrics. Here are some numbers.

Adjusted revenue improved by 30.3% year-on-year to US$512.4 million. Similarly, adjusted EBITDA jumped 32.2% year-on-year to US$298.4 million. Adjusted EBITDA grew faster than adjusted revenue mainly because of margin expansion, which increased from 57.4% last year to 58.2% this quarter.

Operational wise, quarterly active users (QAUs) reached 402.1 million, an increase of 48.0% year-on-year. Paying users now account for 8.9% of QAUs, up from 7.6% in the same period last year. Also worth mentioning here is that average revenue per user (ARPU) expanded from US$1.30 to US$1.40.

Overall, it was a solid performance for the digital entertainment business.


Similar to Gerena, the e-commerce segment operating under Shopee delivered outstanding growth during the quarter.

Adjusted revenue was US$314.0 million, up 110.5% year-on-year from US$149.2 million. Out of this, marketplace revenue grew 132.1% year-on-year to US$ 236.7 million.

This was thanks to the increase in gross merchandise value (GMV), which was up 74.3% year-on-year, and take rate – adjusted revenue as a percentage of total GMV increased to 5.1%, up from 3.8% last year.

Unlike Garena, Shopee reported a loss for the quarter. Adjusted EBITDA for the quarter was US$(260.0) million, higher than the US$(235.3) million reported in the first quarter of 2019. Adjusted EBITDA remained in negative territory as Shopee continued to invest and grow its user base.

Key takeaway

In sum, Sea Ltd reported solid top line growth across all segments.

Looking ahead, Garena is well-positioned to sustain profits as it continues its monetisation efforts. Shopee, on the other hand, will remain in the red for the foreseeable future as it invests aggressively to attract more shoppers.