Sea lifts outlook for e-commerce and gaming as sales soar

Revenue of digital entertainment business seen to exceed US$3.1b and e-commerce, US$2.3b

Sea chief executive officer Forrest Li's net worth is estimated at US$9.8 billion (S$13 billion), according to the Bloomberg Billionaries Index. ST FILE PHOTO
Sea chief executive officer Forrest Li's net worth is estimated at US$9.8 billion (S$13 billion), according to the Bloomberg Billionaries Index. ST FILE PHOTO

NEW YORK • Sea boosted its forecasts for its two key businesses as it reported a surge in revenue, a sign that the Singapore-based company is benefiting from strong demand for gaming and e-commerce in the coronavirus era.

The firm's revenue doubled to US$1.2 billion (S$1.6 billion), while its net loss doubled to US$419.9 million. It now forecasts its digital entertainment business will surpass revenue of US$3.1 billion, compared with an earlier estimate of as much as US$2 billion.

Its e-commerce business is now expected to exceed US$2.3 billion, up from as much as US$1.8 billion.

Sea has emerged as a stock-market sensation since its initial public offering in 2017, a wager the money-losing company can establish itself as a leader in e-commerce and gaming in South-east Asia. Its shares have surged about 1,500 per cent since the start of last year, pushing its market value to US$87 billion. The rally has minted at least three billionaires at the company.

Chief executive officer Forrest Li's net worth is estimated at US$9.8 billion, according to the Bloomberg Billionaries Index.

Revenue at the group's game developer Garena increased 73 per cent to US$569 million, reflecting sustained popularity of mobile battle royale game Free Fire. Revenue from e-commerce platform Shopee and other services climbed 113 per cent to US$489.5 million.

Sea's total sales and marketing expenses in the third quarter increased 87 per cent to US$471 million.

Starting with its earnings release for the third quarter, Sea is discontinuing reporting adjusted revenues and making other changes to its accounting methodology in response to Securities & Exchange Commission inquiries.

Since its initial public offering in New York in 2017, Sea had been encouraging investors and analysts to focus on financial metrics that are not in compliance with the generally accepted accounting principles, or GAAP. Chief corporate officer Yanjun Wang said in August that for Garena, the company will provide another operating metric of "bookings", which is GAAP revenue plus changes in deferred revenue.

Sea's digital payments and financial services unit, SeaMoney, gained traffic in the third quarter as people spent more time and money online. Its total payment volume for the quarter exceeded US$2.1 billion, from US$1.6 billion during the June quarter.

Sea's US depositary receipts closed down 1.8 per cent at US$178.22 in New York on Monday. They have gained 343 per cent so far this year, boosting its market value to US$87 billion.

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A version of this article appeared in the print edition of The Straits Times on November 18, 2020, with the headline 'Sea lifts outlook for e-commerce and gaming as sales soar'. Print Edition | Subscribe