Sea posts Q2 profit of US$331 million
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Sea has started and will continue to ramp up its investments in growing the e-commerce business across its markets, said chairman and CEO Forrest Li.
PHOTO: BT FILE
Benjamin Cher
SINGAPORE - New York-listed Sea has reported a third consecutive profitable quarter, posting a US$331 million (S$449 million) profit for the second quarter of 2023 ended June 30, compared with a loss a year prior.
The Singapore-based tech giant said its revenue for the quarter rose 5.2 per cent to US$3.1 billion in the second quarter of 2023 from US$2.9 billion a year ago. Revenue growth was driven by the e-commerce and other services segment which grew 32.3 per cent from US$1.8 billion in the second quarter of 2022 to US$2.3 billion in the second quarter of 2023.
The increased revenue contribution from the e-commerce and other services segment was due to improved monetisation in the e-commerce business and growth of the credit business. Within the e-commerce segment, core marketplace revenue, consisting of transactions and advertising fees, rose 37.6 per cent year on year to US$1.2 billion due to increased commission rates and uptake of advertising by sellers. Value-added services revenue within the segment also grew 11.3 per cent year on year to US$625.2 million.
The digital entertainment segment recorded a 41.2 per cent drop in revenue to US$529.4 million in the second quarter from US$900.3 million a year before. This was attributed to moderation in user engagement and monetisation.
The last revenue segment, the sale of goods, recorded a 15 per cent drop to US$243.8 million in the second quarter from US$286.7 million the year before.
“In the past couple of quarters, we have not only achieved self-sufficiency, but also demonstrated the profitability of our model and our ability to manage fast and significant shifts in operational focus as we see fit,” said Mr Forrest Li, chairman and chief executive officer of Sea.
Cost of revenue fell 11.2 per cent to US$1.6 billion in the second quarter of 2023 from US$1.9 billion year on year. All segments recorded a fall in cost of revenue, with digital entertainment recording the biggest fall of 38.3 per cent to US$160.7 million from US$260.5 million.
Cost of revenue for e-commerce and other services edged down 5 per cent to US$1.3 billion due to improved gross profit margins in the e-commerce and digital services business. This was driven by increased monetisation and greater cost efficiencies.
Sales and marketing expenses have continued to be slashed, with digital financial services recording the biggest percentage drop of 88.2 per cent to US$19.2 million in the second quarter from US$162.5 million the year before. Digital entertainment saw expenses slashed 69.4 per cent to US$26.6 million in the second quarter from US$87.1 million the year before, while e-commerce’s sales and marketing expenses were cut 35.9 per cent from US$674.1 million in the second quarter of 2022 to US$432 million in the second quarter of 2023.
Mr Li noted that Sea is looking to tap recent developments in user engagement through live streaming, short-form videos and affiliate programmes. These developments would offer opportunities to grow and expand its addressable market. “Given these positive developments and trends, we have started, and will continue, to ramp up our investments in growing the e-commerce business across our markets,” he said.
Sea is on a stronger footing due to past efforts and the efficiency gains that have allowed the company to enhance its ability to invest in growth.
“As we re-accelerate investments in growth, our strategic focus to build cost leadership and continually improve user experience remains key to our long-term success.” said Mr Li. THE BUSINESS TIMES
