Tech giant Sea posts Ebitda loss of $490 million for third quarter

The company also said it would not provide a 2023 forecast for its businesses, citing ongoing macroeconomic uncertainties. PHOTO: SEA LIMITED

SINGAPORE - Technology giant Sea has sunk deeper into the red, posting an adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) loss of US$358 million (S$490 million) for its third quarter ending September.

The company also said it would not provide a 2023 forecast for its businesses, citing ongoing macroeconomic uncertainties.

The group’s adjusted Ebitda loss for the third quarter surged 116 per cent compared with its US$166 million loss in the same period a year ago. Compared with the previous quarter, however, losses narrowed by about 29 per cent.

Revenues for the New-York listed company increased by about 17 per cent year on year to hit US$3.2 billion in the third quarter. It also saw a net loss of US$569 million, flat year on year but improving by about 40 per cent quarter on quarter.

In an earnings call on Tuesday, Sea’s chairman and group chief executive Forrest Li said the company’s focus on achieving self-sufficiency as soon as possible is the right strategy, even if it may result in poor growth in the interim.

Mr Li said: “We remain highly confident about the long-term growth prospects of our businesses and the market. Once we achieve self-sufficiency, we will be in a position to decide to re-accelerate growth again, in a much more efficient and long-term sustainable manner.”

He added that the target is for its e-commerce arm Shopee to break even on its adjusted Ebitda by the end of 2023.

Adjusted Ebitda losses for Shopee narrowed significantly in the third quarter to US$496 million, improving by 28 per cent year on year.

The improvement in Shopee’s adjusted Ebitda was driven by strong topline growth as well as improvement in cost efficiencies, said Sea.

In recent months, Sea has implemented a slew of cost-cutting measures, including workforce layoffs and curbed company expenses. Its top management will also forgo salaries to help the company reach self-sufficiency.

Shopee has gone through at least three rounds of layoffs in 2022, with the latest starting on Monday.

The recent cuts in headcount were related mostly to certain initiatives being given less importance, said Sea’s group chief corporate officer Wang Yanjun.

She added that the savings from these actions, among others, may become more visible in the next few quarters.

Meanwhile, adjusted Ebitda for Sea’s digital entertainment arm, Garena, fell to US$290 million for the third quarter, down from US$334 million in the previous quarter. It was also down by about 60 per cent year on year.

Digital financial services arm SeaMoney recorded an adjusted Ebitda loss of US$68 million, improving by about 57 per cent year on year and 40 per cent from the previous quarter.

Sea said: “The improvement was predominantly driven by more targeted sales and marketing spending for the mobile wallet business, and our credit business maintaining its healthy profitability while generating cash for the group.”

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