Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sea Ltd (SE, Financial) reported a strong quarter with total GAAP revenue increasing by 31% year-on-year to $4.3 billion, driven by growth in e-commerce and digital financial services.
- Shopee achieved positive adjusted EBITDA in both Asia and Brazil, marking a significant improvement in profitability.
- SeaMoney's loan book grew by over 70% year-on-year, with a stable non-performing loan ratio, indicating strong demand and effective risk management.
- Garena's Free Fire bookings grew over 30% year-on-year, maintaining its position as one of the largest mobile games globally.
- The company has improved its monetization strategies, with Shopee's ad rate improving by more than 30 basis points year-on-year, driven by ad tech improvements and increased seller adoption.
Negative Points
- The competitive landscape in e-commerce remains challenging, with social commerce competitors increasing their take rates and cross-border competitors expanding their presence.
- Sales and marketing expenses increased by 13% quarter-on-quarter, slightly impacting the percentage of GMV, despite stable competition.
- The logistics investment, while necessary for growth, could impact EBITDA margins, although the company expects it to be manageable.
- There is uncertainty regarding the potential ceiling for Shopee's ad take rate, with management unable to provide a specific timeline for further improvements.
- Despite achieving profitability in Brazil, the market remains dynamic, and there may be fluctuations in margins as the company continues to invest in growth.
Q & A Highlights
Q: Could you provide insights into the competitive landscape in e-commerce for the fourth quarter and how it impacts growth projections?
A: Forrest Li, Chairman and CEO, stated that the competitive landscape remains stable, and Sea Ltd is maintaining its mid-20s GMV growth guidance. The impact from cross-border competitors is relatively small, as most sellers are local. Improvements in ad take rates are attributed to technical revamps and better traffic utilization, with continued potential for growth.
Q: How should we think about Shopee's growth entering 2025, considering economic conditions and competition?
A: Forrest Li mentioned that it's early to comment on 2025, but the focus will be on profitable growth. The competitive environment is stable in Southeast Asia and Brazil, with cross-border competition having limited impact. Shopee maintains a pricing advantage, and growth will be pursued in a profitable manner.
Q: What is the current percentage of orders handled by SPX in Asia and Brazil, and what are the key drivers for reducing logistics costs?
A: Forrest Li explained that SPX handles over 50% of orders in Asia and over 70% in Brazil. Cost reduction efforts include optimizing first-mile pickups, increasing automation in sorting centers, and improving last-mile delivery efficiency. These efforts contribute to better logistics management and cost savings.
Q: Can you comment on Free Fire's lifecycle and any new games expected soon?
A: Forrest Li expressed excitement about Free Fire's growth, emphasizing its user-centric approach and potential as an evergreen platform. The game continues to attract new users and improve engagement. Sea Ltd is also launching new games like Need for Speed Mobile and strengthening partnerships for future releases.
Q: What are the key priorities for 2025 across each segment, and what initiatives are being undertaken in the DFS segment?
A: Forrest Li highlighted a strong growth mindset for 2025, focusing on quality and profitable growth across all businesses. In the DFS segment, efforts include penetrating the Shopee user base, optimizing products, and expanding use cases beyond Shopee to drive growth and user engagement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
