Singapore’s Sea extends losses on the back of surge in e-commerce spending

Sea founder Forrest Li. Photographer: Michael Nagle/Bloomberg

Sea Ltd., the parent of gaming company Garena, reported that its loss more than doubled in the third quarter on surging marketing costs at mobile-shopping unit Shopee.

In its first earnings announcement as a public enterprise, the Singapore-based gaming and e-commerce company said its net loss was $132.8 million, compared with $65.6 million a year earlier and the $156.6 million loss projected, on average, in a survey of three analysts. Total consolidated revenue rose 3.9 percent to $94.1 million in the period through Sept. 30, in line with predictions.

Founder and Chief Executive Officer Forrest Li is relying on a steady flow of revenue from Sea’s online gaming business to fund investments in e-commerce and digital payments. While concerns about profitability loom, the company’s initial public offering in New York raised about $884 million after Sea pitched itself as an emerging growth company with operations in Southeast Asia and Taiwan.

“The market share does turn into monetization,” Sea President Nick Nash said in a conference call, adding that Shopee is now the largest e-commerce firm in Taiwan and Indonesia in terms of daily orders. “We want to grow this orchard in a patient way. There is no point trying to grow a Christmas tree in three months.”

Sea’s American depositary receipts fell 1.9 percent in extended trading. They fell 4.6 percent to $14.78 at the close in New York Tuesday, before the results were released. The share price has fluctuated since the public debut. After selling stock in the IPO at $15 apiece, it jumped 8.4 percent on the first day of trading, before falling as low as $13.73.

Sea said sales and marketing expenses more than doubled from a year earlier to $131.6 million, with 78 percent of that devoted to Shopee. Sea is forecasting Shopee’s gross merchandise value to reach $3.8 billion to $4 billion in 2017. Shopee’s third-quarter GMV was $1.1 billion, up from $333.3 million a year earlier.

“As GMV nears $4 billion and possibly doubles again next year and as monetization efforts expand to the rest of its markets of operations, it should begin turning closer to profitability in the e-commerce business,” said Matthew Kanterman, a Bloomberg Intelligence analyst.

About 85 percent of Sea’s total revenue during the third quarter came from the games unit, Garena, with the rest coming from the e-commerce and digital payments business. Sea had $581.5 million in cash and cash equivalents at the end of September, which doesn’t include proceeds from the IPO held in October.

Bloomberg

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.