Singapore tech giant Sea’s Q1 losses widen to $422m, revenue up 2.4x

Photo: Sea Group

Singapore-headquartered e-commerce and gaming giant Sea Limited on Tuesday reported a net loss of $422 million during the first quarter of this year, widening its loss from $281 million a year earlier as spending on marketing and manpower grew.

The New York Stock Exchange-listed tech company booked revenue of $1.8 billion, up 147% year-on-year (y-o-y) from $715 million in the same quarter last year due to growth in its main business units Shopee and Garena.

Its e-commerce segment Shopee accounted for the largest share of the group’s revenue. The unit raked in $922.3 million in revenue, up from $263 million y-o-y, while gross merchandise value rose by 103% to $12.6 billion.

However, operating losses at the unit increased to $457 million in the January-March period this year, from $292 million in the same quarter last year.

Its digital payments business SeaMoney, which runs the ShopeePay wallet, also logged an operating loss of $157 million even as it booked $51 million in revenue.

Meanwhile, its online gaming segment Garena raked in $781 million in revenue, up from $370 million the year before, with the increase in active and paying user base as well as the continued success of its proprietary mobile game Free Fire. According to App Annie, it was the highest-grossing mobile game in Latin America, Southeast Asia and India for the first quarter of 2021.

The unit is profitable and produced $432 million in operating income, nearly two-and-a-half times that of Q1 2020.

Quarterly active users on Garena’s platforms stood at 648.8 million, up 61.4% y-o-y, while its quarterly paying users grew by 124% y-o-y to 79.8 million.

And despite mounting pressure to turn a profit, the group’s expenditure rose. Operating expenses doubled to $994 million in the first quarter of this year compared to $475 million in the same quarter last year as the company invested more in marketing and hiring. 

Sea, which counts Tencent as a major shareholder, has yet to turn a profit since it was listed on the NYSE in 2017, but this has not deterred investors hungry for tech stocks. Sea’s stock price, now worth nearly $219 per share, has risen fivefold since the start of 2020.

At a market capitalisation of $113.7 billion, the company founded in 2009 is worth more than fellow NYSE-listed Uber Technologies, which has a market cap of $88.9 billion, and Grab, which is planning to list on the NASDAQ in July at a valuation of $39.6 billion.

The spectacular performance of its stock has allowed it to shore up a war chest to fend off regional rivals Grab and the newly-merged GoTo. Last December, Sea raised $2.6 billion in a secondary stock offering with the intention of expanding its business “including potential strategic investments and acquisitions,” it said in a statement then.

During its earnings call on Tuesday, Sea group chief corporate officer Yanjun Wang downplayed the impact of the Gojek-Tokopedia merger, highlighting the NYSE-listed company’s hold over “three of the largest consumer internet opportunities in high-growth regions” – online gaming, e-commerce and financial services.

“We think we stand in the best position to recapitalize opportunities to build the largest consumer internet ecosystem in this region,” Wang said.

Already, Sea has been trying to prove its might in food delivery and financial services. Earlier this year, it introduced ShopeeFood in Indonesia and courted vendors with massive discounts.

In March, it launched its investment arm Sea Investment Capital with a $1 billion capital injection after acquiring Hong Kong-licensed investment management firm Composite Capital Management – a month after it bought Indonesian lender Bank Kesejahteraan Ekonomi with the aim of turning it into a digital bank.

In December, Sea won a coveted digital banking licence in Singapore, alongside a Grab-Singtel partnership.

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.

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.