Singapore-based consumer internet company SEA Group announced Tuesday that the group’s revenue rose 17.4 percent year on year to $3.2 billion in the third quarter ended September 30, 2022, as its e-commerce revenue surged.
SEA said in a statement the group’s e-commerce revenue for the third quarter jumped 32.4 percent year on year to $1.9 billion.
Its total net loss stood at $569.3 million, flat year-on-year, but improving by 38.9 percent quarter-on-quarter.
Meanwhile, its total adjusted EBITDA losses stood at $357.7 million, as compared to $165.5 million a year ago. It has improved 29.4 percent quarter on quarter.
The group’s E-commerce revenue included $1.6 billion of marketplace revenue, which consists of core marketplace revenue and value-added services revenue.
Core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was up 54.1 percent year-on-year to $1 billion.
Faster growth of core marketplace revenue was one of the factors contributing to the strong improvement in Shopee’s profitability in the quarter.
Value-added services revenue, mainly consisting of revenues related to logistics services, was up 20.3 percent year-on-year to $600 million.
Gross merchandise value was $19.1 billion for the quarter, increasing by 13.5 percent year-on-year.
Adjusted EBITDA losses for Shopee overall was $495.7 million, improving by 27.5 percent year-on-year and 23.5 percent quarter-on-quarter.
The adjusted EBITDA improvement was driven by strong topline growth, particularly in core marketplace revenue, and meaningful efficiency improvements in operating costs across our markets.
This was partially offset by severance and early lease termination related costs related to Shopee and increases in headquarter (HQ) costs for Shopee such as shared research and development (R&D) staffing and shared server hosting expenses.
SEA expects savings on shared costs to start to show in the following quarters as the group began more focused efforts on optimizing HQ costs, including R&D costs, from the later part of the third quarter.
Asia markets recorded adjusted EBITDA losses of $216.8 million in the quarter, improving by 31.4 percent quarter-on-quarter as a result of profitability improvements across all markets in the region.
During the quarter, its Asia markets combined recorded positive contribution margin, in line with its previously shared expectations.
Specifically, most of the markets within Asia, including its largest market Indonesia, achieved positive contribution margin, and Malaysia and Taiwan recorded positive adjusted EBITDA for the quarter.
“Given the significant uncertainties in the macro environment, we have entirely shifted our mindset and focus from growth to achieving self-sufficiency and profitability as soon as possible, without relying on any external funding,” said Forrest Li, Sea’s Chairman and Group Chief Executive Officer.
“We are adapting quickly to the changing climate. All our efforts are directed to ensure that Sea not only survives the macro storms but emerges stronger, more efficient, and more resilient – and as a long-term winner in our markets,
“This positions us to continue capturing the long-term potential of our businesses and markets, and to deliver strong and sustained shareholder returns over time,” he added.
According to him, over the last quarter, the firm took decisive actions to improve margins, and set clear goals and priorities for the quarters to come.
“We remain highly confident about the compelling long- term growth prospects of our businesses and markets,” he said.
Given rising macro uncertainties, and with reopening trends having an ongoing effect on the business, the firm is revising the guidance for digital entertainment.
It now expects bookings for the full year of 2022 to be between $2.6 billion and $2.8 billion, as compared to the previous guidance of between $2.9 billion to $3.1 billion.
In addition, given the ongoing macro uncertainties, the group currently does not intend to provide any guidance for 2023 for its businesses.
