Sea Pledges E-Commerce Growth While Gaming Arm Faces Decline
(Bloomberg) -- Sea Ltd. said it expects e-commerce revenue growth to continue unabated as it expands in Latin America, trying to reassure investors after losing half its market value in a matter of months.
The Singapore-based company expects e-commerce sales, its main source of revenue, to rise to $8.9 billion to $9.1 billion in 2022 from $5.1 billion in 2021, according to its statement on Tuesday. Bookings at Sea's other major business, the gaming division which is facing headwinds in India, are set to decline for the first time ever.
Total revenue in the fourth quarter more than doubled to $3.2 billion. Net loss widened to $617.6 million from $523.6 million as Sea spent more to gain market share in new geographies.
Key Insights
- Sea is trying to cement its early success in Brazil, where it launched its online shopping business in 2019. Still, the company is facing intense competition from Latin American e-commerce giant MercadoLibre Inc. Meanwhile, the online-shopping arm is pulling out of France, retreating from a major market just months after launching its maiden foray into Europe. The unit, Shopee, will focus on Southeast Asia, Taiwan and Brazil, Sea said.
- Business at Shopee surged during the pandemic, with 2021 sales more than doubling as shoppers moved online. Sea went public in 2017 and quickly became the most valuable company in Southeast Asia. It briefly surrendered that position last week amid a broader tech selloff and concerns about India's abrupt ban on its most popular mobile gaming title, Free Fire.
- Gross merchandise value, the sum of transactions across its e-commerce platforms, rose 77% to $62.5 billion last year.
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- Sea forecast $2.9 billion to $3.1 billion in bookings at its digital gaming arm, saying online activity will moderate as economies reopen after the pandemic. That compares with last year's bookings of $4.6 billion.
- “We have taken into consideration” the market opening and “unexpected government actions” in India, Yanjun Wang, Sea's group chief corporate officer, said on a conference call. “That means we are giving back some of the gains we made partially during Covid and with additional discounts to reflect the situation in India, which is highly uncertain. At this point, given the uncertainty we are facing, it's probably more art than science for us.”
- For the first time, Sea gave a revenue forecast for financial-services arm SeaMoney, projecting $1.1 billion to $1.3 billion for this year.
- Fourth-quarter revenue from Shopee, Sea's e-commerce unit, rose 89% to $1.6 billion.
- Revenue from Garena, Sea's digital entertainment unit, doubled to $1.4 billion.
- Total payment volume for Sea's mobile wallet rose 70% to $5 billion.
- Sales and marketing expenses climbed 83% to $1.2 billion.
Market Reaction
- Shares of Sea declined 8% in New York trading before markets opened. They've lost 60% since an October peak.
©2022 Bloomberg L.P.
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