UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission File Number: 001-38237
Sea Limited
1 Fusionopolis Place, #17-10, Galaxis
Singapore 138522
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form
40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
EXHIBIT INDEX
Exhibit 99.1 — Press Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
SEA LIMITED |
|
|
|
|
By: |
/s/ Forrest Xiaodong Li |
|
Name: |
Forrest Xiaodong Li |
|
Title: |
Chairman and Group Chief Executive Officer |
Date: August 15, 2023
Exhibit 99.1
Sea Limited Reports Second Quarter 2023 Results
Singapore, August 15, 2023 –
Sea Limited (NYSE: SE) (“Sea” or the “Company”) today announced its financial results for the second quarter
ended June 30, 2023.
“In the second quarter of 2023, we delivered
strong results, building upon many of the key initiatives we shared previously,” said Forrest Li, Sea’s Chairman and Group
Chief Executive Officer. “In the past couple of quarters, we have not only achieved self-sufficiency, but also demonstrated the
profitability of our model and our ability to manage fast and significant shifts in operational focus as we see fit. Given this, we have
strengthened our execution capabilities and increased the stickiness of our ecosystem. We believe we are now on firmer footing to better
serve our communities.”
“Meanwhile, the economies of our region
have remained resilient, and we are excited to see recent ecosystem developments in the growth of diversified user engagement through
live streaming, short form videos, and affiliate programs. Such developments offer us further opportunities to grow and expand our long-term
profitable addressable market. Given these positive developments and trends, we have started, and will continue, to ramp up our investments
in growing the e-commerce business across our markets. We believe that the efficiency gains and stronger footing we have achieved through
our past efforts have further strengthened our ability to invest efficiently in growth. As we reaccelerate investments in growth, our
strategic focus to build cost leadership and continually improve user experience remains key to our long-term success.”
Second Quarter 2023 Highlights
| o | Total GAAP revenue was US$3.1 billion,
up 5.2% year-on-year. |
| o | Total gross profit was US$1.5 billion,
up 33.1% year-on-year. |
| o | Total net income was US$331.0 million,
as compared to total net loss of US$(931.2) million for the second quarter of 2022. |
| o | Total adjusted EBITDA1 was US$510.0 million, as compared to a loss of US$(506.3) million
for the second quarter of 2022. |
| o | As of June 30, 2023, cash, cash equivalents,
short-term investments, and other treasury investments2 were US$7.7 billion, representing
a net increase of US$477.4 million from March 31, 2023. |
| o | GAAP revenue was US$2.1 billion, up 20.6%
year-on-year. Based on constant currency assumptions3, GAAP revenue was up 24.4%
year-on-year. |
| o | GAAP revenue included US$1.9 billion of
GAAP marketplace revenue, which consists of core marketplace revenue and value-added services
revenue and increased by 27.5% year-on-year. |
| · | Core
marketplace revenue, mainly consisting of transaction-based fees and advertising revenues,
was up 37.6% year-on-year and 7.4% quarter-on-quarter to US$1.2 billion as a result of both
increases in advertisement uptake by sellers on our platform and commission rates. |
| · | Value-added
services revenue (“VAS revenue”), mainly consisting of revenues related to logistics
services, was up 11.3% year-on-year to US$625.2 million. VAS revenue declined 6.6% quarter-on-quarter
as we began to reaccelerate growth during the quarter and increased investments in shipping
subsidies programs. |
| o | Adjusted EBITDA1 was US$150.3
million, as compared to a loss of US$(648.1) million for the second quarter of 2022. |
| · | Asia
markets recorded adjusted EBITDA of US$204.1 million, as compared to a loss of US$(316.1)
million for the second quarter of 2022. |
| · | Other
markets recorded adjusted EBITDA of US$(53.7) million, as compared to a loss of US$(332.0)
million for the second quarter of 2022. |
| · | In
Brazil, unit economics continued to improve, with contribution margin loss per order improving
83.0% year-on-year to reach US$0.24 for the quarter. |
| o | Gross orders increased by more than 10%
quarter-on-quarter as a result of growth in both active buyers and buyer purchase frequency. |
| o | GAAP revenue was US$529.4 million, as
compared to US$539.7 million for the previous quarter. |
| o | Bookings4 were US$443.1 million,
as compared to US$462.3 million for the previous quarter. |
| o | Adjusted EBITDA1 was US$239.5
million, increasing by 4.1% quarter-on-quarter from US$230.1 million for the previous quarter,
partly driven by the sequential increase in Free Fire bookings which has higher margins. |
| o | Adjusted EBITDA represented 54.0% of bookings
for the second quarter of 2023, improved from 49.8% for the previous quarter. |
| o | Quarterly active users were 544.5 million,
increasing by 10.8% quarter-on-quarter from 491.6 million for the previous quarter. |
| o | Quarterly paying users were 43.1 million,
increasing by 14.6% quarter-on-quarter, and paying user ratio increased to 7.9% compared
to 7.7% for the previous quarter. |
| o | Average bookings per user were US$0.8,
as compared to US$0.9 for the previous quarter. |
| § | Digital
Financial Services |
| o | GAAP revenue was US$427.9 million, up
53.4% year-on-year. |
| o | Adjusted EBITDA1 was US$137.0
million, as compared to a loss of US$(111.5) million for the second quarter of 2022. |
| o | As of June 30, 2023, total loans
receivable remained stable quarter-on-quarter at US$2.0 billion, net of allowance for credit
losses of US$278.6 million. Non-performing loans past due by more than 90 days as a percentage
of our total gross loans receivable also remained stable at around 2%. |
1 For a discussion of the use of non-GAAP
financial measures, see “Non-GAAP Financial Measures”.
2 Other treasury investments currently
consist of available-for-sale sovereign and corporate bonds excluding those at our banking entities, with maturities over one year, classified
as part of long-term investments.
3 Current and comparative prior period
local currency amounts are converted into United States dollars using the same exchange rates, rather than the actual exchange rates
during the respective periods.
4 GAAP revenue for the digital entertainment
segment plus change in digital entertainment deferred revenue. This operating metric is used as an approximation of cash spent by our
users in the applicable period that is attributable to our digital entertainment segment.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars “$”
except for per share data)
| |
For
the Three Months ended
June 30, | | |
| |
| |
2022 | | |
2023 | | |
YOY% | |
| |
$ | | |
$ | | |
| |
Revenue | |
| | |
| | |
| |
Service revenue | |
| | | |
| | | |
| | |
Digital Entertainment | |
| 900,258 | | |
| 529,397 | | |
| (41.2 | )% |
E-commerce and other services | |
| 1,755,686 | | |
| 2,322,496 | | |
| 32.3 | % |
Sales of goods | |
| 286,655 | | |
| 243,767 | | |
| (15.0 | )% |
| |
| 2,942,599 | | |
| 3,095,660 | | |
| 5.2 | % |
| |
| | | |
| | | |
| | |
Cost of revenue | |
| | | |
| | | |
| | |
Cost of service | |
| | | |
| | | |
| | |
Digital Entertainment | |
| (260,529 | ) | |
| (160,669 | ) | |
| (38.3 | )% |
E-commerce and other services | |
| (1,329,665 | ) | |
| (1,263,522 | ) | |
| (5.0 | )% |
Cost of goods sold | |
| (262,187 | ) | |
| (220,591 | ) | |
| (15.9 | )% |
| |
| (1,852,381 | ) | |
| (1,644,782 | ) | |
| (11.2 | )% |
Gross profit | |
| 1,090,218 | | |
| 1,450,878 | | |
| 33.1 | % |
Other operating income | |
| 71,104 | | |
| 58,003 | | |
| (18.4 | )% |
Sales and marketing expenses | |
| (973,767 | ) | |
| (493,601 | ) | |
| (49.3 | )% |
General and administrative expenses | |
| (364,447 | ) | |
| (295,169 | ) | |
| (19.0 | )% |
Provision for credit losses | |
| (111,598 | ) | |
| (153,001 | ) | |
| 37.1 | % |
Research and development expenses | |
| (370,926 | ) | |
| (283,297 | ) | |
| (23.6 | )% |
Impairment of goodwill | |
| (177,280 | ) | |
| - | | |
| - | |
Total operating expenses | |
| (1,926,914 | ) | |
| (1,167,065 | ) | |
| (39.4 | )% |
Operating (loss) income | |
| (836,696 | ) | |
| 283,813 | | |
| (133.9 | )% |
Non-operating (loss) income, net | |
| (32,765 | ) | |
| 107,565 | | |
| (428.3 | )% |
Income tax expense | |
| (64,771 | ) | |
| (62,212 | ) | |
| (4.0 | )% |
Share of results of equity investees | |
| 3,033 | | |
| 1,817 | | |
| (40.1 | )% |
Net (loss) income | |
| (931,199 | ) | |
| 330,983 | | |
| (135.5 | )% |
(Loss) Earnings
per share attributable to Sea Limited’s ordinary shareholders: | |
| | | |
| | | |
| | |
Basic | |
| (1.67 | ) | |
| 0.57 | | |
| (134.1 | )% |
Diluted | |
| (1.67 | ) | |
| 0.54 | | |
| (132.3 | )% |
Change in deferred revenue of Digital Entertainment | |
| (182,904 | ) | |
| (86,254 | ) | |
| (52.8 | )% |
Adjusted
EBITDA for Digital Entertainment (1) | |
| 333,619 | | |
| 239,459 | | |
| (28.2 | )% |
Adjusted
EBITDA for E-commerce (1) | |
| (648,145 | ) | |
| 150,339 | | |
| (123.2 | )% |
Adjusted
EBITDA for Digital Financial Services (1) | |
| (111,517 | ) | |
| 136,961 | | |
| (222.8 | )% |
Adjusted
EBITDA for Other Services (1) | |
| (72,555 | ) | |
| (7,189 | ) | |
| (90.1 | )% |
Unallocated
expenses (2) | |
| (7,653 | ) | |
| (9,549 | ) | |
| 24.8 | % |
Total
adjusted EBITDA (1) | |
| (506,251 | ) | |
| 510,021 | | |
| (200.7 | )% |
(1) For
a discussion of the use of non-GAAP financial measures, see “Non-GAAP Financial Measures”.
(2) Unallocated
expenses within total adjusted EBITDA are mainly related to general and corporate administrative costs such as professional fees and
other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed
by the Chief Operating Decision Maker (“CODM”) as part of segment performance.
Three Months Ended June 30, 2023 Compared to Three Months
Ended June 30, 2022
Revenue
Our total GAAP revenue increased by 5.2% to US$3.1
billion in the second quarter of 2023 from US$2.9 billion in the second quarter of 2022.
| · | Digital
Entertainment: GAAP revenue was US$529.4 million compared to US$900.3 million in the
second quarter of 2022, primarily attributable to moderation in user engagement and monetization
year-on-year. |
| · | E-commerce
and other services: GAAP revenue increased by 32.3% to US$2.3 billion in the second quarter
of 2023 from US$1.8 billion in the second quarter of 2022, primarily driven by the improved
monetization in our e-commerce business and the growth of our credit business year-on-year. |
| · | Sales
of goods: GAAP revenue was US$243.8 million, as compared to US$286.7 million in the second
quarter of 2022. |
Cost of Revenue
Our total cost of revenue decreased by 11.2%
to US$1.6 billion in the second quarter of 2023 from US$1.9 billion in the second quarter of 2022.
| · | Digital
Entertainment: Cost of revenue decreased by 38.3% to US$160.7 million in the second quarter
of 2023 from US$260.5 million in the second quarter of 2022. |
| · | E-commerce
and other services: Cost of revenue for our e-commerce and other services segment combined
was US$1.3 billion in the second quarter of 2023, flat year-on-year. Improvement in gross
profit margins was driven by increased monetization and greater cost efficiencies in our
e-commerce and digital financial services business. |
| · | Cost
of goods sold: Cost of goods sold decreased by 15.9% to US$220.6 million in the second
quarter of 2023 from US$262.2 million in the second quarter of 2022. |
Other Operating Income
Our other operating income was US$58.0 million
and US$71.1 million in the second quarter of 2023 and 2022, respectively. Other operating income mainly consists of rebates from e-commerce
related logistics services providers.
Sales and Marketing Expenses
Our total sales and marketing expenses decreased
by 49.3% to US$493.6 million in the second quarter of 2023 from US$1.0 billion in the second quarter of 2022. The table below sets forth
breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).
| |
For the Three Months
ended June 30, | | |
| |
| |
2022 | | |
2023 | | |
YOY% | |
Sales and Marketing Expenses | |
| $ | | |
| $ | | |
| | |
Digital Entertainment | |
| 87,100 | | |
| 26,636 | | |
| (69.4 | )% |
E-commerce | |
| 674,120 | | |
| 431,979 | | |
| (35.9 | )% |
Digital Financial Services | |
| 162,466 | | |
| 19,207 | | |
| (88.2 | )% |
General and Administrative Expenses
Our general and administrative expenses decreased
by 19.0% to US$295.2 million in the second quarter of 2023 from US$364.4 million in the second quarter of 2022.
Provision for Credit Losses
Our provision for credit losses increased by
37.1% to US$153.0 million in the second quarter of 2023 from US$111.6 million in the second quarter of 2022.
Research and Development Expenses
Our research and development expenses decreased
by 23.6% to US$283.3 million in the second quarter of 2023 from US$370.9 million in the second quarter of 2022.
Impairment of Goodwill
We recorded nil impairment of goodwill in the
second quarter of 2023, compared to US$177.3 million in the second quarter of 2022.
Non-operating Income or Losses, Net
Non-operating income or losses mainly consist
of interest income, interest expense, investment gain (loss) and foreign exchange gain (loss). We recorded a net non-operating income
of US$107.6 million in the second quarter of 2023, as compared to a net non-operating loss of US$32.8 million in the second quarter of
2022. The year-on-year increase was mainly due to higher interest income in the second quarter of 2023 and investment losses recognized
in the second quarter of 2022.
Income Tax Expense
We had a net income tax expense of US$62.2 million
and US$64.8 million in the second quarter of 2023 and 2022, respectively.
Net Income or Loss
As a result of the foregoing, we had net income
of US$331.0 million in the second quarter of 2023, as compared to net loss of US$931.2 million in the second quarter of 2022.
Basic and Diluted Earnings or Loss Per
Share Attributable to Sea Limited’s Ordinary Shareholders
Basic earnings per share attributable to Sea
Limited’s ordinary shareholders was US$0.57 in the second quarter of 2023, as compared to basic loss per share attributable to
Sea Limited’s ordinary shareholders of US$1.67 in the second quarter of 2022.
Diluted earnings per share attributable to Sea
Limited’s ordinary shareholders was US$0.54 in the second quarter of 2023.
Webcast and Conference Call Information
The Company’s management will host a conference
call today to review Sea’s business and financial performance.
Details of the webcast are as follows:
Date and time: |
7:30 AM U.S. Eastern Time on August 15, 2023
7:30 PM Singapore / Hong Kong Time on August 15, 2023 |
|
|
Webcast link: |
https://event.choruscall.com/mediaframe/webcast.html?webcastid=qkaSw13n |
A replay of the conference call will be available
at the Company’s investor relations website (www.sea.com/investor/home). An archived webcast will be available at the same
link above.
For enquiries, please contact:
Investors / analysts: ir@sea.com
Media: media@sea.com
About Sea Limited
Sea Limited (NYSE: SE) is a leading global consumer
internet company founded in Singapore in 2009. Its mission is to better the lives of consumers and small businesses with technology.
Sea operates three core businesses across digital entertainment, e-commerce, as well as digital payments and financial services, known
as Garena, Shopee and SeaMoney, respectively. Garena is a leading global online games developer and publisher. Shopee is the largest
pan-regional e-commerce platform in Southeast Asia and Taiwan. SeaMoney is a leading digital payments and financial services provider
in Southeast Asia.
Forward-Looking Statements
This announcement contains forward-looking statements.
These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995.
These forward-looking statements can be identified by terminology such as “may,” “could,” “will,”
“expect,” “anticipate,” “aim,” “future,” “intend,” “plan,” “believe,”
“estimate,” “likely to,” “potential,” “confident,” “guidance,” and similar
statements. Among other things, statements that are not historical facts, including statements about Sea’s beliefs and expectations,
the business, financial and market outlook, and projections from its management in this announcement, as well as Sea’s strategic
and operational plans, contain forward-looking statements. Sea may also make written or oral forward-looking statements in its periodic
reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases,
and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Forward-looking statements
involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in
any forward-looking statement, including but not limited to the following: Sea’s goals and strategies; its future business development,
financial condition, financial results, and results of operations; the expected growth in, and market size of, the digital entertainment,
e-commerce and digital financial services industries in the markets where it operates, including segments within those industries; expected
changes or guidance in its revenue, costs or expenditures; its ability to continue to source, develop and offer new and attractive online
games and to offer other engaging digital entertainment content; the expected growth of its digital entertainment, e-commerce and digital
financial services businesses; its expectations regarding growth in its user base, level of engagement, and monetization; its ability
to continue to develop new technologies and/or upgrade its existing technologies; its expectations regarding the use of proceeds from
its financing activities, including its follow-on equity offerings and convertible notes offerings; growth and trends of its markets
and competition in its industries; government policies and regulations relating to its industries, including the effects of any government
orders or actions on its businesses; general economic, political, social and business conditions in its markets; and the impact of widespread
health developments, including the COVID-19 pandemic, and the responses thereto (such as voluntary and in some cases, mandatory quarantines
as well as shut downs and other restrictions on travel and commercial, social and other activities, and the availability of effective
vaccines or treatments) and the impact of economies reopening further to the COVID-19 pandemic. Further information regarding these and
other risks is included in Sea’s filings with the SEC. All information provided in this press release and in the attachments is
as of the date of this press release, and Sea undertakes no obligation to update any forward-looking statement, except as required under
applicable law.
Non-GAAP Financial Measures
To supplement our consolidated financial statements,
which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP financial measures to help evaluate our
operating performance:
· | “Adjusted
EBITDA” for our digital entertainment segment represents operating income (loss) before
share-based compensation plus (a) depreciation and amortization expenses, and (b) the
net effect of changes in deferred revenue and its related cost for our digital entertainment
segment. We believe that the segment adjusted EBITDA helps to identify underlying trends
in our operating results, enhancing their understanding of the past performance and future
prospects. |
· | “Adjusted
EBITDA” for our e-commerce segment, digital financial services segment and other services
segment represents operating income (loss) before share-based compensation plus depreciation
and amortization expenses. We believe that the segment adjusted EBITDA helps to identify
underlying trends in our operating results, enhancing their understanding of the past performance
and future prospects. |
· | “Total
adjusted EBITDA” represents the sum of adjusted EBITDA of all our segments combined,
plus unallocated expenses. We believe that the total adjusted EBITDA helps to identify underlying
trends in our operating results, enhancing their understanding of the past performance and
future prospects. |
These non-GAAP financial measures have limitations
as analytical tools. None of the above financial measures should be considered in isolation or construed as an alternative to revenue,
net loss/income, or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures
presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly
titled measures differently, limiting their usefulness as comparative measures to Sea’s data. We compensate for these limitations
by reconciling the non-GAAP financial measures to their nearest U.S. GAAP financial measures, all of which should be considered when
evaluating our performance. We encourage you to review our financial information in its entirety and not rely on any single financial
measure.
The tables below present selected financial information
of our reporting segments, the non-GAAP financial measures that are most directly comparable to GAAP financial measures, and the related
reconciliations between the financial measures. Amounts are expressed in thousands of US dollars (“$”) except for number
of shares & per share data.
| |
For the
Three Months ended June 30, 2023 | |
| |
Digital
Entertainment | | |
E-commerce | | |
Digital
Financial
Services | | |
Other
Services(1) | | |
Unallocated
expenses(2) | | |
Consolidated | |
| |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
Operating income (loss) | |
| 296,457 | | |
| 65,550 | | |
| 120,966 | | |
| (10,034 | ) | |
| (189,126 | ) | |
| 283,813 | |
Net effect of changes
in deferred revenue and its related cost | |
| (65,360 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (65,360 | ) |
Depreciation and Amortization | |
| 8,362 | | |
| 84,789 | | |
| 15,995 | | |
| 2,845 | | |
| - | | |
| 111,991 | |
Share-based compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 179,577 | | |
| 179,577 | |
Adjusted EBITDA | |
| 239,459 | | |
| 150,339 | | |
| 136,961 | | |
| (7,189 | ) | |
| (9,549 | ) | |
| 510,021 | |
| |
For the
Three Months ended June 30, 2022 | |
| |
Digital
Entertainment | | |
E-commerce | | |
Digital
Financial
Services | | |
Other
Services(1) | | |
Unallocated
expenses(2) | | |
Consolidated | |
| |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
Operating income (loss) | |
| 456,811 | | |
| (726,127 | ) | |
| (122,735 | ) | |
| (75,604 | ) | |
| (369,041 | ) | |
| (836,696 | ) |
Net effect of changes
in deferred revenue and its related cost | |
| (134,100 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (134,100 | ) |
Depreciation and Amortization | |
| 10,908 | | |
| 77,982 | | |
| 11,218 | | |
| 3,049 | | |
| - | | |
| 103,157 | |
Share-based compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 184,108 | | |
| 184,108 | |
Impairment of goodwill | |
| - | | |
| - | | |
| - | | |
| - | | |
| 177,280 | | |
| 177,280 | |
Adjusted EBITDA | |
| 333,619 | | |
| (648,145 | ) | |
| (111,517 | ) | |
| (72,555 | ) | |
| (7,653 | ) | |
| (506,251 | ) |
(1) A
combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped
together as “Other Services”.
(2) Unallocated
expenses are mainly related to share-based compensation, impairment of goodwill of prior acquisition that are not under our reportable
segments, and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated
to segments. These expenses are excluded from segment results as they are not reviewed by the CODM as part of segment performance.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
Amounts
expressed in thousands of US dollars (“$”) except for number of shares & per share data
| |
For
the Six Months ended
June 30, | |
| |
2022 | | |
2023 | |
| |
$ | | |
$ | |
Revenue | |
| | | |
| | |
Service revenue | |
| | | |
| | |
Digital Entertainment | |
| 2,035,427 | | |
| 1,069,083 | |
E-commerce and other services | |
| 3,255,297 | | |
| 4,582,073 | |
Sales of goods | |
| 551,446 | | |
| 485,608 | |
| |
| | | |
| | |
Total revenue | |
| 5,842,170 | | |
| 6,136,764 | |
| |
| | | |
| | |
Cost of revenue | |
| | | |
| | |
Cost of service | |
| | | |
| | |
Digital Entertainment | |
| (569,714 | ) | |
| (334,035 | ) |
E-commerce and other services | |
| (2,506,142 | ) | |
| (2,504,850 | ) |
Cost of goods sold | |
| (506,068 | ) | |
| (430,311 | ) |
| |
| | | |
| | |
Total cost of revenue | |
| (3,581,924 | ) | |
| (3,269,196 | ) |
| |
| | | |
| | |
Gross profit | |
| 2,260,246 | | |
| 2,867,568 | |
| |
| | | |
| | |
Operating income (expenses) | |
| | | |
| | |
Other operating income | |
| 144,759 | | |
| 115,883 | |
Sales and marketing expenses | |
| (1,978,941 | ) | |
| (893,744 | ) |
General and administrative expenses | |
| (680,114 | ) | |
| (628,546 | ) |
Provision for credit losses | |
| (192,064 | ) | |
| (330,440 | ) |
Research and development expenses | |
| (711,334 | ) | |
| (603,809 | ) |
Impairment of goodwill | |
| (177,280 | ) | |
| (117,875 | ) |
Total operating expenses | |
| (3,594,974 | ) | |
| (2,458,531 | ) |
| |
| | | |
| | |
Operating (loss) income | |
| (1,334,728 | ) | |
| 409,037 | |
Interest income | |
| 29,841 | | |
| 152,326 | |
Interest expense | |
| (23,029 | ) | |
| (20,773 | ) |
Investment loss, net | |
| (59,036 | ) | |
| (28,815 | ) |
Foreign exchange gain | |
| 13,399 | | |
| 27,349 | |
(Loss) Income before income tax and share of results
of equity investees | |
| (1,373,553 | ) | |
| 539,124 | |
Income tax expense | |
| (146,577 | ) | |
| (124,110 | ) |
Share of results of equity investees | |
| 8,795 | | |
| 3,261 | |
Net (loss) income | |
| (1,511,335 | ) | |
| 418,275 | |
| |
| | | |
| | |
Net income attributable to non-controlling interests | |
| (1,585 | ) | |
| (8,595 | ) |
Net (loss) income attributable to Sea Limited’s
ordinary shareholders | |
| (1,512,920 | ) | |
| 409,680 | |
| |
| | | |
| | |
(Loss) Earnings per share: | |
| | | |
| | |
Basic | |
| (2.72 | ) | |
| 0.73 | |
Diluted | |
| (2.72 | ) | |
| 0.69 | |
| |
| | | |
| | |
Weighted average shares used in (loss) earnings per share computation: | |
| | | |
| | |
Basic | |
| 556,834,663 | | |
| 564,261,877 | |
Diluted | |
| 556,834,663 | | |
| 598,716,012 | |
UNAUDITED INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts
expressed in thousands of US dollars (“$”)
| |
As
of December 31, | | |
As
of June 30, | |
| |
2022 | | |
2023 | |
| |
$ | | |
$ | |
ASSETS | |
| | | |
| | |
Current
assets | |
| | | |
| | |
Cash
and cash equivalents | |
| 6,029,859 | | |
| 3,524,449 | |
Restricted cash | |
| 1,549,574 | | |
| 1,427,561 | |
Accounts receivable,
net of allowance for credit losses of $12,818 and $7,735, as of December 31, 2022 and June 30, 2023 respectively | |
| 268,814 | | |
| 192,310 | |
Prepaid expenses
and other assets | |
| 1,798,651 | | |
| 2,051,618 | |
Loans receivable,
net of allowance for credit losses of $236,797 and $276,891, as of December 31, 2022 and June 30, 2023 respectively | |
| 2,053,767 | | |
| 1,999,544 | |
Inventories,
net | |
| 109,668 | | |
| 98,489 | |
Short-term investments | |
| 864,258 | | |
| 2,174,887 | |
Amounts
due from related parties | |
| 13,421 | | |
| 6,969 | |
Total current
assets | |
| 12,688,012 | | |
| 11,475,827 | |
| |
| | | |
| | |
Non-current
assets | |
| | | |
| | |
Property and
equipment, net | |
| 1,387,895 | | |
| 1,307,463 | |
Operating lease
right-of-use assets, net | |
| 957,840 | | |
| 1,000,888 | |
Intangible assets,
net | |
| 65,019 | | |
| 61,326 | |
Long-term investments | |
| 1,253,593 | | |
| 3,183,342 | |
Prepaid expenses
and other assets | |
| 135,616 | | |
| 136,826 | |
Loans receivable,
net of allowance for credit losses of $2,022 and $1,684, as of December 31, 2022 and June 30, 2023 respectively | |
| 21,663 | | |
| 18,797 | |
Restricted cash | |
| 17,724 | | |
| 27,779 | |
Deferred tax
assets | |
| 245,226 | | |
| 325,051 | |
Goodwill | |
| 230,208 | | |
| 115,017 | |
Total
non-current assets | |
| 4,314,784 | | |
| 6,176,489 | |
Total
assets | |
| 17,002,796 | | |
| 17,652,316 | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE
SHEETS
Amounts
expressed in thousands of US dollars (“$”)
| |
As
of December 31, | | |
As
of June 30, | |
| |
2022 | | |
2023 | |
| |
$ | | |
$ | |
LIABILITIES
AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
Current
liabilities | |
| | | |
| | |
Accounts
payable | |
| 258,648 | | |
| 219,048 | |
Accrued expenses
and other payables | |
| 1,396,613 | | |
| 1,409,322 | |
Deposits payable | |
| 1,316,395 | | |
| 1,350,555 | |
Escrow payables
and advances from customers | |
| 1,862,325 | | |
| 1,774,249 | |
Amounts due
to related parties | |
| 415 | | |
| 411 | |
Borrowings | |
| 88,410 | | |
| 101,996 | |
Operating lease
liabilities | |
| 269,968 | | |
| 280,832 | |
Convertible
notes | |
| 31,237 | | |
| – | |
Deferred revenue | |
| 1,535,083 | | |
| 1,251,736 | |
Income tax payable | |
| 176,598 | | |
| 187,574 | |
Total current
liabilities | |
| 6,935,692 | | |
| 6,575,723 | |
| |
| | | |
| | |
Non-current
liabilities | |
| | | |
| | |
Accrued expenses
and other payables | |
| 87,072 | | |
| 82,503 | |
Borrowings | |
| – | | |
| 50,000 | |
Operating lease
liabilities | |
| 756,818 | | |
| 786,961 | |
Deferred revenue | |
| 63,566 | | |
| 194,449 | |
Convertible
notes | |
| 3,338,750 | | |
| 3,341,733 | |
Deferred tax
liabilities | |
| 9,967 | | |
| 603 | |
Unrecognized
tax benefits | |
| 107 | | |
| 107 | |
Total non-current
liabilities | |
| 4,256,280 | | |
| 4,456,356 | |
Total liabilities | |
| 11,191,972 | | |
| 11,032,079 | |
UNAUDITED INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts
expressed in thousands of US dollars (“$”)
| |
As
of December 31, | | |
As
of June 30, | |
| |
2022 | | |
2023 | |
| |
$ | | |
$ | |
Shareholders’
equity | |
| | | |
| | |
Class A Ordinary shares | |
| 258 | | |
| 260 | |
Class B Ordinary shares | |
| 23 | | |
| 23 | |
Additional paid-in capital | |
| 14,559,690 | | |
| 14,974,805 | |
Accumulated other comprehensive loss | |
| (111,215 | ) | |
| (140,189 | ) |
Statutory reserves | |
| 12,490 | | |
| 13,098 | |
Accumulated deficit | |
| (8,745,541 | ) | |
| (8,336,469 | ) |
Total Sea Limited shareholders’ equity | |
| 5,715,705 | | |
| 6,511,528 | |
Non-controlling interests | |
| 95,119 | | |
| 108,709 | |
Total shareholders’ equity | |
| 5,810,824 | | |
| 6,620,237 | |
Total liabilities and shareholders’ equity | |
| 17,002,796 | | |
| 17,652,316 | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts
expressed in thousands of US dollars (“$”)
| |
For
the Six Months ended June 30, | |
| |
2022 | | |
2023 | |
| |
$ | | |
$ | |
Net
cash (used in) generated from operating activities | |
| (1,209,121 | ) | |
| 1,201,016 | |
Net cash used
in investing activities | |
| (2,078,203 | ) | |
| (3,867,640 | ) |
Net cash generated
from financing activities | |
| 439,937 | | |
| 58,143 | |
Effect of foreign
exchange rate changes on cash, cash equivalents and restricted cash | |
| (127,734 | ) | |
| (22,114 | ) |
Net decrease
in cash, cash equivalents and restricted cash | |
| (2,975,121 | ) | |
| (2,630,595 | ) |
Cash,
cash equivalents and restricted cash at beginning of the period(1) | |
| 10,838,140 | | |
| 7,610,384 | |
Cash, cash equivalents
and restricted cash at end of the period | |
| 7,863,019 | | |
| 4,979,789 | |
(1) As
of December 31, 2022, cash and cash equivalents of US$13,227 was included in assets held for sale within prepaid expenses and other
assets.
Net cash used in investing activities amounted
to US$3,868 million for the six months ended June 30, 2023. This was primarily attributable to net placement of US$3,461 million
in securities purchased under agreements to resell, time deposits and liquid investment products, for better cash yield management, increase
in loans receivable of US$242 million and purchase of property and equipment of US$133 million to support the existing operations.
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely
digital entertainment, e-commerce and digital financial services. The Chief Operating Decision Maker (“CODM”) reviews the
performance of each segment based on revenue and certain key operating metrics of the operations and uses these results for the purposes
of allocating resources to and evaluating the financial performance of each segment. Amounts are expressed in thousands of US dollars
(“$”).
| |
For the
Three Months ended June 30, 2023 | |
| |
Digital
Entertainment | | |
E-commerce | | |
Digital
Financial
Services | | |
Other
Services(1) | | |
Unallocated
expenses(2) | | |
Consolidated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
Revenue | |
| 529,397 | | |
| 2,110,551 | | |
| 427,940 | | |
| 27,772 | | |
| - | | |
| 3,095,660 | |
Operating income (loss) | |
| 296,457 | | |
| 65,550 | | |
| 120,966 | | |
| (10,034 | ) | |
| (189,126 | ) | |
| 283,813 | |
Non-operating income, net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 107,565 | |
Income tax expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (62,212 | ) |
Share of results of equity investees | | |
| | | |
| | | |
| | | |
| | | |
| 1,817 | |
Net income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 330,983 | |
| |
For the
Three Months ended June 30, 2022 | |
| |
Digital
Entertainment | | |
E-commerce | | |
Digital
Financial
Services | | |
Other
Services(1) | | |
Unallocated
expenses(2) | | |
Consolidated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
Revenue | |
| 900,258 | | |
| 1,749,350 | | |
| 279,020 | | |
| 13,971 | | |
| - | | |
| 2,942,599 | |
Operating income (loss) | |
| 456,811 | | |
| (726,127 | ) | |
| (122,735 | ) | |
| (75,604 | ) | |
| (369,041 | ) | |
| (836,696 | ) |
Non-operating loss, net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (32,765 | ) |
Income tax expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (64,771 | ) |
Share of results of equity investees | | |
| | | |
| | | |
| | | |
| | | |
| 3,033 | |
Net loss | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (931,199 | ) |
(1) A
combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped
together as “Other Services”.
(2) Unallocated
expenses are mainly related to share-based compensation, impairment of goodwill of prior acquisition that are not under our reportable
segments, and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated
to segments. These expenses are excluded from segment results as they are not reviewed by the CODM as part of segment performance.
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