Southeast Asian tech powerhouse Sea Limited posted its Q3 financial report on Tuesday, with revenue once again beating expectations, showing its aggressive expansion continues to pay off.
Mainly driven by growth in the e-commerce arm Shopee and the digital entertainment unit, the company's GAAP revenue increased 121.8 % year on year to $2.7 billion.
Revenue of digital entertainment reached $1.1 billion, a year-on-year increase of 93.2%, and game bookings amounted to $1.2 billion, a year-on-year increase of 29.2%.
The growth of the gaming sector is likely to continue into the fourth quarter. In October 2021, Free Fire, the company's self-developed mobile game, became the most downloaded game, beating rivals such as PUBG Mobile, Roblox, and Ludo King, Sensor Tower's latest report said, adding that the downloads increased by 72% compared with last year.
India is the country with the most downloads of this battle royale game, accounting for 30% of its total downloads. Previously, PUBG, which counts Tencent as its major investor, is the most popular game in India, but it was banned last September due to the country's conflict with China. Free Fire, which provides players with more innovative updates, game modes, and maps, has grasped the window chance to overtake PUBG, despite the fact that it returned to the developing market in June.
And, last Friday, Sea's maiden investment fund Sea Capital co-led a $725 million investment in blockchain gaming platform Forte.
E-commerce contributed $1.5 billion in revenue, a year-on-year increase of 134.4%, and the gross merchandise value (GMV) hit $16.8 billion, a year-on-year increase of 80.6%.
In the press release, the company once again boosted its full-year guidance for e-commerce. Revenues are now expected to be $5 billion-$5.2 billion, higher than the previously expected $4.7 billion-$4.9 billion, representing a 135.3% increase at the midpoint.
The improved forecast is based on continued growth in the company's key markets, such as Southeast Asia, Taiwan, and Brazil, as well as the entry of new markets.
Shopee has surpassed Mercado Livre as the most popular shopping app in Brazil, steadily eroding the market leader's dominance. After opening the Mexico, Chile, and Colombia markets in early 2021, the Singapore-based company recently brought its e-commerce business to Poland, France, Spain, and India to explore new opportunities.
“We believe that we have gained a deep operational experience in operating in different markets as well as understanding of our business model of focusing on mobile native, social commerce-driven, and long-tail high-diverse categories that serve especially the local sellers and buyers," Yanjun Wang, the chief corporate officer said in the earnings call.
Shopee's business horizons are constantly increasing. As travel starts to rebound, it has partnered with travel platforms Agoda and Booking.com to launch Shopee Hotel across seven markets including Singapore, Malaysia, Thailand, Taiwan, Indonesia, Vietnam, and the Philippines.
In the meantime, the digital financial business, or SeaMoney, continues to grow vigorously. In Q3 2021, its mobile wallet payments totaled $4.6 billion, a year-on-year increase of 111%. In addition, the quarterly paying users of its mobile wallet increased to 39.3 million in the quarter.
To enrich its digital wallet usage scenarios, the company has partnered with more online and offline merchants such as Google Play in Malaysia, Blue Bird taxi in Indonesia, Family Mart in Thailand, and the Locate (ph) Cinemart in Vietnam. Besides the digital wallet service, Sea has launched early initiatives in other digital financial services, such as buy-now-pay-later, digital bank, and insurance.
However, with the huge increase in revenue comes the expansion of losses. According to the financial report, the company's total operating expenses more than doubled to $1.47 billion, and operating loss widened to $458.6 million from a year-ago loss of $305.5 million.
Although Sea remains unprofitable, the tale of its high-flying growth is far from over, especially considering the current easy monetary policy.
The tech upstart has raised about $6 billion in an equity and convertible bond sale in September to fuel its global expansion and potential acquisitions. The sale was the second for the company in less than a year after the company raised $2.6 billion in December.
According to the latest 13F form disclosed by BlackRock, it reported a 65.18% increase in ownership of Sea Limited in Q3. In the meantime, investment giant Tiger Global Management raised its stakes in Sea by 260,000 shares, ranking third in its portfolio.