SINGAPORE, Aug. 22, 2018 /PRNewswire/ -- Sea Limited (NYSE: SE) ("Sea" or the "Company") today announced its financial results for the quarter ended June 30, 2018.
"Sea again delivered strong results in the second quarter of 2018 as we capitalized on our ability to anticipate and quickly adapt to evolving industry dynamics," said Forrest Li, Chairman and Group Chief Executive Officer of Sea. "Shopee continued to expand rapidly across all markets, strengthening its leadership in the region. Our monetization strategy for Shopee is delivering ahead of expectations, even at this early stage. Marketplace revenue surged by more than 69% sequentially to US$37.3 million, as more merchants invested in our value-added services to deepen engagement with their customers. GMV increased more than 14% sequentially to US$2.2 billion, while sales and marketing expenses as a percentage of GMV continued to decline as our growing scale enabled further cost efficiencies."
Mr. Li continued, "In digital entertainment, our efforts to deepen our diversification into mobile games, self-development, and new markets globally are yielding encouraging results. In the month of June, self-developed game revenue accounted for approximately 13% of adjusted digital entertainment revenue, a new record high, driven by the breakout success of our first self-developed global hit, Free Fire."
Second Quarter 2018 Key Metrics
- Group
- Digital Entertainment
- E-commerce
- Digital Financial Services
| 1 Marketplace revenue mainly consists of commission and advertising income and revenue generated from other value-added services. |
| 2 Product revenue mainly consists of revenue generated from direct sales. |
Strategic Business Updates
Digital Entertainment
As growing smartphone penetration continues to improve access to online games globally, Garena has taken steps to leverage our leading position in the industry and our clear competitive strengths to capture the growth opportunities ahead. In particular, we have focused on three key strategic initiatives – moving from PC-only to mobile-first, moving from pure game publishing to both game publishing and development, and expanding from a regional footprint to a global presence.
These efforts continue to generate positive results. In June 2018, approximately 73% of our adjusted revenue for digital entertainment was derived from mobile games, approximately 13% was generated by our self-developed game, and approximately 7% was derived from outside the seven core markets in our region.
Free Fire, our first self-developed hit game, remains one of the leading games in the battle royale category in our region, and during the quarter was among the top-ranked games in its category in the App Store and on the Google Play Store in several non-core markets, including Brazil and Mexico. Its daily active user ("DAU") count has reached a record high of more than 16 million. With the development of various monetization features in the game such as the season pass concept, we see encouraging results from monetizing the game, which accounted for an increasingly significant share of our adjusted revenue for digital entertainment.
Moreover, we continue to explore opportunities to expand the focus of our game business to capture new trends and opportunities, including those related to esports and game streaming, to further enhance our user engagement and develop additional avenues of income.
For example, Garena was one of the organizers of the Arena of Valor World Cup ("AOV World Cup") held in Los Angeles in late July. Garena organized a series of tournaments across the region leading to the final. In our markets, the competitions in aggregate attracted over 33 million views online across all streaming platforms, with the final attracting over 5 million views. We believe the enthusiasm generated by the esports and streaming activities further enhanced the user engagement of the game, which has recently achieved a record high DAU count of more than 14 million.
Our efforts to foster strong community engagement around our key titles on streaming platforms continued to gain traction. According to research by Newzoo on the global esports streaming market, two of our esports channels – Garena and Vietnam Esports TV – ranked in the top five Youtube channels globally in terms of esports hours viewed during the first quarter of 2018.
E-commerce
In the second quarter of 2018, Shopee continued to demonstrate robust growth in GMV, gross orders, and adjusted revenue, complemented by continuing efficiency improvements.
We also recorded significant growth in marketplace revenue of 69.3% quarter-on-quarter, well ahead of the GMV growth rate, as a larger number of sellers made use of our expanding suite of offerings, from advertising tools to value-added services such as fulfilment and logistics.
Shopee is also benefiting from ever-improving economies of scale as the number of buyers and sellers on the platform grows, and users build greater loyalty to the platform. During the quarter, sales and marketing expenses as a percentage of GMV fell once again to 6.2%, compared to 6.6% in the first quarter of 2018.
Other Developments
Convertible Notes Offering
In June 2018, we raised US$575 million in aggregate principal amount of 2.25% convertible senior notes due 2023. The offering size was increased from the original US$400 million to US$500 million to address investor demand, and the subsequent full exercise by the initial purchasers of a 15% 'greenshoe' option brought the total offering to US$575 million.
The additional capital further bolsters our balance sheet, and strengthens our ability to address the evolving needs of the users in our region, be they in digital entertainment, e-commerce, or digital financial services. The net proceeds from this offering will be used for business expansion and other general corporate purposes.
| Unaudited Summary of Financial Results |
|||
| (Amounts are expressed in thousands of US dollars "$") |
|||
| For the Three Months ended June 30, |
|||
| 2017 |
2018 |
||
| $ |
$ |
YOY% |
|
| Revenue |
|||
| Digital Entertainment |
91,459 |
108,029 |
18.1% |
| Others |
10,088 |
75,750 |
650.9% |
| 101,547 |
183,779 |
81.0% |
|
| Cost of revenue |
|||
| Digital Entertainment |
(52,892) |
(61,981) |
17.2% |
| Others |
(22,814) |
(113,216) |
396.3% |
| (75,706) |
(175,197) |
131.4% |
|
| Gross profit |
25,841 |
8,582 |
(66.8)% |
| Other operating income |
163 |
1,707 |
947.2% |
| Sales and marketing expenses |
(74,087) |
(165,075) |
122.8% |
| General and administrative expenses |
(27,644) |
(51,849) |
87.6% |
| Research and development expenses |
(6,739) |
(12,882) |
91.2% |
| Total operating expenses |
(108,307) |
(228,099) |
110.6% |
| Operating loss |
(82,466) |
(219,517) |
166.2% |
| Non-operating loss, net |
(7,193) |
(30,752) |
327.5% |
| Income tax (expense) credit |
(2,230) |
170 |
(107.6)% |
| Share of results of equity investees |
(230) |
(689) |
199.6% |
| Net loss |
(92,119) |
(250,788) |
172.2% |
| Adjusted net loss (1) |
(86,871) |
(198,715) |
128.7% |
| Adjusted revenue of Digital Entertainment (1) |
116,892 |
139,102 |
19.0% |
| Adjusted revenue of E-commerce (1) |
2,597 |
58,815 |
2,164.7% |
| Adjusted revenue of Digital Financial Services (1) |
5,342 |
3,413 |
(36.1)% |
| Revenue of Other Services |
3,596 |
18,229 |
406.9% |
| Total adjusted revenue (1) |
128,427 |
219,559 |
71.0% |
| Adjusted EBITDA for Digital Entertainment (1) |
40,243 |
48,612 |
20.8% |
| Adjusted EBITDA for E-commerce (1) |
(76,233) |
(188,315) |
(147.0)% |
| Adjusted EBITDA for Digital Financial Services (1) |
(11,044) |
(6,780) |
38.6% |
| Adjusted EBITDA for Other Services (1) |
(2,664) |
(12,937) |
(385.6)% |
| Unallocated expenses (2) |
(1,165) |
(2,510) |
(115.5)% |
| Total adjusted EBITDA (1) |
(50,863) |
(161,930) |
(218.4)% |
| (1) For a discussion of the use of non-GAAP financial measures, see "Non-GAAP Financial Measures." |
|||
| (2) Unallocated expenses are mainly related to share-based compensation 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 Chief Operation Decision Maker ("CODM") as part of segment performance. |
|||
Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017
Revenue
The table below sets forth revenue generated from our reported segments. Amounts are expressed in thousands of US dollars ("$").
| For the Three Months ended June 30, |
||||||
| 2017 |
2018 |
|||||
| $ |
% of revenue |
$ |
% of revenue |
YOY% |
||
| Revenue |
||||||
| Digital Entertainment |
91,459 |
90.1 |
108,029 |
58.8 |
18.1% |
|
| E-commerce |
1,150 |
1.1 |
54,655 |
29.7 |
4,652.6% |
|
| Digital Financial Services |
5,342 |
5.3 |
2,866 |
1.6 |
(46.3)% |
|
| Other Services |
3,596 |
3.5 |
18,229 |
9.9 |
406.9% |
|
| 101,547 |
100.0 |
183,779 |
100.0 |
81.0% |
||
| 2017 |
2018 |
|||||
| $ |
% of total |
$ |
% of total revenue |
YOY%
|
||
| Adjusted revenue of Digital Entertainment |
116,892 |
91.0 |
139,102 |
63.4 |
19.0% |
|
| Adjusted revenue of E-commerce |
2,597 |
2.0 |
58,815 |
26.8 |
2,164.7% |
|
| Adjusted revenue of Digital Financial Services |
5,342 |
4.2 |
3,413 |
1.6 |
(36.1)% |
|
| Revenue of Other Services |
3,596 |
2.8 |
18,229 |
8.2 |
406.9% |
|
| Total adjusted revenue |
128,427 |
100.0 |
219,559 |
100.0 |
71.0% |
|
Our total revenue increased by 81.0% to US$183.8 million in the second quarter of 2018 from US$101.5 million in the second quarter of 2017. Our total adjusted revenue increased by 71.0% to US$219.6 million in the second quarter of 2018 from US$128.4 million in the second quarter of 2017. These increases were mainly driven by the growth in each of the segments detailed as follows:
Cost of Revenue
Our total cost of revenue increased by 131.4% to US$175.2 million in the second quarter of 2018 from US$75.7 million in the second quarter of 2017.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 122.8% to US$165.1 million in the second quarter of 2018 from US$74.1 million in the second quarter of 2017. The table below sets forth the breakdown of our sales and marketing expenses of our two major reporting segments. Amounts are expressed in thousands of US dollars ("$").
| For the Three Months |
||||
| 2017 |
2018 |
YOY% |
||
| Sales and Marketing Expenses |
$
|
$
|
||
| Digital Entertainment |
11,858 |
18,916 |
59.5% |
|
| E-commerce |
55,906 |
138,042 |
146.9% |
|
| For the Three Months ended June 30, |
|||
| 2017 |
2018 |
||
| Digital Entertainment |
$
|
$
|
|
| Sales and marketing expenses |
11,858 |
18,916 |
|
| Adjusted revenue |
116,892 |
139,102 |
|
| Sales and marketing expenses as a percentage of adjusted revenue |
10.1% |
13.6% |
|
Sales and marketing expenses as a percentage of adjusted revenue increased to 13.6% in the second quarter of 2018 from 10.1% in the second quarter of 2017. This was mainly due to increased expenses on the launching of new games, while the monetization impact of these new games was not fully captured within the same period.
| For the Three Months ended June 30, |
|||
| 2017 |
2018 |
||
| E-commerce |
$
|
$
|
|
| Sales and marketing expenses |
55,906 |
138,042 |
|
| GMV |
821,175 |
2,221,789 |
|
| Sales and marketing expenses as a percentage of GMV |
6.8% |
6.2% |
|
Sales and marketing expenses as a percentage of GMV was 6.2% in the second quarter of 2018 and improved from 6.8% in the second quarter of 2017.
General and Administrative Expenses
Our general and administrative expenses increased by 87.6% to US$51.8 million in the second quarter of 2018 from US$27.6 million in the second quarter of 2017. This increase was primarily due to the expansion of our staff force, the increase in office facilities and related expenses, as well as the increase in professional fees and other expenses.
Research and Development Expenses
Our research and development expenses increased by 91.2% to US$12.9 million in the second quarter of 2018 from US$6.7 million in the second quarter of 2017, primarily due to the increase in our research and development staff force as we expanded and enriched our product offerings.
Non-operating Income or Losses, Net
Non-operating income or losses consists of interest income, interest expense, investment gain (loss), fair value change for convertible debts and foreign exchange gain (loss). The amount was a net non-operating loss of US$30.8 million in the second quarter of 2018, compared to a net non-operating loss of US$7.2 million in the second quarter of 2017. This was primarily due to a fair value loss of US$37.2 million recognized in the quarter arising from the fair value accounting treatment for the convertible debts raised before our initial public offering.
Income Tax Expense
We had a net income tax benefit of US$0.2 million in the second quarter of 2018, which was primarily due to the deferred tax assets we recognized in our digital entertainment segment in the second quarter of 2018.
Share of Results of Equity Investees
We had share of losses of equity investees of US$0.7 million in the second quarter of 2018, compared with US$0.2 million in the second quarter of 2017.
Net Loss
As a result of the foregoing, we had net losses of US$250.8 million and US$92.1 million in the second quarter of 2018 and 2017, respectively.
Adjusted Net Loss
Adjusted net loss, which is net loss adjusted to remove share-based compensation expenses and fair value change for convertible debts, was US$198.7 million and US$86.9 million in the second quarter of 2018 and 2017, respectively.
Webcast and Conference Call Information
Mr. Forrest Li, Founder, Chairman and Group Chief Executive Officer; Mr. Tony Hou, Group Chief Financial Officer; and Mr. Alan Hellawell, Group Chief Strategy Officer, will host a conference call today to review Sea's business and financial performance.
Details of the conference call and webcast are as follows:
| Date and time: |
8:00 PM U.S. Eastern Time on 21 August 2018 |
| 8:00 AM Singapore / Hong Kong Time on 22 August 2018 |
|
| Webcast link: |
| Dial in numbers: |
US Toll Free: 1-888-317-6003 |
Hong Kong: 800-963-976 |
| International: 1-412-317-6061 |
Singapore: 800-120-5863 |
|
| United Kingdom: 08-082-389-063 |
||
| Passcode for participants: |
1518348 |
A replay of the conference call will be available at the Company's investor relations website (https://www.seagroup.com/investor/financials). An archived webcast will be available at the same link above.
For enquiries, please contact:
Investors / analysts: ir@seagroup.com
Media: media@seagroup.com
About Sea Limited
Sea's mission is to better the lives of the consumers and small businesses of our region with technology. Our region includes the key markets of Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia and Singapore. Sea operates three platforms across digital entertainment, e-commerce, and digital financial services, known as Garena, Shopee, and AirPay, respectively.
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 "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "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 growth in, and market size of, the digital entertainment, e-commerce and digital financial services industries in the region, including segments within those industries; changes 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 growth of its digital entertainment, e-commerce and digital financial services platforms; the growth in its user base, level of user engagement, and monetization; its ability to continue to develop new technologies and/or upgrade its existing technologies; growth and trends of its markets and competition in its industries; government policies and regulations relating to its industries; and general economic and business conditions in the region. 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:
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 ("$").
| For the Three Months ended June 30, 2018 |
||||||
| Digital Entertainment |
E- |
Digital |
Other Services(3) |
Unallocated |
Consolidated |
|
| $ |
$ |
$ |
$ |
$ |
$ |
|
| Revenue |
108,029 |
54,655(1) |
2,866 |
18,229 |
- |
183,779 |
| Changes in deferred revenue |
31,073 |
- |
- |
- |
- |
31,073 |
| Sales incentives net-off |
- |
4,160 |
547 |
- |
- |
4,707 |
| Adjusted revenue |
139,102 |
58,815(2) |
3,413 |
18,229 |
- |
219,559 |
| Operating income (loss) |
15,137 |
(195,034) |
(7,297) |
(14,900) |
(17,423) |
(219,517) |
| Net effect of changes in deferred revenue and its related cost |
24,872 |
- |
- |
- |
- |
24,872 |
| Depreciation and amortization |
8,603 |
6,719 |
517 |
1,963 |
- |
17,802 |
| Share-based compensation |
- |
- |
- |
- |
14,913 |
14,913 |
| Adjusted EBITDA |
48,612 |
(188,315) |
(6,780) |
(12,937) |
(2,510) |
(161,930) |
| For the Three Months ended June 30, 2017 |
||||||
| Digital Entertainment |
E- |
Digital |
Other Services(3) |
Unallocated |
Consolidated |
|
| $ |
$ |
$ |
$ |
$ |
$ |
|
| Revenue |
91,459 |
1,150(1) |
5,342 |
3,596 |
- |
101,547 |
| Changes in deferred revenue |
25,433 |
- |
- |
- |
- |
25,433 |
| Sales incentives net-off |
- |
1,447 |
- |
- |
- |
1,447 |
| Adjusted revenue |
116,892 |
2,597(2) |
5,342 |
3,596 |
- |
128,427 |
| Operating income (loss) |
16,020 |
(77,438) |
(11,309) |
(3,326) |
(6,413) |
(82,466) |
| Net effect of changes in deferred revenue and its related cost |
17,336 |
- |
- |
- |
- |
17,336 |
| Depreciation and amortization |
6,887 |
1,205 |
265 |
662 |
- |
9,019 |
| Share-based compensation |
- |
- |
- |
- |
5,248 |
5,248 |
| Adjusted EBITDA |
40,243 |
(76,233) |
(11,044) |
(2,664) |
(1,165) |
(50,863) |
| (1) For the second quarter of 2018, revenue of $54,655 included marketplace revenue of $33,160 and product revenue of $21,495, net of sales incentives. For the second quarter of 2017, revenue of $1,150 was entirely marketplace revenue. |
||||||
| (2) For the second quarter of 2018, adjusted revenue of $58,815 included marketplace revenue of $37,320 and product revenue of $21,495. For the second quarter of 2017, revenue of $2,597 was entirely marketplace revenue. |
||||||
| (3) A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as "Other Services." |
||||||
| (4) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. The expenses are excluded from segment results as they are not reviewed by the CODM as part of segment performance. |
||||||
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
|||
| Amounts expressed in thousands of US dollars ("$") except for number of shares & per share data |
|||
| For the Six Months ended June 30, |
|||
| 2017 |
2018 |
||
| $ |
$ |
||
| Revenue |
|||
| Digital Entertainment |
179,045 |
218,687 |
|
| Others |
16,447 |
120,136 |
|
| Total revenue |
195,492 |
338,823 |
|
| Cost of revenue |
|||
| Digital Entertainment |
(102,169) |
(125,553) |
|
| Others |
(40,375) |
(196,163) |
|
| Total cost of revenue |
(142,544) |
(321,716) |
|
| Gross profit |
52,948 |
17,107 |
|
| Operating income (expenses): |
|||
| Other operating income |
381 |
2,436 |
|
| Sales and marketing expenses |
(137,985) |
(317,224) |
|
| General and administrative expenses |
(52,852) |
(96,336) |
|
| Research and development expenses |
(12,991) |
(23,594) |
|
| Total operating expenses |
(203,447) |
(434,718) |
|
| Operating loss |
(150,499) |
(417,611) |
|
| Interest income |
473 |
5,350 |
|
| Interest expense |
(8,997) |
(11,555) |
|
| Investment (loss) gain |
(359) |
8,478 |
|
| Changes in fair value of convertible debts |
- |
(55,956) |
|
| Foreign exchange (loss) gain |
(789) |
4,684 |
|
| Loss before income tax and share of results of equity investees |
(160,171) |
(466,610) |
|
| Income tax (expense) credit |
(4,162) |
925 |
|
| Share of results of equity investees |
(862) |
(1,272) |
|
| Net loss |
(165,195) |
(466,957) |
|
| Net loss attributable to non-controlling interests |
51 |
641 |
|
| Net loss attributable to Sea Limited's ordinary shareholders |
(165,144) |
(466,316) |
|
| Adjusted net loss (1) |
(153,834) |
(385,417) |
|
| Loss per share: |
|||
| Basic and diluted |
(0.94) |
(1.39) |
|
| Shares used in loss per share computation: |
|||
| Basic and diluted |
174,988,779 |
336,531,721 |
|
| (1) For a discussion of the use of non-GAAP financial measures, see "Non-GAAP Financial Measures." |
|||
| UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| Amounts expressed in thousands of US dollars ("$") |
|||
| As of December 31, |
As of June 30, |
||
| 2017 |
2018 |
||
| $ |
$ |
||
| ASSETS |
|||
| Current assets |
|||
| Cash and cash equivalents |
1,347,361 |
1,477,140 |
|
| Restricted cash |
95,300 |
154,207 |
|
| Accounts receivable, net |
61,846 |
55,114 |
|
| Prepaid expenses and other assets |
186,181 |
270,026 |
|
| Inventories, net |
9,790 |
16,906 |
|
| Short-term investment |
18,000 |
− |
|
| Amounts due from related parties |
2,235 |
5,904 |
|
| Total current assets |
1,720,713 |
1,979,297 |
|
| Non-current assets |
|||
| Property and equipment, net |
74,348 |
121,920 |
|
| Intangible assets, net |
37,333 |
29,591 |
|
| Long-term investments |
28,216 |
71,006 |
|
| Prepaid expenses and other assets |
46,297 |
63,801 |
|
| Restricted cash |
2,317 |
2,369 |
|
| Deferred tax assets |
48,104 |
56,428 |
|
| Goodwill |
30,952 |
30,952 |
|
| Total non-current assets |
267,567 |
376,067 |
|
| Total assets |
1,988,280 |
2,355,364 |
|
| UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS |
||
| Amounts expressed in thousands of US dollars ("$") |
||
| As of December 31, |
As of June 30, |
|
| 2017 |
2018 |
|
| $ |
$ |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||
| Current liabilities |
||
| Accounts payable |
8,644 |
33,920 |
| Accrued expenses and other payables |
285,248 |
404,900 |
| Advances from customers |
27,155 |
24,716 |
| Amount due to related parties |
36,790 |
32,668 |
| Short-term bank borrowings |
2,013 |
− |
| Deferred revenue |
268,241 |
273,688 |
| Income taxes payable |
9,614 |
8,031 |
| Total current liabilities |
637,705 |
777,923 |
| Non-current liabilities |
||
| Accrued expenses and other payables |
7,547 |
8,429 |
| Deferred revenue |
133,481 |
184,841 |
| Convertible debts |
726,950 |
1,145,836 |
| Deferred tax liabilities |
4,378 |
3,954 |
| Unrecognized tax benefits |
3,088 |
2,938 |
| Total non-current liabilities |
875,444 |
1,345,998 |
| Total liabilities |
1,513,149 |
2,123,921 |
| Shareholders' equity |
||
| Class A ordinary shares |
91 |
94 |
| Class B ordinary shares |
76 |
76 |
| Additional paid-in capital |
1,564,656 |
1,776,246 |
| Accumulated other comprehensive income |
10,701 |
24,984 |
| Statutory reserves |
46 |
46 |
| Accumulated deficit |
(1,106,545) |
(1,572,861) |
| Total Sea Limited shareholders' equity |
469,025 |
228,585 |
| Non-controlling interests |
6,106 |
2,858 |
| Total shareholders' equity |
475,131 |
231,443 |
| Total liabilities and shareholders' equity |
1,988,280 |
2,355,364 |
| UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||
| Amounts expressed in thousands of US dollars ("$") |
||
| For the Six Months ended June 30, |
||
| 2017 |
2018 |
|
| $ |
$ |
|
| Net cash used in operating activities |
(115,731) |
(283,113) |
| Net cash used in investing activities |
(17,393) |
(61,851) |
| Net cash generated from financing activities |
626,976 |
544,791 |
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash |
3,486 |
(11,089) |
| Net increase in cash, cash equivalents and restricted cash |
497,338 |
188,738 |
| Cash, cash equivalents and restricted cash at beginning of the period |
190,824 |
1,444,978 |
| Cash, cash equivalents and restricted cash at end of the period |
688,162 |
1,633,716 |
1 UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital entertainment, e-commerce and digital financial services. The Chief Operation 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, 2018 |
||||||
| Digital Entertainment |
E- |
Digital |
Other Services(1) |
Unallocated |
Consolidated |
|
| $ |
$ |
$ |
$ |
$ |
$ |
|
| Revenue |
108,029 |
54,655 |
2,866 |
18,229 |
- |
183,779 |
| Operating income (loss) |
15,137 |
(195,034) |
(7,297) |
(14,900) |
(17,423) |
(219,517) |
| Non-operating loss, net |
(30,752) |
|||||
| Income tax credit |
170 |
|||||
| Share of results of equity investees |
(689) |
|||||
| Net loss |
(250,788) |
|||||
| For the Three Months ended June 30, 2017 |
||||||
| Digital Entertainment |
E- |
Digital |
Other Services(1) |
Unallocated |
Consolidated |
|
| $ |
$ |
$ |
$ |
$ |
$ |
|
| Revenue |
91,459 |
1,150 |
5,342 |
3,596 |
- |
101,547 |
| Operating income (loss) |
16,020 |
(77,438) |
(11,309) |
(3,326) |
(6,413) |
(82,466) |
| Non-operating loss, net |
(7,193) |
|||||
| Income tax expense |
(2,230) |
|||||
| Share of results of equity investees |
(230) |
|||||
| Net loss |
(92,119) |
|||||
| (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 and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. The expenses are excluded from segment results as they are not reviewed by the CODM as part of segment performance. |
||||||
| SUPPLEMENTAL OPERATIONAL METRICS |
|||||
| For the Three Months 2018 |
For the Three Months 2018 |
||||
| Digital Entertainment |
Unit |
||||
| Quarterly active users |
millions |
126.7 |
160.6 |
||
| Monthly active users (last month) |
millions |
77.4 |
90.6 |
||
| Quarterly paying users |
millions |
7.2 |
6.6 |
||
| Average revenue per user |
US$ |
1.2 |
0.9 |
||
| Average revenue per paying user |
US$ |
20.3 |
21.1 |
||
| E-commerce |
|||||
| Gross GMV |
US$ millions |
1,941.4 |
2,221.8 |
||
| Gross orders |
millions |
111.4 |
127.8 |
||
| Digital Financial Services |
|||||
| GTV |
US$ millions |
1,702.2 |
2,463.9 |
||
