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Sea (SE) Incurs Q4 Loss, Gets a Top-Line Boost on Free Fire
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Sea Limited (SE - Free Report) incurred fourth-quarter 2020 loss of 87 cents per share, missing the Zacks Consensus Estimate by 4.8%. Moreover, the figure was wider than the year-ago quarter’s reported loss of 53 cents.
However, revenues of $1.57 billion jumped 101.6% on a year-over-year basis.
The year-over-year upside can be attributed to growth in the company’s digital entertainment business, especially the self-developed game — Free Fire — and the continued monetization efforts in its e-commerce business.
Top-Line Details
Sea operates three core businesses across digital entertainment, e-commerce plus digital payments and financial services known as Garena, Shopee and SeaMoney, respectively.
Digital entertainment (Garena) revenues of $693.4 million surged 71.6% year over year. This was primarily driven by continued quarterly active-user growth and further deepening of paying-user penetration, driven by the consistent strong performance of Free Fire.
Sea Limited Sponsored ADR Price, Consensus and EPS Surprise
Per App Annie data cited by Sea, Free Fire was the most-downloaded mobile game globally for 2020. Moreover, Free Fire continued to be the highest-grossing mobile game in Latin America, Southeast Asia and India for the fourth quarter.
Notably, quarterly active users (QAUs) reached 610.6 million, up 72.1% year over year. Quarterly paying users of 73.1 million soared 119.5% year over year, reflecting 12% of QAUs in the second quarter.
Average bookings per user for the reported quarter were $1.70 compared with $1.40 in the year-ago quarter. Bookings surged 111.1% to $1 billion.
Moreover, in the quarter under review, Free Fire e-sports tournaments accumulated more than 170 million online views.
E-commerce (Shopee) and other services revenues were $842.2 million, up 178.3% from the year-ago quarter.
E-commerce revenues included $627.6 million of marketplace revenues, up 175.4% year over year. Marketplace revenues primarily consist of transaction-based fees, and advertising income and revenues generated from other value-added services.
Product revenues, which primarily consist of revenues generated from direct sales, surged 187.1% year over year to $214.6 million.
Gross orders for the quarter under review totaled 1 billion, up 134.6% year over year. Gross merchandise value was $11.9 billion, up 112.5% year over year.
Finally, sales of goods soared 182.7% year over year to $216.6 million in the fourth quarter of 2020.
Shopee’s Popularity Spurs Growth
In Indonesia, Shopee registered more than 430 million orders, or above 4.7 million orders on a daily-average basis, reflecting a skyrocketing increase of 128% year over year in the fourth quarter.
Shopee also ranked first in Indonesia by average monthly active users, downloads and total time devoted to apps on Android in the Shopping category during the fourth quarter, per App Annie.
Moreover, both in Southeast Asia and Taiwan, Shopee claimed the number one spot in the Shopping category by average monthly active users and the total time spent on Android apps, according to App Annie data.
Digital Financial Services Details
Digital Financial Services revenues were $24.4 million compared with $3.2 million in the year-ago quarter.
Mobile wallet total payment volume for the fourth quarter surpassed $2.9 billion.
Further, quarterly paying users for mobile wallet services were more than 23.2 million in the fourth quarter.
Notably, Sea recently expanded its partnership with Alphabet (GOOGL - Free Report) division Google to offer its mobile wallet as a payment option for the Google Play Store in Indonesia.
Operating Details
Gross profit surged a whopping 101.5% year over year to $533.7 million in fourth-quarter 2020. This massive growth was driven by a solid revenue contribution from Sea’s self-developed game.
Adjusted EBITDA was $48.7 million compared with the loss of $104.9 million in the year-ago quarter.
Sales and marketing expenses flared up 94.7% year over year to $665.2 million in the fourth quarter. Digital entertainment sales and marketing expenses increased 37.4% year over year. While e-commerce sales and marketing expense jumped 72.1%, Digital Financial Services witnessed a whopping 292.4% growth.
General and administrative expenses shot up 72.3% to $189 million. This year-over-year growth was attributed to higher staff compensation and benefits costs.
Research and development expenses soared 121.4% to $109.5 million.
Operating loss was $357.3million compared with loss of $230 million in the year-ago quarter.
Balance Sheet & Other Details
As of Dec 31, 2020, Sea had cash and cash equivalents of $7.05 billion.
Cash flow from operations was $185.4 million at the end of the fourth quarter.
Markedly, Sea has acquired 100% of Composite Capital Management, a Hong Kong-licensed global investment management firm. The company has established Sea Capital, a platform to manage Sea’s overall investment efforts. The company has allocated an initial $1 billion to be deployed by Sea Capital over the next few years.
Guidance
For 2021, Sea expects digital entertainment bookings between $4.3 billion and $4.5 billion, indicating 38.1% growth at the mid-point on a year-over-year basis.
Moreover, revenues for e-commerce are expected between $4.5 billion and $4.7 billion. The midpoint of the guidance represents an increase of 112.3% from 2020.
Avid Technology is set to report its quarterly results on Mar 9. Semtech is likely to report the same on Mar 10.
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Sea (SE) Incurs Q4 Loss, Gets a Top-Line Boost on Free Fire
Sea Limited (SE - Free Report) incurred fourth-quarter 2020 loss of 87 cents per share, missing the Zacks Consensus Estimate by 4.8%. Moreover, the figure was wider than the year-ago quarter’s reported loss of 53 cents.
However, revenues of $1.57 billion jumped 101.6% on a year-over-year basis.
The year-over-year upside can be attributed to growth in the company’s digital entertainment business, especially the self-developed game — Free Fire — and the continued monetization efforts in its e-commerce business.
Top-Line Details
Sea operates three core businesses across digital entertainment, e-commerce plus digital payments and financial services known as Garena, Shopee and SeaMoney, respectively.
Digital entertainment (Garena) revenues of $693.4 million surged 71.6% year over year. This was primarily driven by continued quarterly active-user growth and further deepening of paying-user penetration, driven by the consistent strong performance of Free Fire.
Sea Limited Sponsored ADR Price, Consensus and EPS Surprise
Sea Limited Sponsored ADR price-consensus-eps-surprise-chart | Sea Limited Sponsored ADR Quote
Per App Annie data cited by Sea, Free Fire was the most-downloaded mobile game globally for 2020. Moreover, Free Fire continued to be the highest-grossing mobile game in Latin America, Southeast Asia and India for the fourth quarter.
Notably, quarterly active users (QAUs) reached 610.6 million, up 72.1% year over year. Quarterly paying users of 73.1 million soared 119.5% year over year, reflecting 12% of QAUs in the second quarter.
Average bookings per user for the reported quarter were $1.70 compared with $1.40 in the year-ago quarter. Bookings surged 111.1% to $1 billion.
Moreover, in the quarter under review, Free Fire e-sports tournaments accumulated more than 170 million online views.
E-commerce (Shopee) and other services revenues were $842.2 million, up 178.3% from the year-ago quarter.
E-commerce revenues included $627.6 million of marketplace revenues, up 175.4% year over year. Marketplace revenues primarily consist of transaction-based fees, and advertising income and revenues generated from other value-added services.
Product revenues, which primarily consist of revenues generated from direct sales, surged 187.1% year over year to $214.6 million.
Gross orders for the quarter under review totaled 1 billion, up 134.6% year over year. Gross merchandise value was $11.9 billion, up 112.5% year over year.
Finally, sales of goods soared 182.7% year over year to $216.6 million in the fourth quarter of 2020.
Shopee’s Popularity Spurs Growth
In Indonesia, Shopee registered more than 430 million orders, or above 4.7 million orders on a daily-average basis, reflecting a skyrocketing increase of 128% year over year in the fourth quarter.
Shopee also ranked first in Indonesia by average monthly active users, downloads and total time devoted to apps on Android in the Shopping category during the fourth quarter, per App Annie.
Moreover, both in Southeast Asia and Taiwan, Shopee claimed the number one spot in the Shopping category by average monthly active users and the total time spent on Android apps, according to App Annie data.
Digital Financial Services Details
Digital Financial Services revenues were $24.4 million compared with $3.2 million in the year-ago quarter.
Mobile wallet total payment volume for the fourth quarter surpassed $2.9 billion.
Further, quarterly paying users for mobile wallet services were more than 23.2 million in the fourth quarter.
Notably, Sea recently expanded its partnership with Alphabet (GOOGL - Free Report) division Google to offer its mobile wallet as a payment option for the Google Play Store in Indonesia.
Operating Details
Gross profit surged a whopping 101.5% year over year to $533.7 million in fourth-quarter 2020. This massive growth was driven by a solid revenue contribution from Sea’s self-developed game.
Adjusted EBITDA was $48.7 million compared with the loss of $104.9 million in the year-ago quarter.
Sales and marketing expenses flared up 94.7% year over year to $665.2 million in the fourth quarter. Digital entertainment sales and marketing expenses increased 37.4% year over year. While e-commerce sales and marketing expense jumped 72.1%, Digital Financial Services witnessed a whopping 292.4% growth.
General and administrative expenses shot up 72.3% to $189 million. This year-over-year growth was attributed to higher staff compensation and benefits costs.
Research and development expenses soared 121.4% to $109.5 million.
Operating loss was $357.3million compared with loss of $230 million in the year-ago quarter.
Balance Sheet & Other Details
As of Dec 31, 2020, Sea had cash and cash equivalents of $7.05 billion.
Cash flow from operations was $185.4 million at the end of the fourth quarter.
Markedly, Sea has acquired 100% of Composite Capital Management, a Hong Kong-licensed global investment management firm. The company has established Sea Capital, a platform to manage Sea’s overall investment efforts. The company has allocated an initial $1 billion to be deployed by Sea Capital over the next few years.
Guidance
For 2021, Sea expects digital entertainment bookings between $4.3 billion and $4.5 billion, indicating 38.1% growth at the mid-point on a year-over-year basis.
Moreover, revenues for e-commerce are expected between $4.5 billion and $4.7 billion. The midpoint of the guidance represents an increase of 112.3% from 2020.
Zacks Rank & Stocks to Consider
Sea currently carries a Zacks Rank #3 (Hold).
Avid Technology and Semtech (SMTC - Free Report) are a couple of better-ranked stocks in the broader computer and technology sector. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avid Technology is set to report its quarterly results on Mar 9. Semtech is likely to report the same on Mar 10.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>