Sea Limited Reports Second Quarter 2019 Results
SINGAPORE, Aug. 20, 2019 /PRNewswire/ -- Sea Limited (NYSE: SE) ("Sea" or the "Company") today announced its financial results for the quarter ended June 30, 2019.
Second Quarter 2019 Highlights
- Group
-- Total adjusted revenue was US$665.4 million, up 203.1% year-on-year from
US$219.6 million for the second quarter of 2018.
-- Total adjusted EBITDA was US$(11.0) million compared to US$(161.9)
million for the second quarter of 2018.
- Digital Entertainment
-- Adjusted revenue was US$443.2 million, up 218.6% year-on-year from
US$139.1 million for the second quarter of 2018.
-- Adjusted EBITDA was US$263.8 million, up 442.6% year-on-year from
US$48.6 million for the second quarter of 2018.
-- Adjusted EBITDA margin increased to 59.5% for the second quarter of 2019
from 34.9% for the second quarter of 2018.
-- Quarterly active users ("QAUs") reached 310.5 million, an increase of
93.3% year-on-year from 160.6 million for the second quarter of 2018.
-- Quarterly paying users continued to grow, accounting for 8.4% of QAUs
for the second quarter of 2019, increasing from 4.1% for the same period
in 2018.
-- Average revenue per user was US$1.4 compared to US$0.9 for the second
quarter of 2018.
-- Our self-developed game, Free Fire, continued to grow. It was the third
most downloaded mobile game and the most downloaded battle royale game
globally across the Google Play and iOS App Stores combined in the
second quarter, according to App Annie. It also continued to be the top
ranking game by monthly active users and consumer spending in Latin
America([1]) in the second quarter, according to App Annie.
-- We started pre-registration for Call of Duty®: Mobile, a mobile version
of the classic action game which is a collaboration between Activision
and Tencent Games, under our right of first refusal arrangement with
Tencent, and published Garena Speed Drifters in Latin America, the first
third-party game that we are publishing in this region.
-- Our esports efforts continue to support the growth of our most popular
titles. In July, we hosted the Arena of Valor World Cup in Vietnam, in
partnership with Tencent. This global Arena of Valor event was held in
our region for the first time, and the tournament attracted more than 74
million cumulative views online. In July, we also hosted the largest
ever esports event for Free Fire in Brazil, which attracted over 12
million cumulative views online, with the final match recording peak
concurrent viewers of over 800 thousand on YouTube.
- E-commerce
-- Adjusted revenue was US$177.4 million, up 201.7% year-on-year from
US$58.8 million for the second quarter of 2018.
-- Adjusted revenue included US$137.8 million of marketplace revenue([2]),
up 269.2% year-on-year from US$37.3 million for the second quarter of
2018, and US$39.7 million of product revenue([3]), up 84.5% year-on-year
from US$21.5 million for the second quarter of 2018.
-- Gross merchandise value ("GMV") was US$3.8 billion, an increase of 72.3%
year-on-year from US$2.2 billion for the second quarter of 2018.
-- Adjusted revenue as a percentage of total GMV increased to 4.6% in the
second quarter of 2019, up from 2.6% for the same period a year ago.
Adjusted marketplace revenue as a percentage of total GMV was 3.6% in
the second quarter of 2019.
-- Gross orders for the quarter totaled 246.3 million, an increase of 92.7%
year-on-year from 127.8 million for the second quarter of 2018.
-- Sales and marketing expenses were US$163.7 million, an increase of 18.6%
year-on-year from US$138.0 million for the second quarter of 2018.
-- Adjusted EBITDA was US$(248.3) million compared to US$(188.3) million
for the second quarter of 2018. Adjusted EBITDA loss per order decreased
by US 46 cents, or 31.3%, in the second quarter, compared to the same
period in 2018.
-- In Taiwan, Shopee continued to record a positive quarterly adjusted
EBITDA before allocation of the headquarters' common expenses in the
second quarter of 2019.
-- In Indonesia, its largest market, Shopee's year-on-year growth rate
accelerated compared to the previous quarter, with over 110 million
orders registered in the second quarter, or a daily average of over 1.2
million orders.
-- Shopee ranked number one in the Shopping category by average monthly
active users, and by downloads across the Google Play and iOS App Stores
combined, in both Southeast Asia and Taiwan in the second quarter,
according to App Annie.
-- Shopee was also the top ranking app by total time spent in app on
Android in the second quarter in Southeast Asia as a whole, and in each
of our five biggest markets, according to App Annie.
-- In mid-August, Shopee announced the global football icon, Cristiano
Ronaldo, as its newest brand ambassador in Southeast Asia and Taiwan. He
will work with Shopee on a wide range of activities in the region,
starting with Shopee's signature annual shopping event, 9.9 Super
Shopping Day.
[1] Latin America rankings data for
App Annie is based on Argentina,
Brazil, Chile, Colombia, Mexico, and
Uruguay.
[2] Marketplace revenue mainly
consists of transaction-based fees
and advertising income and revenue
generated from other value-added
services.
[3] Product revenue mainly consists
of revenue generated from direct
sales.
Guidance
We are raising the guidance for both digital entertainment and e-commerce for the full year of 2019.
We now expect adjusted revenue for digital entertainment to be between US$1.6 billion and US$1.7 billion, representing 142.0% to 157.2% growth from 2018. This compares to the previously disclosed guidance of between US$1.2 billion and US$1.3 billion, representing 81.5% to 96.7% growth.
We also expect adjusted revenue for e-commerce to be between US$780 million and US$820 million, representing 168.3% to 182.1% growth from 2018. This compares to the previously disclosed guidance of between US$630 million and US$660 million, representing 116.7% to 127.0% growth.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars "$")
For the Three Months
ended June 30,
2018 2019
$
$ YOY%
Revenue
Service revenue
Digital Entertainment 108,029 229,478 112.4%
E-commerce and other services 53,923 165,741 207.4%
Sales of goods 21,827 40,932 87.5%
183,779 436,151 137.3%
Cost of revenue
Cost of service
Digital Entertainment (61,981) (94,952) 53.2%
E-commerce and other services (91,036) (198,431) 118.0%
Cost of goods sold (22,180) (45,324) 104.3%
(175,197) (338,707) 93.3%
Gross profit 8,582 97,444 1,035.4%
Other operating income 1,707 2,437 42.8%
Sales and marketing expenses (165,075) (198,074) 20.0%
General and administrative expenses (51,849) (101,267) 95.3%
Research and development expenses (12,882) (35,059) 172.2%
Total operating expenses (228,099) (331,963) 45.5%
Operating loss (219,517) (234,519) 6.8%
Non-operating loss, net (30,752) (29,210) (5.0)%
Income tax credit (expense) 170 (15,278) (9,087.1)%
Share of results of equity investees (689) (1,089) 58.1%
Net loss (250,788) (280,096) 11.7%
Net loss excluding share-based compensation and (198,715) (215,114) 8.3%
changes in fair value of the 2017 convertible notes
Adjusted revenue of Digital Entertainment (1) 139,102 443,185 218.6%
Adjusted revenue of E-commerce (1) 58,815 177,449 201.7%
Adjusted revenue of Digital Financial Services (1) 3,413 2,791 (18.2)%
Revenue of Other Services 18,229 41,991 130.4%
Total adjusted revenue
(1) 219,559 665,416 203.1%
Adjusted EBITDA for Digital Entertainment (1) 48,612 263,760 442.6%
Adjusted EBITDA for E-commerce (1) (188,315) (248,251) 31.8%
Adjusted EBITDA for Digital Financial Services (1) (6,780) (18,144) 167.6%
Adjusted EBITDA for Other Services (1) (12,937) (4,996) (61.4)%
Unallocated expenses (2) (2,510) (3,339) 33.0%
Total adjusted EBITDA
(1) (161,930) (10,970) (93.2)%
(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, 2019 Compared to Three Months Ended June 30, 2018
Revenue
The table below sets forth revenue and adjusted revenue generated from our reported segments. Amounts are expressed in thousands of US dollars ("$").
For the Three Months ended June 30,
2018 2019
$
% of
$
% of YOY%
revenue
revenue
Revenue
Service revenue
Digital Entertainment 108,029 58.8 229,478 52.6 112.4%
E-commerce and other services 53,923 29.3 165,741 38.0 207.4%
Sales of goods 21,827 11.9 40,932 9.4 87.5%
Total revenue 183,779 100.0 436,151 100.0 137.3%
2018 2019
$
% of total
$
% of total YOY%
adjusted adjusted
revenue revenue
Adjusted revenue
Service revenue
Digital Entertainment 139,102 63.4 443,185 66.6 218.6%
E-commerce and other services 58,630 26.7 181,299 27.2 209.2%
Sales of goods 21,827 9.9 40,932 6.2 87.5%
Total adjusted revenue 219,559 100.0 665,416 100.0 203.1%
Our total revenue increased by 137.3% to US$436.2 million in the second quarter of 2019 from US$183.8 million in the second quarter of 2018. Our total adjusted revenue increased by 203.1% to US$665.4 million in the second quarter of 2019 from US$219.6 million in the second quarter of 2018. These increases were mainly driven by the growth in each of the segments detailed as follows:
-- Digital Entertainment: Revenue increased by 112.4% to US$229.5 million
in the second quarter of 2019 from US$108.0 million in the second
quarter of 2018. Adjusted revenue increased by 218.6% to US$443.2
million in the second quarter of 2019 from US$139.1 million in the
second quarter of 2018. This increase was primarily due to the increase
of our active user base as well as the deepened paying user penetration
as we continue to bring new and engaging content to our users and
enhance the game and monetization features based on a deep understanding
of local preferences and conditions as well as our strong efforts in
esports and community-building.
-- E-commerce and other services: Revenue increased by 207.4% to US$165.7
million in the second quarter of 2019 from US$53.9 million in the second
quarter of 2018. Adjusted revenue increased by 209.2% to US$181.3
million in the second quarter of 2019 from US$58.6 million in the second
quarter of 2018. This increase was primarily driven by the growth of our
e-commerce marketplace, and positive development in each of our
marketplace revenue streams - transaction-based fees, value-added
services, and advertising.
-- Sales of goods: Revenue increased by 87.5% to US$40.9 million in the
second quarter of 2019 from US$21.8 million in the second quarter of
2018. The increase was primarily due to the increase in our product
offerings.
Cost of Revenue
Our total cost of revenue increased by 93.3% to US$338.7 million in the second quarter of 2019 from US$175.2 million in the second quarter of 2018.
-- Digital Entertainment: Cost of revenue increased by 53.2% to US$95.0
million in the second quarter of 2019 from US$62.0 million in the second
quarter of 2018. The increase was largely in line with revenue growth in
our digital entertainment business. Improvement in gross profit margins
was largely due to higher revenue contribution from our self-developed
game.
-- E-commerce and other services: Cost of revenue for our e-commerce and
other services combined increased by 118.0% to US$198.4 million in the
second quarter of 2019 from US$91.0 million in the second quarter of
2018. The increase was primarily due to costs incurred in line with
growth of our e-commerce marketplace, including, among other costs,
higher bank transaction fees driven by GMV growth, higher costs
associated with value-added services and other ancillary services we
provided to our e-commerce platform users, as well as higher staff
compensation and benefit costs.
-- Cost of goods sold: Cost of goods sold increased by 104.3% to US$45.3
million in the second quarter of 2019 from US$22.2 million in the second
quarter of 2018. The increase was largely in line with the increase in
our product offerings.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 20.0% to US$198.1 million in the second quarter of 2019 from US$165.1 million in the second quarter of 2018. The table below sets forth the breakdown of the sales and marketing expenses of our two major reporting segments. Amounts are expressed in thousands of US dollars ("$").
For the Three Months
ended June 30,
2018 2019 YOY%
Sales and Marketing
Expenses
$
$
Digital Entertainment 18,916 19,219 1.6%
E-commerce 138,042 163,707 18.6%
-- E-commerce: Sales and marketing expenses increased by 18.6% to US$163.7
million in the second quarter of 2019 from US$138.0 million in the
second quarter of 2018. The increase in marketing efforts was aligned
with our strategy to fully capture the market growth opportunity and was
primarily attributable to the ramping up of brand marketing as well as
higher staff compensation and benefit costs.
General and Administrative Expenses
Our general and administrative expenses increased by 95.3% to US$101.3 million in the second quarter of 2019 from US$51.8 million in the second quarter of 2018. This increase was primarily due to the expansion of our staff force and the increase in office facilities and related expenses.
Research and Development Expenses
Our research and development expenses increased by 172.2% to US$35.1 million in the second quarter of 2019 from US$12.9 million in the second quarter of 2018, primarily due to the increase in research and development staff force.
Non-operating Income or Losses, Net
Non-operating income or losses consist of interest income, interest expense, investment gain (loss), fair value change for the 2017 convertible notes and foreign exchange gain (loss). We recorded a net non-operating loss of US$29.2 million in the second quarter of 2019, compared to a net non-operating loss of US$30.8 million in the second quarter of 2018, both of which arose mainly from the fair value loss on the 2017 convertible notes.
Income Tax Expense
We had a net income tax expense of US$15.3 million in the second quarter of 2019 and net income tax credit of US$0.2 million in the second quarter of 2018. The income tax expense in the second quarter of 2019 was primarily due to withholding tax and corporate income tax expenses incurred by our digital entertainment segment, partially offset by deferred tax assets recognized during the period.
Net Loss
As a result of the foregoing, we had net losses of US$280.1 million and US$250.8 million in the second quarter of 2019 and 2018, respectively.
Net Loss Excluding Share-based Compensation and Changes in Fair Value of the 2017 Convertible Notes
Net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, was US$215.1 million and US$198.7 million in the second quarter of 2019 and 2018, respectively.
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 conference call and webcast are as follows:
Date and time: 7:30 AM U.S. Eastern Time on August 20, 2019
7:30 PM Singapore /Hong Kong Time on August
20, 2019
Webcast link: https://services.choruscall.com/links/
se190820.html
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: 7758370
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 businesses 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 businesses and 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:
-- "Adjusted revenue" of our digital entertainment segment represents
revenue of the digital entertainment segment plus change in digital
entertainment deferred revenue. This financial measure is used as an
approximation of cash spent by our users in the applicable period that
is attributable to our digital entertainment segment. Although other
companies may present such measures related to gross billings
differently or not at all, we believe that the adjusted revenue of our
digital entertainment segment provides useful information to investors
about the segment's core operating results, enhancing their
understanding of our past performance and future prospects.
-- "Adjusted revenue" of our e-commerce segment represents revenue of the
e-commerce segment (currently consisting of marketplace revenue and
product revenue) plus certain revenues that were net-off against their
corresponding sales incentives. This financial measure enables our
investors to follow trends in our e-commerce monetization capability
over time and is a useful performance measure.
-- "Adjusted revenue" of our digital financial services segment represents
revenue of the digital financial services segment plus certain revenues
that were net-off against their corresponding sales incentives.
-- "Total adjusted revenue" represents the sum of the adjusted revenue of
our digital entertainment segment, the adjusted revenue of our
e-commerce segment, the adjusted revenue of our digital financial
services segment, and the revenue of our other services. This financial
measure enables our investors to follow trends in our overall group
monetization capability over time and is a useful performance measure.
-- "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. Although other companies may calculate adjusted
EBITDA differently or not present it at all, 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. Although other companies may calculate adjusted EBITDA
differently or not present it at all, 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. Although other companies
may calculate adjusted EBITDA differently or not present it at all, 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 unaudited 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, 2019
Digital
E-
Digital
Other
Unallocated
Consolidated
Entertainment commerce Financial Services(3) expenses(4)
Services
---
$
$
$
$
$
$
Revenue 229,478 162,615(1) 2,067 41,991 436,151
Changes in deferred revenue 213,707 213,707
Sales incentives net-off - 14,834 724 15,558
---
Adjusted revenue 443,185
177,449 (2) 2,791 41,991 665,416
Operating income (loss) 98,126 (269,648) (18,564) (7,868) (36,565) (234,519)
Net effect of changes in deferred
revenue and its related cost
161,283 161,283
Depreciation and Amortization 4,351 21,397 420 2,872 29,040
Share-based compensation - 33,226 33,226
---
Adjusted EBITDA 263,760 (248,251) (18,144) (4,996) (3,339) (10,970)
For the Three Months ended June 30, 2018
Digital
E-
Digital
Other
Unallocated
Consolidated
Entertainment commerce Financial Services(3) expenses(4)
Services
---
$
$
$
$
$
$
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)
(1) For the second quarter of 2019, revenue of $162,615 included marketplace revenue of $122,955 and product revenue
of $39,660 net of sales incentives. 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.
(2) For the second quarter of 2019, adjusted revenue of $177,449 included marketplace revenue of $137,789 and product
revenue of $39,660. For the second quarter of 2018, adjusted revenue of $58,815 included marketplace revenue of
$37,320 and product revenue of $21,495.
(3) A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable
segments are grouped together as "Other Services."
(4) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs
such as professional fees and other miscellaneous items that are not allocated to segments. The expenses are excluded
from segment results as they are not reviewed by the CODM as part of segment performance.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Amounts expressed in thousands of US dollars ("$") except for number of shares & per share data
---
For the Six Months
ended June 30,
2018 2019
---
$
$
Revenue
Service revenue
Digital Entertainment 218,687 402,877
E-commerce and other services 86,374 296,404
Sales of goods 33,762 88,736
Total revenue 338,823 788,017
Cost of revenue
Cost of service
Digital Entertainment (125,553) (179,594)
E-commerce and other services (161,829) (372,796)
Cost of goods sold (34,334) (98,727)
Total cost of revenue (321,716) (651,117)
Gross profit 17,107 136,900
Operating income (expenses):
Other operating income 2,436 5,890
Sales and marketing expenses (317,224) (376,052)
General and administrative expenses (96,336) (176,895)
Research and development expenses (23,594) (63,568)
Total operating expenses (434,718) (610,625)
Operating loss (417,611) (473,725)
Interest income 5,350 14,812
Interest expense (11,555) (20,248)
Investment gain, net 8,478 2,913
Changes in fair value of the 2017 convertible notes (55,956) (467,876)(1)
Foreign exchange gain (loss) 4,684 (1,591)
Loss before income tax and share of results of equity investees (466,610) (945,715)
Income tax credit (expense) 925 (22,483)
Share of results of equity investees (1,272) (1,507)
Net loss (466,957) (969,705)
Net loss (profit) attributable to non-controlling interests 641 (1,717)
Net loss attributable to Sea Limited's ordinary shareholders (466,316) (971,422)
Net loss excluding share-based compensation and changes in fair (385,417) (452,404)
value of the 2017 convertible notes
Loss per share:
Basic and diluted (1.39) (2.35)
Shares used in loss per share computation:
Basic and diluted 336,531,721 412,857,316
(1) Fair value loss of $467.9 million on the 2017 convertible notes was recorded as our share prices during the first half
of 2019 significantly exceeded the conversion prices of the 2017 convertible notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars ("$")
---
As of As of
December 31, June 30,
2018 2019
$
$
ASSETS
Current assets
Cash and cash equivalents 1,002,841 2,308,086
Restricted cash 254,100 320,246
Accounts receivable, net 97,782 149,143
Prepaid expenses and other assets 312,387 437,269
Inventories, net 37,689 22,523
Short-term investments 690 8,944
Amounts due from related parties 5,224 3,507
Total current assets 1,710,713 3,249,718
Non-current assets
Property and equipment, net 192,357 256,155
Operating lease right-of-use assets, net 169,780
Intangible assets, net 12,887 12,895
Long-term investments 111,022 100,399
Prepaid expenses and other assets 69,065 109,236
Restricted cash 2,371 16,572
Deferred tax assets 63,302 73,402
Goodwill 30,952 30,952
Total non-current assets 481,956 769,391
Total assets 2,192,669 4,019,109
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars ("$")
---
As of As of
December 31, June 30,
2018 2019
$
$
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 37,163 32,402
Accrued expenses and other payables 636,880 729,133
Advances from customers 29,355 37,871
Amount due to related parties 46,025 58,126
Short-term borrowings 856 1,279
Operating lease liabilities 44,324
Deferred revenue 426,675 784,345
Convertible notes 24,480
Income tax payable 9,539 9,795
Total current liabilities 1,186,493 1,721,755
Non-current liabilities
Accrued expenses and other payables 7,894 18,013
Long-term borrowings 1,026 945
Operating lease liabilities 139,605
Deferred revenue 171,262 257,903
Convertible notes 1,061,796 438,657
Deferred tax liabilities 679 554
Unrecognized tax benefits 2,974 2,733
Total non-current liabilities 1,245,631 858,410
Total liabilities 2,432,124 2,580,165
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars ("$")
---
As of
As of
December 31, June 30,
2018 2019
$
$
Shareholders' equity
Class A Ordinary shares 94 154
Class B Ordinary shares 76 76
Additional paid-in capital 1,809,232 4,469,920
Accumulated other comprehensive income 15,199 2,425
Statutory reserves 46 46
Accumulated deficit (2,067,786) (3,039,208)
Total Sea Limited shareholders' (deficit) equity (243,139) 1,433,413
Non-controlling interests 3,684 5,531
Total shareholders' (deficit) equity (239,455) 1,438,944
Total liabilities and shareholders' (deficit) equity 2,192,669 4,019,109
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands of US dollars ("$")
---
For the Six Months ended
June 30,
2018 2019
---
$
$
Net cash (used in) generated from operating activities (283,113) 7,730
Net cash used in investing activities (61,851) (164,632)
Net cash generated from financing activities 544,791 1,532,319
Effect of foreign exchange rate changes on cash, cash equivalents and (11,089) 10,175
restricted cash
Net increase in cash, cash equivalents and restricted cash 188,738 1,385,592
Cash, cash equivalents and restricted cash at beginning of the period 1,444,978 1,259,312
Cash, cash equivalents and restricted cash at end of the period 1,633,716 2,644,904
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, 2019
Digital
E-
Digital
Other
Unallocated
Consolidated
Entertainment commerce Financial Services(1) expenses(2)
Services
$
$
$
$
$
$
Revenue 229,478 162,615 2,067 41,991 436,151
Operating income (loss) 98,126 (269,648) (18,564) (7,868) (36,565) (234,519)
Non-operating loss, net (29,210)
Income tax expense (15,278)
Share of results of equity investees (1,089)
Net loss (280,096)
For the Three Months ended June 30, 2018
Digital
E-commerce
Digital
Other
Unallocated
Consolidated
Entertainment Financial Services(1) expenses(2)
Services
$
$
$
$
$
$
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)
(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
For the Three Months
ended March 31, ended June 30,
2019 2019
Digital Entertainment Unit
Quarterly active users
millions 271.6 310.5
Monthly active users (last month)
millions 170.3 185.2
Quarterly paying users
millions 20.7 26.1
Average revenue per user
US$ 1.4 1.4
Average revenue per paying user
US$ 19.0 17.0
E-commerce
Gross GMV
US$ millions 3,529.3 3,827.8
Gross orders
millions 203.5 246.3
View original content:http://www.prnewswire.com/news-releases/sea-limited-reports-second-quarter-2019-results-300904262.html
SOURCE Sea Limited
