Sea Ltd. (Singapore) Q3 FY2024 earnings call

• E-commerce: Shopee saw strong GMV and order volume growth, improved monetization in commissions and advertising. Price competitiveness, service quality via SPX Express, and progress in content ecosystem (live streaming) were highlighted. Achieved positive adjusted EBITDA in Asia and Brazil.
• Digital Financial Services: Loan book grew over 70% Y/Y, NPL ratio stable at 1.2%. Diversified funding sources and growth in consumer/SME loans.
• Digital Entertainment: Garena's Free Fire had strong performance with over 100M daily active users in Q3, new game launches, and strategic partnerships leveraging local trends.

E-commerce (Shopee): Delivered strong GMV and order volume growth. User growth was strong with average monthly active buyers up over 20% Y/Y. Achieved positive adjusted EBITDA in Asia and Brazil. GMV on track for mid-20% year-on-year growth. Digital Financial Services (SeaMoney): Loan book grew over 70% year-on-year this quarter while maintaining a stable NPL ratio. Consumer and SME loans active users reached about 24 million by end of quarter, growing over 60% Y/Y. Digital Entertainment (Garena): Free Fire's full year bookings expected to grow over 30% Y/Y. Total bookings up 24% Y/Y, adjusted EBITDA up 34% Y/Y. Need for Speed Mobile launched in Taiwan, HK, Macau and ranked #1 racing game in those markets.

• Shopee on track to deliver full year guidance of mid-20% year-on-year GMV growth.
• SeaMoney's loan book grew by over 70% Y/Y this quarter.
• Garena expects Free Fire's full year bookings to grow over 30% Y/Y.
• Shopee expected to remain profitable going forward.

• Competitive landscape changes impacting growth projections.
• Potential ceiling for ad take rate and timeline for ramp-up.
• Logistics cost management risks across end-to-end value chain.

Q: Could you provide insight into the latest competitive landscape in Q4 and impact on growth projections?

A: Forrest Li noted stable competitive landscape, maintaining mid-20s GMV growth guidance. Impact from cross-border competitors relatively small.

Q: What drove the 30 basis points uptick in ad take rate?

A: Technical revamp of ad systems, algorithm improvement, traffic utilization optimization, and improved seller ad product experience.

Q: How should we think about Shopee growth entering 2025 and competition?

A: Monitoring Q4 trend, aiming for profitable growth, with limited impact from cross-border due to price competitive advantage.

Q: What's the latest percentage of orders handled by SPX in Asia and Brazil?

A: Asia over 50%, Brazil over 70%, with cost reduction efforts across end-to-end logistics value chain.

Q: Thoughts on Free Fire's life cycle and new games?

A: Free Fire seen as still early stage with strong user growth, content freshness, and local trend collaborations. New game launches like Need for Speed Mobile mentioned.

Q: What drove 13% Q/Q growth in sales and marketing expense?

A: Revenue growth and promotional season in Q3, with expectation of sales and marketing expenses adjusting as growth stabilizes.

Q: How is DFS growth panning out beyond Indonesia?

A: Growth in Thailand, Malaysia, Brazil; penetration via Shopee users, product optimization, and new use cases outside Shopee platform.

Q: Thoughts on e-commerce penetration in Southeast Asia and expansion out of Asia?

A: Still meaningful penetration room in Southeast Asia, Brazil has growth potential, with no immediate expansion plans outside Asia beyond Brazil.

Q: Outlook for margins in Brazil and DFS?

A: Hopes for margin improvement in Brazil with profitable growth, DFS growth driven by user and product expansion with focus on user life cycle value.