Sea Limited
SE
incurred first-quarter 2021 loss of 62 cents per share, missing the Zacks Consensus Estimate by 59%. Moreover, the figure was wider than the year-ago quarter’s reported loss of 52 cents.
However, revenues of $1.76 billion jumped 146.7% 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 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 $781.3 million surged 111.4% 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
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Sea Limited Sponsored ADR Quote
Notably, quarterly active users (QAUs) reached 648.8 million, up 61.4% year over year. Quarterly paying users of 79.8 million soared 123.5% year over year, reflecting 12.3% of QAUs in the first quarter.
Average bookings per user for the reported quarter were $1.70 compared with $1.30 in the year-ago quarter. Bookings surged 117.4% year over year to $1.1 billion.
Moreover, in the quarter under review, Free Fire continued to be the highest-grossing mobile game in Latin America, Southeast Asia and India, according to App Annie.
E-commerce (Shopee) and other services revenues were $922.3 million, up 250.4% from the year-ago quarter.
E-commerce revenues included $715.9 million of marketplace revenues, up 285% 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 167.1% year over year to $206.4 million.
Gross orders for the quarter under review totaled 1.1 billion, up 153% year over year. Gross merchandise value was $12.6 billion, up 103.2% year over year.
Finally, sales of goods soared 166.8% year over year to $209.9 million in the first quarter of 2021.
Shopee’s Popularity Spurs Growth
In Indonesia, Shopee continued to rank first by average monthly active users and total time spent in app on Android in the Shopping category for the first quarter of 2021, 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 total time spent on Android apps, according to App Annie data.
Digital Financial Services Details
Digital Financial Services revenues were $51.3 million up 396% year over year.
Mobile wallet total payment volume for the first quarter surpassed $3.4 billion. Further, quarterly paying users for mobile wallet services surpassed 26.1 million in the first quarter.
Notably, Sea’s expanded partnership with
Alphabet
GOOGL
division Google to offer its mobile wallet as a payment option for the Google Play Store in Indonesia has been a key catalyst.
Operating Details
Gross profit surged a whopping 212% year over year to $645.4 million in first-quarter 2021.
Adjusted EBITDA was $88.1 million against the loss of $69.9 million in the year-ago quarter.
Sales and marketing expenses flared up 120.2% year over year to $679 million in the first quarter. Digital entertainment sales and marketing expenses increased 111.9% year over year. While e-commerce sales and marketing expense jumped 119.2%, Digital Financial Services witnessed a whopping 113% growth.
General and administrative expenses shot up 96.1% to $248.9 million. This year-over-year growth was attributed to higher staff compensation and benefits costs.
Research and development expenses soared 118.5% to $141.1 million.
Operating loss was $348.4 million compared with loss of $267.7 million in the year-ago quarter.
Balance Sheet & Other Details
As of Mar 31, 2021, Sea had cash and cash equivalents of $6.83 billion compared with $7.05 billion as of Dec 31, 2020.
Cash flow from operations was $318.3 million at the end of the first quarter.
Zacks Rank & Stocks to Consider
Sea currently carries a Zacks Rank #3 (Hold).
Dell Technologies
DELL
and
DXC Technology
DXC
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
.
DXC is set to report its quarterly results on May 26. Dell is scheduled to report the same on May 27.
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