SE - Earnings call transcript Q3 2020

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Operator

Good morning. Welcome to Sea Limited Third Quarter 2020 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Minju Song. ahead. go Please

Minju Song

Office. Good to Kate. I good everyone Corporate morning, Minju Thank XXXX evening third welcome Officer’s Chief Group Sea’s from call. quarter and Song you, Sea’s and earnings am conference

when includes we Also, Before we continue, measures, that such enhance share-based of our to forward-looking as would to discussion notes. fair for like may subject the as in of this not our which inherently adjusted net press used and disclosure. can in loss, GAAP businesses stated cash convertible investors’ our may the various EBITDA value as financial compensation you are future excluding non-GAAP to statements, risks and actual a make remind We I XXXX measures call of the that in release. complement and uncertainties be our these understanding believe certain changes flows of realized reasons major

with measures Corporate Chief of For Yanjun non-GAAP the discussion Chairman reconciliation Group Wang. release. section in the refer financial Tony Executive a GAAP I and non-GAAP measures on Hou; with Chief Forrest our Officer, use financial measures, and here Officer, Chief Sea’s to press Li; please and the Financial have Group of Group posted Officer,

have. business Q&A in let session that, Our Forrest. performance management any and which will to call a With by will the we share and updates, you financial highlights questions This operating followed strategy me for the over be welcome turn quarter.

Forrest Li

for Hello, call. everyone today’s joining always as you and thank

quarter very performance happy our strong business. are report another of We to across

quarter. in global sustaining of on of deepening shift market is and to our digitalization growth engagement our user robust see accelerating to platforms the during believe continued each the trend. We We user

by we acceleration. leader market core our presented capture to the As the growth opportunities are well this segments, positioned in

Our markets. to for share the well again and ability faster-growing of operational the a execute our financial see results once underline quarter and disproportionate strong

to year-on-year million. Gross grew grew level, GAAP profit reach group quarterly our reach On XXX% $X.X year-on-year revenue XX% the $XXX.X to billion.

EBITDA We also efficiency million. recorded very further This strong of adjusted the and model. bottom demonstrates results, business our reaching $XXX.X with line strength

growth are We we guidance our we strong our the the our with digital for efficiency will for believe with market drive XXXX. and we will through sustain strong fourth both to very In year leadership. extend in raising our results, line full quarter. digital In e-commerce continue further rapid performance third quarter of entertainment, the as entertainment

represents to for XXXX. expect $X.X As from a entertainment midpoint billion, of guidance. more of digital than from XX% we This revised result, an now guidance exceed growth previously bookings increase over XX% representing disclosed the the

also the revisions midpoint than and These previously GAAP net-off from plus outlook expect year for exceed increase revised strong $X.X the this both far incentives a have historical moving a represents more e-commerce XX% reflect of billion. our more revenue disclosed the sales XXXX positive fourth the The from we into and quarter. We so performance guidance. than achieved to increase XXX% guidance continued

digital me entertainment. with Let start

up Quarterly XX% Quarterly active users. strong representing performance with representing all bookings. The of XXX% Bookings of performance EBITDA XXX.X XX% increase $XXX.X up paying million, The Garena were robust XXX% user year-on-year. across active $XXX.X active was million, and quarter year-on-year, and driven third Adjusted strong quarterly paying XXX% an reached over of key standout another was year-on-year users was up our by growth. quarter for metrics. XX% million, users million, reached year-on-year. XX.X

America key and sustained taste mobile engage content continues Annie, Fire and to to performance. Free the be it ability months, Latin third of that by grossing for attract users. celebrities. encouraged actors and and Asia the App paying deliver Fire are the inspired its constantly A quarter. the for create user global high-quality We deliver Southeast ability such celebrities our strong in to continually highest in other playable preferences Fire’s active growth This According our to and artists content partnered the strong quarter. particularly reflects by with Bollywood to tailored recent our the game in base. in-game these Free and Free In as is success huge continued factor content global user characters high-quality

the example, highest playable XXXX. star character film of Bollywood in actor lead September, the released a we was grossing For a in who Indian in

We with another of more million inside introduced to song Within song weeks a various more play into which the being streamed online exclusively platforms. social a and Free X launched, artist the the XX community worked have across create popular game. was We is features times also game. for global Fire, than

new example, our ground meet highly game and been For the hang within This has an training out popular feature is with where users. the can players area socially.

This So one features and other of and far, social everyday game. average. four effect spends network the further our the about there in strengthen on stickiness time of players

to over On Free note, national recorded the quarter online XX a our for spanning tournament Brazil tournament during community date. continues months. have same the we million views over strive. tournaments This hosted X XXX accumulated held online to date. has to e-sports million Fire’s In views August,

extending strong are e-sports our audience. We events also online beyond our of the reach

on for fan Fire broader final even Fall, was For reaching and online Indonesia broadcasted XXXX base, TV an offline. example, national the Free Masters grand

improves community base and content that Free our efforts over with Our highly ensure our time. These local This engagement. and also of for our fresh turn users activities stays Fire. interactive the users in game relevant increase user ability and and grows

the into Free to the and experiences, within global with features. community As fresh and engaging continue through the and community social quarter both Fire providing will our on captivating we to we focus content XXXX, game and and look move fourth

a very franchise. runway long are We that for there ahead confident is this

expanding Shopee and capture leadership, region’s on segment. more momentum continue our e-commerce, great e-commerce we another quarter. to Turning of Building had our to share rapidly

the Shopee gross orders, year-on-year. and revenue value our XXX% to year-on-year, third monetization driving XXX% more sellers million, for deliver recorded and efficient deepening million to quarter while GMV an of continued also was of increase XXX% $XXX.X XXX.X buyers, year-on-year. up up $X.X billion, We growth. GAAP and

increase to largest We It also leadership. across Shopee million XX% It EBITDA shopping Shopee on million Asia continues third average shopping Annie. average its the category continues App to a over with to during rank market market, global Shopee by the Taiwan year-on-year quarter. monthly daily Android number over in app per also adjusted of third by continue across Indonesia, time total further the to extend users of Annie. $X.XX Annie. quarter, a category as download, in business the Southeast shopping Indonesia users, category second orders, on the our according efficiencies in and ranked was to registered XXX spent most in for X.X In app App total at In monthly to the around On Android an App decreasing year-on-year. Xst in active on app average downloaded level, order downloads the the and the and in drive XXX% the quarter, also spent in time one the according was orders active based loss

across been is As our the focused value the e-commerce region, Shopee more have growth merchants on we ecosystem. important across for delivering

with partnership merchants knowledge, X designed This leading to brands and in e-commerce agencies program have meritable can example, Shopee example. consumers. retention succeed Sellers global the they with user Life third to skills announced a Live with recorded experiences is on hours Google Shopee. partnership Further, to engage in create Shopee and help Shopee last is results. quarter. media merchants and these equip helpful in-depth feature over quarter, we so found help addition strategic retail agencies. and million For X watched in more XX driving tools launched new better shopping this the engagement scale

sellers heartened time day. has Sale festival. our record-breaking the through carried the than recording Sale successful momentum see XXx forward average newer XX.XX particular, first event who sales Our sold XX.XX a the an more the into Shopee an In for incredibly were shopping Big joined to We platform. sellers orders SME Big

recently users, Shopee XXXX Shopee the have represents and one the brands with the Best today, and brand Amazon e-commerce with two of best of is powerful ranking. YouGov’s number the We Brands loved across ranking, globally bonds in recognized most was In together published built ranked our eight world’s XX and community. brand our Global affinity top

our our and As leadership healthy region. for e-commerce, ecosystem sustainable will focused extend stay to our on and users providing market for solidify continue in a value we we best long-term and building the

saw same Garena we across during growth the the strong Moving to momentum SeaMoney, quarter. and on Shopee

effectively. In our the growth Shopee’s Shopee, reach with $X.X were Our wallet. exceeded more million. users total XX% leveraging to extensive than mobile deepen wallet paying quarter combined orders our payment rapid paid continues total across efficiently surpassing volume quarterly market scale to and mobile gross and XX.X its integration with for SeaMoney Shopee’s of October, billion using

manner to online we community. continued of in partnerships on building our SeaMoney We expand and efficient of a also core brand of by and across increased third-party use a and our awareness in our third see opportunity that SeaMoney the further it This quarter. We cases. usage has highly the significant cases ahead believe and can use suite the off-line capture

into strong of business year convenience to Our merchants digital the momentum first third the quarter enable solutions. on more of has from and to remains the the our consumers the half beyond. on the the ease closing, focus building carried benefit and In and from

to rapidly performance Our needs to evolving and is third the a our testament preferences our ability quickly the quarter community. to adapt of

innovate tailwinds the and growth we Garena content push we our we to Shopee’s benefiting execution secular While continue focused on very from and users. digitalization, listen games highly towards and strong to opportunity. on new to will partnerships, rapid capture deeply are engaging From the to remain around local

key the extending economy we end we our across position region. our of of and XXXX, in further are into As market all solidifying and segments XXXX the the towards leadership move digital

with growing of ahead over the the economy I financials. conviction Tony will to the term growth Sea to enabling them for in is benefit the and from invite With opportunities run. the even communities serving Our scale of that, We long stronger. discuss our to remain our committed in digital technology the long

Tony Hou

and for Thank everyone joining you, thanks to call. Forrest the

analysis included We have the in today’s corresponding press quarterly schedules with management release. detailed financial together

of has other will some highlights, so my metrics. focus Forrest discussed on financial comments the As relevant I our

XX% Digital base entertainment increased well $X.X were success driven strong mainly digital GAAP and year-on-year grew bookings our user our total especially in and and as growth overall, for continued share year-on-year e-commerce our our XXX% to deepened entertainment to revenue million, primarily our the paying increase year-on-year particular, past by Fire. quarters mainly billion, growth Sea growth year-on-year in Free of in EBITDA active bookings. in by line XX% the was which driven self-developed and to monetization Fire. entertainment continued digital $XXX.X business million growth adjusted game, business, user game, For game $XXX our $XXX.X self-developed to of due revenue XXX% increase penetration, efforts by of The self-developed GAAP of accounting an of was Free the an million, in top as

ability to economy. region. fully as expansion loss growth of revenue demonstrated year-on-year, the up the e-commerce GAAP investment million, revenue in opportunity digital penetration our EBITDA deepening the e-commerce up of of our $XXX.X million, of E-commerce GAAP The revenue of million, opportunities created accelerated capture $XXX.X included to rapid we Our the was this and GAAP continued market and results $XXX.X XXX% the capture XXX% $XXX.X year-on-year. product by million marketplace strong adjusted

We our of million will third in primarily drive to due third quarter XXXX to $XX.X period quarter an Digital of growth of primarily numbers, in was quarter our This increase EBITDA in the continue XXXX. in growth in XXXX $XX.X invest loss from non-operating compared million a the and the XXX% compared of wallet financial quarter a drive third due million, third to $X.X Non-operating year-on-year efficiency. partnerships. markets the recognized loss third-party off-line to of $XXX.X expand with continued of was million we a use of net prudently XXXX. GAAP $XX.X XXXX. non-operating income Adjusted loss business. mobile net quarter withholding consolidated to of of to efforts million our to online services in third suite cases XXXX, the the million foreign and and loss. in the and the due had primarily $XX.X entertainment tax third a was was Returning interest income quarter corporate same our the tax revenue loss million of was of to and income recognized high-quality and $X.X of exchange We higher expense in tax expense of in digital which net increasing XXXX

$XXX excluding in XXXX a XXXX net notes, that, same value to XXXX. let convertible Yanjun. of was period compensation the With for compared million as third changes the of $XXX.X As quarter call in the share-based turn to the result, in loss, million and fair me

Yanjun Wang

Thank you.

to questions. now are Operator? call open We ready the for

Operator

[Operator first Go Sachs. is Goldman Koh from Our Chuen Instructions] question from ahead. Miang

Miang Chuen Koh

Thank you with that.

Firstly, numbers. are, significantly we side, congratulations of My firstly, on set ratio for see gaming increased the pay two strong another questions the sequentially.

because So launched can or events is you features you’ve billing guidance, as well full ratio of this bit in in fourth last in given the billings the that, And due Town to terms you social quarters? suggest along the you’ve trends pay question have perhaps line, of Fairy gross coming perhaps little so e-sports or Thank like new just Tail? it second it to few the a decline do bit added for games that especially wondering, months, a discuss And of is in as asking Fantasy see quarter-to-quarter a what quarter launched XQ. in the quarter? gross appears the for I’m ceiling we year gaming the far, the you. the

Yanjun Wang

And ratio, So see a deepening quarter. healthy our we user to of we the ratio on pay for in and time. pay with very globally users pay will work terms over ratio engaging continue this

with a overall, we our content wouldn’t also Fire, social major that it a we Although Free a say think a long are – [indiscernible] gaming is and singular community. platform for varied to is make KPI and tiny driving, into goal as I

through third globally our our focus growth Our we all community. lot of community had time, the our also the and to, happened in we And quarter, drive highlight a our the same Fire. to anniversary increase And that e-sports which special helped also by to well of Free is during markets. engagement, user user the be events still is you want One to At and very thing want as to events. content I also pay ratio. user that it with therefore, third received refer

continue look to we XXX% want fourth is you more third that, We outstanding billion, $X.X very that And if exceed to the than strong we that on just to booking the the very XXX think the therefore, well. quarter, fourth this our year quarter our the expect meant sustaining highlight trend overall strong – if So more game gaming to fourth billion. And we despite quarter to we and we next year-on-year on strong stated to to at will actually although XX% that, remain with XQ expect we see quarter but to than growth. with quarter the as growth, we even hit third side, continue into we performance we of be want And conservative for quarter. $X.X beat performance close the projections. hope year-on-year

simulation game. is our casual new Fantasy In a farming Town of terms games,

content, local also our game RPG cater local and to gaming landmarks Fairy really communities characters example, portfolio are these is the Tail efforts local And to to into Indonesia turn-based and time. We our incorporated of our game. a over genre for preferences. diversify our expand lot

of games. preferences So understanding we’re particularly their to our focused for per local but and on different with base games, not behavior community respect user monetization types on and more these se

Operator

Chong question next Our Go ahead. is Jefferies. from from Thomas

Thomas Chong

COVID? competition comment And Thank in of any in online Thank results. Asia of you. question for congratulations landscape. think category see grocery can the comment taking about should the that the post on whether e-commerce about market? set we you, Southeast is we My on management on questions. top market Can how management my also about a competitive front, Indonesia intensifying And you strong

Yanjun Wang

to landscape, far Thank leadership. you. Shopee On continues our as as competitive is I it continue concerned, think improve to market we as extend

the the Our will enjoys rates And our reflect believe is as to QX that the effect, we before, growth than ahead year-on-year, we network market a was something XXX% slide players’ very which more quarter said also, and way markets. as And order strong lead growth is e-commerce rate. growth of well. other in

So as And of environment to leader, disproportionate it’s strong of golden a a to a we digitalization there’s current in this run, we to go time, opportunity market any Southeast the think market we’ll But long we penetration us In and rapidly the much market collectively we deepening at we believe in demographic believe we for work to for become And e-commerce penetration case, at capture runway our given share region, the should relatively the a Asia hope grow. players adoption growth. the hope the the given deeper also to very and all low the players of geographic accelerated in in expand market – continue the we e-commerce, pie. our stage given e-commerce believe we of yet. leadership. for the market further with nature all – the believe also and extend same deepening longer

online FMCG, our that the sticky. – during having platform, it’s once period, strong into platform. In the especially this of as – to on believe users grocery on something people see people, to in online it see social We this very continue category. as we think is as COVID growth terms convenience new during get the things And this our the habit, user that strong we grocery, I demand is distancing very of continue experienced period, well very to come buying on including especially

Operator

ahead. from Our Piyush Choudhary next is question Go HSBC. from

Piyush Choudhary

results. for and a set of Two strong questions, e-commerce. on Hi, both thanks a lot congratulations

this advertising from share income? some agencies. of Firstly, on proportion faring monetization? give with growth, revenue And you can you success in you And a us secondly, improvement how And quarter-on-quarter initial is it insights could GMV what your you on media launched that? comes X have across what program of drove Can share countries?

Yanjun Wang

Sure.

expand seeing handling the that Shopee platform. And increase revenue, fees, opt-in the are the in our is Also, very contributed including as commissions, But which a well we increased fees, revenue programs, the transaction-based well. to logistics cross-border from monetization, still in as strong the e-commerce the product to healthy advertisement. growth certain programs to sellers opt-in part as as our the fee programs revenue improve side first-party joining that value-added On of as as of on well and that etcetera, largely own such attributable i.e., shopping voluntarily to high-margin advertisement event. commission our from actually key increase and feature consist by during volume largely platform services, pay or mainly we as also for where seller program, also for as earning benefit trend their their continue high-margin thus in and well and promotion a consumers sellers vouchers thanks revenue, programs our free programs on sales demand is the can increase higher journey shipping

this, So trend. is I think, positive very a

our work continue these to as continue programs seller communities We our the will to us. to with improve grow as of advertisement well sellers with as adoption

Operator

is Our next from... question

Yanjun Wang

Let well. as questions me two address the other

agency example business our media especially this we where sellers great is another faster. partnership, to the the grow Regarding on help brand our side mall sellers,

on attract Shopee’s So engage user to with various been platform, and our educate them best we media working behavior and advertisement agencies have on with how users. to our

line offering And restrictions we are have increase Q-on-Q think the And demand the see they see The now overall stayed users also lockdown GMV the the therefore, more those as increasingly their Xx to generally in on the terms continued given some new to And different other very that of us so e-commerce and But markets growth In were in where than subsequently, general I saw our brands We Vietnam, as And and rates markets, in whereby though demand trends. Xx tend brand we – even we robust market platform, Their and continues with recent see this line measures, is we QX, they see And brands before. this like Thailand to growth continue COVID of cases most as see we our and to period see in resurgence Shopee restrictions. to lockdown by to to fast, integral a in difference. our some be lifted number stick in as increase differences growth we time continue or the growth. still time, have to to in throughout. very throughout so affected markets strong their have well. this lockdown especially that of the continue Singapore, by and on coming which QX I and digital between the formats. markets, like terms strong. user the for Even platform something performance we in markets tend and trend, less with strong from wouldn’t during affected social the distancing across continued Indonesia, brands growth. with solution being see XX,XXX in that’s example, strong different like period, think of a initially also more. see better. very shared the been can of especially year-on-year our be to help And Philippines growth Taiwan, imposed to result, are be lot And Malaysia, clients, that as we platform. heightened to

too much during sustained think I of lockdown measures So those given have have in our about markets, the time, lifted observed But periods and strong a platform. situation. all been talk early post-COVID very the still to pretty we of the it’s before growth

period of to deepening this digitalization and is during e-commerce continue adoption believe sustainable. We the that of

Operator

Go Our from next John from question is Blackledge Cowen. ahead.

John Blackledge

couple thanks. of Okay, A questions.

is there markets part monetization that anything out Fire’s helpful? flattish you’ve significant color going And would if trajectory Taiwan in past, in Thank And EBITDA just digital markets, other your expenses, the Asia you. structurally be on then get share the you Shopee’s more Southeast margin In corporate any EBITDA profile? outside market on position, that forward and in could America? Free Shopee, limit First on advantage. to before share Latin of broadly, given you entertainment, discuss similar is would called market

Yanjun Wang

you. Thank

our and monetization bookings In shared we to pay the in and we’ll very user GDP very users terms drive including our to of probably we and revenue of size. not over growth of constitutes the in per continue game. very it’s – stage already Again, We will looking previously our is to are of EBITDA terms And for steepening see Latin But engagement outside rise. Shopee that we monetization continue population of growth Asia America are contribution the world. markets we we as are in with as similar at which the terms grow continue outside game still run. digital before Southeast entertainment long-term to and of Asia strong Asia, trends Southeast other majority capita, Taiwan’s trying and markets a X Latin long in platform, [indiscernible] And drive higher margin this a has well to continue at to there’s America than bit potential in Southeast think good the a to X user market region. therefore,

So, it’s not flattish. actually

do we actually it’s especially no we a margin, healthy can don’t there very is not e-commerce, separately market a leader, flattish. that command that strong but therefore, it, we disclose although – doubt have So believe

in longer very the not do market anything but in believe a that would run, be we So achieved therefore, see margin that potentially that other limit leader. we markets, there’s can strong the that

Operator

ahead. from Ranjan question next Sharma JPMorgan. from Go is Our

Ranjan Sharma

for presentation. you side. Two and Hi, thank from the good evening questions my

can do what evolved the Brazil, Firstly, for local on seems more It market sellers business that you see some there. is Shopee strategy cross-border have than to because share a we now?

perspective. aspirations for talk can about from you Brazil if an So e-commerce your

MAX. question Fire second The on is Free

number seeing We tests a of open beta have been happening.

If then you doing Thank And you. to of has in more drive markets? feedback been? that developed game the share can success what what you’re

Yanjun Wang

you. Thank

saw Shopee sellers, before, we and business, the started shared the And grow therefore, local terms initiated primarily team to by and also was which cross-border by Brazil, we that. it’s In as certainly team, of we cross-border continued adoption driven. welcome our

preferences of of – an users of Fire terms can version Fire see cater In again, broadest integral Fire and we on Free the you as it’s Free – as range Free play MAX, experience. part on depending game, the also as their we Fire will map. because And playing Free [indiscernible]. it And see a who be but don’t we Fire are and the making part their we I focused Free the are Fire is own the on to user same think people the MAX or try MAX that – as sure highly to so Fire, Free to basically, of are we smooth Free choose separate can it preferences experience own consumers

So the experience, worked be need on user up, focus to continue through will details a lot to of our Free whether MAX it’s we improving and Fire or version.

Operator

Our next question is ahead. from Alicia Yap Go from Citigroup.

Alicia Yap

strong questions the evening e-commerce. have my Also on follow-up on results. I questions. Good taking some congrats you. thank for management. Hi, Thanks the

us monetization, rate potentially, meaningful change us a growth bit the growth Indonesia then difference seasonality of is of the And level. product a terms or versus also, let’s – is of advertising. like the this year-over-year little And fastest help revenue help In quarter? the country contributions there you transaction the among group could the in overall just lower. terms Any quarter. say, growth VAS Because rank rate, mix fee, rank by AOV model, you percentage this or it in the between, of the could seems secondly,

Thank on So purchase frequency what the if quarter? us you. and the this that reasons update for be can you could

Yanjun Wang

you. Thank

manage majority we and the be don’t market It’s our is actually And our growth. might suffice the of majority because the revenue sophisticated transaction-based to is the percentage a reason yet reason revenue, etcetera, on allow featured that free. The they that important their driving actually that growth. the program on of programs, Shopee programs revenue relating of lot not calculate the seller actually by revenue we fee fee and very to a worry we high-margin fees placement – advertisement predict, of to advertising facilitate advertisement well become and under are the shopping contribution terms to launched individually shop, as that offering to our but or In this sellers together fees contributing of help opt-in is is and say advertising specific we revenue then also the as to pay advertisement, placement in certain to from have so that like platform. ROI transaction-based who hire transaction-based

the events, etcetera, We participation manage bidding, placement, them fee. of the keywords part will transaction-based the banner, for in as

run, but hard bit thing So it’s I the little the in or the is the reason revenue to part believe percentage it’s is longer also the that think transaction-based That margin whether a high is is of say and we driving a important that’s growth. low be the is low-teen fee, higher advertisement quarter, And of to something the model also range mentioned probably we our to mid-teens in that’s profitability double terms e-commerce I for – worried. think market. appropriate this our to to that AOV before is not digit of e-commerce mid

smaller populations over like as during lower I smaller particular, where time, measures overtaking basket markets, in there this but lockdown see period. Indonesia Indonesia, whole off to larger as those Philippines more account see, those And therefore, over Singapore, Taiwan population. during and markets we more with than strong with with for, size size Malaysia, larger implemented those and mentioned, from on very time, growth period, or being the growth are population, basket also, the we Philippines, think tend countries naturally, generally the you GMV with like and markets

I the year-on-year strong growth – from think, those product continue So watch is overall, there is particularly we very But markets. mix closely. to will the

growth. that particular living, enjoyed particularly is like see a COVID and during strong we period, what categories home think I FMCG the

in eased pace is accelerating. with remains category. recover being fashion continue regions, most And of to see Now the of we start and recovery our it top a to lockdown

overall see the to top of continue mix So and and start changed home But – be recovery very and we FMCG strong, – fashion. to beauty home category we living and continues – while very also category really health much. hasn’t strong

Operator

question from Go Our ahead. John Daiwa. next is Choi from

John Choi

taking questions. two here. have Good for evening my thank and I you questions

trend Clearly, investment priorities the like EBITDA strong seeing your and our to the think the on want down into. more think clearly, what the are revenue of understand you need to and So I I line where want first just it business, think on your when know Shopee are comes GMV the very we investment I going all, also I think bookings a bit do highlights. to think new methodology do like I how eventually kind to is now? it put that to And launch forward? the to of growth Can right you much and work done some any further priorities top – we’ve propel but narrow monetization side. are we more we type and know how And year, the should seems in upside we’re on the of stage, average a see still Fire. across well you management of early user per more Free games? going the second about terms I this elaborate in region. ARPU we very within

Yanjun Wang

that and communication and grow strengthen pace – the consistent market. our of very never platform focus on leadership, I efficiency is to e-commerce, our changed we to regard. approach of monetization and in focus time, deepening terms growth think a at same that our And of to at right we therefore, in our market continue want continue e-commerce for our In are

where very believe come we to is region. business drive our network as with e-commerce important believe it’s a a and period It rapid breakeven in digitalization naturally to is effect. of be course, of very reached. – growth, and scale we deepening model, continue can business a also Of see business it naturally And therefore, accounting eventually we will and to during strong a very continue especially margin adoption

very we user. number for overall, a at I of in million we the – and $X.X a and grow an penetration have base for in quarter XXX That the can to third is to make achieved e-commerce and regions. than digital of user per so growth, this golden quarter. active think is also As want sure drive time further emphasize, our booking, we entertainment terms And strong healthy more

continue market pay the it time. So itself. are for average and grow as well booking to focus, game user also to there believe is can But to for is again, growing, given achieve pay I our we drive to the as over user think game, potential that we similar continue accessing e-commerce, global ratio to the

base a user very – massive – We are user with a a is not of worried come game does high about This and monetization it engagement. massive naturally.

at top naturally didn’t and scale. we line it. business the you as If try growth just performance also we It our when line drive that at comes even look group well bottom the as level, didn’t hard, especially,

and the very continue on. we So users, is our very efficiency of to focus priority. the of course, we something saving, scaling course, to natural still and But careful dynamics market that be is close this watching about are top and

Operator

is Our Mark Go from Stanley. Goodridge next question ahead. Morgan from

Mark Goodridge

guys. Hi,

you obviously question seen last success business, for marketplace. a Latin we’re Free growing we specifically the from And potentially had on third-party the publishing guys business Just we’ve games a then in out heard that Fire. year, of huge America,

[indiscernible] – to potentially are But replicate that of the then third-party there year, some to ask, publishing doing, coming specifically some is to on And into front. America? games of wanted following share just into through I the that well? been that as on care into it’s specifically potential So you’ve would India opportunity an business Latin that been you that initiatives this

Yanjun Wang

you. Thank

publishing we terms of helpful, definitely potential partners In global work not and I very that scale strong kind our – that capability our in Fire and all very with in opportunities assessing markets market, is developer understanding difficult market partners basically player to have. complex of those developer globally drive of to continue performance would discuss growth of the closely for say, third-party market, has in Free we data in wouldn’t another point be the our the to those capabilities track side, particularly operational achieved and a and the record where, relatively

So unique the e-sports position that mobile growth on put a us game in in driving side. very globally

And continue will for partners our as work or don’t potential we pipeline confidentiality discussions with or reasons. we partners. and usual, initiatives So disclose to

But to we focus it. it officially announce when on. will see You that’s continue something that we also

Operator

next from Credit Suisse. is Varun Our from question Ahuja

Varun Ahuja

everyone. good hi evening Yes

So I have three got questions.

side, if by Free the than on on quarters, two think, Fire. strong look seen you very more First last growth I at XX% driven side, you the gaming of have quarter-on-quarter two primarily, gaming

with you it know color? on have held can all if provide been performance I such strong So little the the COVID, more a a coincided markets also Free but bit which has Fire.

You growth. better which is of are still have seen growth? you believe have also That launches. know much this one. be way helpful. sustainability The is and helpful. coming rankings other some to the monetization just key it or from give mentioned games on that new to that where a U.S. any you Number have shown the long a will improving points I to India has revenue is go. in things some game number that that happening from we two is you. It’s be new games the is Any data been comfort, But while some draw seen color, it’ll countries anything

[indiscernible]? color helpful. is you mobile that not the on thing Another Any for it. get that be guys is Legends League of being it would reasons Any didn’t Is launched, sale?

profitability. it’s if – comfortable Lastly, at have side, – on your on it you if the on consolidated very very the at look EBITDA consolidated now you you Is EBITDA, look come profitability or likely the to investment it e-commerce look future, is at is this remain that have it quarter-on-quarter will upon make? ahead to going if any you. you you Thank depending to fluctuate

Yanjun Wang

you. Okay. Thank

three Taiwan contribution, and of America – – engagement of markets us. the time emerging And then of emergence which of Southeast the the – world, are the of we we buckets, Fire, Latin of the Free performance terms the with engage the game. our and broadly revenue launching what frontier the for that’s In the rest new Asia ranked call global by and talked and

coming three revenue revenue all is that see we that, growth. same of regions terms from contribution in as So

in global including And see markets, terms you very I many all formally three opportunity of – that of strong speak about so And even, in low markets, given and course, yet captured greatest runway, is long-term in high-demand frontier entered growth and trends of probably very wouldn’t the encouraging. and we And present the haven’t say, potential the really which, penetration buckets. fully yet. the if current some very we markets

and games. still is very for are tap think we a e-sports regard, example, Latin and for for there huge engagement in that monetization, for which long will deepening huge America, and Asia for runway relatively user continue new to team whereas I So same drive our opportunity Southeast to Taiwan, market

than to already including seen. market has showcase I the terms of that Asia, mentioned We trends as deep potential not can I before. Southeast be very think strong least good penetration remain how the in see penetration, more be, at if the paid positive

was think reason us the if I And confidence the year-on-year one that continuing XXX%. look to revenue very XX%; in that sustainability QX, growing So optimistic than is Fire. we QX, there. the at of than growth, are And give you of growth game more of QX Free XX%; the more

there very rapid So was acceleration. a fast

growth team. for a our again, happy performance for game to gaming run. QX QX grow achievement we close to for And get of we X-digit sustaining to will quite see is continue are long is I I game continue for to the revenue why think projection think, our this very the and strong that magnitude, that’s of the

our as that are base on massive EBITDA And before, low user In markets well give we focus business of not given drive is each – of business in growth of of core terms guidance core our notably I each units. we EBITDA. many our penetration to as said trajectory, as as our seeing in the do for potential,

the are And confident each of I we really the of think the economy business, the is ahead of our profitability ultimate way for in to tap. opportunity us our of for business. businesses, digital of and game very also our globally, particular, region in

You so healthy is and can’t a really drive leader market for a very be that’s loss-making see margin, in business e-commerce, a the game strong profitable to DFS. cannot

well been I very proven. think model business has the ultimate

question same and record And how right is scale efficiency continue I shown rate efficient as to our at on can time. think track an that our we execute. we our growth is for market, will the as focus has that we well and at business the

very try that margin we But say it artificially hard it something wouldn’t is drive to the So comes, I naturally when it. comes. improvement

Operator

ahead. session. our turn I concludes would Song back to remarks. call Minju like to closing now for This Go question-and-answer the

Minju Song

everyone all you. Thank to next speaking joining to today’s you you We for Thank forward look call. again quarter.

Operator

presentation. for now has conference attending today’s The Thank concluded. you

now disconnect. You may

Sea Limited (SE) 18 Nov 202020 Q3 Earnings call transcript