Singapore’s Sea Doubles Revenue as Tech Battle Intensifies

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Sea Ltd., Southeast Asia’s most valuable company, more than doubled revenue in the first quarter, though losses swelled as it spent to ward off competition in the regional e-commerce and online entertainment arenas.

Sales rose to $1.76 billion in the three months ended March from $714.9 million a year earlier, the Singapore-based company said in a statement on Tuesday. Net loss widened to $422.7 million from $281.5 million.

Sea’s American depositary receipts rose 4.2% in U.S. trading. They have more than tripled in the past year, valuing the company at $118 billion.

The company, traded in New York, is locked in a fierce battle with Gojek and Grab Holdings Inc., with all three companies bolstering their e-commerce and payment offerings in one of the fastest-growing internet markets on the planet. Southeast Asia’s online spending is set to triple to more than $300 billion by 2025, research from Google and its partners shows.

On Monday, ride-hailing and delivery giant Gojek and e-commerce platform PT Tokopedia announced a deal to create the largest internet company in Indonesia, by far the biggest market for tech companies in Southeast Asia. Grab, which provides car-sharing, delivery and fintech services, agreed last month to go public in the U.S. through a combination with Altimeter Growth Corp., the largest-ever merger with a blank-check company.

“It’s a huge opportunity in our region. There’s a very long runway,” said Yanjun Wang, Sea’s chief corporate officer. “We should all collectively focus on expanding the pie and growing the digital economy in the region and invest in the long run.”

In response to the intensifying competition, Sea launched a food delivery service in Jakarta in the first quarter. Still, that’s a crowded field, with even Traveloka, an Indonesian travel unicorn preparing to go public, trying its hand in that business.

What Bloomberg Intelligence Says

Sea’s user-growth strategy and e-commerce leadership, particularly in its largest market and biggest Asean digital economy Indonesia, may enable it to meet consensus expectations for a more than doubling in 1Q revenue, we believe. Expansion into food delivery in Indonesia, Vietnam and potentially other markets has allowed the region’s most valuable tech firm to boost its user base, which could have synergistic effect on its online shopping and fintech businesses.

- Matthew Kanterman, analyst

Click here for the research.

Key Insights

  • Revenue at Garena more than doubled to $781.3 million on persistent popularity of hit title Free Fire.
  • Revenue from Shopee more than tripled to $922.3 million as the pandemic boosted demand for online shopping.
  • Revenue from digital finance unit SeaMoney rose to $51.3 million from $10.3 million as e-wallet services continued to expand.
  • Sea’s mobile wallet total payment volume during the quarter more than tripled to $3.4 billion from a year ago. Sea is trying to build financial services into a key growth pillar, similar to so-called super apps such as Grab and GoTo, the newly merged entity of Gojek and Tokopedia.

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  • First-quarter sales and marketing expenses more than doubled to $678.9 million.
  • Digital entertainment bookings were $1.1 billion, more than doubling from a year earlier.
  • Free Fire continued to be the highest grossing mobile game in Latin America, Southeast Asia and India during the first quarter, according to App Annie, Sea said.
  • Shopee ranked first in the shopping category in Southeast Asia and Taiwan by average monthly active users and total time spent in app among Android users for the first quarter, Sea said, citing App Annie.

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