Sea Ltd (NYSE:SE) stock surges 10.95% (As on August 13, 11:24:42 AM UTC-4, Source: Google Finance) after the company raised the outlook for its main online retailing arm, signaling the Southeast Asia e-commerce leader is effectively encountering intense competition from the likes of TikTok and Lazada. The value of goods sold by the Shopee division will rise in the “mid-20%” range this year, rather than the “high teens” pace predicted in March. Free Fire achieved over 100 million daily active users throughout Q2.
Moreover, E-commerce revenue, which makes up about two-thirds of the company’s total, grew 34% to $2.8 billion, above analysts’ expectations of $2.68 billion, according to LSEG data. Bookings at its digital entertainment segment, which includes gaming unit Garena, grew a stronger-than-expected 21%, while sales from its financial services business SeaMoney were up 21.4%, just shy of estimates. The company’s adjusted EBITDA was $448.5 million, also above the expected $397.4 million. In its Digital Entertainment segment, adjusted EBITDA reached $302.8 million, exceeding the projected $270.2 million. The Digital Financial Services segment also outperformed expectations, with an adjusted EBITDA of $164.7 million compared to the estimate of $156.4 million. E-commerce gross orders grew 40.3% YoY to 2.5 billion. However, E-commerce adjusted EBITDA turned negative to $(9.2) million from $150.3 million in Q2 2023.
Furthermore, in E-commerce, Core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was up 41.4% year-on-year to US$1.8 billion. Value-added services revenue, mainly consisting of revenues related to logistics services, was up 15.5% year-on-year to US$722.3 million.
SE in the second quarter of FY 24 has reported the adjusted earnings per share of 14 cents, missing the analysts’ estimates for the adjusted earnings per share of 18 cents. The company had reported the adjusted revenue growth of 23 percent to $3.81 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $3.71 billion. Its net profit declined to $79.9 million from $331 million last year. As of June 30, 2024, cash, cash equivalents, short-term investments, and other treasury investments were US$9.0 billion, representing a net increase of US$364.7 million from March 31, 2024.
On the other hand, Sea also announced board changes. Effective August 12, 2024, Dr. Silvio Savarese and Ms. Jessica Tan have been elected as independent directors to Sea’s board. Concurrently, Mr. Tony Hou, who also serves as Sea’s Chief Financial Officer, stepped down from the board.