Sea Ltd (NYSE: SE) stock fell 0.8% in the pre market session on November 21st, 2018 after the company in the third quarter of FY 18 has reported a wider net loss of $218 million for the quarter ending in September from $132.8 million in the same period last year, on higher expenditure on the e-commerce business. Total revenue rose to $204.9 million from $94.1 million.
The Singapore-based company remains optimistic for its e-commerce business, Shopee, despite extending losses. The unit posted an adjusted EBITDA loss of over $214 million for Q3 2018, a 65.3% rise. Sea Group’s sale and marketing expenses on the e-commerce business increased by 48.5% to $152.9 million in the third quarter of 2018 from $103.0 million in the third quarter of 2017. Shopee’s sales and marketing expenses as a percentage of GMV, however, fell to 5.7% from 6.2% the previous quarter, driven by strong user engagement, the company statement noted. Shopee also set a new record of over 11 million orders during its Shopee 11.11 Big Sale, 4.5 times the number of orders from last year. Shopee currently enjoys strong market share in the e-commerce business in Southeast Asia. The platform was one of three, alongside Lazada and Tokopedia, noted by Google and Temasek to be capturing the highest number of transactions in the region.
Sea Group has also raised its 2018 forecast for total adjusted revenue to between $930 million and $970 million against the previous reported guidance of between $780 million and $820 million. Sea is also forecasting e-commerce gross merchandise value for 2018 at between $9.2 billion and $9.7 billion, up from its previous estimate of between $8.2 billion and $8.7 billion.
Meanwhile, Sea’s entertainment unit, Garena, has signed a binding letter of intent with an affiliate of Tencent Holdings, under which Tencent will grant Garena a right of first refusal to publish Tencent’s mobile and PC games in Indonesia, Taiwan, Thailand, the Philippines, Malaysia and Singapore. The five-year arrangement builds on a long-standing strategic partnership between Tencent and Garena, which already publishes a number of the most successful games from Tencent’s portfolio in its core markets. These include Arena of Valor and League of Legends. The two companies intend to work closely together to identify strategic opportunities to distribute and promote top titles from Tencent’s portfolio in the relevant markets.