Sea posts net loss of $1.28 billion in second quarter, withdraws e-commerce guidance for 2022

SINGAPORE (BLOOMBERG) — Shopee owner Sea posted a bigger-than-expected loss in the second quarter and withdrew its e-commerce forecast for 2022, joining other online giants struggling to gauge an economic outlook. increasingly uncertain world.

The Singapore-based company on Tuesday (August 16) posted an adjusted loss before interest, tax, depreciation and amortization of US$506.3 million (S$698 million) for three months to the end of June, beating the average projection of 482, 3 million US dollars.

Sea’s net loss more than doubled to $931.2 million (S$1.28 billion) in the June quarter from $433.7 million a year ago amid higher overhead costs and provisions for credit losses.

Sea shares fell 14% on Tuesday to close at US$77.43 in New York.

The disappointing result came after Sea slashed its full-year e-commerce revenue outlook in May to a low of $8.5 billion from $8.9 billion previously. Shoppers emerging from pandemic shutdowns are reducing their online purchases and turning to basics during a possible recession.

Sea, which counts Tencent Holdings as its biggest investor, has suffered a series of setbacks this year, including a sudden ban on its most popular mobile game in India and the subsequent shutdown of its e-commerce operations there. Its shares have fallen about 75% since the October high.

The company attempted to increase profitability as revenue growth plateaued. Second-quarter sales rose 29% to US$2.9 billion, the slowest growth in nearly five years.

In Southeast Asia and Taiwan, the adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) loss per order for Shopee — before allocation of common headquarters expenses — was less than 1 cent. Managing Director Forrest Li said the company’s goal is to achieve positive Adjusted Ebitda before Asia headquarters costs this year.

In the second quarter, revenue from Shopee, Sea’s e-commerce unit, rose 51% to around $1.7 billion from estimates of $1.9 billion.

Revenue from the Garena games arm fell to $900.3 million, slightly ahead of estimates of $827.6 million, as hit mobile game Free Fire comes of age. The company said in March that it expected Garena to see bookings of $2.9 billion to $3.1 billion in 2022, which was expected to be its first decline.

Revenue from SeaMoney, Sea’s digital financial services unit, reached $279 million.

Sea has shrunk its overseas footprint and cut jobs at outlying businesses as competition takes its toll and it focuses more on profitability, a dramatic shift from its previous stance of spending on expansion world.

Shopee’s gross merchandise value, the sum of transactions passing through its platform, rose 27% to $19 billion.

Some investors are reducing their exposure to Sea. Tiger Global Management sold $473.8 million worth of Sea shares, trimming its holdings after six quarters of buying, according to filings with the U.S. Securities and Exchange Commission.

Singapore-based Grab Holdings shareholder Altimeter Capital Management exited Sea’s Class A US certificates of deposit, according to an analysis of its filings by Bloomberg News.

Ann J. Cox