Sea’s gaming arm, its most profitable division, posted sales of US$1.14 billion, versus projections for less than US$930 million. Its shares climbed more than 10% in trading before US exchanges opened.
The Singaporean company’s large e-commerce business however underperformed. Consumers emerging from prolonged lockdowns are cutting back on online purchases, especially with the war in Ukraine and rising interest rates clouding the global economic outlook.
Sea revised its full-year outlook for e-commerce sales, its main source of revenue, to US$8.5 billion to US$9.1 billion from its previous guidance of US$8.9 billion to US$9.1 billion. The company also posted a wider loss for the first three months as expenses soared.
Key Insights
- The pandemic triggered a rally in online shopping and gaming shares as consumers spent more time and money online, helping Sea become Southeast Asia’s most valuable company. But the broader tech selloff, the shutdown of its e-commerce operation in India and disappointing earnings have wiped 81% off its value since a peak in October.
- First-quarter revenue from Shopee, Sea’s e-commerce unit, rose 64% to US$1.5 billion, versus estimates of US$1.7 billion.
- Revenue from gaming arm Garena gained 45%. The company said in March that it expects Garena to post US$2.9 billion to US$3.1 billion in bookings in 2022, set to be its first decline ever.
- Sea plans to diversify its portfolio across game genres, Chief Executive Officer Forrest Li said during a conference call. Moonlight Blade, a third-party massive multiplayer online role-playing game, is set to be introduced on mobile and PC in Thailand in the coming months after launching in Taiwan last year, he said. The company is also exploring publishing partnerships and making early investments in game studios.
- Revenue from SeaMoney, Sea’s digital financial services unit, more than quadrupled to US$236 million.
