Sea Ltd's Q3 2024 Earnings Call: A Deep Dive into Growth and Profitability

Sea Ltd's Q3 2024 earnings call revealed a strong performance across its three core businesses: e-commerce, digital financial services, and digital entertainment. The company reported robust revenue growth of 30.8% year-on-year, driven by high growth in all its segments. Notably, Shopee, Sea's e-commerce platform, achieved positive adjusted EBITDA in both Asia and Brazil, marking a significant improvement in profitability while sustaining high growth. The company's digital entertainment segment, led by Garena, also performed well, with bookings growing over 30% year-on-year. SeaMoney, the digital financial services arm, saw a 73.2% year-on-year increase in consumer and SME loans principal outstanding, demonstrating the segment's rapid expansion. Forrest Li, Sea's chairman and CEO, expressed confidence in the company's ability to maintain high growth and profitability, emphasizing the company's strategic priorities and market performance.

Sea Limited's revenue growth in Q3 2024 was driven by strong performance across all three business segments: e-commerce, digital financial services, and digital entertainment. Here's how each segment contributed to the overall growth:

1. E-commerce: Shopee's GMV and order volume growth, sustained market leadership, and improved monetization were key drivers. The platform achieved positive adjusted EBITDA in Asia and Brazil, indicating profitability. Shopee's ad take rate improved by more than 30 basis points, and ad-paying sellers increased by over 10%. The platform's focus on price competitiveness, service quality, and content ecosystem enhancement also contributed to its success.

2. Digital Financial Services: SeaMoney's loan book grew by over 70% year-on-year, while maintaining a stable NPL ratio. The segment's revenue increased by 38% due to robust growth in consumer and SME loans outstanding. The stable NPL ratio, despite rapid expansion, highlights SeaMoney's prudent risk management.

3. Digital Entertainment: Garena's bookings grew by 24.3% year-on-year, driven by Free Fire's continued momentum. The segment's adjusted EBITDA increased by 34.4%, representing 56.5% of bookings. Quarterly active users and paying users both grew by double-digit percentages, contributing to the segment's strong performance.


These key drivers and the overall solid quarterly performance demonstrate Sea Limited's ability to deliver high growth across its diverse business segments, while also improving profitability. As the company continues to expand its market share within these segments, investors should monitor Sea Ltd's progress, particularly in its e-commerce and digital financial services segments, as these businesses continue to drive growth and contribute to the company's overall success.

Sea Ltd's adjusted EBITDA and net income in Q3 2024 showed significant improvements compared to the previous year. Adjusted EBITDA increased to $521.3 million, a 1,378% year-over-year (YoY) increase from $35.3 million in Q3 2023. Net income also improved, reporting $153.3 million compared to a net loss of $144.0 million in the same quarter last year. The company's strong performance can be attributed to its focus on growth and profitability across all three business segments: e-commerce, digital financial services, and digital entertainment.

Forrest Li, Sea Ltd's Chairman and CEO, shared key takeaways from the company's Q3 2024 earnings call, highlighting its strong performance across all three businesses: e-commerce, digital financial services, and digital entertainment. Here are the main points:

1. **High Growth and Profitability**: Sea Ltd saw high growth across all its businesses, with Shopee on track to deliver mid-20% year-on-year GMV growth, SeaMoney's loan book growing over 70% year-on-year while maintaining a stable NPL ratio, and Garena expecting Free Fire's full-year bookings to grow over 30% year-on-year. The company also improved its profitability while achieving high growth.
2. **Shopee's Performance**: Shopee delivered strong GMV and order volume growth, sustaining market leadership in Asia. The platform improved its monetization through increased commission and advertising take rates. Ad-paying sellers increased by over 10%, and ad-paying revenue per seller grew by over 25% year-on-year. Shopee's ad take rate improved by more than 30 basis points compared to the same quarter last year.
3. **SeaMoney's Growth**: SeaMoney's loan book grew by over 70% year-on-year, with a stable NPL ratio. The company maintained a prudent risk management approach amidst rapid expansion.
4. **Garena's Success**: Garena's Free Fire bookings grew over 30% year-on-year, highlighting the game's sustained market relevance. The company's digital entertainment segment saw a 24.3% increase in bookings and a 34.4% increase in adjusted EBITDA.

These takeaways underscore Sea Ltd's strong performance and growth potential. The company's focus on delivering growth while maintaining profitability positions it well for the future. Investors should monitor Sea Ltd's progress, particularly in its e-commerce and digital financial services segments, as these businesses continue to drive growth and contribute to the company's overall success.