Sea second-quarter sales beat analysts’ estimates as more of Southeast Asia’s consumers turn to online shopping for anything from iPhones to daily groceries.
The stock climbed 8% in pre-market trading after Sea said revenue rose 38% to a record US$5.26 billion in the three months through June. Analysts estimated US$5 billion on average. Net income jumped to US$414.2 million from US$79.9 million a year earlier, but fell short of the US$444 million analysts predicted.
The results assuage some concerns about the prospects of e-commerce arm Shopee. The region’s top online retail platform is battling deep-pocketed global challengers including ByteDance’s TikTok Shop and Alibaba Group Holding’s Lazada. Emerging players like Shein and PDD Holding’s Temu are also eyeing to break into the emerging region of 675 million people where more and more shoppers are coming online.
To boost its bottom line, Shopee has been steadily raising the commissions it charges merchants in various core markets by about a third since the start of last year. The hikes, which bring Shopee’s fees above its rivals, show that Sea is confident it can attract and retain merchants, helped by a broad user base and well-established delivery services. Shopee’s second-quarter revenue rose 34% to US$3.8 billion, helped by surging commissions and ad revenue.
Sea Share Price More Than Quadruples on Shopping Gains | Stock has surged since start of last year
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Sea is also betting on new initiatives from digital finance to logistics to grow its dominance and convince investors of its growth potential. Its logistics arm SPX Express now handles the majority of Shopee’s billions of parcels annually, while its finance arm — now known as Monee — increased sales 70% last quarter to US$882.8 million. Bookings at gaming division Garena rose 23%.
“In the past, cash flow from Sea’s gaming arm Garena was used to grow Shopee and Monee, but now Shopee and Monee are in healthier capital positions,” Hussaini Saifee, an analyst at Maybank Securities, said before the results. “Sea can now invest in further developing Garena which has also made a strong rebound over the last year and a half.”
