top of page

Sea Limited


Wall street consensus:


​Recent Conference Call

### **Sea Limited NYSE: SE FQ3 2023 Earnings Call Summary**

#### **Insightful Quote:**
Group CFO & Director, Hou Tianyu, insightfully summarized the rationale behind the company's operational shifts: *"As business conditions change, sometimes rapidly, we need to decide which factor to prioritize for that period. Our strategy for e-commerce is driven by the principle that maximizing the long-term profitability of the business will generate the greatest returns to our shareholders in the long run."* This highlights Sea Limited's agility in responding to the dynamic market environment and prioritizing long-term profitability over short-term gains.

#### **Key Quarterly Business Trends:**
1. **Accelerated Investment in E-commerce and Market Share Consolidation:** Sea Limited has shifted its operational focus towards increasing market share and strengthening market leadership in e-commerce by leveraging its improved cash reserves and operational efficiency. This strategic shift comes in the wake of intensified competition and the emergence of new players in the market.

2. **E-commerce Content Ecosystem Development through Live Streaming:** The increasing popularity of live streaming has presented a unique opportunity for the company to efficiently build its e-commerce content ecosystem. This tailwind is expected to make live streaming e-commerce a sizable and profitable part of Sea Limited's platform, thereby extending its long-term growth potential.

3. **Strategic Deployment of Logistics Investments:** The company has made significant progress in driving down logistics costs while enhancing user experience. This not only improves the platform's competitive moat but also demonstrates the company's commitment to optimizing investment efficiency in logistics to support e-commerce growth.

#### **Critical Analyst Questions:**
1. **Future of E-commerce Profitability:** Analysts inquired about the anticipated timeline for Shopee to achieve profitability and the specific market share or KPIs aimed before normalizing spending. The management indicated flexibility in operational focus based on market dynamics, emphasizing investment within means to maintain a strong cash position.

2. **Digital Entertainment Segment Performance:** Questions were raised about the quarter-on-quarter softness in pay users despite new game launches. The management attributed this to early signs of seasonality and external factors like schools reopening but remained positive about user engagement and retention improvements.

3. **Outlook on Lending Growth in Digital Financial Services (DFS):** Analysts sought insights into the potential for lending growth in relation to Shopee GMV. Management emphasized the opportunities for lending growth both on and off the Shopee platform, highlighting efforts to further diversify credit portfolios and optimize funding sources.

#### **Outlook or Guidance:**
Sea Limited maintains a positive outlook, underpinned by strategic investments in market share gain and e-commerce content ecosystem development. The management's commitment to investing within means and leveraging the company's strengths in operational efficiency and market leadership underscores confidence in achieving sustainable long-term profitability and growth. Comparatively, this strategic direction aligns with the initial investment thesis focusing on adapting to changing business demands and solidifying competitive advantages in the face of increasing market

Key Questions to follow

bottom of page