Sea(SE) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a total GAAP revenue increase of 23% year-on-year to $3.7 billion, driven primarily by GMV growth in e-commerce and the credit business [21][22] - Adjusted EBITDA for the first quarter was$401 million, down from $507 million in the same quarter of the previous year [21] - The net loss for the first quarter was$23 million, compared to a net income of $87 million in the first quarter of 2023 [22] Business Line Data and Key Metrics Changes - E-commerce segment saw gross orders increase by 57$499 million, with adjusted EBITDA up by 50% to $149 million [10] - Digital entertainment bookings were$512 million, with GAAP revenue of $458 million and adjusted EBITDA of$292 million [10] Market Data and Key Metrics Changes - In Asia, adjusted EBITDA for e-commerce was $11 million, down from$276 million year-on-year, while losses in other markets narrowed from $68 million to$33 million [10] - The contribution margin loss per order in Brazil improved by nearly 88% year-on-year to reach $0.94 [10] Company Strategy and Development Direction - The company aims to enhance price competitiveness, strengthen its content ecosystem, and improve service quality for buyers in its e-commerce operations [47] - The credit business is a primary driver of revenue growth, with a focus on prudent risk management and gradual increases in credit limits for users [8][19] - The company is committed to building Free Fire into a long-term franchise by focusing on user experience and continuous product improvements [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate challenges and adapt to changing environments, emphasizing a strong start to 2024 [1] - The competitive landscape has been stable recently, with management prepared to evaluate responses to any aggressive moves by competitors [54] - The company anticipates further growth in digital financial services and is optimistic about sustaining user engagement in gaming [49][55] Other Important Information - Shopee's operational priorities for 2024 include enhancing price competitiveness and improving logistics capabilities, which are seen as key differentiators [47] - The company has implemented measures to improve operational efficiency, such as managing the return and refund process directly [7] Q&A Session Summary Question: How does the company ensure sustainable growth while managing competition? - Management emphasized focusing on long-term competitive advantages such as cost efficiency and service quality to outcompete rivals [30][54] Question: What are the drivers behind the strong GMV growth? - Management noted that seasonality, particularly due to Lunar New Year and Ramadan, contributed to GMV growth, alongside execution improvements [32] Question: What is the outlook for sales and marketing expenses? - A reduction in sales and marketing expenses was noted, attributed to improved performance in the marketplace and live streaming [34][43] Question: How does the company view its logistics strategy? - The company highlighted that over 50% of orders in Asia and 70% in Brazil are fulfilled through its own logistics, with plans to increase this percentage [72][98] Question: What is the outlook for the digital financial services segment? - Management indicated that customer acquisition costs are impacting margins, but funding costs are improving, suggesting a focus on optimizing user acquisition strategies [92][93]