Gaming Sales Slowdown Impacts on Sea Limited Results

Buffeted by headwinds in digital entertainment, the Sea Limited (SL) stock plunged almost 10.3% the day its fourth-quarter results, which missed the earnings forecast, were announced, even though revenue estimates were met.

On revenue of $3.2 billion, an adjusted per-share loss of 88 cents was announced, against analyst expectation of a per-share loss of 59 cents on revenue of $2.9 billion. The reported revenue is almost twice the amount in the corresponding period in the previous year.

Breakdown of revenue

E-commerce revenue was $1.6 billion, an increase of 89%.

Digital entertainment, at $1.4 billion, doubled over the previous corresponding period.

Financial services increased 711% to $197.5 million.

2022 expectations

E-commerce is expected to increase by 75% at the midpoint and deliver $8.9 to $9.1 billion in revenue.

Digital entertainment revenue is expected to reduce from $3.2 billion for the previous year to $2.9 to $3.1 billion for the current year.

The company said: “With many economies reopening further in the fourth quarter and into this year, we have observed some moderation in online activities and fluctuations in user engagement. Moreover, due to unanticipated government actions, Free Fire is currently unavailable in the Google Play and iOS app stores in India.”

About Sea Limited

Active in Southeast Asia, SL is a leading provider of digital entertainment and e-commerce and is made up of three internet businesses:

Garena (digital entertainment)

A leading developer and publisher of global online games

Shopee (e-commerce)

The largest regional platform for e-commerce in Taiwan and Southeast Asia

SeaMoney (financial services)

Providing financial services and digital payments

Final word

“With our growing scale, market leadership, and strong cash balance, we believe we are well placed to increasingly leverage efficiencies across our ecosystem for growth and manage the levers of our business to reach profitability across more markets and segments in 2022 and beyond,” Chief Executive Forrest Li said in written remarks with the Sea earnings release.

Katie Sullivan

Katie Sullivan

Katie is a digital nomad and business consultant. She has a bachelor's degree in business and has in the last 15 years in both the private and non-profit sectors. Her passion is helping people become better themselves and in turn creating better businesses. When she isn't chasing around her twin boys, she loves reading and gardening. She can be reached at [email protected]onsultanthub.com.

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