Sea Stock Plunges on Q3 Report, Faces Challenges in Digital Entertainment and E-Commerce Sectors

Sea Limited SE reported third-quarter FY23 revenue growth of 4.9% year-on-year to $3.310 billion, beating the consensus of $3.109 billion. 

Adjusted EPS loss of $(0.26), down from $(1.01) Y/Y, missed the consensus of $0.03. 

Digital Entertainment revenue decreased 33.7% Y/Y to $592.15 million, and bookings improved to $447.9 million versus $443.1 million a year ago. The segment's adjusted EBITDA was $234.0 million, compared to $239.5 million a year ago.

Quarterly active users were 544.1 million, compared to 544.5 million in the prior quarter.

Average bookings per user were $0.82, which increased slightly Q/Q.

E-commerce and other services revenue increased 22.3% Y/Y to $2.42 billion. Adjusted EBITDA for Shopee overall was $(346.5) million versus $(495.7) million a year back.

Core marketplace revenue grew 31.7% Y/Y. Gross orders rose over 13.2% Y/Y and 23.6% Q/Q. 

Digital Financial Services revenue grew 36.5% Y/Y to $446.2 million.

Sea Ltd held $7.9 billion in cash and equivalents.

Chair and CEO Forrest Li said, "And maximizing long-term profitability requires scale and strong market leadership. To achieve this long-term objective, we look at three key operational factors: growth, current profitability, and market share gain."

The Q4 consensus for revenue and EPS are $3.3 billion and $(0.14).

Price Action: SE shares traded lower by 21.90% at $35.92 session on the last check Tuesday.