Sea Stock Dips then rebounded on the first quarter result

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    Southeast Asian tech giant Sea Limited (NYSE: SE) reported earnings for the first quarter on Tuesday morning and investors were initially disappointed as the results fell short of expectations. The stock opened about 7% lower before recovering. As of 12:30 p.m. EST, stocks rose 3%.

    This is how Sea developed in the first quarter.

    Triple-digit growth across the company

    Total revenue rose 147% to $ 1.76 billion in the first quarter, just missing the consensus estimate of $ 1.81 billion in revenue. This resulted in an adjusted net loss per share of $ 0.52, which was also slightly worse than the adjusted loss of $ 0.46 per share that Wall Street analysts had modeled.

    In Sea’s digital entertainment business, which primarily includes mobile games, quarterly active users (QAUs) increased 61% to 648.8 million. Of these, 79.8 million quarterly were paid users, or around 12% of the QAUs. The average bookings per user were $ 1.70 compared to $ 1.30 a year ago. The company’s in-house developed game Free fire remains the highest-earning mobile game in several major markets including Latin America, Southeast Asia and India. Bookings in the Digital Entertainment segment were $ 1.1 billion.

    In the e-commerce business, gross merchandise volume (GMV) more than doubled to $ 12.6 billion, representing revenue of $ 922.3 million. Gross orders jumped 153% to 1.1 billion, and Sea’s Shopee platform was the top shopping app in Southeast Asia and Taiwan for the quarter when measured average monthly active users and total time on the app.

    While the two core businesses are enjoying excellent growth rates, Sea continues to expand its range of digital financial services, with SeaMoney enjoying greater acceptance. The total payment volume for the company’s mobile wallet was more than $ 3.4 billion and the quarterly paying users of Sea mobile wallets were $ 26.1 million.

    Sea also announced that it issued 4.8 million new shares between March 5 and May 10 in the last several months to settle conversions related to outstanding convertible bonds. This event will be dilutive, but it will also effectively wipe out some debt and result in interest savings. The company now has 524.4 million shares outstanding.

    Ongoing uncertainties of COVID-19

    Due to the ongoing macroeconomic uncertainties related to the COVID-19 pandemic, Sea has not provided an update to its annual guidelines. Many of Sea’s key markets in Asia are grappling with deteriorating conditions and rising case numbers, particularly India. Executive Yanjun Wang said the company will continue to closely monitor local trends and will provide investors with an updated outlook as soon as Sea is ready.

    In March, Sea released a full-year 2021 forecast predicting digital entertainment bookings of $ 4.3 billion to $ 4.5 billion, a 38% growth in the middle. The e-commerce segment should generate revenue of $ 4.5 billion to $ 4.7 billion this year.

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    Evan Niu, CFA, has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Sea Limited. Millennial Money is part of the Motley Fool Network. Millennial Money has a disclosure policy.

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