Sea Limited Quarterly Results Miss on Earnings As Gaming Sales Slow

Sea Limited (SE) reported fourth-quarter results early Tuesday that missed earnings estimates but beat on revenue, as the company faced headwinds in digital entertainment. SE stock took a dive.


The company reported an adjusted loss of 88 cents a share on revenue of $3.2 billion. Analysts expected Sea to report a loss of 59 cents on revenue of $2.9 billion. Revenue doubled from the year-ago period.

SE stock plunged 12% to 128.20, during afternoon trades on the stock market today.

Sea said e-commerce revenue climbed 89% to 1.6 billion. In addition, digital entertainment doubled to $1.4 billion. Also, financial services soared 711% to $197.5 million.

For 2022, Sea expects e-commerce to be in the range of $8.9 billion to 9.1 billion, up 75% at the midpoint.

However, it expects digital entertainment revenue to be between $2.9 billion and $3.1 billion. That’s down from $3.2 billion the prior year.

SE Stock: Moderation In Online Activities

“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, the company said in written remarks. “Moreover, due to unanticipated government actions, Free Fire is currently unavailable in the Google Play and iOS app stores in India.”

Sea is a leading provider of e-commerce and digital entertainment in the Southeast Asia region. Sea breaks down into three core internet businesses — digital entertainment, e-commerce and financial services. The three units are called Garena, Shopee and SeaMoney, respectively.

According to Sea, Garena is a leading global online games developer and publisher. In addition, it says Shopee is the largest pan-regional e-commerce platform in Southeast Asia and Taiwan. SeaMoney provides digital payments and financial services.

“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.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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