SE Q2 Earnings Call w/ Analyst Q&A
8/17/2021
Q Garena: How should we think about potential competition developing similar games? RE: New games
contribution
A They believe gaming is not a competition business. Freefire is a platform in which they continue to
see growth. They’ll continue to grow the platform and ways to monetize the game. They don’t discuss
pipeline games.
Q What will we see re: e-commerce in the future re: Pandemic?
A During Covid they will see growth in health and beauty and grocery delivery.
Q Shopee in Indonesia. What are plans in other parts of the world?
A Nothing more to announce at this point.
Q Guidance for gaming indicates softness in the 2nd half. Please expand.
A +40% growth y/y, which is a record. Their focus is to continue to grow their user base and paid user
base. Their past track record is that they’ve proven they’re effective at doing this in the past.
Q Ecommerce- What factors in what countries have lowest take rate?
A Attributable to advertisement and marketing tools. It’s not driven by any one particular market.
Q S&M increases in ecommerce
A Given their strong market leadership, it’s normal and natural during this phase of their growth.
Q Shed color in one new region you’re moving into. How would you rate your strength/weakness in this
area?
A Having launched recently in Brazil, this area has a very low ecommerce penetration, so they see a
long runway in Brazil. SE Asia focus on high margin categories.
Q Shopee in Brazil. Any color in terms of the % of revenue in Brazil and growth expectations for
Brazil.
A We don’t break this out. Still very early stage. Will continue to study this, stay humble and
proceed accordingly.
Q Is it because of better monetization in Indonesia that the numbers look so good.
A Most of monetization came from transaction fees and advertisement adoption. Still very early stages.
Take rate is relatively low as they’re still relatively early in this opportunity.
Q Looking at user base for Garena, where are you seeing growth in the market?
A Came from all 3 regions of South East Asia and Latin America, especially in Freefire game.
Q Provide color in investments in ecommerce and increased investments in going into Brazil?
A 12% and 18% take rate for certain sellers. Still assessing growth potential.
Q Leader has made significant investments in Latin America, please provide color.
A Latin and early stages of growth when they started in South East Asia.
–Additional Remarks from CEO and CFO–
Improved Guidance:
Digital Entertainment is now expected to be $4.5B-4.7B
Ecommerce GAAP revenue is now expected to be $4.7 -$4.9B
Adding (physical) Shopee Centers in Indonesia and adding Shopee classes in local universities.
Adding Shopee Centers to help local farmers sell their goods
Serve the underserved and help people to digitalize. Bettering lives through technology.
Garena bookings were up 55% y/y
Quarterly paying users increased 92% y/y
Freefire was highest grossing video game in history of video gaming
Shopee was the most downloaded app on Google and Apple Pay
Shopee ranked 1st in total downloads and most popular mobile app in MAU’s
A substantial population in their markets is benefitting from the Shopee ecosystem.
SeaMoney mobile wallet services was up approx. 150%
Recently expanded partnership with Mastercard and partnering with Pure Gold to accept SeaMoney.
–Financials–
Growth mainly came from ecommerce business (grew revenue 191% y/y) as well as digital entertainment (grew revenue 65%)
Thank you to all who make Saul’s board the special place that it has become. Shout out to the board managers and Saul for what must be a thankless job of managing the one-liner posts, etc. and the time/effort you invest in managing this.
sjo