'Free Fire' parent Sea's stock soars after revenue beat amid e-commerce strength

By Tomi Kilgore

Gaming business misses Q4 revenue expectations but 'positive trends' in 2024 for 'Free Fire' game

Shares of Sea Ltd. soared toward a seven-month high Monday, after the e-commerce and online-gaming platform company reported fourth-quarter revenue that beat expectations.

The Singapore-based company's results were fueled by strength in its e-commerce business, Shopee. And while the digital-entertainment business, Garena, missed revenue expectations, among the "positive trends" seen was the "Free Fire" game achieving more than 100 million peak daily active users in February.

The stock (SE) shot up 11.7% in premarket trading, to put it on track for an eighth straight gain, and to open at the highest price seen during regular session hours since Aug. 11.

The company swung to a net loss of $111.6 million, or 19 cents a share, from net income of $422.8 million, or 72 cents a share, in the same period a year ago. The FactSet consensus for reported per-share losses was 20 cents.

Revenue grew 4.8% to $3.62 billion, above the FactSet consensus of $3.57 billion.

Among Sea's business segments, e-commerce revenue jumped 23.2% to $2.6 billion, above the FactSet consensus of $2.5 billion. Gross orders climbed 46% to 2.5 billion and gross merchandise value increased 28.6% to $23.1 billion, above expectations of about $22.7 billion.

"Despite an environment of intensified competition in Southeast Asia, we believe Shopee had a meaningful gain in market share between the start and the end of 2023," said Chief Executive Forrest Li.

Digital entertainment revenue dropped 46.2% to $510.8 million, below expectations of $564.9 million.

For Garena, the company said "Free Fire" was the most downloaded mobile game globally in 2023, according to Sensor Tower.

"We are pleased that these positive trends are continuing into 2024," Li said. "In February, Free Fire achieved more than 100 million peak daily active users."

For the digital-financial-services business, or SeaMoney, revenue rose 24.3% to $472.4 million, below the FactSet consensus of $484.5 million.

"For SeaMoney, 2023 was the first year of positive profit, primarily attributed to our consumer and SME [small and medium enterprise] credit business," Li said.

The stock has rallied 33.6% over the past three months through Friday, while the S&P 500 index SPX has advanced 12.4%.

-Tomi Kilgore

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03-04-24 0803ET

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