Sea Limited

Good morning and good evening to all and welcome to the Sea Limited Third Quarter 2024 Assault Conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to record your question, press star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mr. MC Kao to begin the conference. Please go ahead.

Hello, everyone, and welcome to SEAS 2024 Third Quarter Earnings Conference call. I am MC, SEAS Investor Relations Director. On this call, we may make forward-looking statements, which are inherently subject to risk and uncertainties and may not be realized in the future for various reasons, as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. I have with me SEAS Chairman and Chief Executive Officer, Forrest Lee, President Chris Fung, and Chief Financial Officer Tony Ho. Our management will share strategy and business updates, operating highlights, and financial performance for the third quarter of 2024. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forrest.

Hello, everyone, and thank you for joining today's call. I'm happy to report that it has been another solid quarter. We are seeing high growth across all our three businesses. Shopee is on track to deliver our full-year guidance of mid-20 year-on-year GMV growth. Ximany's loan book grew by over 70% year-on-year this quarter. while maintaining a stable NPL ratio. And for Garena, we now expect Free Fire's full-year booking to grow over 30% year-on-year. I'm very proud that we also improved our profitability while getting back to high growth. This quarter, Shopee achieved positive adjusted EBITDA in both Asia and Brazil. As we continue to focus on delivering growth, we expect Shopee to remain profitable going forward. With that, let me take you through each business' performance in more detail, starting with e-commerce. Shopee has delivered strong GMV and order volume growth this quarter, sustaining strong market leadership in our Asian markets. user growth remains strong, with average monthly active buyers in the third quarter growing by over 20% year-on-year. We have improved our monetization in both commissions and advertising take-rates this quarter. On commissions, further market rationalization in Southeast Asia has led to industry-wide increases in commission take-rates. On advertising, our ad tech improvements attracted more sellers to our paid ad features. We simplified seller onboarding, optimized the algorithm for traffic allocation, and introduced a dashboard, making it easier for sellers to set their ad spend and ROI targets. This helped our sellers both see the benefits of their ad spend and achieve better returns on it, driving up adoption of our ad offerings. In the third quarter, ad paying sellers increased by over 10%, and ad paying revenue per seller increased by over 25% year on year. Compared to the same quarter last year, Shopee's ad take rate has improved by more than 30 basis points And we see much more upset here. On the operations front, we remain committed to the same three priorities to deepen our competitive mode. Enhancing our price competitiveness, improving our service quality, and strengthening our content ecosystem. Price competitiveness continues to be a key value proposition that we bring to Shopee users. It is a strong anchor of our brand man share among buyers. In a recent survey conducted by Quartrix, Shopee received the highest score among e-commerce platforms for good product prices in our Asia market and Brazil. On service quality, investing in end-to-end logistics integration across our logistics partners has given us a vital and structural advantage over our peers. Our buyers are happy with the cost savings we pass on to them and the better customer service we are able to provide. Our sellers also appreciate it as we give them access to one-stop logistics solutions that are both reliable and cost-effective efficient. XPX Express, in particular, continues to be a key depreciating factor for us. It has become a leading logistics service provider in our market with extensive coverage, fast delivery speed, and cost leadership. In the third quarter, half of XPX Express orders in Asia were delivered within two days of order placement. Cost per order also continued to improve quarter on quarter in both Asia and Brazil. We have also made significant progress on the content ecosystem front. Live streaming continues to be a popular format on both the supply and demand side in our market. Our division in the second half of last year to invest in building Shopee's live streaming capability has paid off. In the third quarter, our average daily unique streamers grew over 50%, and the daily unique live streaming buyers grew over 15%, both quarter on quarter. Average basket size on live streaming has consistently increased over the past few quarters, driving improvements in its unique economics.