Southeast Asian tech titan Sea (NYSE:SE) has reported its third-quarter financials for FY2023, showcasing a mix of triumphs and challenges. The company, known for its e-commerce and gaming platforms, registered revenues of $3.31 billion, marking a 4.9% year-over-year increase and surpassing Wall Street predictions.
Despite the revenue beat, Sea experienced a shortfall in earnings per share (EPS), with a GAAP EPS loss at $0.26, which is an improvement from last year's loss of $1.02 per share but still below expectations. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $35.3 million, a significant turnaround from the loss of $357.7 million in Q3 2022 but falling short of analyst forecasts of $179.8 million.
The company's strategic choices appear to be geared toward long-term gains rather than immediate profitability. This is evidenced by the substantial growth in gross profit, which soared by 17.4% year-over-year to $1.4 billion, boosting the gross margin to 43.5% from 38.9% in the same quarter the previous year.
However, not all indicators were positive. The number of paying users dipped to 40.5 million this quarter, down from 51.5 million year-over-year and missing the target of 44 million users. This decline reflects a slowdown in user growth, a trend that has persisted over the past two years.
Forrest Li, Chairman and Group CEO of Sea, reiterated the company's commitment to maximizing long-term profitability for improved shareholder returns—a sentiment that may offer some reassurance amidst the mixed results.
On the financial health front, Sea remains strong with a market capitalization of $26.09 billion and more than $7.50 billion in cash reserves as of September 30, 2023—an increase from earlier figures.
Following the earnings release today, Sea's stock reacted with an 11.4% drop to $40.8 per share as investors digested both the achievements and the shortfalls of the quarter.
InvestingPro Insights
Drawing upon real-time data and expert analysis from InvestingPro, we can glean further insights into Sea's financial outlook.
InvestingPro Tips indicate that the company holds more cash than debt on its balance sheet, a healthy sign for any business. This aligns with the report of Sea's substantial cash reserves of $7.5 billion. Moreover, analysts predict the company will be profitable this year, despite a recent drop in stock price. This is further supported by the expected growth in net income and the fact that the company has been profitable over the last twelve months.
InvestingPro Data reveals a market capitalization of $26.09 billion USD, and a P/E ratio of 85.05, which is high relative to near-term earnings growth. The company also registered a revenue growth of 8.43% over the last twelve months as of Q2 2023.
With these insights, potential investors can make more informed decisions. For more detailed information and additional tips, consider exploring the InvestingPro platform, which offers a wealth of data and expert analysis.
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