Written by Tomi Kilgore
Gaming business misses fourth-quarter revenue forecast, but 'Free Fire' game sees 'positive trend' in 2024
Shares soared toward a seven-month high on Monday after the e-commerce and online gaming platform company reported better-than-expected fourth-quarter earnings.
The Singapore-based company's performance was supported by the strong performance of its e-commerce business, Shopee. Also, digital entertainment business Garena missed revenue expectations, but although he saw “positive trends,” he said one of the things he said was that his “Free Fire” game reached more than 100 million users at its peak in February. Daily his active is what his users achieved.
The stock (SE) rose 11.7% in pre-market trading, continuing its eight-year upward trajectory and opening at its highest price during regular trading since August 11.
The company posted a net loss of $111.6 million, or 19 cents per share, from net income of $422.8 million, or 72 cents per share, in the year-ago period. The FactSet consensus for reported loss per share was 20 cents.
Revenue rose 4.8% to $3.62 billion, beating the FactSet consensus of $3.57 billion.
Among Sea's business segments, e-commerce sales increased 23.2% to $2.6 billion, beating the FactSet consensus of $2.5 billion. Total order value increased by 46% to $2.5 billion, and gross merchandise value increased by 28.6% to $23.1 billion, exceeding expectations of approximately $22.7 billion.
“Despite the increasingly competitive environment in Southeast Asia, we believe Shopee has significantly increased its market share from the beginning of 2023 to the end of 2023,” CEO Forrest Lee said.
Digital entertainment revenue fell 46.2% to $510.8 million, below expectations of $564.9 million.
Regarding Garena, the company said that “Free Fire” was the most downloaded mobile game in the world in 2023, according to Sensor Tower.
“We are pleased to see these positive trends continue into 2024,” Mr Lee said. “In February, Free Fire surpassed his 100 million peak daily active user count.”
Revenue from its digital financial services business (SeaMoney) rose 24.3% to $472.4 million, below the FactSet consensus of $484.5 million.
“For SeaMoney, 2023 was the first year of positive earnings, primarily driven by consumers and small businesses. [small and medium enterprise] It’s a trust business,” Lee said.
The company's stock has risen 33.6% over the past three months through Friday, while the S&P 500 Index SPX has risen 12.4%.
-Tommi Kilgore
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03/04/24 0803ET
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