Sea Limited (SE, Financial) experienced a significant 12% surge, reaching its highest levels since early 2022. This rise follows a successful Q3, where the company delivered adjusted earnings upside. Previously, SE had shifted its focus from growth to profitability, which led to a 90% drop in its stock from its 2021 peak. However, the company's renewed growth strategy, coupled with efficiency improvements, has driven a nearly threefold increase in its stock value year-to-date in 2024.
In Q3, Sea Limited's e-commerce division, Shopee, achieved a 25.2% increase in gross merchandise volume (GMV) to $25.1 billion, aligning with its FY24 growth projections. Shopee's revenues grew by 42.6% year-over-year to $3.2 billion. Meanwhile, SeaMoney, the digital financial services arm, saw a 38% revenue increase to $615 million. Garena, the digital entertainment segment, reported a 24.3% rise in bookings, supporting a 30% forecast growth for FY24.
Overall, SE's consolidated revenue grew by 30.8% in Q3 to $4.33 billion, up from previous quarters. Despite this growth, profitability improved, with Shopee achieving a positive adjusted EBITDA of $34.4 million, reversing a loss of $346.5 million from the prior year. Adjusted EBITDA for SeaMoney and Garena also increased by 13.4% and 34.4% year-over-year, respectively, resulting in a second consecutive quarter of non-GAAP profitability with an EPS of $0.24.
Looking forward, SE is exploring growth opportunities. Shopee is leveraging live streaming, with a 15% sequential increase in daily live-streaming buyers in Q3. This strategy has been successful for PDD Holdings (PDD, Financial) and is being implemented across SE's markets, including Indonesia, Thailand, and Vietnam. Garena's Free Fire game remains highly popular, with over 100 million daily active users in Q3, a 25% increase from last year. The game is expanding into North Africa, a largely untapped market. In digital financial services, SE is capitalizing on the underserved credit lending sector.
SE's strong combination of accelerating revenue growth and improving profitability is attracting investors. Although the stock is still about 70% below its 2021 peak, SE is making significant strides in the Asian Pacific markets, setting the stage for long-term growth.
