Sea’s Shopee turns first profit after fending off TikTok, Lazada
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Despite fierce competition, Sea has raised the commissions it charges merchants in many core markets by about a third since the start of the year.
PHOTO: REUTERS
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SINGAPORE – Sea’s stock soared to its highest in more than two years after its e-commerce business posted its first adjusted profit, a sign it is holding its own against bigger Chinese rivals like Alibaba Group Holding.
Its US shares climbed 10.5 per cent, the biggest gain since August. The Singapore-based company reported overall net income that topped estimates at US$153.3 million (S$205 million), as well as a better-than-projected 31 per cent rise in revenue to US$4.3 billion for the September quarter.
The results alleviate some concerns about the prospects for online retail arm Shopee, which is fighting ByteDance’s TikTok and Alibaba’s Lazada across South-east Asia. The two Chinese companies have adopted AI features including chatbots and other tools for sellers on their platforms, trying to erode Shopee’s dominance. Newer contenders like Shein and PDD Holdings’ Temu are also targeting a region of more than 675 million people, where more shoppers are moving online.
“As we continue to focus on delivering growth, we expect Shopee to remain profitable going forward,” Sea’s chief executive Forrest Li said in a statement.
Shopee’s adjusted operating profit reached US$34.4 million, following years of losses. Sea’s more-profitable gaming unit, Garena, has supported the company’s finances as it has built out its e-commerce operations.
The volatile e-commerce market is reflected in Sea’s share price, which has more than doubled in 2024 after plunging for two years. Once one of Asia’s hottest e-commerce players that lost some of its steam, the company is now trying to convince investors of its long-term earnings potential.
Despite fierce competition, Sea has raised the commissions it charges merchants in many core markets by about a third since the start of the year. The hikes, which bring Shopee’s fees far above its rivals, show that Sea is confident it can attract and retain merchants, helped by the e-commerce pioneer’s broad user base and well established delivery services.
Sea’s e-commerce gross merchandise volume (GMV), or the value of goods sold, climbed a higher-than-estimated 25 per cent to US$25.1 billion in the third quarter. The company expects to reach a billion active users for e-commerce, chief executive Forrest Li said during a conference in Singapore last week, without specifying a timeframe.
The earnings report “demonstrates operating efficiency and management execution towards balancing between growth and profitability”, Citigroup analyst Alicia Yap said in a note. Sea posted a “solid beat in e-commerce order volume and GMV growth”.
In September, Shopee struck a pact with Alphabet’s YouTube in Indonesia, betting the video platform will help it attract more shoppers and stay ahead of rivals in its biggest market.
Beyond South-east Asia, Shopee is gaining steam in its newer market, Brazil. The number of average monthly active buyers there grew by close to 40 per cent year on year last quarter, Mr Li said on a conference call. That helped the company break even for the first time in that market too on adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) basis, he said. BLOOMBERG
