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Sea Limited Reports Third Quarter 2018 Results

SINGAPORE, Nov. 21, 2018 /PRNewswire/ -- Sea Limited (NYSE: SE) ("Sea" or the "Company") today announced its financial results for the quarter ended September 30, 2018. "We once again achieved strong growth in the third quarter of 2018," said Forrest Li, Chairman and Group Chief Executive Officer of Sea. "Shopee posted its best ever quarterly gross merchandise value and number of orders as it extended its lead as the largest e-commerce platform in our region. Building on this momentum, our recent annual 'Shopee 11.11 Big Sale' also set a historical high record for Shopee, helping to cement its reputation as the go-to online destination for consumers in our region." "In digital entertainment, our self-developed game, Free Fire, is now one of the world's most popular online games, recently achieving its record high peak daily active user count of over 27 million and surpassing 200 million registered users globally," Forrest continued.  "We are also excited about our strong game pipeline, boosted by the new publishing arrangement with Tencent, our long-term investor and strategic partner. The strong momentum across our e-commerce and digital entertainment businesses is reflected in our revised full year outlook." Third Quarter 2018 Key Metrics - Group Total adjusted revenue was US$242.8 million, up 60.1% year-on-year from US$151.7 million for the third quarter of 2017 and up 10.6% quarter-on-quarter from US$219.6 million for the second quarter of 2018. Total adjusted EBITDA was US$(183.8) million, compared to US$(99.7) million for the third quarter of 2017 and US$(161.9) million for the second quarter of 2018. - Digital Entertainment Adjusted revenue was US$144.6 million, up 7.4% year-on-year from US$134.5 million for the third quarter of 2017 and an increase of 3.9% quarter-on-quarter from US$139.1 million for the second quarter of 2018. Adjusted EBITDA was US$53.7 million, up 19.2% year-on-year from US$45.1 million for the third quarter of 2017 and increased 10.5% quarter-on-quarter from US$48.6 million for the second quarter of 2018. Quarterly active users reached 176.1 million, an increase of 155.2% year-on-year from 69.0 million for the third quarter of 2017 and up 9.7% quarter-on-quarter from 160.6 million for the second quarter of 2018. Average revenue per user was US$0.8 compared to US$2.0 for the third quarter of 2017 and US$0.9 for the second quarter of 2018.           - E-commerce Gross merchandise value ("GMV") was US$2.7 billion, an increase of 152.7% year-on-year from US$1.1 billion for the third quarter of 2017 and up 21.1% quarter-on-quarter from US$2.2 billion for the second quarter of 2018. Gross orders for the quarter totaled 158.5 million, an increase of 140.5% year-on-year from 65.9 million for the third quarter of 2017 and up 24.0% quarter-on-quarter from 127.8 million for the second quarter of 2018. Adjusted revenue was US$71.2 million, up 1,156.5% year-on-year from US$5.7 million for the third quarter of 2017 and up 21.1% quarter-on-quarter from US$58.8 million for the second quarter of 2018. Adjusted revenue included US$50.3 million of marketplace revenue[1] and US$20.9 million of product revenue[2]. Adjusted EBITDA was US$(214.9) million, compared to US$(130.0) million for the third quarter of 2017 and US$(188.3) million for the second quarter of 2018. Sales and marketing as a percentage of GMV stood at 5.7%, and improved from 9.7% for the third quarter of 2017 and 6.2% for the second quarter of 2018. In Indonesia, Shopee's largest market, total orders for the quarter reached 63.7 million, or a daily average of 0.7 million orders, which we believe made Shopee the largest e-commerce platform in Indonesia. Sales and marketing as a percentage of GMV for Indonesia was even lower than the ratio for Shopee as a whole, as Shopee achieved greater marketing efficiency in its largest market. [1] Marketplace revenue mainly consists of commission and advertising income and revenue generated from other value-added services. [2] Product revenue mainly consists of revenue generated from direct sales. Strategic Business Updates Digital Entertainment Driven by the strong performance of our key game titles, Garena continued to deliver robust growth in the third quarter of 2018. Our self-developed game, Free Fire, continues to grow quickly, recently surpassing 200 million registered users globally and achieving a peak daily active user count of over 27 million, compared to our previously disclosed peak of over 16 million daily active users. Our monetization programs for Free Fire are also generating results. Throughout the month of October, Free Fire was consistently the highest grossing game on the Google Play Store in Brazil, Argentina, and Mexico, according to App Annie. It is also building traction in our core markets in Southeast Asia, becoming the highest grossing game on the Google Play Store in Indonesia in late October, based on App Annie's rankings. On November 19, we announced a binding letter of intent with Tencent for it to grant us a right of first refusal to publish its mobile and PC games in Indonesia, Taiwan, Thailand, the Philippines, Malaysia, and Singapore. We believe our strategic partnership with Tencent will enhance our continual efforts to bring top quality content to our region. E-commerce Shopee continued to scale rapidly in the third quarter, driven by robust GMV and order growth across all our markets. Its marketplace revenue grew by 34.8% quarter-on-quarter as more sellers made use of Shopee's suite of advertising and value added services to reach its fast-growing consumer community. During the quarter, Shopee also continued to benefit from improved economies of scale and greater marketing efficiencies, with sales and marketing expenses as a percentage of GMV falling further to 5.7%, compared to 6.2% in the second quarter of 2018. This strong momentum was driven by robust user engagement on the platform. At the culmination of the Shopee 11.11 Big Sale, an annual shopping festival held from late October to mid-November, Shopee set its new record with over 11 million orders recorded on the platform over the 24 hours of November 11, 2018. This represented approximately 4.5 times the number of orders recorded on the same date last year. Other Developments The Company announced today that Terry Zhao has been appointed President of Garena. Terry has been with the Company since its inception in 2009 and has served in a number of senior roles in our digital entertainment business across several key markets, most recently running our games studio in Shanghai. He has been heavily involved in our push into self-developed games and mobile games and, in his new role, will focus on further extending our offering in these important strategic areas. The Company also announced that Group Chief Strategy Officer, Alan Hellawell, will depart the Company effective November 23, 2018. Drawing on his prior experience as a seasoned equity analyst in the technology sector, Alan made important contributions to the Company's successful initial public offering and its transition through the initial stage as a publicly listed company during his tenure. "On behalf of Sea, I would like to thank Alan for his service to the Company, and wish him all the best in his future endeavors," said Forrest, Sea's Chairman and Group Chief Executive Officer. Alan's responsibilities have been assumed by the Company's corporate development and strategy team under the oversight of its Group General Counsel, Yanjun Wang. In addition to the legal function, Yanjun also oversees the corporate development, investor relations, public policy, and public relations functions of the Company. Yanjun has been with the Company since early 2014 and, as a member of the Company's leadership team, worked closely with the board and Group Chief Executive Officer on all key strategic and corporate matters of the Company in the past few years. Unaudited Summary of Financial Results (Amounts are expressed in thousands of US dollars "$") For the Three Months ended September 30, 2017 2018 $ $ YOY% Revenue Digital Entertainment 79,799 112,520 41.0% Others 14,295 92,401 546.4% 94,094 204,921 117.8% Cost of revenue Digital Entertainment (55,577) (63,960) 15.1% Others (27,698) (135,351) 388.7% (83,275) (199,311) 139.3% Gross profit 10,819 5,610 (48.1)% Other operating income 959 3,072 220.3% Sales and marketing expenses (131,571) (180,304) 37.0% General and administrative expenses (33,262) (57,285) 72.2% Research and development expenses (7,661) (17,293) 125.7% Total operating expenses (171,535) (251,810) 46.8% Operating loss (160,716) (246,200) 53.2% Non-operating income, net 25,802 30,903 19.8% Income tax credit (expense) 2,147 (2,020) (194.1)% Share of results of equity investees (64) (702) 996.9% Net loss (132,831) (218,019) 64.1% Adjusted net loss (1) (127,133) (237,568) 86.9% Adjusted revenue of Digital Entertainment (1) 134,548 144,558 7.4% Adjusted revenue of E-commerce (1) 5,669 71,233 1,156.5% Adjusted revenue of Digital Financial Services (1) 4,792 3,113 (35.0)% Revenue of Other Services 6,717 23,934 256.3% Total adjusted revenue (1) 151,726 242,838 60.1% Adjusted EBITDA for Digital Entertainment (1) 45,083 53,724 19.2% Adjusted EBITDA for E-commerce (1) (129,964) (214,861) (65.3)% Adjusted EBITDA for Digital Financial Services (1) (8,198) (7,001) 14.6% Adjusted EBITDA for Other Services (1) (5,327) (13,850) (160.0)% Unallocated expenses (2) (1,276) (1,764) (38.2)% Total adjusted EBITDA (1) (99,682) (183,752) (84.3)% (1) For a discussion of the use of non-GAAP financial measures, see "Non-GAAP Financial Measures." (2) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses areexcluded from segment results as they are not reviewed by the Chief Operation Decision Maker ("CODM") as part of segment performance. Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017 Revenue The table below sets forth revenue generated from our reported segments. Amounts are expressed in thousands of US dollars ("$"). For the Three Months ended September 30, 2017 2018 $ % of revenue $ % of revenue YOY% Revenue Digital Entertainment 79,799 84.8 112,520 54.9 41.0% E-commerce 2,786 3.0 65,919 32.2 2,266.1% Digital Financial Services 4,792 5.1 2,548 1.2 (46.8)% Other Services 6,717 7.1 23,934 11.7 256.3% 94,094 100.0 204,921 100.0 117.8% 2017 2018 $ % of total adjusted revenue $ % of total adjusted revenue YOY% Adjusted revenue of Digital Entertainment 134,548 88.7 144,558 59.5 7.4% Adjusted revenue of E-commerce 5,669 3.7 71,233 29.3 1,156.5% Adjusted revenue of Digital Financial Services 4,792 3.2 3,113 1.3 (35.0)% Revenue of Other Services 6,717 4.4 23,934 9.9 256.3% Total adjusted revenue 151,726 100.0 242,838 100.0 60.1% Our total revenue increased by 117.8% to US$204.9 million in the third quarter of 2018 from US$94.1 million in the third quarter of 2017. Our total adjusted revenue increased by 60.1% to US$242.8 million in the third quarter of 2018 from US$151.7 million in the third quarter of 2017. These increases were mainly driven by the growth in each of the segments detailed as follows: Digital Entertainment: Revenue increased by 41.0% to US$112.5 million in the third quarter of 2018 from US$79.8 million in the third quarter of 2017. Adjusted revenue increased by 7.4% to US$144.6 million in the third quarter of 2018 from US$134.5 million in the third quarter of 2017. This increase was primarily due to improvements in the monetization of our existing games and the launch of new games. E-commerce: Revenue increased by 2,266.1% to US$65.9 million in the third quarter of 2018 from US$2.8 million in the third quarter of 2017. Adjusted revenue increased by 1,156.5% to US$71.2 million in the third quarter of 2018 from US$5.7 million in the third quarter of 2017. This increase was primarily due to the growth of our GMV and our sellers' use of our services and product offerings under 'Service by Shopee,' 'Shopee Logistics Service,' as well as our other value-added services. Digital Financial Services: Revenue decreased by 46.8% to US$2.5 million in the third quarter of 2018 from US$4.8 million in the third quarter of 2017. Adjusted revenue decreased by 35.0% to US$3.1 million in the third quarter of 2018 from US$4.8 million in the third quarter of 2017, as we switched to focus our efforts on strengthening our infrastructure to support our existing platforms. The decrease was also in part due to the continuation of the restrictive measures imposed by Vietnam's leading mobile operators on using prepaid telco cards for online game top-ups. Other Services: Revenue increased by 256.3% to US$23.9 million in the third quarter of 2018 from US$6.7 million in the third quarter of 2017. The increase was primarily due to the growth of the ancillary services we provide to our e-commerce platform users. Cost of Revenue Our total cost of revenue increased by 139.3% to US$199.3 million in the third quarter of 2018 from US$83.3 million in the third quarter of 2017. Digital Entertainment: Cost of revenue increased by 15.1% to US$64.0 million in the third quarter of 2018 from US$55.6 million in the third quarter of 2017. The increase was largely in line with revenue growth in our digital entertainment business. Others: Cost of revenue for our other segments combined increased by 388.7% to US$135.4 million in the third quarter of 2018 from US$27.7 million in the third quarter of 2017. The increase was primarily due to the costs incurred following the launch of 'Service by Shopee,' 'Shopee Logistics Service,' and direct sales at the end of 2017; higher bank transaction fees driven by GMV growth from our e-commerce business; higher costs associated with other ancillary services we provided to our e-commerce platform users; as well as higher staff compensation and benefit costs. Sales and Marketing Expenses Our total sales and marketing expenses increased by 37.0% to US$180.3 million in the third quarter of 2018 from US$131.6 million in the third quarter of 2017. The table below sets forth the breakdown of our sales and marketing expenses of our two major reporting segments. Amounts are expressed in thousands of US dollars ("$"). For the Three Months ended September 30, 2017 2018 YOY% $ $ Sales and Marketing Expenses Digital Entertainment 21,724 19,046 (12.3)% E-commerce 102,996 152,934 48.5% Digital Entertainment: Sales and marketing expenses decreased by 12.3% to US$19.0 million in the third quarter of 2018 from US$21.7 million in the third quarter of 2017. The decrease was primarily due to higher marketing pushes around the competition back in 2017. For the Three Months ended September 30, 2017 2018 $ $ Digital Entertainment Sales and marketing expenses 21,724 19,046 Adjusted revenue 134,548 144,558 Sales and marketing expenses as a percentage of adjusted revenue 16.1% 13.2% Sales and marketing expenses as a percentage of adjusted revenue decreased to 13.2% in the third quarter of 2018 from 16.1% in the third quarter of 2017 as we continue to improve the efficiency of our marketing efforts. E-commerce: Sales and marketing expenses increased by 48.5% to US$152.9 million in the third quarter of 2018 from US$103.0 million in the third quarter of 2017. The increase in marketing efforts was aligned with our strategy to fully capture the market growth opportunity and was primarily attributable to shipping and other promotions on our platform that were designed to increase our user base and enhance user engagement. For the Three Months ended September 30, 2017 2018 $ $ E-commerce Sales and marketing expenses 102,996 152,934 GMV 1,064,759 2,690,927 Sales and marketing expenses as a percentage of GMV 9.7% 5.7% Sales and marketing expenses as a percentage of GMV was 5.7% in the third quarter of 2018 and improved from 9.7% in the third quarter of 2017 as we continue to improve the efficiency of our marketing efforts. General and Administrative Expenses Our general and administrative expenses increased by 72.2% to US$57.3 million in the third quarter of 2018 from US$33.3 million in the third quarter of 2017. This increase was primarily due to the expansion of our staff force, the increase in office facilities and related expenses, as well as the increase in professional fees and other expenses. Research and Development Expenses Our research and development expenses increased by 125.7% to US$17.3 million in the third quarter of 2018 from US$7.7 million in the third quarter of 2017, primarily due to the increase in our research and development staff force as we expanded and enriched our product offerings. Non-operating Income or Losses, Net Non-operating income or losses consists of interest income, interest expense, investment gain (loss), fair value change for convertible debts and foreign exchange gain (loss). The amount was a net non-operating income of US$30.9 million and US$25.8 million in the third quarter of 2018 and 2017, respectively. This was primarily due to a fair value gain of US$36.0 million recognized in this quarter on the convertible debts issued before our initial public offering, while the net non-operating income in 2017 was primarily attributable to a gain on disposal and re-measurement of our investments. Income Tax Expense We had a net income tax expense of US$2.0 million in the third quarter of 2018, compared with a net income tax benefit of US$2.1 million in the third quarter of 2017, which was primarily due to corporate income tax and withholding tax recognized for our digital entertainment segment in the third quarter of 2018. The net income tax benefit in the third quarter of 2017 was primarily due to deferred tax assets recognized on deferred revenue arising from our digital entertainment segment. Share of Results of Equity Investees We had share of losses of equity investees of US$0.7 million in the third quarter of 2018, compared with US$0.1 million in the third quarter of 2017. Net Loss As a result of the foregoing, we had net losses of US$218.0 million and US$132.8 million in the third quarter of 2018 and 2017, respectively. Adjusted Net Loss Adjusted net loss, which is net loss adjusted to remove share-based compensation expenses and fair value change for convertible debts, was US$237.6 million and US$127.1 million in the third quarter of 2018 and 2017, respectively. Updated Guidance For the full year of 2018, we now expect total adjusted revenue to be between US$930 million and US$970 million, representing 68.0% to 75.2% growth from 2017. This compares to the previously disclosed guidance of between US$780 million and US$820 million, representing 40.9% to 48.1% growth. We expect adjusted revenue for digital entertainment for the full year of 2018 to be between US$600 million and US$620 million, representing year-on-year growth of 21.0% to 25.0%. We are also revising our e-commerce GMV guidance for the full year of 2018. We now expect e-commerce GMV for the full year of 2018 to be between US$9.2 billion and US$9.7 billion, representing 123.7% to 135.9% growth from 2017. This compares to the previously disclosed guidance of between US$8.2 billion and US$8.7 billion, representing 99.4% to 111.5% growth. Webcast and Conference Call Information The Company's management will host a conference call today to review Sea's business and financial performance. Details of the conference call and webcast are as follows: Date and time:   7:00 PM U.S. Eastern Time on November 20, 2018 8:00 AM Singapore / Hong Kong Time on November 21, 2018 Webcast link: https://services.choruscall.com/links/se181120.html Dial in numbers:      US Toll Free: 1-888-317-6003 Hong Kong: 800-963-976 International: 1-412-317-6061        Singapore: 800-120-5863 United Kingdom: 08-082-389-063 Passcode for Participants: 1600352 A replay of the conference call will be available at the Company's investor relations website (https://www.seagroup.com/investor/financials). An archived webcast will be available at the same link above. For enquiries, please contact: Investors / analysts: ir@seagroup.com Media: media@seagroup.com About Sea Limited Sea's mission is to better the lives of the consumers and small businesses of our region with technology. Our region includes the key markets of Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia and Singapore. Sea operates three platforms across digital entertainment, e-commerce, and digital financial services, known as Garena, Shopee, and AirPay, respectively. Forward-Looking Statements This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident," "guidance," and similar statements. Among other things, statements that are not historical facts, including statements about Sea's beliefs and expectations, the business, financial and market outlook, and projections from its management in this announcement, as well as Sea's strategic and operational plans, contain forward-looking statements. Sea may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases, and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Sea's goals and strategies; its future business development, financial condition, financial results, and results of operations; the growth in, and market size of, the digital entertainment, e-commerce and digital financial services industries in the region, including segments within those industries; changes in its revenue, costs or expenditures; its ability to continue to source, develop and offer new and attractive online games and to offer other engaging digital entertainment content; the growth of its digital entertainment, e-commerce and digital financial services platforms; the growth in its user base, level of user engagement, and monetization; its ability to continue to develop new technologies and/or upgrade its existing technologies; growth and trends of its markets and competition in its industries; government policies and regulations relating to its industries; and general economic and business conditions in the region. Further information regarding these and other risks is included in Sea's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Sea undertakes no obligation to update any forward-looking statement, except as required under applicable law. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP financial measures to help evaluate our operating performance: "Adjusted revenue" of our digital entertainment segment represents revenue of the digital entertainment segment plus change in digital entertainment deferred revenue. This financial measure is used as an approximation of cash spent by our users in the applicable period that is attributable to our digital entertainment segment. Although other companies may present such measures related to gross billings differently or not at all, we believe that the adjusted revenue of our digital entertainment segment provides useful information to investors about the segment's core operating results, enhancing their understanding of our past performance and future prospects. "Adjusted revenue" of our e-commerce segment represents revenue of the e-commerce segment (currently consisting of marketplace revenue and product revenue) plus commission income that were net-off against sales incentives. This financial measure enables our investors to follow trends in our e-commerce monetization capability over time and is a useful performance measure.  "Adjusted revenue" of our digital financial services segment represents revenue of the digital financial services segment plus service revenue that were net-off against sales incentives. "Total adjusted revenue" represents the sum of the adjusted revenue of our digital entertainment segment, the adjusted revenue of our e-commerce segment, the adjusted revenue of our digital financial services segment, and the revenue of our other services. This financial measure enables our investors to follow trends in our overall group monetization capability over time and is a useful performance measure. "Adjusted net loss" represents net loss before share-based compensation and changes in fair value of convertible debts. We believe that the adjusted net loss helps to identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that are included in net loss. The use of adjusted net loss has its limitations in that it does not include all items that impact the net loss or income for the period, and share-based compensation and changes in fair value of convertible debts are significant expenses. "Adjusted EBITDA" for our digital entertainment segment represents operating income (loss) before share-based compensation plus (a) depreciation and amortization expenses, and (b) the net effect of changes in deferred revenue and its related cost for our digital entertainment segment. Although other companies may calculate adjusted EBITDA differently or not present it at all, we believe that the segment adjusted EBITDA helps to identify underlying trends in our operating results, enhancing their understanding of the past performance and future prospects. "Adjusted EBITDA" for our e-commerce segment, digital financial services segment and other services segment represents operating income (loss) before share-based compensation plus depreciation and amortization expenses. Although other companies may calculate adjusted EBITDA differently or not present it at all, we believe that the segment adjusted EBITDA helps to identify underlying trends in our operating results, enhancing their understanding of the past performance and future prospects. "Total adjusted EBITDA" represents the sum of adjusted EBITDA of all our segments combined, plus unallocated expenses. Although other companies may calculate adjusted EBITDA differently or not present it at all, we believe that the total adjusted EBITDA helps to identify underlying trends in our operating results, enhancing their understanding of the past performance and future prospects. These non-GAAP financial measures have limitations as analytical tools. None of the above financial measures should be considered in isolation or construed as an alternative to revenue, net loss/income, or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to Sea's data. We compensate for these limitations by reconciling the non-GAAP financial measures to their nearest U.S. GAAP financial measures, all of which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on any single financial measure. The tables below present selected financial information of our reporting segments, the non-GAAP financial measures that are most directly comparable to GAAP financial measures, and the related reconciliations between the financial measures. Amounts are expressed in thousands of US dollars ("$"). For the Three Months ended September 30, 2018 Digital Entertainment E-commerce Digital Financial Services Other Services(3) Unallocated expenses(4) Consolidated $ $ $ $ $ $ Revenue 112,520 65,919(1) 2,548 23,934 - 204,921 Changes in deferred revenue 32,038 - - - - 32,038 Sales incentives net-off - 5,314 565 - - 5,879 Adjusted revenue 144,558 71,233(2) 3,113 23,934 - 242,838 Operating income (loss) 19,403 (223,787) (7,387) (16,186) (18,243) (246,200) Net effect of changes in deferred revenue and its related cost   26,192 - - - -   26,192 Depreciation and amortization 8,129 8,926 386 2,336 - 19,777 Share-based compensation - - - - 16,479 16,479 Adjusted EBITDA 53,724 (214,861) (7,001) (13,850) (1,764) (183,752) For the Three Months ended September 30, 2017 Digital Entertainment E-commerce Digital Financial Services Other Services(3) Unallocated expenses(4) Consolidated $ $ $ $ $ $ Revenue 79,799 2,786(1) 4,792 6,717 - 94,094 Changes in deferred revenue 54,749 - - - - 54,749 Sales incentives net-off - 2,883 - - - 2,883 Adjusted revenue 134,548 5,669(2) 4,792 6,717 - 151,726 Operating income (loss) (6,874) (132,292) (8,561) (6,015) (6,974) (160,716) Net effect of changes in deferred revenue and its related cost   44,873   -   -   -   -   44,873 Depreciation and amortization 7,084 2,328 363 688 - 10,463 Share-based compensation - - - - 5,698 5,698 Adjusted EBITDA 45,083 (129,964) (8,198) (5,327) (1,276) (99,682) (1) For the third quarter of 2018, revenue of $65,919 included marketplace revenue of $45,147 and product revenue of $20,772, net of sales incentives. For the third quarter of 2017, revenue of $2,786 was entirely marketplace revenue. (2) For the third quarter of 2018, adjusted revenue of $71,233 included marketplace revenue of $50,303 and product revenue of $20,930. For the third quarter of 2017, adjusted revenue of $5,669 was entirely marketplace revenue. (3) A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as "Other Services." (4) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. The expenses are excluded from segment results as they are not reviewed by the CODM as part of segment performance.     UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Amounts expressed in thousands of US dollars ("$") except for number of shares & per share data For the Nine Months ended September 30, 2017 2018 $ $ Revenue Digital Entertainment 258,844 331,207 Others 30,742 212,537 Total revenue 289,586 543,744 Cost of revenue Digital Entertainment (157,746) (189,513) Others (68,073) (331,514) Total cost of revenue (225,819) (521,027) Gross profit 63,767 22,717 Operating income (expenses): Other operating income 1,340 5,508 Sales and marketing expenses (269,556) (497,528) General and administrative expenses (86,114) (153,621) Research and development expenses (20,652) (40,887) Total operating expenses (374,982) (686,528) Operating loss (311,215) (663,811) Interest income 2,162 8,567 Interest expense (17,458) (21,413) Investment gain (loss) 33,943 9,374 Changes in fair value of convertible debts − (19,928) Foreign exchange (loss) gain (2,517) 5,304 Loss before income tax and share of results of equity investees (295,085) (681,907) Income tax (expense) credit (2,015) (1,095) Share of results of equity investees (926) (1,974) Net loss (298,026) (684,976) Net loss attributable to non-controlling interests 201 358 Net loss attributable to Sea Limited's ordinary shareholders (297,825) (684,618) Adjusted net loss (1) (280,967) (622,985) Loss per share: Basic and diluted (1.69) (2.03) Shares used in loss per share computation: Basic and diluted 175,970,648 337,804,410 (1) For a discussion of the use of non-GAAP financial measures, see "Non-GAAP Financial Measures."   UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS Amounts expressed in thousands of US dollars ("$") As of December 31, As of September 30, 2017 2018 $ $ ASSETS Current assets Cash and cash equivalents 1,347,361 1,209,235 Restricted cash 95,300 247,773 Accounts receivable, net 61,846 61,220 Prepaid expenses and other assets 186,181 265,342 Inventories, net 9,790 19,565 Short-term investment 18,000 − Amounts due from related parties 2,235 5,328 Total current assets 1,720,713 1,808,463 Non-current assets Property and equipment, net 74,348 147,379 Intangible assets, net 37,333 25,668 Long-term investments 28,216 118,188 Prepaid expenses and other assets 46,297 59,981 Restricted cash 2,317 2,370 Deferred tax assets 48,104 59,418 Goodwill 30,952 30,952 Total non-current assets 267,567 443,956 Total assets 1,988,280 2,252,419   UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS Amounts expressed in thousands of US dollars ("$") As of December 31, As of September 30, 2017 2018 $ $ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable 8,644 25,168 Accrued expenses and other payables 285,248 503,336 Advances from customers 27,155 26,456 Amount due to related parties 36,790 34,802 Short-term bank borrowings 2,013 − Deferred revenue 268,241 348,663 Income taxes payable 9,614 8,114 Total current liabilities 637,705 946,539 Non-current liabilities Accrued expenses and other payables 7,547 10,548 Deferred revenue 133,481 144,366 Convertible debts 726,950 1,116,384 Deferred tax liabilities 4,378 3,501 Unrecognized tax benefits 3,088 2,913 Total non-current liabilities 875,444 1,277,712 Total liabilities 1,513,149 2,224,251 Shareholders' equity Class A ordinary shares 91 94 Class B ordinary shares 76 76 Additional paid-in capital 1,564,656 1,793,010 Accumulated other comprehensive income 10,701 23,042 Statutory reserves 46 46 Accumulated deficit (1,106,545) (1,791,163) Total Sea Limited shareholders' equity 469,025 25,105 Non-controlling interests 6,106 3,063 Total shareholders' equity 475,131 28,168 Total liabilities and shareholders' equity 1,988,280 2,252,419   UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Amounts expressed in thousands of US dollars ("$") For the Nine Months ended September 30, 2017 2018 $ $ Net cash used in operating activities (170,840) (357,029) Net cash used in investing activities (67,474) (158,938) Net cash generated from financing activities 696,442 545,106 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 4,228 (14,739) Net increase in cash, cash equivalents and restricted cash 462,356 14,400 Cash, cash equivalents and restricted cash at beginning of the period 190,824 1,444,978 Cash, cash equivalents and restricted cash at end of the period 653,180 1,459,378 1     UNAUDITED SEGMENT INFORMATION The Company has three reportable segments, namely digital entertainment, e-commerce and digital financial services. The Chief Operation Decision Maker ("CODM") reviews the performance of each segment based on revenue and certain key operating metrics of the operations and uses these results for the purposes of allocating resources to and evaluating the financial performance of each segment. Amounts are expressed in thousands of US dollars ("$"). For the Three Months ended September 30, 2018 Digital Entertainment E-commerce Digital Financial Services Other Services(1) Unallocated expenses(2) Consolidated $ $ $ $ $ $ Revenue 112,520 65,919 2,548 23,934 - 204,921 Operating income (loss) 19,403 (223,787) (7,387) (16,186) (18,243) (246,200) Non-operating income, net 30,903 Income tax expense (2,020) Share of results of equity investees (702) Net loss (218,019) For the Three Months ended September 30, 2017 Digital Entertainment E-commerce Digital Financial Services Other Services(1) Unallocated expenses(2) Consolidated $ $ $ $ $ $ Revenue 79,799 2,786 4,792 6,717 - 94,094 Operating income (loss) (6,874) (132,292) (8,561) (6,015) (6,974) (160,716) Non-operating income, net 25,802 Income tax credit 2,147 Share of results of equity investees (64) Net loss (132,831) (1) A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as "Other Services." (2) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. The expenses are excluded from segment results as they are not reviewed by the CODM as part of segment performance.   SUPPLEMENTAL OPERATIONAL METRICS For the Three Months ended June 30, 2018 For the Three Months ended September 30, 2018 Digital Entertainment Unit Quarterly active users millions 160.6 176.1 Monthly active users (last month) millions 90.6 104.5 Quarterly paying users millions 6.6 7.2 Average revenue per user US$ 0.9 0.8 Average revenue per paying user US$ 21.1 20.1 E-commerce Gross GMV US$ millions 2,221.8 2,690.9 Gross orders millions 127.8 158.5  

Actress-artist Lucy Liu will Feature in Singapore Contemporary Art Exhibition Co-presented by The Ryan Foundation

SINGAPORE, Nov. 20, 2018 /PRNewswire/ -- The Ryan Foundation, a private non-profit arts organisation started by lawyer and art collector Ryan Su, is proud to kick off Singapore's art calendar in 2019 with Unhomed Belongings — Singapore's first major art exhibition featuring award-winning Hollywood actress and artist Lucy Liu (USA) and Jurors' Choice Award recipient Shubigi Rao (Singapore). The exhibition is free to the public and will run from 12 January to 24 February 2019 at the historic Stamford Gallery in the National Museum of Singapore. Liu will also make her first trip to Singapore to commemorate the opening. The Ryan Foundation serves as a lively and accessible key player in the local and regional art scene, with a mission to promote arts awareness in Singapore and around the world. Lucy Liu and Shubigi Rao: Unhomed Belongings is co-organised by The Ryan Foundation and the National Museum of Singapore. Unhomed Belongings presents artworks by two creative minds, Lucy Liu (b.1968) from the United States and Shubigi Rao (b.1975) from Singapore, with striking overlaps in perspective and subject matter. Through an exploration of their respective practices, the artists slowly developed into "visual penfriends" as their discourse unveiled similar themes. Liu and Rao share an interest in examining and dissecting cultures, histories, identities and relationships. Both are also drawn to the repurposing of found objects in their art, as these objets trouvés become narrators to their creations and conduits to their expressions. The artistic dialogue between these two kindred spirits will be documented for the first time at the National Museum of Singapore, with the exhibition housed in the Stamford Gallery, the museum's oldest and most historically rich space. "It is important for The Ryan Foundation to be a platform with an international outlook that encourages diverse cultural exchanges around art. The Singapore art scene is developing, and it is timely to show two artists who happen to be strong women as they navigate themes of identity and growth with such honesty and strength. We connected instantly with Lucy and her art, and knew at once we had to share her powerful work with everyone," said Ryan Su, founding director of The Ryan Foundation. "We are committed to raising the profile of contemporary art in Singapore and Asia by collaborating with international artists to present publicly engaging content." Unhomed Belongings highlights the honest parallels between two artists who hitherto have never met before, yet possess interesting commonalities in their artistic practices. Their artworks are presented in thoughtful conversation: Liu's installation Lost and Found echoes Rao's Stabbing at Immortality: Building a Better Jellyfish, where the artists invite viewers to examine objects that may seem ordinary at first glance but possess peculiar character when observed up-close. Through their delicate yet deliberate craftwork, Liu and Rao transform the ordinary into the conceptual, and the salvaged into the sublime. Liu's artwork addresses themes of security, salvation, and the long-term effects of personal relationships on our physical and emotional selves. Her exploration spans multiple mediums, taking the forms of painting, sculpture, collage, silkscreen, video and found objects appropriated into handmade reliquaries. A key artwork featured in Unhomed Belongings is an installation titled Lost and Found, which consists of discarded objects Liu picks up on her travels, hidden in around 200 hand-made books. Visitors are encouraged to pick up the books and open them, and free to replace them anywhere within the installation. In this way, visitors become participants in a cycle of rediscovery, as the lost objects are given new meaning not only through the narrative that Lucy has created for them within her books, but also through the constant re-ordering of the books themselves.  "Many people know me as an actress, but visual art has always been an equally important part of my life. My work is personal in nature - inspired by my memories and experiences, by shifting notions of security and salvation, and how these experiences and ideas manifest themselves physically in the body. It is exciting to be able to connect with new audiences through all expressions of art, and I am so excited to exhibit my works in Singapore for the first time, presented in conversation with Shubigi Rao, a Singaporean female artist. I would like to thank The Ryan Foundation and the National Museum of Singapore for their incredible efforts in making this possible," said Lucy Liu, featured artist, award-winning actress and director. The Ryan Foundation is a Singapore non-profit arts organisation that aims to increase arts awareness by developing ambitious projects and exhibitions in Singapore and around the world. Previous exhibitions organised by The Ryan Foundation include Andy Warhol: Social Circus in Singapore and Kuala Lumpur (featuring the largest collection of Warhol's Polaroid photography ever exhibited in Asia), Ryder Ripps' Diventare Schiavo in Venice and Singapore (a virtual reality artwork that challenged the boundaries of contemporary art) and Re|Collecting Asia: Selections from Singapore Private Collections. Lucy Liu and Shubigi Rao: Unhomed Belongings is the highlight of the Singapore art calendar in January 2019, a month when the city will be abuzz with art fairs, exhibitions and gallery openings. This monumental exhibition creates an interesting interaction between Liu's and Rao's work by representing contemporary issues of identity and relationships, and positions Singapore as a global destination for contemporary artists. The exhibition will run from 12 January to 24 February 2019 at the National Museum of Singapore, and admission is free to the public. Events planned for Unhomed Belongings include an artist talk and an art collectors' roundtable, details of which will be released in due course. The Ryan Foundation and the National Museum of Singapore will also jointly publish a limited edition hardcover catalogue for the landmark exhibition in a print run of 500. For more information, please visit:www.theryanfoundation.com For press kit and images, please visit:www.theryanfoundation.com/press For press inquiries, please contact:Victoria ChanCommunications OfficerThe Ryan Foundationpress@theryanfoundation.com        View original content:http://www.prnewswire.com/news-releases/actress-artist-lucy-liu-will-feature-in-singapore-contemporary-art-exhibition-co-presented-by-the-ryan-foundation-300753696.htmlRelated Links :theryanfoundation.com

London's renowned "The Spirit of Christmas" decoration landed in Lee Tung Avenue

Unparalleled Christmas Celebration in 100% British Fashion HONG KONG, Nov. 20, 2018 /PRNewswire/ -- This Christmas, Lee Tung Avenue has partnered with Regent Street, the famous shopping boulevard in London, to bring the world-renowned Christmas lights spectacular "The Spirit of Christmas" to Hong Kong. Being the signature street in London city, Regent Street is the pioneer to introduce the world design sensational festive decoration. Ever since 1954, their Christmas lights has become an acclaimed tradition to embellish this lovely festival. Without precedent, "The Spirit of Christmas" steps outside Britain and moves across the pond to Hong Kong. Its first time collaboration with Lee Tung Avenue forges the no.1 oversea "Regent Street" in Christmas style, which awaits to showcase its exquisite glamor to the entire world. Starting on 16th November, Lee Tung Avenue plays host to exhibit five iconic handcrafted spirits of Regent Street to celebrate the festivities with original Britishness. To make Christmas this year more splendid and remarkable, romantic snowy moments and Christmas sales are also back, dedicated to envelop this 100% British Christmas in a joyous and festive ambience. London’s renowned “The Spirit of Christmas” decoration landed in Lee Tung Avenue Nov 16 - "The Spirit of Christmas" Kick-off Ceremony The switch-on ceremony on Regent Street was held on the evening of 15th November. The whole boulevard from Oxford Circus to Piccadilly Circus, and nearby pedestrian streets between the world class hotels and restaurants were replete with citizens who were eager to be the first to savour the festive joy. In the wake of the switch-on on Regent Street, an equally amazing kick-off ceremony was held on Lee Tung Avenue on 16th November (Friday). This also marked the date on which thrilling Christmas parade and varied theme activities commence to celebrate the festivities every day until the very end of Christmas, which allows everyone to enjoy the most fantastic festive moments of the year. Bringing World-Class Art Pieces to Hong Kong William Chan, General Manager of Lee Tung Avenue Management Company Limited, said, "The iconic Christmas lights and switch-on ceremony on Regent Street is an annual festive tradition. It's our honour to be partnered with Regent Street this year to bring such world-class art pieces to our Hong Kong audience. Through this collaboration, we hope to consolidate the image as an arts and cultural landmark, and gain recognition from both international tourists and Hong Kong citizens." James Cooksey, Chairperson of The Crown Estate Central London Region, expressed his pride to have their Christmas lights to be exhibited abroad this year. He also felt glad to establish partnership with Lee Tung Avenue through this collaboration. From his point of view, Lee Tung Avenue is to Hong Kong what Regent Street is to London, both are of high reputation. "We understand the astounding impact our Christmas lights display have on London shoppers, and I'm more than thrilled that this year we'll be bringing The Spirit of Christmas to Hong Kong too," said Cooksey. Partner with Business of Design Week of HKDC and Hong Kong Tourism Board - Kickoff the first wave of England Fashion Partnered with Hong Kong Design Centre, Lee Tung Avenue is the satellite street in BODW City Programme and the Christmas lights of London Fashion - "The Spirit of Christmas" on Lee Tung Avenue is the kick-off series of Business of Design Week (BODW 2019), which England has been selected as the partner country. In support of the British Consulate General Hong Kong, numerous British designers are invited to showcase the quintessence of British design to Hong Kong. "The Spirit of Christmas" is one of the main projects of "Hong Kong Winter Lights", an international promotion by Hong Kong Tourism Board. It is a first-ever for this long renowned street in London bringing its incredible light installation to Asia. The decoration, with snowy moments and an array of festive performances, submerges Hong Kong in rich British Christmas atmosphere. Return of Snowy Fantasy in Lee Tung Avenue - "The Spirit of Christmas" and Romantic Snow Scene add splendor to each other The globally-renowned Christmas lights - "The Spirit of Christmas" on Lee Tung Avenue is a must-see and one of the top check-in locations with no doubt. Its Snowy Moment has also gained extensive acclaim in the past two years, and it is ready to continue the legend this year. Created by Orient Snow, world's leading specialist in creating snow effects for international films & TV winter sports, snow experiences and events, it brings real snow scene for everyone to spend the festive with their loved ones. Should you wish to photograph at the best spot or view the mesmerizing delicacy of "The Spirit of Christmas", you can reserve in advance the restaurants on Lee Tung Avenue - Blue Brick Bistro, Bistro Seoul, DJAPA and Passion by Gerard Dubois. As such, you can savor the incredible Christmas meal surrounded by charismatic "The Spirit of Christmas" and enthralled landscape of snow. The Spirit of Christmas Date: 16th November to 31st December 2018 Time: 8am to 11pm Venue: Along Lee Tung Avenue Details: Lee Tung Avenue has partnered with Regent Street, the famous shopping boulevard in London, to bring the world-renowned Christmas lights spectacular "The Spirit of Christmas" to Hong Kong. Without precedent, "The Spirit of Christmas" steps outside Britain and moves across the pond to Hong Kong for this fantastic festive celebration. Five iconic handcrafted spirits on Regent Street are displayed along Lee Tung Avenue, to celebrate the festivities with original Britishness. Snowy Moment Date: 17th November to 31st December 2018 Time: Time: 17-18/24-25 Nov and 1-2/7-9/14-16/21-23/26-30 Dec - 5pm, 6pm, 7pm, 8pm, 9pm 24-25/31Dec – 3pm, 4pm, 5pm, 6pm, 7pm, 8pm, 9pm,10pm,11pm Venue: Centre Piazza@ Lee Tung Avenue Details: Return of emblematic Snowy Moment on Lee Tung Avenue brings us the most touching England White Christmas. Lee Tung Avenue's Christmas Parade Date: 24th to 26th December 2018 Time: 24 & 26 Dec -- 4pm to 4:30pm 25 Dec -- 4pm to 4:30pm & 6pm to 6:30pm Venue: Along Lee Tung Avenue Details: A gang of dancers brings Lee Tung Avenue vibrant songs and dances to share Christmas joy under the Snowy Moment Event Photos and Videos download: https://goo.gl/ZBYUZY About Lee Tung Avenue Lee Tung Avenue website: http://www.leetungavenue.com.hk Follow Lee Tung Avenue Instagram: @leetungavenue #leetungavenue #LTAXmas #TheSpiritofChristmasHK #LTAxRegentStreet Photo - https://photos.prnasia.com/prnh/20181120/2305567-1 Related Links :http://www.leetungavenue.com.hk

The Belt and Road

2018 Silk Road Business Summit to be held in Zhangjiajie City on October 16, 2018

On September 29, the press conference of 2018 Silk Road Business Summit in Zhangjiajie city was successfully held in Changsha, Hunan Province. Leaders from the China Association for Friendship, Hunan Sub-council of China Council for the Promotion of International Trade, Zhangjiajie Municipal Government, Silk Road Chamber of International Commerce (SRCIC), and more than 30 mainstream media representatives attended the press conference. The announcement was made for the summit to be held in Zhangjiajie city on 16-17 October 2018. The summit is to actively respond to the Belt and Road Initiative, to build a multilateral economic and trade platform, to promote the formulation of international standards and the building-up of the Belt and Road brands, to explore the new mode of cultural exchange, to create the international tourist attractions, to facilitate the synergy of cultural industries, cultural undertakings, and cultural tourism as contribution to the development of a shared future for the world. The abundant resources of SRCIC will uplift Hunan province in its advantages in the Belt and Road construction and in its strategy of “Innovation Leads and Open Policies for Rise” to expedite Hunan province as an important inland hub of the Belt and Road.  The Zhangjiajie Summit is the 3rd silk road business summit organized by SRCIC, following the successful summits in 2016 and 2017. It’s the first summit with its venue in a city away from Xi’an. The summit in Zhangjiajie city will give a full play to the city’s unique natural resources, ecological culture, and its tourist economy.By report, Silk Road Urban Alliance Roundtable: Belt and Road International Cooperation on Tourism is scheduled at the summit. Themed with strengthening the tourist cooperation and facilitating the Belt and Road construction, the participants are expected to share views on setting up mechanisms for the Silk Road Urban Alliance and have in-depth discussion on promoting tourist and economic development. The summit will release consensuses, international standard proposals and tourist destination development strategies.Over the five years, the Belt and Road Initiative has gained strong support from the Belt and Road countries. International commercial associations and enterprises are important participants in the Belt and Road construction. SRCIC, one of the summit organizers, is the first transnational business confederation named after the Belt and Road and mainly composed of national chambers of commerce from the Belt and Road countries. Since its establishment in 2015, SRCIC is devoted to narrating the Belt and Road stories, initiating the Belt and Road voices, and facilitating the cultural exchanges in building up pragmatic platforms for win-win cooperation. Currently SRCIC has 129 organizational members from 79 countries, including state-level business organizations and millions of affiliated enterprises. SRCIC serves as a bridge connecting enterprises and governments, providing a cooperative platform between business associations and SRCIC members. It plays a vital role in advancing economic and social development with an emphasis on international collaboration and global governance.According to the plan, the annual silk road business summits are to be held in different SRCIC member countries for bigger influence and popularity, and for building up more cooperative platforms to benefit SRCIC commercial association members and enterprise members. (ASIA PACIFIC DAILY)

2018-10-01

Belt and Road Initiative paves way for win-win cooperation between China and Czech

By APD Writer He WeiIn July last year, the first China-EU freight train departed from Prague, captial of Czech,to Yiwu, a city in east China’s Zhejang Province. The new cargo train service marked the official launch of “the Belt and Road Initiative” in Czech. Thanks to joint efforts of both sides, the economic and trade ties between China and Czech Republic is heading for a bright future.During the Belt and Road Forum for International Cooperation in May 2017, two months before the opening, China signed the Memorandum of Understanding to Jointly Coordinate and Promote Cooperation and Project Implementation with Czech. According to the memorandum, more efforts will be made to set up a China-Czech Cooperation Center under the Belt and Road initiative, a key project bank and a cooperation platform, integrate domestic and foreign resources, as well as adjoin and implement projects On the sidelines of the The Working Conference of China-Czech Jointly Coordinating and Monitoring Cooperation Plan and Projects under the Framework of the “Belt and Road Initiative”, Liu Jielei, vice chairman of the Czech-China Friendship Association, told the Asia Pacific Daily (APD) that besides geographic advantage, Czech enjoys a sound investment environment because of its stable domestic policies, friendly policy toward China, lower business taxes and labor cost than that of in other European countries.The "Yixin’ou (Yiwu-Xinjiang-Europe) cargo train, which began in Yiwu, was hailed as an important bridge linking Asian and European continents and a signficiant achievement in the early stage of the initative by Chinese President Xi Jinping. Xu Jie, general manager of Rongsheng Travelling (Czech) Investment Co., Ltd., said because of its important location, they have launched two projects including the Czech-Chinese Technology Business District (CCTBD) project and the South Moravia Chinese Herbal Spa Project in Prague during the past two years, stressing that initial success has been achieved thanks to the initiative.Transalated by Hu Yahui(ASIA PACIFIC DAILY)

2018-06-12