Nick Nash, group president of Sea, at Tech in Asia Singapore 2017.
Sea, one of Southeast Asia’s largest internet companies, has released its full IPO prospectus containing a treasure trove of previously private information. It is looking to raise US$1 billion.
Among the highlights in its financial statement: dramatically increasing revenue, but an equally dramatic widening in its net loss.
The bottom line comparison between H1 2016 and H1 2017 give a hint of what is to come. Sea’s net loss doubled to US$153m during that time period, while revenue only grew 17 percent.
It’s a familiar pattern seen in most nascent, fast-growing internet companies in Southeast Asia who spend cash at a rapid clip to gain market share, in the hopes of achieving dominance which will then translate to profitability.
Sea had US$651 million in cash and cash equivalents on June 30, 2017.
Sea acknowledges that there’s a risk it “may not achieve profitability in the future.” It attributes its rising net loss to sales and marketing costs, which include promotions and shipping subsidies for the users of Shopee, its ecommerce business.
Its challenge will be to lower customer acquisition costs against better-funded competitors.
The company adds that most of its revenue comes from its online entertainment business, Garena. As of 2016, that segment made up 95 percent of the top line. However, Sea claims to be the number one player in the region in all its categories.
It has yet to prove that its dominance in gaming can translate to building sustainable payments and ecommerce businesses at scale in Southeast Asia. But no one else has done it either.
Read more:
- Q&A: How Singapore unicorn Sea wants to unite Southeast Asia against the giants
- It’s official: Sea files for IPO on NYSE
This post With upcoming IPO, Sea reveals net loss of $223m and revenue of $345m appeared first on Tech in Asia.
from Tech in Asia https://www.techinasia.com/upcoming-ipo-sea-reveals-net-loss-223m-revenue-345m-2016
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