Q1 2021 Sea Ltd Earnings Call
Good morning, and good evening and welcome to the Sea Ltd first quarter 2021 results conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero and.
After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded and now I'd like to turn the conference over to MS. Ms. Zhou. So please go ahead.
Hello, everyone and welcome to <unk> 2021 first quarter earnings conference call I haven't been as you saw from sea as group Chief Corporate officers office.
We continue I would like to remind you that we may make forward looking statements, which are inherently subject to risks and uncertainties and may not be realized and the future for various reasons as stated in our press release.
This call includes a discussion of certain non-GAAP financial measures such as adjusted EBITDA and net loss excluding share based compensation. We believe these measures can enhance our investors' understanding of the actual cash flow was of our major businesses when used as a complement to our GAAP disclosures.
For a discussion of the usual on the use of non-GAAP financial measures and reconciliation with the closest GAAP measures. Please refer to the section on non-GAAP financial measures and our press release.
I have with Macy's Chairman and group Chief Executive Officer Force Li Group, Chief Financial Officer, Tony Hull and group Chief Corporate Officer, Andrew Wang on.
Our management will share strategy and business updates operating highlights and financial performance for the first quarter of 2021. This will be followed by a Q&A session and which we welcome any questions you have with that let me turn the call over to for us.
Thank you.
Hello, everyone and thank you as always for joining today's call.
We are pleased to start 2021 on a strong note with our results for first of all for showing continued high growth across our businesses.
You will with the gradual recovery in off line activities and our region since the second half of 2020.
Our strong performance in terms of user growth and engagement Joe.
So adoption is still rising healthily.
And the communities, we serve and continue to embrace the benefits of online and lifestyle.
At a group level for the first quarter of 2021.
We're happy to report GAAP GAAP revenue of $1 8 billion.
Each represents 147 per ton year on year gross.
We reported particularly strong growth and gross profit, which reached $645 $4 million.
Up 200, and a 12% year on year.
Well, but adjusted EBITDA was $88 1 million.
Compared to a loss of $59 $9 million a year ago.
This strong performance on both the top and bottom line once again demonstrate the ability to capture the high growth potential of the industry and the regions we operate.
While deploying capital and our resources effectively and efficiently across our businesses.
Before we discuss our business performance in detail.
Important to note that many of the communities consumers and small businesses, we serve and continue to face significant challenges as a result of the ongoing impact of the pandemic.
And including recent increases in cases and some countries.
And we are committed to play our part in helping our communities navigate to these ongoing challenges.
This includes a pulse to address the most pressing near term needs of our communities as well and our systems barcode on health.
And more people to benefit from the growth of the digital economy.
Our global teams are working hard to identify ways, we can hope for tangible near term as opposed to our community.
For example impact on Indonesia, We recently spent type of vaccine Nisha center in collaboration with the Western <unk> sales update to.
And to deliver 20000 doses of vaccine.
And the Philippines, we launched the second theory.
And our front line package for health care workers delivery, and a logistics provider and other personnel who contribute in the fight for guests to pandemic.
We have all for them.
This package of discounts and the mobile Walter and prepaid Wi Fi devices from Sharpie and its partner.
Meanwhile, we are mindful that many small businesses around the region are still recovering from the shock of the last year and.
And we continue to invest and initiative to help them successfully adjust to the digital economy scale their businesses and generate more income to provide for their family.
Hey, Thanks demo in March Shockey and now.
It will work with the SKU on export Indonesia to 500000, small and medium enterprise and export their products by 2030.
In April Sharpie, and paper announced that it will be offering training program for female entrepreneur, Indonesia to digitalize their business needs and expand our customer reach.
In Malaysia, Shockey and worked with the federal Agriculture marketing authority to teach local farmers on how to effectively move their businesses online.
For the effects of the pandemic.
We also continue to groom tailored during this difficult period.
We're clearly aware that many people in our key market, both young and old may need to cultivate new use debt to benefit from the rapidly growing digital economy.
We want to do our part to bring positive impact to our communities by helping to nurture new skill sets.
In February we announced the second season of our Shockey COVID-19, Li the largest online and costly and southeast Asia and Taiwan.
Attended by 15000 participants from eight countries.
In addition as that.
Ongoing initiative our.
Howard Garena Academy, and Thailand helped guide and I do pay for young people on how to develop a career in the gaming and esports industry.
Most importantly, we are proud to serve the underserved with our businesses.
And by connecting communities, enabling consumer and.
Empower and small businesses, especially those who traditionally like obsessed with tech platforms and the opportunities they bring.
With that <unk>.
Let me now discuss each business individually starting with digital entertainment.
<unk> delivered another quarter of outstanding performance bookings.
Bookings were $1 $1 billion up 100, and a 17% year on year, well and adjusted EBITDA reached 700, and a $17 $3 million up 148% year on year.
In the quarter quarterly active users reached $648 8 million up 51% year on year, while quarterly paying user he is $79 8 million up 124% year on year.
Our paying user ratio goes to reach 12, 3% compared to eight 9% a year ago, showing that we can grow our user base, while also deepening monetization.
Once again free fire had a standout quarter as our focus on building out the platform with more for ACP and engaging content and the user engagement activities continue to resonate with gamers around the world.
Indeed free fire remained highest grossing mobile game in Latin America, Southeast Asia, and India for the quarter. According to App Annie.
Maintaining a top ranked for Latin America, and southeast Asia for seven consecutive quarters.
And achieving the same in India for two consecutive quarters.
A key success factor is our ability to keep our strong global community deeply engaged with our platform by constantly delivering fresh high quality and the locally relevant content.
In the first quarter, we lowered our partnership with popular Japanese manga titles like one touch men and.
Check on Titan to create memorable force or even and the content and experiences for our users.
We also received very positive feedback when we introduced the in game character based on popular local celebrities.
For example, in Vietnam and in Mena, we collaborated with the popular we pop free.
Samsung and GP, who has more than 9 million followers and and nearly 2 billion views on Youtube and is a framework Egyptian singer and actor Mohammed regimen, and who had a top EBITDA last year that has been generated over 225 million viewers on.
Youtube to creating game character.
Our community engagement and esports effort are key drivers of success.
In the first quarter, we introduced the highly popular community content around India wholly patentable.
<unk> fruit by our music video for the festival drove 15 million views.
We've also organized esports tournament like the free fire need Latino America 2021.
In April our flagship guerilla work event generated online audience.
One 2 million and more than 40 million phone line views across Facebook Youtube and other social media channel.
During the 40 of virtual two day event that was hosted in Thailand, we use the combination of augmented reality visual effects and emission and other technologies to provide our funds with net interactive and immersive experience for.
For example, we hosted a dedicated life streaming platform, where viewer on customer Mike Your avatar and expressed their view to chat.
And we also welcomed 30 19 from nine region to compete in our online gaming tournament.
This demonstrated our ability to adapt to faster changing environment and to successfully deepened engagement with our users through technology.
We also received a number of award at the Pocket Gamer Award 2020, well with arena, winning the best and mobile publisher Awards and the free fire named as the best the backlog or low game.
This effort to grow and strengthen the free for our platform through continuous content rollout and empathy and community building activities have delivered clear results not only in terms of strong user metrics and the financial performance, but also users.
<unk>.
Indeed, our free bar cohort analysis shows that even a strict lockdown in our core markets have been gradually eased since the second quarter of 2020.
Time spent per daily active user on free fire remain far higher than pre pandemic levels.
We are encouraged to see that for older coal for the.
Time spent per active user and especially paying user ratio are still rising even though this user has been claimed refer since it's early day.
New cohort of those start off stronger the older cohort.
<unk> are higher and the faster growing paying user ratio the older cohorts over time.
Looking ahead, we continue to plan for a deep pipeline of innovative content fresh partnership and exciting esports activities to further and better engage with our ever growing global community of users.
We are also working to ensure that our long term game for quoting pipeline remained strong.
A significant number of our more than 1000 in house game developers globally are constantly working on new ideas.
While we continue to engage with third party game studios for collaboration and problem.
Missing and complementary game development and publishing opportunity.
Let us turn to e-commerce.
Shockey delivered exceptional results for the fourth quarter building on a dialup performance in 2020.
As it continues to gain momentum and attract more buyers and sellers.
In the first quarter shopping and reported $1 1 billion gross orders of 153% year on year.
And the <unk> of $12 6 billion.
And an increase of 103% year on year.
GAAP revenue grew 250% year on year to 900, and the $22 3 million.
Our year on year order growth rate.
Gross rate continued to accelerate in the quarter underscoring.
Underscoring our strengthening market leadership.
We are pleased to note that adjusted EBITDA loss per order and fell once again.
It's declined 38% year on year to 38% during the quarter.
Demonstrating the growing efficiencies of our core E Commerce operations.
As we continue to invest in growth.
According to App Annie Shoppe, he continued to ramp for us across southeast Asia, and Taiwan by average monthly active users and the total time spent and app on Android in.
And the shopping had a great for a quarter.
Indonesia shop at target and market, we continued to ramp first across low same metrics, while our year on year gross order growth further accelerated in the quarter.
We also saw growing user reception to our platform in Brazil.
We will continue to access the trends and opportunities they are carefully and the investor will efficiency to continually enhance our platform offerings to the users.
Our focus on.
Execution excellence remains the key factor driving shop is sustained success.
And everything we do we are relentless about optimizing our performance and maximizing the output.
In the first quarter with low without more initiatives to support our original seller base and the brand.
And thanks tempo for small and medium sellers and we worked with future Singapore in March to offer a step by step program to successfully solve them to transition online.
For brand, we launched and new program like our regional champion brand program, and our $100 million cloud to help them maximize their own line growth potential.
We are also gave out award like best of product launch for best of Tech innovation to reward grant who have depreciated themselves on our platform like PNG Disney low rail Samsung and Unilever.
We are happy to share and that's the number of brands working with shopping mall has grown to more than 25000.
To conclude we believe that e-commerce penetration remains low across all our market is back after that change in digitalization since the onset of the pandemic.
Against this backdrop, we remain committed to investing with efficiency to capture attractive potential over the long run.
We believe our hyper local and highly targeted approach alongside our commitment to focus and invest with efficiencies for the long term will allow us to build a healthy and assist and the bulk ecosystem that can offer the best long term value for buyer and seller and in turn.
And our other stakeholders.
Turning now to digital financial services.
<unk> continued to see great high growth in the quarter.
Building upon the excellent performance last year.
For the fourth quarter and seamless mobile wallet services reported a total payment volume of three 4 billion.
Which more than tripled compared to the $1 $1 billion a year ago.
Quarterly paying users surpassed $26 1 million in the quarter.
We are pleased that <unk> continued to gain traction as the quick and convenient online and contactless payment option.
Indeed, according to net card, Indonesia, and the way in March Sharpie pay was the most used the most remembered and the most liked mobile wallet by Indonesia and consumers during the fourth quarter.
In addition to leveraging the strong and growing on platform use cases on sharpie and we've continued to expand our range of off platform use cases.
For example, shockey pace now available as a payment option and into March one on Indonesia, leading convenient store chain.
As well as various popular and E chain, such as Wendy and the Domino's Pizza the.
And the reception so far has been strong in the first week of our partnership with into March and more than 1 million transactions were paid using sharpie PE.
We also added new features to the shopping experience to enhance is utility for both consumers and shockey pay merchant.
In April we launched a new feature called more around Europe for more for.
And our Dear deals near me.
It shows the user attractive deal with India immediate.
Vicinity.
User and then purchase the relevance and Walter on the App and and redeem them immediately at the physical outlet.
This has been highly successful in driving significant actual for will on boarded offline merchants.
We believe that digital financial services sector, and our region is this deal and the early stages and expected to develop significantly more use cases features and opportunities in due course.
As we scale. This business, we will apply the same rigor and discipline and efficiency as we have achieved across our businesses. So far.
Okay.
To conclude our first quarter result is a great start for the year.
Each of our businesses has performed impressively and is well positioned to benefit from attractive long term industry potential.
On one offline activity continued to redo and we expect rising digital adoption to be a tailwind for seed distant growth.
We will also keep investing prudently and efficiently to strengthen our competitive moat and to position ourselves for new opportunities.
And our commitment to serve consumers and small medium businesses, which technology is stronger than ever and we are determined to enable more people across our communities to benefit from the digital economy.
With that I will invite Tony to discuss our financials.
Thank you for us and thanks to everyone for joining the call. We have included detailed financial schedules together with our corresponding management analysis and today's press release and for.
For us and discuss some of our financial highlights.
Focus my comments on the other guidance metrics.
For <unk> overall total GAAP revenue and increased 147% year on year to walk on EBITDA.
This was mainly driven by strong performance and our E Commerce business as we continue to roll out tools to better serve our users.
And as well as growth of our Detroit and attendant business, especially our self developed games and <unk>.
Digital entertainment and bookings grew 117% year on year to $1 $1 billion.
GAAP revenue was up 111% year on year to <unk> $781 3 million.
The gross was primarily driven by the increase of our active user base and deepened paying user penetration as we continue to engage the community through new content and partnerships rollout and esports events.
Digital Entertainment adjusted EBITDA was $717 3 million this represents year on year growth of 140%.
This was mainly due to the strong top line growth and an increased share for our self developed game among our total bookings.
On E Commerce.
Our first quarter GAAP revenue of 922 3 million included cash.
GAAP marketplace revenue of 715 on $900 up 285% year on year, and GAAP product revenue of $206 $4 million.
At wealth manager and 67% year on year.
The strong results demonstrated the deepening penetration of e-commerce, and our ability to capture this accelerated growth opportunities as we continuously enhance our offerings to create greater value for our capital and users.
E Commerce adjusted EBITDA loss was $412 9 million as we continued our investments to fully capture the opportunities in other markets.
We remain committed to efficiently investing in and growing the ecosystem to serve our users better.
Digital financial services, GAAP revenue was $51 $3 million and increase of 396% year on year from $10 $3 million and the first quarter of 2000 and 'twenty.
And the growth was primarily due to increasing traction ebbs and continue to expand our suite of service offerings.
Adjusted EBITDA loss was $153 1 million compared to a low $93 $1 million and the same period of 2002 thousand.
This was primarily due to our continued efforts to drive mobile wallet adoption.
Returning to our consolidated numbers, we recognized a net non operating loss of $23 $3 million and the first quarter of 2021 compared to a net non operating income of $11 $2 million and the first quarter of 2020 are non operating.
Loss for the first quarter and 'twenty levels, primarily due to increased interest expense on our convertible notes.
We had a net income tax expense of $51 million and the first quarter of 2021, which was primarily due to corporate income tax and withholding tax recognized and our digital entertainment business.
As a result net loss excluding share based compensation was 300 and fundamental and the first quarter of 2071 as compared to $239 5 million for.
For the same period in 2020.
With that let me turn and policy engine.
Thank you for it and Tony and we're now ready to open the call for questions operator.
We will now begin the question and answer session.
I'll ask a question you May press Star then one on your Touchtone phone for using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
And the interest of time, we will take a maximum of two questions at a time from each caller. If you wish to ask more questions. Please request to join the question queue again. After your first question has been addressed at this time, we will pause momentarily to assemble our roster.
Our first question comes from Thomas Chong from Jefferies. Please go ahead.
Hello, and Thomas is your line muted.
And Mike.
Thanks Howard.
Yes.
Lifecycle.
Yes.
Got it.
Okay.
Should we expect.
Please go on.
Net income and Latam.
And thank you.
Thanks Thomas.
Regarding your question Sir Your line is typically I understand your question regarding the lifecycle of free fire as well as gross drivers.
Users and Dr. Peter you and.
And then.
Losses coming from Latin region.
And internet.
Yeah.
I will answer these questions first.
I think and we can offset some our disclosure helpful quarterly active user paying user and.
And for games as well as the bottom line and adjusted EBITDA.
And which is largely also attributable to Li <unk> global gains and losses.
He and I and healthy rate globally.
And still at.
Early stage on the lifecycle and in fact, we see and increasingly and a platform and a major IP franchise, we are focusing on continuing to grow our user base on that.
And <unk>.
On the gross compound for southeast Asia, and Latam, as well and India and the rest of the world.
And that debt at the same store sales that user base as well as teams and so it's still and foreign exchange of driving gross on a user data and teens updates for this game and developing and into <unk>.
Inclusion and social platform, where people and not only.
A replay and a core gameplay and also enjoy other low hanging out listen to music social lines on time.
In the game continues to be very high and two to three hours per daily active user and as we discussed the index.
Earlier comments that we upsell and they're encouraging trends on the cohort analysis as well.
The other call slides, who had been with US since the early day of this gain have shown stronger trends in <unk> and swatch PE ratio and we also see younger cohorts and even more recently share even faster growth of changes and insurance as well and stickiness and Theyre all sides.
We mentioned positive feedback loop between paying user as well as and.
And stickiness of the team and.
User pay and Tim.
And they tend to play the game on and be with <unk> for longer we also of interest system and building our ecosystem.
Esports and community.
And as well and collaboration with third party IP.
And we mentioned before we have collaborated with for example on punishment and share their successful campaign.
<unk> for March and further engagement in our games.
Thank you.
And then much a profit.
User growth and change the gross and we will continue to focus on growing <unk> globally.
The next question comes from Piyush <unk> from Goldman Sachs. Please go ahead.
Okay.
Thank you for Tony and Jim.
What other could be comments Christmas I was hoping you could shed some light on where you are and Brazil.
And also help on so on the scan the drivers of the improvement that we saw and the take rate.
And related to e-commerce, and better understanding the spend that is taking place and people.
Being able to tell us and give us a feel for how much.
And again the drag on the EBITDA for the common side.
And the warm Q period. Thank you.
Okay.
Thanks Piyush.
And as we mentioned earlier on we've seen contingency positive user reception in Brazil and.
And we will continue to invest to enhance our offerings to our stylists and growing user base there and then.
It's still very early for us.
And generally our country and to upset that trend locally and and <unk>.
Focus on efficient investment there.
Could you could you shed some light on.
The other day and we can drag on day April we need to go on it will give investments and Oh Quad This region.
Okay.
And I'll give you still day early stage I think it's still too early to.
Talk about just the market for separately.
I think the contribution in terms of the margin and see if on the ecommerce perspective, it's still very positive our EBITDA loss per order countries for us and in terms of top line for us.
At 260%, which is very strong.
So I think that yet still and.
Dave Shaffer for surplus and discuss it and disciplined market.
Okay.
The next question comes from Alicia Yap from Citigroup. Please go ahead.
Hi, good.
Good evening management, Thanks for taking my questions and congratulation on the solid results on.
I have two quick.
Quick questions number one.
Just wondering if management can share the conditions in India and Keith.
On the free fire traction stand given the Lockdown do you actually see the time spent on increasing or you're actually seeing submarket and in part because of the ear and Ericsson.
On the MLP.
And so any colors on the game performance and to India and then second question is on the food delivery business.
If you can share your plans and ambitions.
Would that be more.
Complementary or is there a need to be a theme that you wanted to challenge the market leader.
Thank you Alicia and regarding India, We also observed.
Local situations closely.
Yes, as we mentioned earnings.
And you did the top grossing.
The markets and.
Where our game performed strongly.
Time spent per user per country to be very high.
<unk> lighting pay user ratio that we see as a highly promising market and channel will continue to contribute.
Meaningfully to our gross and again with a very long way.
And we will focus on promoting our gain and user engagement and India.
And in terms of food delivery.
And as a category on chassis.
And so we see very strong reception naturally and.
Similar share Holly angle too well on these other categories on sharpie.
Through strong execution.
That business model and user engagement and.
And as we mentioned before.
For for food, we see and at a more other complementary to our other e-commerce offerings and will.
And we'll do become the market leader and naturally like and what happened in Vietnam.
And we're happy to see that but and we see and that focus on healthy growth and sustainable growth and part of the overall e-commerce ecosystem.
The next question comes from Ron Zone, Sharona from J P. Morgan. Please go ahead.
Okay.
Hi, Sanjay Sharma from Jpmorgan. Thank you for the presentation.
Two questions from my side, Firstly on Sharpie, and Latam you have seen success and drug.
Adoption and Brazil.
And Mexico. If you could also show how you see the rest of Latin America is an opportunity for E Commerce and.
And secondly on food delivery.
You and Vietnam and Indonesia.
How should we think about shopping food expanding drug.
Thank you.
In terms of on Latam market.
And even Brazil is there and Italy stage for us not to mention the <unk>.
Others we.
And we don't have much to update at this point debt any development, there and we will update the market and thank you for food.
Within a day.
Food in Vietnam and has been the market need and are there and Indonesia, Italy, very recently and rolled out plus interest Kantar and us.
Glad to any other and expanding to other markets over time, but.
But chat and we have not announced any plans for any other market. If there's any update on the auto net market now.
The next question comes from John Blackledge from Cowen. Please go ahead.
Got it great. Thanks, two questions first.
Could you just give us an update on choppy as competitive positioning and the core markets and greater Southeast Asia and then.
This is kind of been asked and I'm going to ask again.
Sales and marketing spend was higher than expected could you just provide guidance.
And some further color on.
On the sales and marketing spend and.
Was.
Brazil expansion, a key driver of the sweet.
Thank you.
Thank you.
In terms of competitive landscape.
For you to improve for us as we continue to extend our market leadership.
And the markets our cost of funds and.
And as evidenced by our improving.
And top line channel order for us.
And a very high rate and more than 150%.
And in Southeast Asia, Taiwan.
And also on increasing take rates time I'm on.
And that transition in terms of our sales and marketing spend I think our top line was also on the annual exceeded the consensus so sales marketing expense percentage of G and be actually dropped quarter on quarter.
And so I think we will continue to observe the trends and that's very important to note that share.
And this is leading and managed outcome.
For us and we look at on the opportunity.
A.
A company that we have and this is actually the 11th quarter.
We've shown on triple digit growth and.
On the top line and any other company of our scale and size and speed of growth.
May not be and many other large cap internet companies that have shown a debt level of sustained and theyre high gross and our gross and carefully managed results through prudent efficient spending and investment and the non tons.
Development of the business model and we are in high cost regions.
Whereby the penetration after share economy is still there is no.
The runway is very high.
On the competition landscape and not any kind of debt Ocean zero sum game situation is debt.
And we actually continue to see.
Our market leadership, extending and we while we have begun and they're also growing we believe and faster than many other players so that actually bodes well for our growth opportunities and we want to continue to invest in the long term business model, which we believe.
Can maximize profitability download zone for us and our shareholders and our bottom line.
The next question comes from Josh Levin from Autonomous Research. Please go ahead.
Hi, Good afternoon, I have two questions first of all in the E comm business and.
As you think about the future how are you thinking about the mix of in house versus three P. Logistics and then second what are the implications of go Jack and took a PDR merging for your business and do you see any disadvantage to not having a ride hailing business. Thank you.
Okay.
In terms of logistics.
Our approach has been quite consistent.
And we primarily work with third party logistic services providers in our region and for being also focus on investing in gross with us.
And we put us more deeply integrated with that help them to improve the efficiency and quality of services to our users as we continue to see delivery time being shortened efficiency and food and cost nowhere it over time.
On the express delivery services are complementary to the third party logistic services.
England markets and of course, we will have continue to have.
First party and capability.
And to make sure our users are well served especially if you're in peak season.
And sometimes during the Lockdowns went down could be Tom strength and capacity.
In terms of the.
Patients often much as we'd like to.
Bachelor Lake <unk> on their successful.
And we think debt.
As I've mentioned, it's a huge.
Huge opportunity on region.
Yeah, it's a very long runway and we should all collectively focus on expanding the pie and growing digital economy, Yeah on me.
And and.
And the net and Madame Wang to serve our users and community Center.
In terms of the disadvantage of any.
And not having any particular business, we don't really see that we think that we are very fortunate to have three other largest consumer internet opportunity.
Hi, Bose region that we are in and we are able to manage it across so many.
Complex and different markets and with the three gross engines and also especially high profitable game business debt.
And helped to largely fund outflows e-commerce and just to finish it.
We think we stand and the best opportunity to in a best position to recapitalize the opportunity to build on logistics and consumer Internet ecosystem industry region and will continue to focus on executing on our core businesses as well and building the ecosystem.
The next question comes from Piyush Choudhary from HSBC. Please go ahead.
Good evening, Thanks, a lot and congratulations for a solid result, two questions for sleep for free fire and could.
Share your thoughts on where do you see opportunity to expand user base further and various time spend per user can potentially expand share.
And lead on your digital financial services strategy beyond wallet can you talk about your consumer lending and merchant lending product how has been the response to buy and all day later and merchant lending and.
The outlook for regional expansion. Thank you.
Yeah, and I think Lee country, and just see opportunity to expand our user base.
And across all our markets in southeast Asia and Latam as.
And as well as of course, the India and the rest of the world.
And yet.
In fact, there has been a consistent trend historically, we see that penetration rate and still deepening over time.
And so as that paves, a penetration day and as we continue to flow up more IP and engagement and different game modes, and engage with our users online and offline and some different activities community.
Community engagement.
We think they are definitely opportunities to further buildings updates as well as user time spent on platform we.
See you debt can spend for some of the top users.
Okay and spend multiple hours a day on.
The platform and we are focused on of course more us and.
Losses.
Time spent as opposed to <unk>.
Top times debt and Smart group of users of course with 100 100 million daily active users, we're talking about a much larger community over time. So our focus is continue to promote and mass.
Massive day.
On that platform and and and all of our community and provide them with content and opportunities for social and E engagement trial different modes of games 12 different characters.
Other times or having different ways on plane for example.
Recently and unchanged.
And more of our military Salvi game mode, some something like among us.
And with pets net.
Players on the kit. So we're continuing to innovate to bring more content to that and that's what we focus on growing they use a day as well as time spent per user and engagement and the game.
In terms of the.
Balance sheet under a program, we see it as an integral part and I'll let.
And he managed services to our shop, what listed shopping users.
And as we continue to improve our model and understand all user behavior and better.
With my gradually will other programs are possible and it's a larger user base as well as a plus.
Market, but we'll continue to focus on efficiency.
And lending and management of user experience.
That respect I think this is a program that facilitates a wallet usage as well as further facilitate growth of our e-commerce platform and it.
Same time allow us to.
And provide better services and have better models on.
Top of which we can build other digital financial services such as each attack.
And wealth management.
Energy services again, we will continue to focus on.
And using technology.
Power and delivery of understood financial services to underserved communities, and we are surfaced and collaborating with other financial institutions and growing the pie together collectively.
The next question comes from Fair Rune <unk> from Credit Suisse. Please go ahead.
Okay.
Yeah, Hi, good evening management and thanks for the opportunity for any questions first on the.
The.
E Commerce side I think why don't you excuse me, it's supposed to be relative maybe he could be when it's coming out of a strong <unk> for this quarter. So day.
And a 6% quarter on quarter growth on G. M B school of strong growth.
Can you just give some color there in terms of which segments and which countries.
Greenville.
And obviously, you've not given the number for those by Indonesia. If you can give some color on that front and back it would be helpful. On the gaming side can you provide little bit more color on have you launched free fire Max.
And and <unk> pingo above the knee.
And he didn't onto the new pad and then you can color that could help.
And.
If he is on <unk>.
Colored how is it scrambling and they developed market.
Currently on the digital financial services line.
If you can.
Sure how much of this.
For the $4 billion for PPV is related to the E. Commerce, that's almost all metallic towards part D and E vehicles that would be helpful. Thank you.
Okay.
Thank you for us.
In terms of e-commerce business and yes, it is continuing to experience.
And the cash flows across all markets.
And Jeff and and categories. So our category competition IPD hasn't shifted much.
And we continue to see gross across all major categories.
And the same Florida the market different market.
In Indonesia.
And debt.
Yeah on your close rate actually for an accelerated in fact this is the highest young and flow nature.
And in recent times and.
And.
In terms of the Sapphire glass.
We continue to.
And on improve on that gain and.
In terms of understanding our user preference and behavior would be testing it.
And control environment and select market.
On to outlook on the debt.
Dispersion and I think our goal is to pass.
<unk> defense offerings for users with different preferences, and Zephyr and integrated and seamless user experience okay.
In terms of no day launch pipeline.
I think we previously announced.
On them, which is.
It's a.
Open World Survivor.
<unk> and <unk> and.
So we believe it will also offer a fashion content to communities and outcomes.
You know Walt and then also the.
More likely Which's MMORPG game.
And based on.
Well well known IP in parts of Asia.
So I think these on some of the examples debt.
And you have mentioned in the.
On a pipeline.
And again as yeah, and you know package, while we do have a non pipeline of potential IP.
We don't pre announce those earnings.
And when that download gamer community to share pump therapy come on.
Net debt.
First and.
And it turns out that TPB DAU.
And most of it still on related to chassis as well as our sales on a.
Services and as I mentioned before we believe the most efficient way of flow.
I mean, our.
See money business in particular, and that you wanted business and to running our own ecosystem.
And the one use case, which also happened to be the largest and some other highest quality online use cases that allow us to well to wallet and efficiently and on top of which could have had quite low.
And you said analysis and understanding to be able to build a comprehensive digital financial services on top on it.
Hello. This is will continue to be Ellis our strategy.
Okay.
Again, if you have a question. Please press Star then one.
Our next question comes from Penguin from Goldman Sachs. Please go ahead.
Hi, Thank you very much about the opportunity that's two questions for me that's me on currency coming on.
I understand wise and barge and decline quarter on quarter, turkeys and debt free fire continue on.
And second question is related to COVID-19 impact, we see no blending and Congress and you said something about them for it.
And email.
And so far and Thailand, and I'm, saying.
And how prepared E comm and he's been in Asia, and continue to Boston, where should we expect low gala.
Okay, and SBC and basket and care.
Thank you Pam.
In terms of the EBITDA margin, we mentioned before that we believe our EBITDA margin might fluctuate from cash.
Time to time, but remain at a high rate compared to the industry average.
So mark related to the first quarter.
And as I mentioned, we have IP collaboration such as on Punch men.
And this might also contributes.
Two additional pay ups, we need to make to third party IP owner and overall, we think this is dairy.
And helpful in for.
On the engagement with other uses and and.
Promoting our games to a broader base and in promoting a P was that as well.
And so we will continue to focus on Boeing on user base, and pays and things and user engagement.
We have proven.
And that he tool commercial line.
Any what it's jumped about all third party IP incorporated yeah and.
And our team broadly across many markets.
And in terms of a COVID-19 impact.
The rack debt. So we have seen a resurgence of cases and a restart of some.
Form a lockdown.
Ill share a social movement in our region and such.
And as Taiwan, Singapore, Thailand, and Vietnam.
And yet and also.
We also see there last night and cases and for other countries like Indonesia, Malaysia, and the themes, we conscientious sea.
A large number of cases on it.
And so I think we're still very much in the COVID-19 situation and and Joe.
We are well prepared for it.
We believe tool handle that shot it.
It seems the only last year.
And when the.
The pandemic hit I think on team have shown resilience and adaptability to be able tool and manage that fit this form of lockdown to deliver the well needed services to our communities and.
And with that.
Specs and service levels, and and we continue to fulfill those services and demand for quality and it will also a wealth of pet and.
And the new surgeons in cases and continue to be vigilant and.
And the dominance of COVID-19 on.
GAAP up in digitalization, and we believe it's here to stay.
And has been evidenced on the numbers of course, if there are further lockdown and restrictions on movement, we think there'll be even greater and needs.
For online services to reach broader communities and we are ready to deliver that.
Our next question is a follow up from Ron Jan.
Sharon on from J P. Morgan. Please go ahead.
Alright, thank you.
Can I just have a quick follow up on free fire.
The U S, which seems to be well.
A vast improvement on a popularity and the U S. A.
If you can shed any color on what's driving this.
And I think the engagement remains where it is how do you feel about the given guidance for this year.
Thank you.
Yeah, we punch interest sea.
Positive reception and gross a free fire.
In developed markets in North America and.
We think it's a highly encouraging signs and we will continue to sell for use of scare.
And think there.
It's not a battle Royale games on the same on.
And you should talk hit game habits on appeal towards on audience, and I think olive game differentiate itself in terms of the appeal to broad base.
Not necessary actions focused audience, but with a lot of.
For our base appeal with fantasy elements social elements.
And various forms of engagement and game modes.
And user friendliness to broad based communities plus gender age and level of experience with federal L action game and general and this helps in promoting our game.
Two different types of audiences and will there will one way or the other find us and we see strong organic growth in net <unk> community. Our continued its focus on reaching the right community.
With our game and serving them well.
And the developed markets and as well.
In terms of that any guidance.
Uh huh.
Pushed out and we see very strong results this quarter and well continue to observe and then.
And that.
Need to update our guidance, we'll let people know, but at this point channel will continue to observe the trends.
This concludes our question and answer session.
I'd like to turn the conference back over to MS. Zhu song for any closing remarks.
Okay.
Hi, Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Thank you.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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