Q2 2021 Sea Ltd Earnings Call
Two 9% year on year growth.
Our gross profit was $931 million.
Up 364% year on year.
Bookings for Garena reached one 2 billion.
Growing 65% compared to last year.
<unk> recorded $1.4 billion gross orders.
127% year on year increase.
And the <unk> mobile wallet services registered total payment volume of over $4.1 billion.
Up close to 150% from last year.
We are very encouraged to see such strong year on year growth across our businesses.
This is in comparison to our standout results for the second quarter of 2020.
When most of our markets, we are under the strictest form of Lockdowns.
Considering the strong performance observed across our businesses in the first half of 2021.
We are raising our full year 2021 guidance.
Our digital entertainment portfolio has outperformed our expectations so far this year.
As such we now expect bookings of between $4.5 billion and $4.7 billion.
Representing over 44% growth from 2020 at the midpoint of the revised guidance.
E Commerce results in the first half of 2021 also exceeded our expectations.
And the GAAP revenue is now expected to be between $4.7 billion and $4.9 billion.
Representing over 121% year on year growth at the midpoint of the revised guidance.
While strict lockdowns have mostly been lifted in our region since the end of the second quarter last year.
Many of our markets continues to see a high volume of Covid cases.
In this dynamic environment.
We continue to demonstrate our ability to adapt quickly to faster changing circumstances and to execute well to serve evolving needs of our users.
We are also working hard to help our communities navigate the near term challenges brought by the pandemic.
For example, we have donated medical supplies supported vaccination programs and worked with local governments and our partners on various initiatives to assist Smes and the broader economy through this period.
In addition, we are working with our government partners to use our platforms to distribute aid and information related to the pandemic quickly and efficiently.
Also considering the ongoing challenges to our communities, we are doubling down on our mission to better lives through technology by promoting innovation and creating employment opportunities.
An example of this is our partnership with the West Java Province in Indonesia.
Working with the local government.
We plan to establish shopping centers that will serve as local e-commerce hubs for more than 5000 villages there.
West Java, Indonesia, most populous region.
Home to close to 50 million people.
We expect these shopping centers to provide infrastructure training and assistance to help villagers and small business there to accelerate their digitalization journey.
Besides the shopping centers, we're also partnering with vocational schools across western power to include <unk>.
Syllabus and the courses related to shop in their official curriculum.
In Vietnam, We have launched an initiative called Sharpie farm to enable Minimis farmers to go digital.
Together with government partners shop.
<unk> works closely with agricultural cooperative across be numb to onboard local farmers.
Our teams organized training sessions to teach.
The necessary skills to sell and promote their agricultural products on the <unk> platform.
Many of these rural producers account.
Coming online for the first time.
In Malaysia, we have been working with the government to distribute aid and promote digital inclusion through participation in the <unk> program using our mobile wallet services.
The <unk> program is an initiative under Malaysia budget 2021 to help ease the financial burden off and promote cashless spending by the young people.
This is done through giving mobile wallet credit of 150 <unk> to every qualified person.
Through our mobile wallet and other mobile wallets selected for participation in the program.
These efforts reflect our commitment to serve the underserved in our market through technology and.
And to give back to our communities through social support.
In the current environment, we see a greater urgency than ever for our communities to digitalize.
We are working hard to support this process and to maximize the value we offer through our ecosystem.
Indeed, we strongly believe that our business performance is closely linked with our ability to deliver on our mission of bettering lives through technology.
Let me now discuss each business segment in greater detail.
The arena recorded strong results for the second quarter of 2021.
Bookings were $1.2 billion.
Up 65% year on year.
And adjusted EBITDA grew to $741 million up 70% from last year.
The results are mainly due to the continued strong growth of our active and paying user base globally.
We reported quarterly active users of $725 million.
Up 45% year on year.
Well, our quarterly paying users grew 85% over the same period to reach $92 million.
As a result, our paying user ratio improved to 12, 7% from 10% last year.
<unk> delivered excellent results during the quarter.
Setting multiple new record.
Building on its strong performance across global markets.
The game recently exceeded 1 billion cumulative downloads on Google play.
We believe <unk> is the first ever mobile Battle Royale games to achieve this milestone.
Okay.
It was ranked third globally.
Average monthly active users on Google play in the second quarter. According to App Annie.
Furthermore, <unk> peak daily active users hit more than $150 million during the quarter.
This is a new record for us.
And we believe that few online games globally have ever reached this scale.
Meanwhile, <unk> continued to be the highest grossing mobile game in Southeast Asia, Latin America, and India in the second quarter. According to App Annie.
The game has now returned its leadership in Southeast Asia, and Latin America for eight straight quarters.
And in India for three straight quarters.
We have also gained traction in certain developed markets like the U S.
The game was ranked the highest grossing mobile battle Royale game for the past two quarters based on App Annie.
<unk> was the second highest grossing mobile game in the us on Google play across all games categories in the second quarter as well.
The exceptional global scale of its user base and the ecosystem has solidified free fire at one of the largest and most popular online game platforms worldwide.
We also believe <unk> is increasingly establish as a long lasting global platform, which is massive and growing user base and deepening user engagement.
<unk> continued success is built on our relentless focus on community engagement around high quality content and immersive experiences.
An increasing number of gamers joy and stay on our platform to enjoy not just the core Battle Royale game play, but also the new experiences we frequently introduce.
For example, during the second quarter, we launched pet rebel.
This is a social deduction game mode, where players can use their income virtual paths to take part in a game of corporation and the infiltration.
Many of our new game modes are designed to be highly social and to provide more ways for our gamers to interact with their friends and other members of the free fire community.
We are also setting new records in terms of esports engagement.
In May the finals of the free fire World series 2021, Singapore hit a peak of $5.4 million concurrent online viewers. According to esports charts.
Esports are great way to connect and engage with our community.
As first view and the route four teams together, while lending the best place from professional players.
With esports growing similarities to traditional sports.
We expect large esports games to activate the same level of community engagement and appeal as physical sports.
And become more and more deeply ingrained in general communities and the mass culture.
In addition, we have been adding to our portfolio of published titles to further diversify our game offerings.
In June we launched Moonlight blade mobile in Taiwan.
Moonlight Blade mobile is a third party massively multiplayer online low playing games that combines fantasy and martial arts.
And as an example of our ongoing efforts towards growing our portfolio across a larger number of game genres.
The game has received very positive reception from our users.
We will continue to work closely with our global partners to bring more new and exciting content to our markets.
Looking ahead we.
We will leverage our local insights and knowhow to keep delivering high quality experiences to our fast expanding global user base.
Now, let's turn to e-commerce.
<unk> continued to deliver superior retail experience to our consumers and merchants.
During the quarter, our communities continue to face challenges with the surge in pandemic cases across the region.
We remain focused on helping our merchants with their digital transformation to build a successful e-commerce business.
While providing our buyers with better experiences and a wider choices.
We recorded $1.4 billion gross orders in the quarter.
127% year on year.
<unk> grew 88% year on year to hit $15 billion.
GAAP revenue reached $1.2 billion.
Growing 100, and a 61% from last year.
GAAP revenue as a percentage of total GMB improved year on year.
And sequentially to reach seven 7%.
This deepening monetization was driven mainly by growing merchant investments.
In marketing and advertisement on the shop platform to better attract and serve buyers.
Yes.
According to App Annie Shoppe.
<unk> was the most downloaded app on Google play and the second most downloaded app across the Google play and iOS App stores combined for the shopping category globally in the second quarter.
Sharpie also ranked the third by the total time spending app in the shopping category globally.
Sharpie remained the top ranked mobile app, both across southeast Asia and in Taiwan.
Average monthly active users and.
And the total time spent in app in the shopping category for the quarter.
In <unk> largest market Indonesia.
It also ranked first across those same metrics.
Sharpie continued to extend its market leadership in Indonesia, with consistent triple digit year on year growth in <unk>.
Your numbers.
Shoppe is adjusted EBITA loss per order declined 20% year on year to <unk> 41 standard.
We are happy to share that shop in Malaysia has become our second market after Taiwan to report a positive adjusted EBITDA before allocation of headquarter expenses.
Sure.
Given the highly attractive growth opportunities ahead of us.
We continue to invest in sustainable growth with efficiency to maximize long term value.
While we may see period to period rate fluctuations with shopping seasons and event.
We will continue to drive improving economics over the long run as we scale.
Consistently delivering value to our merchants.
An important driver of our business.
During the quarter, we launched a number of new features in our programs to support our diverse seller base.
For example, we recently deployed shopping more Brent memberships across southeast Asia and Taiwan.
It offers a new customer management and a retention tool for brand.
Okay.
Program allows brands to introduce their own loyalty programs within sharpie to drive more conversions and the repeat purchases on our platform.
Sure.
Brent which were early adopters.
Reported strong results, including material increase.
If buyers and significantly higher spending by members.
I am also encouraged to note that shortly continued to see growing traction in Brazil.
According to App Annie Shoppe is ranked first in Brazil by downloads and the total time spent in app.
And it ranked the second most popular mobile app by average monthly active users in the shopping category for the second quarter.
While the market the choppy operate in a highly diverse.
Consistent trend, we see is that the potential for future digitalization remains high in our market.
Therefore, a substantial portion of the population in our markets is increasingly benefiting from our growing and improving platform services.
With that in mind, we will continue to invest efficiently towards the long term and highly localized the growth of the <unk> ecosystem.
Finally, our digital financial services business see money.
Continued to perform well in the second quarter as digital payment adoption deepened in our markets.
Our mobile wallet services reported total payment volume of over $4.1 billion.
Up close to 150% year on year.
This was driven by both user growth.
With quarterly paying users increasing to over $32 million in the second quarter.
And the more frequent usage of our mobile wallet services with growing use cases.
In particular, we.
We are quickly expanding off platform digital payment use cases.
For example, besides increasing our payment touch points at convenience stores, F&B Chang's and on the Google play store.
Our mobile wallet service recently expanded its partnership with Mastercard in Thailand.
This will allow our users to pay with any of the 200000 plus offline outlays.
Sept Mastercard contactless.
We are also partnering with the pure gold one of the largest supermarket chains in the Philippines to assert our mobile wallet payment.
100 of these stores.
Even though the money is still at an early stage of development.
Long term addressable opportunity is highly significant.
Consumers and small businesses in our market.
Moving more of their consumption and the commercial activities online.
<unk>, a greater need for the digital financial services that <unk> can offer.
One example is the 1 billion program in Malaysia.
Which was run by the government to distribute financial assistance to the young people as mentioned earlier.
Of the $1.7 million or 1 billion applicant recorded as of June seven.
Close to 1 million chose to claim their credit with our mobile wallet or other wallets participating in the program.
Okay.
Credit received in the mobile wallet can be used in any online and offline transactions that assess such mobile wallet payments.
Indeed, the strong adoption could be partly attributed to the faster growing popularity of our mobile wallet with over 750000 touch points nationwide in Malaysia.
Moreover, we are encouraged to see the strong network effects of our mobile wallet, helping to drive his acceptance and adoption across the region.
We are working closely with various local stakeholders to continue more use cases features and the products to our users.
By utilizing and expanding the existing relationships, we have built with a growing consumer and the merchant use user base.
We look to serve even more segment of our market efficiently with technology.
To conclude.
Our performance in the first half of the year has been strong across all our business segments.
Our conviction in the size of the long term opportunities, we are addressing as well as the positive impact we are making in our communities.
Has only grown.
Leverage of what show cycles, and the network effect, both within and across our core business.
We believe we are very well positioned to capture this long term growth opportunities.
This is also reflected in our revised full year guidance for both arena and choppy.
More importantly, as demonstrated by our consistent track record will continue to focus on prudence and efficiency in managing long term sustainable growth.
With that.
Ill invite Tony to discuss our financials.
Thank you.
Thanks to everyone for joining the call.
Thanks for the detailed financial schedules together with the.
All these measures.
In today's press release.
Thank you Scott.
Our financial highlights.
So I will focus my comments on the other.
Yes.
We will see overall total GAAP revenue increased 115, 9% year.
$3 billion.
It was mainly driven by growth in the scale of our E Commerce business.
As we continue to better support our users needs.
New features and programs.
As far as growth of our digital entertainment business.
Especially also.
Developed game free fire.
Digital entertainment bookings grew 65% year on year to $1.2 billion.
Revenue was up 167% year on year to $1 billion.
The growth was primarily driven by the increase of our active user base and deepened paying user penetration as we continue to engage the community through quality content.
These experiences.
Digital entertainment adjusted EBITDA.
$41 million.
Yes.
This represents year on year growth of 17%.
This was mainly due to strong topline growth and.
An increased share of ourselves developed game among our total bookings.
E Commerce.
Our second quarter GAAP revenue of $1.2 billion included yes.
Marketplace revenues.
$105 million.
191% year on year.
Product revenue of $251 million.
90% year on year.
The strong results demonstrated the deepening penetration of e-commerce, and our ability to capture the accelerated growth.
As we continuously.
Our offerings to create greater value for our platform users.
E Commerce adjusted EBITDA loss was.
<unk> hundred $80 million as.
As we continue our investment to fully capture the opportunities in our markets.
We remain committed to efficiently invest.
And the growing ecosystem to serve our users better.
Digital financial services revenue.
$89 million.
An increase of 659% year on year.
In the second quarter of 2017.
Growth was primarily due to increasing traction as we continue to expand our suite of service offerings.
Adjusted EBITDA loss was $155 million.
Compared to about $97 million.
In the same period of 2019.
This was primarily due to our continued efforts to drive mobile wallet adoption.
Returning to our consolidated numbers.
We recognized a net nonoperating loss of $25 million in the second quarter of 2010.
Compared to a net non operating income.
In the second quarter of 2017.
Our operating loss in the second quarter of 2021 was primarily due to interest expenses.
Our outstanding convertible notes.
We had a net income tax expense of $75 million in the second quarter of 2021.
Which was primarily due to corporate income tax and withholding.
With holding tax recognized in our digital entertainment business.
As a result net loss excluding share based compensation was $321 million in.
In the second quarter of 2021.
As compared to $318 million.
For the same period in 2020.
With that let me turn to costs.
Thank you Tony.
And we are now ready to open the call for questions operator.
We will now begin the question and answer session.
Ask a question you May press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
In 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.
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.
Hi, Good evening, Thanks management for taking my questions and congratulation on a strong set of results.
Bob two questions. The first question is about the arena.
Our online gaming business.
You have seen our strong outperformance of <unk>.
In Southeast Asia.
So I just want to get a sense about.
How we should think about potential competition.
Our peers even obtain.
Similar.
Gain much onboard.
The coming months.
Correct.
Bye.
As low as the revenue growth and on my end.
Regarding the new games contribution.
How much of the new gains expected into our revised guidance and then on my second question is about.
The <unk> business, we are similarly strong globe.
Sharpie.
Covid.
Croatia.
<unk> right now.
We are seeing.
The trend was disappointed.
Tactically.
In the second half.
We're going to see more people.
Bye.
Or should we.
Any color on that.
Typically trends would be grateful. Thank you.
Okay.
Thank you Thomas.
Motion loans.
Competitions.
I think as we discussed before we believe that gain is not E mini competition driven type of business.
It is more concentrated in particular.
Please go ahead.
We just had such a launch.
Okay.
Good day.
Yes, hi.
Highly social type of scheme.
And then a lot more about engagement.
Okay.
So in the past and Tony.
Other cash.
Sean.
The market.
And so far <unk> has been.
Would that be.
Any impact from any kind of.
Okay.
Again.
To be increasingly platform incorporating different types of gameplay.
Social casual element.
A lot of sense.
Our markets have any market users.
We are very encouraged to see continued strong growth.
At the moment.
I think quarter on quarter.
Even against a strong comp.
Last year last year. So we'll continue to focus on growing the platform and using that as well.
Introducing more different types of environments.
Thanks Lee.
So shimon.
Into the scheme.
Hey, Ken.
New game contribution to the right.
Guidance.
<unk>.
Our revised guidance is based on our current expectations.
<unk>.
Published.
Publishing pipelines as well.
Pipeline.
And.
As usual, we don't specifically discuss any gain.
But.
For the new diesel already published.
Yeah.
Thank you.
This is Seth.
Seth.
Category trends.
So far we see that our category trends have been.
But stable.
<unk> category.
The session health and beauty.
Many andy's long scale high margin category voluntary COVID-19.
We tend to see high growth in particular in the <unk>.
Any category S&P Paul.
<unk> and <unk>.
We also start to see.
Including grocery.
Become more popular category over time as people coming in and delivery to the home would be.
Working with.
Thank you.
Can I use it to two.
Efficiently.
Thank you min.
Alright.
Trends.
Right.
Yeah.
No.
<unk> co location and be certain cases.
In our region.
It is now.
<unk>.
When this might be the cases might go down.
Matt can get back to normal during this period of time.
With Covid.
Sharon is focused on continuing to.
Managing our operations efficiently.
Make sure we meet this demand.
Davidson.
Yes.
In time.
Focus on digital inclusion.
Evidence.
Accelerating digitization.
Our market.
Again.
Opportunities for long term growth.
Stable growth in our market.
The step up in Digitization is going to stay.
The next question comes from Ron Jon Sharma from JP Morgan Singapore. Please go ahead.
Alright, Thank you and congratulations on the results.
Two questions from my side.
Firstly can you also please talk about food maybe you have seen.
Shopping food growing aggressively in Indonesia, what the rollout plans.
In other.
Awesome.
We have as well.
And secondly, if I come back to the guidance you had a pretty strong first half.
And especially in the second quarter.
But the guidance for the gaming is indicating.
Keeping revenues softening in the second half.
Are you seeing any softness in the gaming trends.
Or should we assume that there could be upside to the guidance. Thank you.
Okay.
Thank you.
So the action is.
Thanks, Sean.
Ken.
Positive reception.
Value shares.
Total community.
Market.
Sure.
Okay.
The second quarter, and we will continue to focus on.
The quality of our services.
Yes.
Any if there's any new market.
Anything that's in development.
Make announcements.
We don't have any anything to report at this point.
Thank you.
Guidance.
Dave.
Again, we believe overall guidance.
Shell, a one point year on year growth.
Compared to last year.
<unk> also next year.
And with that.
Commencement of Lockdown.
I think this is a very strong performance already.
As you can tell from Dee Ann.
Kidney cancer indication.
Well.
Sure.
In terms of how to grow.
Platform.
Is to continue to pursue.
Almost as well.
And also thank you Jessie.
<unk>.
Dash market in the world as we continue to see almost jumped potential as well.
Our posture.
Sure.
Generally did head to commercialization.
Given market.
Not to be difficult.
The limitation.
So we don't really worry about not being able to commercialize content that we've built.
<unk> continued to see growth.
<unk>.
Making it even larger platform.
Now to recap.
To build a stronger ecosystem with very strong social.
The next question comes from.
Piyush <unk> from HSBC, Singapore. Please go ahead.
Yes, hi, good evening.
Congratulations for a strong set of results two questions.
Firstly on the e-commerce.
Sure.
Factored in which countries are driving an increase in take rate.
And could you give some color on which countries have been Louis take rate and the highest potential to increase.
Secondly.
In E Commerce, we have seen a surge in.
Sales and marketing expenses during the quarter.
Can you give some color on how the competitive dynamics that's changed has that led to increase in.
Customer retention cost thank you.
Thank you.
E Commerce take rates.
Yes.
Mainly attributable to.
Adoption of advertisements and increased adoption by our sellers.
Advertisement and marketing tools.
And this is a clock.
Various market across the board.
Not driven by any one particular market.
Yes.
In terms of the marketing.
Relating to competitive dynamics.
Hey, thanks.
Again.
We discussed it before.
Our scale and market leadership.
Good condition now that.
Our sales marketing.
It's more driven by our view about.
Efficiency of investments.
<unk> market at this point in time for example in the shopping season.
Any particular opportunities to promote brand et.
Et cetera.
Davidson.
Managed.
Depends on our bonds than Netflix cases growth in this market.
At any point in time.
Our strategy in capturing.
Efficient manner that growth.
Loss affected by competitive dynamics.
Considering the market.
And as you can tell from our.
Closely while we are multiple times larger.
Our competitive arena.
We are also growing at a faster rate.
Our next question.
Our next question comes from.
<unk> from Goldman Sachs. Please go ahead.
Thank you for taking my question.
Yes, Jimmy grew very strongly would it be possible to shed some color on in particular, the one new region. They are moving into and any any light on the tactic.
Embarking on we understand that the popularity has risen dramatically, but there are nuances of that market and you have no knowledge to taking on a well established competitive.
So based on what you've done in the past how would you rate.
Your strength weakness in that market if at all possible.
Comment on and then the second area is on the cash burn side, where the.
Cashback proceeding okay.
Just wanted to understand where that is and when you look at that on a per order basis that looks like it's rising.
On the <unk> on a per order basis also there is some trends that are interesting if you could comment on that thank you.
Yes, Thank you piyush.
In terms of.
New markets.
And so to give you a expansion can market share decline. It is still a very early stage for us as we.
Continued sales.
Adapt to local market practices.
On to our operation well business.
We did share in this quarter journey webcast.
Even though we.
The recently launched in those markets, particularly Brazil.
Performance, so far has been strong.
One of the top ranking in downloads.
Two ranking in the U S.
Johnny.
Yes, I think we will continue to.
I will focus on growth.
Market again.
<unk>.
Well, let me add to that competition.
Because each market.
What is still a very low level of e-commerce penetration.
Yes.
Ocean market to us and so we see.
Large opportunity and very long.
Long way for these markets.
E Commerce players is there evidence based on their payment strategy.
Coaches and the market segment so.
So we will continue to grow and focus on efficiency.
In those newer markets.
And in this.
Business model I think.
So if somebody else.
This is Marty.
Southeast Asia markets and continue to promote.
Mobile native and.
Social marketing.
Our marketplace model.
Listen we're going to focus on their core categories.
Those long tail and hot high margin categories.
And the healthy local small businesses.
Hi, Matt.
To the mobile business.
Market place.
Approach and the agency.
Okay.
Sure.
Your market.
And so ethanol car markets in southeast Asia.
Net income cash.
Cash burn.
And just as I mentioned, Jeff.
A previous question.
It is more of an edge are constantly look cats.
Kent.
Opportunity and timing of the market.
Sample in Q2.
And Ramadan season.
All of it.
Our largest market in <unk>, Indonesia.
This is Tom.
Yes.
Both in E.
E Commerce adoption is very efficient.
Yes.
Our size frequency of law to more than six times a month.
Indonesia.
Seven tons per month.
We believe is healthy.
Healthy.
Marketplace platforms and continue to also.
New buyers.
And increased activity.
In the region, we believe net.
Continue to.
Invest efficiently how accurate that sets.
It is important to note that our big picture view.
H E Commerce model in a highly profitable ones.
In terms of the market based model, we're pursuing and then second we will continue to focus on efficiency and new debt long term.
And Amit unit economics should continue to be lumpy, but it doesn't change.
Naturally happen with scale.
While continuing improvements.
Both efficiency and our continued strengthening of our market leadership.
Thesis never changed.
Yes, I think.
Yeah.
We continue to monitor the market trends and Jim we will invest efficiently.
Our next question comes from Alicia Yap from Citigroup. Please go ahead.
Hello, Alicia as your line open.
Right. Yeah can you hear me Okay alright.
Management.
Congrats on the strong results.
My question is on Sharpie.
In Brookdale any color you can share in terms of the percentage of orders.
Org a percent based on revenue contribution from Brookdale currently.
And if management Picasso.
We might.
And expectation for.
<unk> market opportunity in Manhattan.
And if you can elaborate the monetization rate contribution by ranking.
That actually coming more from the commission fee or the appetite.
Or is it more from the quarter.
Got you.
And do you perceive.
<unk>.
Brookdale on that trend.
Higher than that.
South East Asia.
Then the second question very quickly on the positive EBITDA for Malaysia.
That cost off the Pat them on attack rate or is it because of.
<unk> operating cost.
Cost efficiency. Thank you.
Thank you Michelle.
It does.
Brazil, we don't breakdown.
Based on revenue contribution by country.
But as we change our OTC positive reception in the market.
And science and that will continue.
Okay. Thank deficient moves there.
Yes.
Our hopes and expectations for that Ken I think this is still.
Still very early stage for us and it's evolving.
Operation.
We will continue the same sample.
Thank you Mark.
And so on.
Continued improvements.
Offshore operations and service to the region.
Sure.
So some monetization.
Contribution.
By ranking.
So our.
Most of our monetization.
Strong high margin types of revenue transaction based fees equally permissions and mirrors all types of handling fee et cetera, as well as advertisement and more importantly, the increase in bad kicked.
<unk> seen quarter on quarter.
While attributable to these types in particular.
Good quarter. Thank you.
So to advertisements adoption on.
Maybe bob increasing function, including non lung samples.
AC advertisements.
Yeah.
Our platform, but it's still very early stage.
Hey, thanks.
<unk> take rate is still slow and maybe test.
Much money to Tony to be rolled out to the.
Duffy.
As well, we believe our market.
Early stage funding.
Ecosystem.
At times, our seller community.
D train and get some multiyear with various types of advertising and marketing tools, we can leverage our platform and we focus on <unk> 18 on <unk>.
And at the same time.
Increased adoption showed effectiveness.
Our advertising and marketing tools as well.
Increasingly.
Our platform is creating for our seller community.
Welcome to voluntarily adopting more marketing on the shelf and platform.
Certainly sir.
<unk> four.
Brazil.
Japan Southeast.
Southeast Asia again this is.
Too early for us to tell given the early stage of operations that will continue.
And to see what will be the.
<unk> Anthony noted.
It will be it.
It's not a target.
But really.
Natural.
The category mix.
In terms of the.
Relevant categories.
Perhaps.
Is that a blanket.
Each market and it's more than that.
And then.
England.
Our perspective.
We'll focus on driving the license category that will generally generate like it will be for the markets and can we might dynamic market.
Conditions.
Each month evolve over time to see whether that.
Mix and category mix and product mix season like niche market.
In terms of EBITDA from Malaysia.
Again, we're very happy to report that till Malaysia has become ducks certain markets to achieve.
EBITDA back to Taiwan, our shopping business.
Of course it is helpful.
Yes.
But better monetization over time.
Thanks, Joe.
It will be.
Operation efficiency of the plant.
Please go ahead.
One that the.
Marketplace E Commerce model in terms of profitability with two things.
With scale and James for market leadership.
To deliver clear and increasing value to our seller community.
We will be able to make a strong profit dollar rolls.
And Jeff this is basically generating value to our community and to generate value to our shareholders as well.
The next question comes from Arun <unk> from Credit Suisse. Please go ahead.
Yeah, Hi, good evening, everyone. So a quick few questions number one if you look at your user base for the Garena again this quarter. It grew very strongly.
The five new.
The active users you have added.
It does it cause they did from last two quarters just wanted to understand despite those game being there in the market for so long, where you're still seeing growth in the market.
Do you think market new markets any color.
Maybe it would be very helpful.
Secondly on the.
Brazil, let me try a little bit differently, if you can give.
Some color.
You have seen sequential increases in investments in E Commerce, and you already mentioned that two of the market's up profitability nausea.
So how should we think about it as increased investments going into Brazil or any color on.
On a like like basis on a xeon how much did some qualitative color will be helpful.
Thirdly on the logistics side maybe.
In Latam.
The Vida E Commerce has made significant investments on the logistics side.
Did the current choppy.
The system is in that grid, so hollow those choppy thinks about that Bob.
But the market leader.
If anything over the next couple of few years are you looking to make more investments in Latam and even in <unk>.
<unk> seen in keeping investments by sharpie on logistics, so any color on that.
Okay.
Yes. Thank you.
No.
The user growth.
We're also very happy to.
We put that to achieve pain pumps, all key regions Southeast Asia and in Latam as well.
<unk> of the world.
And therefore.
We believe.
Seeing that market participation has been very strong for all of our games, especially free fire.
<unk>.
Brazil.
Yes, I think we are still in their early stage investment.
To measure right.
Yes.
Our.
Operations as well.
Adoption.
Our services offering there.
Obviously, we continue to evaluate and we continue to see improving unit economics as well in Brazil.
Scale is there so we will continue to focus on efficiency.
Gross.
As you know we recently also made.
Take rates.
Brazil.
<unk>.
12% and 18% for certain size.
<unk> was up to our efficiency programs and we believe that.
The reception to the very strong Jeff beneath.
It's a good market for continued investment.
Well again, thank you.
That's the growth potential there.
In terms of the logistics environment.
I think that.
There could be some.
A two arm between.
Brazil.
<unk> market.
Steve.
Let me Dave.
East Asian market.
Part of it is a little bit of a chicken and egg.
So when there is not much of the demand for.
Third party to get services.
Commerce platform.
Because most of the platforms are using their own services or they haven't been models.
Volume chassis.
Broadly generated.
Yes.
Platforms, Dan probably there is.
That's also the initial growth opportunities.
Jesse.
On the one hand, we are also hopeful nurture Windsor.
Growing e-commerce team.
Region and more filters.
Yes.
Global investors into those growth opportunities in the region. While we may also see similar trends.
In those markets and this is hopefully some contribution we can make to the market in terms of bringing more opportunity more.
Digitization and well as e-commerce ecosystem.
Not just close up shop EBITDA also goes up the surrounding.
Including Ppl's within the region.
Importantly, with Cts.
<unk> success.
<unk> successfully been going the e-commerce ecosystem and then the same time these supplier partners.
We enjoyed a very strong growth.
And as well.
At the close partnership with choppy, we are very happy to continue to adopt that model.
Going forward.
Brazil is one of the other new markets as well.
Hi.
Do half hour shopping express Jonathan.
Well.
Within each market as we see appropriate.
<unk> capacity, especially during peak volume signed in the holiday season or is there any markdown events et cetera.
On that front, we will continue to upsell what makes sense from that operation as well as music service perspective as well.
Relevant.
Stakeholders.
In connection with the ecosystem.
Our model operations, Accordingly, but again, we focus on efficiency.
This concludes our question and answer session I would like to turn the conference back over to MS. Zhu song for any closing remarks.
Thank you all for joining today's call and we look forward to speaking to all of you again next quarter. Thank you.
The conference has now concluded.
Thank you for attending today's presentation you may now disconnect.
[music].