Q3 2021 Sea Ltd Earnings Call
Good morning, and good evening welcome to the Sea limited third quarter 2021 results conference call.
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After todays presentation, there will be an opportunity to ask questions.
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I would now like to turn the conference over to Messman Tucson. Please go ahead.
Yeah.
Hello, everyone and welcome to the <unk> 2021 third quarter earnings Conference call I've made yourself from Easter Chief operating officer.
Before we continue I would like to remind you that we may make forward looking statements, which are in charge at least subject to risks and uncertainties and may not be realized in the future for Berry season as stated in our press release.
Also 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 Kenny necessary. That's your understanding of the actual cash flow of our major businesses when used as a comparable GAAP disclosure.
For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP numbers. Please refer to the section on non-GAAP financial measures in our press release.
I have with me, if he's chairman and group Chief Executive Officer for fleet.
Chief Financial Officer, Tony Hull, and go Chief Corporate Officer and Angela.
Our Marcia will share strategy and business update operating highlights and financial performance for the third quarter of 2021. This.
This will be followed by a Q&A session in which we welcome any questions you have.
With that let me turn the call over to fly.
Yeah.
Hello, everyone and thank you for joining today's call.
C C to connect communicated in April consumer and empower small businesses.
More people can benefit from the growth of the economy.
We continue to scale with efficiency and build deeper connections across our ecosystem.
As this happens we are expanding our total addressable market.
We are reporting another quarter of strong results across all our businesses in the third quarter.
Our results once again demonstrate our ability to capture new and attractive opportunities.
And at group level for the third quarter of 2021.
We continued to record a triple digit growth in GAAP revenue and gross profit.
Revenue increased 122% year on year to $2 $7 billion.
While gross profit grew 148% year on year to reach $1 billion.
Along with our strong financial and operating results for the quarter.
We load out more initiatives to empower our users to benefit from the opportunities of the digital economy.
Let me share some examples.
In Indonesia, we have ramped up our efforts to keep local Smes the resources they need to build successful businesses online.
Including helping them to reach new international market on Sharpie.
In recent months shopping App opens shockey expert.
I need compensate in solo and burned down.
This competition is local businesses, the resources and training they need to help them scale them more effectively and to sell internationally.
Smbs concept inventory management system.
Marketing is to postpone.
Really chase like photography studios Corestates on management.
And the initial and individual training sessions with the Shockey team.
In Malaysia, we are working with the government to digitize rural sellers and help boosted their skill sales on e-commerce platforms.
We partnered with the Malaysian Communications and multimedia commission to use their rural Internet centers nationwide to offer free ecommerce training to local entrepreneurs.
Since the start of the campaign in July 2021, we have Twain and helped more than 6000 rural centers nationwide.
We also partnered with the Malaysian government as part of the shell shocked militia online program to promote over 280000 online and offline local brands and a seller.
The program aims to further boost the local smbs participation in the growth opportunity offered by the digital economy.
In Thailand, we are working with the digital economy promotional agency the stock exchange of Thailand, and its office of small and medium enterprise promotion to launch the digital opportunities for Talos protests.
This initiative aims to develop digital entrepreneur skills for young entrepreneurs.
Right training and mentoring sessions.
Similarly in Brazil, we have been focused on onboarding more local smes to help them to sell and grow online.
I'm pleased to note that more than 1 million local seller in Brazil have registered with choppy things we started welcoming local sellers in mid 2020.
Meanwhile, we are mindful that the impact of the pandemic remains a significant challenge in all our markets.
For instance.
Vietnam imposed strict at the lockdown of the entire pandemic during the third quarter.
Stuart touched locked us we quickly adapted to serving our users as much as possible, while ensuring the safety and health of our employees.
We will work closely with governments to ensure the safety of our team and continue to serve our sellers and buyers to the best of our ability.
We have also launched a virus initiatives to assist the government our market enrolling all containment and vaccination efforts.
Indonesia breaks down hole, we have worked with the government to integrate the national contact tracing system within our app to enable more users to access this service with ease.
In Malaysia in the Philippines, we introduced a small reward programs for users who had been vaccinated to suppose the governmental efforts to encourage vaccine uptake.
All of these initiatives reflect the fundamental mission of our business.
We want to ensure that the benefit of the technology and the digitalization a wide reaching assessable.
As more people in our communities embraced the digital economy, we are committed to serving the needs of more consumers and small businesses and continuing to play our part in building a healthy and a sustainable digital economy.
Let us now look at the performance of each of our business segments.
Starting with digital entertainment.
In the third quarter Garena continues to solidify its position as one of the worlds leading game developers and publishers.
<unk> deepened engagement with our large and growing global user base.
We reported bookings of $1 $2 billion up 29% year on year.
Adjusted EBITDA grew 22% from last year to reach $715 million.
Quarterly active users were 729 million representing year on year growth of 27%.
And our quarterly paying users hit 93 million.
Up 43% from last year.
Our paying user ratio increased to 12, 8% from 11, 4% a year ago.
There is very nice now serving some of the largest game communities globally.
We are very focused on creating great experiences to engage entertain and top friends and families spend time together.
In particular free forest massive and highly engaged user base represent.
Exciting and a growing opportunity for us.
We continue to create high quality that work content, so that our community can enjoy fresh and engaging experiences.
For example, we introduced more new content, that's developed the storylines across the free prior universe.
Any characters to deepen user affinity.
We love, saying you'd win themed around more coal with a focus on in reaching that narrative around one of the most popular playable characters a brief bar.
We also had our first movie collaboration partnering with one of them, let there be courage kearney to bring random things playable content.
In game items and collect both to our users.
We're also finding other creative ways to Holistically inquiry.
Engage with our broader community through offline experiences.
This week free fire will make a buck.
The fashion.
<unk> had some Sao Paulo fashion week, where 'twenty in games schemes will be brought to life I had a fashion show.
It was like at least a break waste bars to connect our users across different mediums.
And it reinforces <unk> growing influence and importance.
Both online and offline among our community.
Yeah.
Importantly, we continue to enhance the variety of game modes, we think brief bar.
In the third quarter, we launched one be one and the two b two mode.
And have been significant adoption across our community.
Players enjoying the simplicity of this mode, because they offer a more casual and a Quaker game with a smaller group of brands.
We're also introducing more diverse gameplay options, we think brief bar.
Such as the recently launched pet menu.
This mode enables users to compete against their friends or other members of the community in virus fast paced casual games.
Another highlight of the quarter was the global celebration around <unk> fourth anniversary.
Among other activities to celebrate this milestone with our community.
Worked with global architecture to produce a theme song, which has been streamed over 50 million times across merit online platforms to date.
At the end of the third quarter, we introduced a free fire Max globally to a very strong reception from our community.
Free farmer Mac's offers that enhance the <unk> experience through higher quality effects animation graphics and features.
But retaining the same great gameplay.
Because we are committed to empowering users everywhere we can.
Work hard to ensure that players of both of those free fire in the prepared remarks complete together seamlessly.
To make that possible, we developed proprietary in house technology to guarantee complete integration between both <unk> and Bruce power Max.
This also allows existing users of <unk> to use the same account on free farmer Macs and think account data across both app with respect to old game mode.
With free fire Mac.
We have also incorporated a map editor feature called cropland.
Players can create their own unique mass and in wide Dear friends to join them in paying we think this custom maps.
This enables us to tap into the creative power of our community.
They have always been the source of inspiration for game and now they have the opportunity to create their own experiences within the game.
It is also a powerful new way for friends to enjoying a game in the space that they have greater together.
Which adds a new and a deeper dimension to our community building efforts.
While still early fruit farmer Macs will be an important component of the three power platform by continuing to drive more engagement and experiences across our large and diverse user base.
The positive community reception to this initiative, it's reflected in strong engagement across our markets.
According to App Annie free fire was ranked second globally by average monthly active users for all mobile games on Google play in the third quarter.
<unk> also continued to be the highest grossing mobile game in Southeast Asia, Latin America and India.
It has maintained the leading position in southeast Asia and in Latin America for nine consecutive quarters.
And the India for four consecutive quarters.
In the U S. <unk> remained the highest grossing mobile battle Royale game for the third consecutive quarter and it was the second largest grossing mobile game on Google play across old game categories during the quarter.
Leaving three fast growing global popularity, we see significant opportunity to provide our community with many kinds of ways to enjoin free power platform.
And we continue to invest in building towards a long lasting global franchise.
We are looking forward to a busy calendar of esports event towards the end of the year.
<unk> will be hosting the free fire Asia champion shape, and a briefer EMEA eventration, though at the end of this month.
Additionally, arena of Valor International Championship will be held in the coming weeks.
We believe these exciting lineup of esports tournaments.
Further drive engagement across our communities.
We are also very focused on growing our global reach and building against pipeline that ensures we can capture the most promising and valuable long term trending online games.
Our growing global presents across diverse high growth markets gives us important local insights.
And our strong local operational capabilities.
And our in House development team is tapping into this as they work on both existing games and new ideas.
Moreover, given our proven global track record, we have received more interest from studios seemed to build strategic relationships with us.
As such our pace of investment in and the partnerships weight game Studios worldwide has picked up.
Yes.
Now moving to e-commerce.
Shopping continues to grow much more quickly than the overall market as we deliver ever greater value to our sellers and the buyers.
In the third quarter <unk> recorded GAAP revenue growth of 134% from last year to reach one $5 billion.
It also recorded gross orders of $1 7 billion up 123% year on year.
This is the ninth consecutive quarter of triple digit year on year order growth for shockey.
<unk> was $16 8 billion.
An increase of 81% since last year.
With monetization continuing to improve.
GAAP revenue as a percentage of total GMB rose to eight 6% from six 7% in the third quarter of 2020.
The stronger monetization was driven by growth.
Our revenue streams, including value added services transaction based fees and advertising revenue.
In view of <unk> performance.
We are again, raising our full year 2021 e-commerce guidance.
We now expect ecommerce GAAP revenue to be between 5.0 billion and $5 $2 billion.
Representing over 135% growth from 2020 at the midpoint up to revise the guidance.
Our previous ecommerce GAAP revenue guidance was between $4 7 billion and $4 9 billion.
As with the Arena Shoppe is focused on deepening engagement with our users is the winning strategy.
We are helping sellers be more competitive.
For example, we have load out more features tools and services to help them build engagement with their customers and grow their business.
We recently launched et cetera mission.
The incentive programs that reward sellers with privilege as they complete certain tasks.
The program Gimme five the experience of sellers.
This guide them through features and tools on sharpie, they can use to become Petro centers.
We also introduced the tools like lifting optimizer, which helps sellers identify listings that can be improved and how to improve them.
This initiative helps sellers grow on the Schottky platform and create better experiences for our buyers too.
We also recently celebrated the first anniversary of Sharpie premium.
Based on Shockey for select brand partners in the luxury segment.
Since launch we have doubled the number of shop your premium brands.
Through a more immersive shopping experience.
<unk> premium helps Brent shared their stories and build deeper personalized relationships with buyers.
And for our buyers will continue to roll out captivating content and activities.
Such as our hugely popular double day sales.
Last week <unk> had a fantastic double 11 shopping festival with widespread success.
It was especially heartening to see uplift in participation from consumers in rural and smaller towns as they enjoyed the convenience of and a wide assortment on sharpie.
Additionally, our new local sellers also benefited through a substantial increase in sales during the positive peer right.
This shopping festival was showcased in numerous ways in which we serve and engage with our community.
And its success.
Exactly five shockey strengthening position as the go to marketplace for our consumers.
Our focus on engagement and adding value for our community is a key factor in our sustained strong user metrics.
According to App Annie globally on Google play shocking ranked first in the shopping category by total time spending app and second by downloads and average monthly active users in the third quarter.
<unk> also continues to be the top rank app in the shopping category in both southeast Asia, and Taiwan by average monthly active users and the total Tam spending app during the quarter.
<unk> was the leading App of course, the same metric in Indonesia, where we recorded another quarter of triple digit year on year order growth.
Shockey also continued to make good progress in Brazil.
In the third quarter. It was once again ranked first by download and the total Tam spending app and second by average monthly active users for the shopping category. According to App Annie.
Well, Brazil is still a young market for us our local teams are focused on better understanding our growing community of local buyers and sellers.
And improving the experience we offer to them.
We believe that our deepening engagement with the local community is a promising sign of this market long term potential for sharpie.
<unk>.
<unk> total adjusted EBITDA loss per order across all market was <unk> 41 in the third quarter.
As we have said previously we are committed to investing efficiently and growing in a sustainable manner.
Our market as choppy scales.
And with that in mind, we are pleased to note that adjusted EBITDA loss per order improved both on a year on year and quarter on quarter basis in southeast Asia, and Taiwan, combined as well as in shop in other markets combined.
Looking ahead, we are prudently and efficiently exploring how to maximize our largest addressable opportunities.
In our growing market position.
In the recent months is we launched a sharpie in Poland, France, Spain and India.
From time to time, we may test the waters in new markets, where we believe there may be an opportunity to use our experience the highly diverse environments to reach underserved of buyers and sellers.
On the one hand, our core focus remains managing our efficient and sustainable growth in southeast Asia, Taiwan and Brazil.
Where we have established and continuing to grow our strong presence serving local sellers and the buyers.
On the other hand, the opportunities we can address.
Efficiently leveraging the schottky platform in existing markets and expanding into new market have increased.
We will continue to exercise prudence and flex.
Flexibility as we pursue the significant growth opportunities with accelerating investments.
Turning to our digital financial services business.
The money is recorded excellent results in the third quarter.
The total payment volume of our mobile wallet services grew by 111% year on year to reach $4 6 billion.
Quarterly paying users of our mobile wallet services increased to over $39 million up 120% year on year.
One of our key areas of focus is expanding the number of used cases for our mobile wallet. So that because there are more businesses and add greater value for our users.
In the recent months is we've partnered with more online and offline merchants such as Google play in Malaysia, Blue Bird taxi, Indonesia family Mart in Thailand, and the low case cinema in Vienna.
As we grow the number of use cases, we are naturally seeing an increase in consumer adoption of our mobile wallet.
As more people grow to appreciate the ease and convenience that our platform offers.
And as our user base growth we.
We see growing interest from merchants wanting to work with us, creating a positive flywheel effect that we believe will drive increasingly efficient growth for simoni.
Besides our mobile wallet business, we have launched early initiatives in other digital financial services, such as buy now pay later digital bank and to ensure tech.
These products are still in the early development phase and we are currently focused on strengthening our models and operations.
In line with our mission to serve underserved segment in our market, we intend to roll out more of these digital financial products.
Thoughtful manner with our customer re focus on long term sustainable growth.
We are excited about a significant long term growth potential of the opportunity that the money addresses.
And we believe we are well positioned to serve this opportunity by building on our strong technology core and our unique insights.
And the relationship with consumers and businesses across our markets.
Last but not least I.
I am very pleased to announce corresponds appointment as <unk> group President effective from January one 2022.
Chris This exceptional business leader, who has delivered outstanding results for fee and a deeply embodies our core values.
Pete together with the rest of the leadership team and our hugely talented team.
Has not only driven our business forward, but also significantly further this mission to better the livestock consumers and small businesses with technology.
Going forward, Chris will continue to directly report to me and operate our sharpie and <unk> businesses.
In addition, as group President Chris will work closely with me and the rest of the group leadership team on our long term strategic initiatives with an increasing focus on synergy creation across our various businesses.
In closing.
Our first core value at sea is we serve and.
And as this continues to inform everything we do.
We believe that technology holds the greatest potential to improve People's lives.
And we believe that in the current environment.
Our commitment to serving the unmet needs of our community newer technology has never been more important.
In the quarters ahead.
We'll continue to focus on connecting communities, enabling consumers and empowering small businesses. So that more people can benefit from the growth of the digital economy.
With that I will invite Tony to discuss our financials.
Thank you Chris.
Thanks to everyone for joining the call. We have included detailed financial schedules together with the corresponding management analysis in today's press release and bars has discussed some of our financial highlights. So I will focus my comments on the other relevant metrics.
Foresee overall total GAAP revenue increased 124% year on year to $2 $7 billion.
This was mainly driven by growth in the scale of our E Commerce business as we continue to deepen the engagement with our users as well as the growth of digital entertainment business, especially our self developed game free fire.
Digital entertainment bookings grew 29% year on year to $1 2 billion.
GAAP revenue was up 93% year on year to $1 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 Comanche Israel quality content and immersive experiences.
Digital entertainment adjusted EBITDA was $715 million this.
This represents year on year growth of 22% and was mainly driven by the topline growth.
On E Commerce, our third quarter GAAP revenue of $1 5 billion included GAAP marketplace revenue of $1 $2 billion App.
151% year on year, and GAAP product revenue of zero parts per billion.
At 82% year on year, the strong results demonstrated a deepening penetration of e-commerce, and our ability to capture the significant growth opportunities.
E Commerce, adjusted EBITDA loss was $684 million.
As we continued our investment to fully capture the opportunities in our markets.
We remain committed to continue investing in a prudent and sustainable manner and growing the ecosystem to serve our users better.
Digital financial services GAAP revenue was $132 million.
An increase of 818% year on year from $14 4 million in the third quarter of 2020.
The growth was primarily due to the increasing traction as we continue to expand our suite of service offerings.
Adjusted EBITDA loss was $159 million.
Compared to a loss of $149 million in the same period of two southern in 'twenty.
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 $13 million in the third quarter of 2021 compared to a net nonoperating loss of $74 million in the third quarter of 2020 are non operating loss in the third quarter of 2021 was primarily due to interest expenses our convertible note.
Partially offset by foreign exchange gains.
We had a net income tax expenses of $101 million in the third quarter of 2021, which was primarily due to corporate income tax and withholding tax recognized in our digital entertainment business.
As a result net loss excluding share based compensation was $448 million in the third quarter of 2021 as compared to $346 million for the same period in 2020.
With that let me turn the call agenda Andrew Thank.
Thank you for it and Tony.
Today I have Tony and yes, you are now ready to open the call for questions.
Later.
Yeah.
Thank you and we will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
And 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 to join the question queue again.
After your first questions have been addressed.
At this time, we will pause momentarily to assemble our roster.
Okay.
Our first question today will come from Alicia Yap of Citigroup. Please go ahead.
Hi.
Good evening management, Thanks for taking my questions. Congrats on the solid results two questions here.
I guess.
As mentioned on Sharpie entering <unk>.
For example, Portland.
And also more country netcom.
What is the target you wanted to achieve.
Especially from the European countries, what kind of Kpis that you will monetize SaaS that your program.
You know well achieve.
Potentially to evaluate that's more and then second question. Please.
Yeah.
The free fire quarterly.
Ah patient of active users.
Slow down to things like that.
While these such as more or less saturated penetration of food three times your Tam.
Or would that be a room for flood the accident the radar.
New games launched.
More new content arguably indefinitely.
Any color you could share would be appreciated. Thank you.
Thank you Chad.
So in terms of the e-commerce expansion.
<unk> also got specimen summer on our markets, our existing market in southeast Asia, Taiwan, as well as a new market growth market in Brazil, where we have.
Thanks, Tom persons.
So we made of course from time to time test the waters in your markets in other parts of the world given our past experience operating.
Many different markets, including seven highly diverse market in southeast Asia, and Taiwan, and Brazil also the different market from these other markets in Asia. We believe that we have gained a deep operational experience in operating a deferral.
Markets as well as understanding of our business model, focusing on mobile native and social Commerce, Japan.
Long tail highly diverse.
Category.
So, especially the local sellers and buyers.
<unk> be underserved in their existing markets. However of course, we are.
We remain very humble being published at.
One of our core values impact and yet you're constantly tell ourselves that we need to carefully evaluate all of these market opportunities as we learn.
At the same time.
<unk> developed a localized and tailor a solution for each market shall we wouldn't make any assumptions we believe that.
Hopefully I'll entrants could add value.
A link to the markets and see.
See potential new growth areas that could also.
And not the local e-commerce costs together with our peers.
We haven't set any fixed to keep your eye.
It's still a very nascent exploratory.
And we are optimistic our sharpie and long term growth because we believe there is.
Global needs, it's a lot of demand for our business model is servicing the small business sellers as well as on yourself to consumers to our model.
Okay.
In terms of the.
See fire well.
Of course, we have enjoyed a very strong growth in FIFA 18, one of the largest mobile games.
Passing history, so far in general we continue to see strong user base in fact, yet well we look at it.
Metrics across the board they have improved not only year on year, but also a quarter on quarter.
Very tough comps trained especially during the past periods, where most of our markets look deeply affected by Covid now.
Now as our people.
Action catch.
Catch up across the world and.
And also our community Jane lunches.
GAAP killed the situations I.
I think there is more of a normalized debt.
Yes.
Approach now and we're looking at a.
More of a pre call Nick back to more of a pre COVID-19 environment in terms of that the team operations.
However, our user growth continue to.
To sustain itself.
Especially in the newer markets that we have been changed.
So going forward, we're looking to sustain our existing strong user base.
Existing markets and explore new growth opportunities in markets that we havent deeply penetrated.
Especially with the launch of FIFA maps, and jet and new features including.
Tools for user generated content.
Aircraft Lance and Cam.
Sure we might introduce features when they introduced to the game in the future Lustbader focused on building out our strong IP and platforms now with more than 700 million quarterly active users and <unk>, we believe that this test.
The platform itself.
Can be further enhanced to really include moored modes more features a different weight of entertainment and socializing our user community.
Well as introducing more online offline collaboration with IP, including fashion week that forest just mentioned.
To further build out this IP as well as a platform and to maximizing our long term potential of the fire and we will continue to.
A question on that as well as our continued to build out a.
A pipeline with more diversified genres.
Alex talked about the pipeline as well as publishing as well as our investment.
Our pipeline so that's been going to be our focus in the near term to longer term.
Do you just see a long term potential for the game.
Our next question today will come from <unk> Choudhary of HSBC. Please go ahead.
Yeah, Hi, good evening to the entire management team congratulations.
And thanks for the opportunity two questions for me.
Firstly refi Max was launched in late September So could you give us some insights on user engagement, how is that option and time spend how different is it from pre fire and how does it impact your 2022 outlook.
Second question is on the fee capital could.
Could you give us an update how much of initial $1 billion capital is already deployed and there was a media room around investment in <unk> is that correct and if yes, then what's the strategic rationale for the same thank you.
<unk>.
Thank you Paresh in terms of the C five Max.
It's still early stage, we already see some encouraging signs when they all expectation of that deeper engagement with our users.
Have a higher ASP that phones again.
That can enjoy a higher resolution pictures.
Features et cetera, but very importantly, we make sure.
Our proprietary technology fully integrates free fire and fat mass so that our users playing pulse durations can play together in the same game and also user can't use the statement capsule logging to the dose escalations.
And also with increased IMAX and we have introduced them set features such as a cross link which allows people to add map and customize it and make it available for other uses and this is our.
Initial attempts in creating more user generation toward your generation content tools for our community engagement.
And just bringing more creativity pharma community into the game itself.
So I think there are a lot of exciting developments that are to be rolled out that you can take that.
<unk>.
And that's why I think the fire. So we are very much looking forward to.
You know the first quarter and a half to continue to grow this game.
In terms of our seed capital.
Well, we don't give specific disclose investment amounts.
It's important to focus on supporting our ecosystem as well as innovations as a condition of not just.
Just see but also the different arms, including seed capital well well.
Team will continue to as we mentioned before the team is to focus on.
I supported innovations supporting.
Founding teams and for our.
Providing better services and enabling our communities through technology. There are generally aligned with our mission to serve our communities with technology and 14 investments.
Out of that effort as well.
Our next question will come from Piyush.
About <unk> of Goldman Sachs. Please go ahead.
Thank you for taking my question.
Talk about normalization post Covid could you take us through the B range of possible outcomes as we come out of Covid.
Given your footprint across gaming and e-commerce, it's slightly confusing if I look through the e-commerce businesses that you're in and in those jurisdictions, it's likely to be an economic boost that you will see which in theory should be great for ecommerce companies E Commerce footprint.
And when I look at it on the gaming side, yeah, well, there will be greater degrees of affordability and that does have repercussions for what you're paying ratios could be but I can understand in markets like the U S. It would have a different impact. So if you could take us through what you think the post Covid world could look like for you.
Like normal number we should be looking at.
I'd be grateful that's my first question and my second question again, a big picture question, you talked initially about helping merchant build out and leverage the platform to go.
Across the world.
Could you take us through where you think that process is and the buildup of the merchant base in countries like Indonesia, compared to where the cycle that we've seen in China.
And give us a feel for what innings, we're in baseball context. Thank you.
Thank you Piyush in terms of the Covey I think were already living in a more normalized that time and I believe the Q3 results partly reflect that.
In fact, so we continue to see.
John calls.
Commerce sites across various markets now we discussed it before Gerry I believe a few quarters earlier when Covid hit there are different scenarios. One is on the one hand, there is tailwind.
Tailwind coming from social distancing rules, where people relying more on online shopping.
To fulfill their consumption needs.
Because of social distancing rules as well as for safety measure.
On the other.
In the longer run there is a significant impact on.
Economies, there could be a downward pressure on overall consumption that could also affect e-commerce industry as a whole and how much of that impact might be.
That's up by us individually and remain to be seen now.
Looking at our current trends and results we believe that.
On the one hand the step.
Step up in digitalization in our market.
For me of user behavior.
To shop online and also sell things online.
After especially the small businesses and even the brands.
Our permanent are here to stay and Meanwhile, we haven't seen any particular economies b, so deeply permanently impacted by COVID-19.
There is a clear.
Clearly our impact on consumption and at least from our perspective that you know as a market leader.
We continue to grow.
Our market leadership, especially in our markets, which are generally high growth markets with low e-commerce penetration.
Continue to see long term growth potential.
So that prompted we're quite optimistic about the long term growth potential of E Commerce of course.
The stage, one and two young.
Year comparison.
It's entirely possible E Commerce company I think Xiaomi has done.
Our teams have done a great job in continuing to grow at a triple digit rates for so many quarters.
And that was a lot of efforts and.
We also applaud our astellas, our communities and their efforts in working with us and that actually leads to.
The second question on the how equal our merchant base.
To help them grow more.
Our collection.
Especially as we focus on more on the small business sellers they need more handholding and also.
Hello.
Managing that business.
We started with a very basic.
Towards teaching them, how to take a picture of their products to be nicely to be sold on 900 described the product accurately to be taken up by the right keyword searches.
All the way to how to manage inventory auto mass marketing to maximize.
How to manage accounts and finance Sylvia.
So we have all levels of classes.
For all merchants as well as so many shopping centers.
Set up everywhere that we can.
Help them with tools and develop the online tools and mobile tools game features social features.
As many ways as we can to reach them very deeply to help them manage their sales and of course on that.
From a platform perspective, we also offer integrated payment and logistic services to make things much easier for them now our international.
Potential we have been very focused on helping our Indonesia by chance to also globally and sell their products and that.
That are in demand.
For example, do you see.
Our international programs that their products can be mapped easily too.
Different markets.
You I without them, having to 11 different languages and do a lot of tweaking and that's done through our in house technology.
Their main tools, we have developed to help them by making this as smooth as possible on the game side I think as I mentioned.
Post Covid normalization as you can see we have a more of a stable user base.
However, even against a very tough comps, we see improvements yeah, yeah in Q.
Pretty much across all metrics. So I think that has already shown a great achievement by our team.
Never in the longer run we continue to see growth opportunities both increased fire itself with new features new mode.
Collaborations and new IP and be introduced into it as well as our further growing in game pipeline.
After that men publishing and investment partnerships. So we are very positive on the outlook as well.
And our next question today will come from veneer Gopal Gari of Bernstein. Please go ahead.
Hi, good evening, everyone and thanks for the opportunity.
My first question is again on the expansion the new geography.
But given that we've seen a number of countries.
Last couple of months as we've done in terms of the countries that we wanted to do in terms of global expansion.
Secondly, when we sort of absorb the.
This campaign centered post the launch we haven't really seen any.
Aged activities at all whether you're using social.
So it shouldn't media just like when we didn't like it.
Good evening.
Julien for losses.
So wanted to understand how are you approaching b, one with a single tenant, but you know what.
Externally, we kept things incrementally, which pulled a pause a bit on the cost specifically ecommerce business as well as equal forward. So that's the first question.
One is on the line.
The press release itself you mentioned.
<unk> Oh on the cost side pretty commerce logistics is one of the reasons for doing things as well.
I wanted to understand from a sustainability perspective is it more driven by new freight rate increases.
Globally.
Actually with the largest cross border. Unfortunately.
Given our geographic expansion.
Or is it more driven by the value, but at least it gives you you are leaving us well, which of course all of that comes to the take rate.
Thanks.
Okay. Thank you.
E Commerce.
<unk>.
So regarding the global expansion I think as we mentioned.
We may test waters from time to time.
So I think it's just too early to focus on those.
Those markets and Theres not much fun to report on if we open a new market I'm sure.
People will hear about it in the markets are otherwise.
So I think theres not much to report on at this point I'm not.
If I understand correctly, you're asking whether we have been employing social media tools like Instagram to promote our E. Commerce platform is that the question.
Rather the question is if we haven't released really didn't meet your brand advertising.
Testers are.
And.
Oh, you know in the geography, what we're actually seeing deploying social media. So we have seen we are seeing in spend around for example, you had a lot of folks out there, but we don't do anything too meaningful lewisville for some of these oh look at social media and Instagram feeds and stuff like that.
So wanted to understand you know.
From a cost structure point of view at what stage will you have to kick start failing.
Basically they use it arena because geographies like India. They do large so we would have to at some stage you allocate some amount of of course towards that.
Yeah, I think that.
India is still very very early stage.
So you know we haven't.
Really focused on a widespread campaign nationwide.
But if you look at our other markets. We believe that we are very well followed on social media.
And Vietnam, Southeast Asia, and Latam markets, especially for the newer market again I wanted to read too much into the current operations on numbers, because it's really at a very nascent stage.
In terms of logistics and cross border logistics.
We as usual we continue to partner with the.
Third party logistic service providers to serve our sellers and our buyers communities most of our buyers and sellers in fact are primarily local sellers.
Some muscle countries.
Connecting with locals with Pls to make sure. The process is smooth and the delivery is timely and reliable for our users and also the cost can overtime go down and due to efficiency and improvement of our operations and deeper connections integration with our platform. So this app.
It's not been a changing our overall strategy, while we do have a shopping express last mile delivery services in the market as a supplement to three P. L. A capacity we continue to view it as a holistic from a holistic perspective.
You'll see how overall logistic experience has been for our sellers and buyers whenever we need to ramp up more of our own chassis express delivery or we can.
Relying more on the three pls so on that probably a very open minded and adopt a highly pragmatic approach on this.
Our next question will come from Ranjan Sharma of Jpmorgan. Please go ahead.
Hi, good evening and thank you for the call.
Two questions from my side, Firstly on the gaming side, you have no change to guidance.
And based on their nine months results, indicating that the gaming portfolio is going to be solved.
Declining in the fourth quarter.
Despite the launch of FIFA Max.
Is there any trends that are making this way or could there be some upside.
The rest of the guidance from the.
The second question is on the ecommerce basket size it seems to be trending down.
Could you help us understand what's driving that.
That could be turned around as well thank you.
Yeah. Thank you Brandon regarding the game site as I mentioned.
We are continuing to build our <unk> franchise as we find Max we see as a user engagement to deepen.
With our user engagement with you the committee's offer more features and possibilities for users, especially those with a felt about having higher specs that Ken.
More high resolution maps and features so this is not for us.
Especially at this stage a revenue driver.
We believe our game guidance given at the beginning of the year has been a very strong.
The guidance in terms of monetization.
The comp versus last year and.
And the overall size of the portfolio, we have already achieved.
Getting app so rapidly over the course of a few years.
So I think it's very important for us to also focus on solidifying our user base and our game content pipeline capabilities.
Capabilities to focus on long term growth and long term maximization of the potential of the <unk> platform and IP as well as the diversification of our sureness across Oh.
Further.
<unk> strongest spectrum.
In terms of our ecommerce L D.
I think it's been certainly trending downwards, partly also because of that.
Trends of a new market where.
We tend to be the basket size might be smaller with a new market mix and overall I think it'll be has been relatively stable at a high single low double digit range.
Sometimes you can fluctuate because of her shopping seasons or seasonal seasonality of the category mixes. So overall I think as being quite stable. So the ELV mix, it's not our over overall aon. The size is not a target for us we don't have a P. P. I G.
Say that we must drive up it'll be what it'll be is it the right niche for us depends.
The markets that we have and our understanding of what uses in those market needs and what categories. So that gives us best.
And also it might evolve over time as we focus on user close so.
That's bumps I don't think it's necessarily having a higher <unk>.
<unk> strategy, while e-commerce platform.
And she can learn at the singularity.
We could have a negative impact on the health and the long term profitability of the E Commerce platform.
This concludes our question and answer session.
Like to turn the conference back over to MS. Zhu song for any closing remarks.
Thank you and thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Thank you.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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