Sea has released its second-quarter results again. It seems to be steadily improving. The company may give up high growth in the short term.
📌 Look at the overall situation
The entire group's revenue is 29% YoY: It continues to slow down, and EBITDA is basically flat QoQ (personally, it is a good sign). Next, analyze it sector by sector.
All indicators continue to decline, from daily life-revenue-cost-marketing expenses-EBITDA are all declining, and the entire sector is shrinking. This is also in line with the game life cycle of Sea's freeware, and it is time to come to an end.After all, FF accounts for basically all of Sea's game revenue (Sea never mentioned it, but it definitely exceeds 85%).Before the next game explosion, the entire sector may continue to shrink, which is unattainable.Personally, I think that if there is no game explosion in the future of sea, it will really go in the direction of Ali (e-commerce +payment). Tencent's shadow will become less and less.
📌 Highlight: E-commerce
Although the earnings report still shows a slowdown in growth, I personally see some signs of management's direction and improvement.
1. With the global economy in such a difficult situation in the second quarter, compared with the first quarter, it did not fall but rose. This is still the case with so many markets closed. Sea has the strength to stabilize the existing market and increase its penetration rate.
2. While stabilizing the existing market, the marketing cost ratio of GMV continues to maintain a downward trend, and the user stickiness has become better. Shopee probably also hopes to get rid of the way of retaining customers by spreading coupons, and more hope that everyone will get used to using shopee.
3. Revenue/GMV continued to rise, and shopee's ability to circle money steadily increased.From this, it can be seen that the direction of management has gradually changed from spreading money to grab the market to monetizing from the existing market.
Summary: The efficiency of the sector has improved, and more profits have been maintained with less expenditure.At present, in a state of high uncertainty in the global economy and continuous increase in financing costs, management must also save money and reduce rash expansion. This is why so many new markets have been closed this year (money really can't be burned so fast).Instead, improve the quality of the existing market, reduce expenses, increase the margin rate, first monetize the existing market, and then use the earned money to support the new market.Everyone may have forgotten that sea issued so many debts before, or convertible notes (now that the stock price has become like this, it is estimated that no one wants to ask for shares, so they are also under pressure to repay the money).
The speed of consuming cash has decreased, mainly because while the game's monetization ability has deteriorated, the speed of e-commerce burning money has also slowed down.The management pays more attention to the profitability of e-commerce, reduces marketing, increases the margin rate and increases monetization.
📌 The future of the sea
DFS is still very small, the game continues to shrink, and new businesses such as bank insurance will take time.The expansion slows down and improves the efficiency of existing market operations.At least at this stage, Sea is being forced to shift from a growth company to a mature and stable company (let's make money first).After that, if market conditions improve, the path of expansion may continue.