What happened
Shares of Sea Limited (SE 4.08%) climbed by 17.5% in November, according to data provided by S&P Global Market Intelligence.
Despite the rise, the Singaporean e-commerce company's share price is still down by 74% year to date.
Image source: Getty Images.
So what
Sea Limited's revenue for its third quarter came in at $3.2 billion, up 17.4% year over year. Its gross profit jumped by 21.7% year over year to $1.2 billion, but net loss remained fairly constant at $569.3 million. For the first nine months of 2022, revenue climbed 33.6% year over year to $9 billion, but net loss ballooned by 45.4% year over year to $2.1 billion. Operating cash flow for that period also turned negative, clocking in at $1.38 billion versus a positive operating cash inflow of $513.4 million the year before.
Despite the weaker results, investors are probably feeling optimistic about what Forrest Li, Sea Limited's CEO, said in the earnings announcement. He said that the company is now shifting its focus from growth to achieving profitability as soon as possible, rather than relying on external funding such as debt and equity.
This pivot should be good news to investors and comes at a crucial time. Sea's digital entertainment division continues to report lower quarterly active users with an 8% quarter-over-quarter decline to 568.2 million. Quarterly active users are now 22.1% lower year over year while bookings have plunged 45.5% year over year to $664.7 million.
Now what
There's still some good news, though. Gross orders for its e-commerce division, Shopee, rose 19% year over year to 2 billion, while gross merchandise value increased by 14% year over year to $19.1 billion and was slightly ahead of the second quarter's $19 billion.
Sea Limited's resolve to achieve profitability has also led to three rounds of job cuts at Shopee, with the latest being that of around 100 staff in the middle of last month. In total, the company has laid off around 7,000 jobs in the past six months as part of its plans to reduce expenses and deal with a sharp slowdown. It may take some time before Sea Limited can generate profits, but it seems to be heading in the right direction for now.
