This weekly newsletter chronicles top digital themes and trends playing out in SE Asia, especially Indonesia. We will decode policy and regulatory changes affecting digital economy sectors, crunch earnings data of top players, track developments related to gig economy workers and attempt to piece together ecosystem buildouts in some of the fastest-growing, venture-backed plays. You can access the previous editions of the Vantage Point weekly posts here.
- Sea Ltd: Wild swings by design
- P2P lending restrictions reflect a dilemma
- TikTok’s return may be slow and painful
- SCG Decor IPO likely to see good response
Sea Ltd: Wild swings by design
Sea Ltd saw its Q3 2023 results swing back to a loss after turning on the investment tap at Shopee, with a focus on live streaming during the quarter in the face of intensified competition, mainly from TikTok Shop.
This threat has somewhat diminished after TikTok’s exit from Indonesia, which may not be permanent. If it does come back, it is likely to be less of a threat in the near term given the scrutiny it will receive.
Tokopedia has also pointed toward investing more in growth, which may present another pressure point in Q4 2023, although its category focus is less sensitive for Shopee.
Sea Ltd increased its sales and marketing expenses by 12.4% YoY, driven by 49.7% YoY growth in such expenses for e-commerce, while digital entertainment fell 59.2% YoY and digital financial services dropped 80.8% YoY.
From a sequential perspective, sales & marketing expenses lept by 89% QoQ overall, with e-commerce rising by 99% QoQ to $861.5 million, digital entertainment dropping 7.2% QoQ to $24.7 million, and digital financial services rising 25.7% QoQ to $24.1 million.
|Sales & Marketing Expenses (Q3 2023)||% Change YoY||% Change QoQ|
|Digital Financial Services||-80.8%||+25.7%|
Last quarter, Sea Ltd had hinted that it would accelerate its investment in e-commerce to adapt to the changing environment but the degree of the increase was a surprise to the market.