Last night Asia time (16 May), Sea Group released their 2023 Q1 results. The market sentiment appears quite negative – with Sea’s share price falling by more than 17% in the first full trading day since the release – as the company missed its expectations for the first quarter.  

This contrasts the bullish sentiment following the release of its 2022 Q4 and FY earnings report.


As usual, here are some of our thoughts about the latest results: 


  1. Garena’s monetisation engine continues to slow down – a key reason for the price drop.

    In the earnings call, Sea Group CEO Forrest Li announced a couple of upcoming games, one of which is Undawn (an overseas version Tencent’s game 黎明觉醒). After being in the release pipeline for over a year, it appears that the game has undergone sufficient testing and is now finally deemed ready for a public launch.

    However, Undawn and the other games announced are just published by Garena rather than being self-developed. It seems like the focus of Garena to increase the lifespan and peripheries of Free Fire seems to be out of necessity, not choice.

  2. There is a US$117.9 million impairment of goodwill associated with a change in carrying amount of goodwill associated with prior acquisitions. The group’s previously disclosed/reported acquisitions includes Phoenix Labs (by Garena), SeaBank in Indonesia, four insurance companies (two in ID and two in PH respectively).
  3. In its Q1 2023 reports, Sea did not disclose its GMV numbers for its e-commerce arm Shopee.

    This is probably because Q1 2022 was before cost cuttings (GMV: $17.4B vs. $18.0B of Q4 2022). But if we assume the same take rate as Q4 2022, Q1 2023 GMV would probably be $18.0B, an increase of only 3.5% YoY. Perhaps the group is preparing for Q2 2022 numbers.

  4. The presence of the trio from China – Pinduoduo’s Temu, ByteDance’s TikTok Shop, and SHEIN – has definitely shaken up the (especially cross-border ecommerce) landscape in numerous markets.

    So far, TikTok Shop is the only one launched across Southeast Asia, and is reported to be aiming for a GMV target of US$12B by 2023, up from US$4.4B in 2022. SHEIN is operating in a limited number of Southeast Asian markets (excluding Indonesia, which they exited in July 2021), while Temu has yet to put Southeast Asia on their expansion map – they might.

    For more comprehensive insights on these two companies, you can refer to Momentum Works’s reports “Who is SHEIN” and “Who is Temu”.

  5. The rapid advances of the three companies above can offer a variety of valuable insights and lessons for Shopee. For example, despite a lower average item cost of less than $5, Temu is able to achieve an average basket size of above US$30.

    Although some may credit Temu’s success to its focus on the affluent North American market, Shopee is nonetheless closely observing Temu’s operating model, technology, and efficiency, likely aiming to learn and apply relevant lessons from Temu’s approach.

    At the same time, Shopee will need to prevent sellers from decamping to TikTokShop, in addition to protecting/increasing the take rate and balancing growth (with reduced acquisition spend).

  6. As we mentioned previously, we would not be surprised if Temu would move into Brazil as well.

    With the market thinking MercadoLibre is performing well, with its share prices doubling from last year’s low to be only one-third lower than historical highs (a feat amongst its peers). Many prominent players with experience in the Chinese market must be thinking – ‘such a good market and it is so obvious we could do much better than MeLi’.

    Any foreign market is NOT an easy market. Shopee’s key leadership is probably dedicating significant attention to the Brazilian market, perhaps even more so than their core market in Southeast Asia. It is a challenging undertaking in many aspects, but dedicating leadership headspace is definitely necessary.

  7. In the earnings call, the executives highlighted the improvements in Shopee’s own fulfilment infrastructure, which now caters to “95% of buyer base” in Indonesia and includes 8 distribution/sorting centres in Brazil.

    Shopee Express is also already the largest provider for Shopee in a few markets, surpassing even J&T Express. Keep a look out for our upcoming Ecommerce in Southeast Asia report for structured insights on this topic.

  8. Lastly, SeaMoney’s lending business remains stable. The loan book decreased only slightly from US$2.1 billion (Q4 2022) to US$2.0 billion (Q1 2023), and the non-performing loans past due by more than 90 days as a percentage of our total gross loans receivable remains stable at around 2%.

    In addition to the balance sheet loan book (including deposits), SeaMoney has various other funding sources, such as co-lending partnerships with major banks.Given the uncertainties surrounding the macroeconomy in the region, any consumer lending business will probably need to be cautious about growth until the situation becomes clearer. SeaMoney seems to be balancing growth and risk well in this environment.  

Overall, the past two quarters of positive net income obviously has alleviated significant concerns and pressure regarding the Group’s viability and sustainability. However,
it will probably take  2-3 quarters of solid performance for the group to fully regain investors confidence. 


Sea has been actively taking steps on various fronts to rebuild confidence as seen by the founder’s recent interview with Bloomberg to share the story behind last year’s drastic strategic shift and talk about granting a 5% pay raise to every employee. These efforts signify Sea’s commitment to regain trust and restore confidence on multiple fronts. 


We will issue a new version of Apples to Apples: Benchmarking Shopee, Grab, GoTo and other major tech platforms report once every platform company covered there has released their Q1 results. Stay tuned! 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].