+ Shopee growth re-accelerating on better monetisation. Revenue growth accelerated sequentially from 32% YoY in 4Q22 to 36% YoY. 54% YoY growth in core marketplace revenues (transaction-based fees and advertising revenue) were the main driver as monetisation improved. Indonesia, Malaysia, and Thailand were the best performing regions, with Shopee Brazil breakeven in sight. Operating margin increased sequentially by 40bps to 5.6%, with operating income improving by ~US$915mn YoY due to a -52% reduction in marketing spend.
+ Expenses continued to decline, contributing to sustained profitability. Operating expenses were down -23% YoY, led by a drop in marketing spend of -60% YoY (US$605mn), offset with a ~US$100mn YoY increase in loan provisions. SE had its 2nd straight quarter of net profit (US$87mn). Operating expenses are expected to continue declining given the company’s focus on cost optimization and profitability.
– Topline growth declining sequentially, dragged by Garena. YoY revenue growth for 1Q23 was 4.9%, down sequentially from 7.1% in 4Q22. Overall growth was hurt by a -53% decline in gaming revenue, with bookings down -44% YoY. The quarterly paying user (QPU) ratio was also down 2.3% to 7.7% (1Q22: 10.0%) as Garena continued to see weakening user trends. Garena revenue represented 31% of total revenue in FY22, but only 16% in 1Q23.
Gross Merchandise Value (GMV): total value of merchandise sold over a given period on Shopee.
Quarterly Paying User (QPU) Ratio: ratio of the average number of QPU in a quarter vs the average quarterly active users (QAU).