Technology firm Sea Ltd missed estimates for second-quarter revenue on Tuesday, as consumers held back spending on Internet and discretionary services, sending its U.S.-listed shares down 12% in trading before the bell.
Tepid spending amid a challenging macroeconomic outlook pressured Sea’s e-commerce business Shopee and caused a steep decline in its mobile gaming business.
After a meteoric run in 2020 and part of 2021, with multiple quarters of triple-digital revenue increases, Sea’s growth tapered as the pandemic-fueled boom in e-commerce and digital entertainment waned.
Southeast Asia’s biggest listed tech firm began an overhaul of the group last year, reducing its workforce by around 7,000 people, or about 10%, and freezing salaries as its market capitalization tumbled to less than half of its pandemic high of over $200 billion.
The overhaul, which included exiting India, Europe and some Latin American markets, helped the company achieve its first-ever quarterly net profit in December. Earlier this year, Shopee raised commission fees charged to sellers on its platform.
In the three months ended June 30, sales from the digital entertainment segment, which includes gaming platform Garena, fell over 41%, declining for the fifth quarter in a row. Sales from the financial services business were up over 53%.
Revenue grew over 5% from a year earlier to $3.10 billion, compared with analysts’ estimate of $3.20 billion, according to Refinitiv data.
E-commerce revenue, which contributes about two-thirds of the company’s top-line, grew about 21% to $2.1 billion from a year earlier, but missed expectations of $2.25 billion.