SINGAPORE -- Southeast Asia's most valuable listed company Sea reported on Tuesday a net loss of $422 million for the three months ended in March, widening from a net loss of $281 million in the same quarter a year ago, as the Singapore-based tech group continued aggressive marketing to capture growing demand amid the pandemic.
Sea's announcement comes a day after its regional peers Gojek and Tokopedia announced a merger that would create a big Indonesian group, which is expected to go public later. Another regional tech rival Grab also announced a U.S. listing last month, drawing attention from investors. Sea's earnings therefore will be closely watched as they will be revealing of the competitive landscape in the fast-growing Southeast Asian tech scene.
According to Sea's financial statements, the New York-listed company's revenue for the first quarter was $1.76 billion, up from $714 million a year ago, thanks to growing demand for its core e-commerce services. Revenue for its e-commerce segment soared by 250% to $922 million from a year ago, while its online gaming revenue increased 111% to $781 million, and its digital finance revenue rose nearly 400% to $51 million.
The increase in e-commerce revenue was "primarily driven by the growth in the scale of our e-commerce marketplace, and increase in each of its revenue streams, including transaction-based fees, value-added services, and advertising," the company said in a statement.
"We believe that e-commerce penetration remains low across all our markets, in spite of the step change in digitalization since the onset of the pandemic," Chairman and CEO Forrest Li said in a teleconference, suggesting that the company will seek further growth in this sector.
Rapid growth of e-commerce and digital financial services also means the company spent more on marketing. The company's total operating expenses more than doubled to $993 million in the quarter, reflecting stiff competition with other digital services providers.
Sea's current businesses include online gaming, e-commerce, food delivery and digital payment. As the company expands, it competes more with Southeast Asian tech unicorns. In Indonesia, Sea's Shopee and Tokopedia are the two largest e-commerce platforms. It has also launched food delivery in Indonesia in a challenge to Gojek and Grab. In Singapore, both Sea and Grab are expected to launch a digital bank as early as next year.
With Grab planning to go public by September and the merged entity of Gojek and Tokopedia, or GoTo, expected to follow, more investors participating in the U.S. stock market will be exposed to the relatively young Southeast Asian digital economy, which is expected to grow threefold over five years through 2025. The prolonged COVID-19 pandemic could further accelerate the digitalization of the region.
Yanjun Wang, Sea's chief corporate officer, commented on the Gojek-Tokopedia merger. "We think we stand in the best position to recapitalize opportunity to build the largest internet ecosystem in this region," she said, noting that Sea has "three of the largest consumer internet opportunities" -- online gaming, e-commerce and financial services.
Investors' expectations for Southeast Asian tech companies are high and their profitability will be closely watched as competition heats up. Sea and Grab reported a huge net loss of $1.6 billion and $2.7 billion, respectively, last year. Sea's performance in the first quarter suggests that it would be a while before the company reaches profitability given intensifying competition.
One of Sea's edges over its rivals is its online gaming business, which has already turned a corner and reported an operating profit of $431 million for the first quarter of 2021. Unlike Grab and Gojek that remain focused on Southeast Asian markets, Sea has entered Latin America, where it has launched the e-commerce platform in Brazil and Mexico, seeking further growth.