Good morning and good evening. Welcome to the Sea Limited Third Quarter 2021 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ms. Min Ju Song.

Please go ahead..

Hello, everyone, and welcome to Sea's 2021 third quarter earnings conference call. I am Min Ju Song from Sea's Group Chief Corporate Officer's office.

Before we continue, I would like to remind you that we may make forward-looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release.

Also, this call includes a discussion of certain non-GAAP financial measures, such as adjusted EBITDA and net loss, excluding share-based compensation. We believe these measures can enhance our investors’ understanding of the actual cash flow of our major businesses, when used as a complement to our GAAP disclosures.

For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP numbers, please refer to the section on non-GAAP financial measures in our press release.

I have with me Sea’s Chairman and Group Chief Executive Officer, Forrest Li; Group Chief Financial Officer, Tony Hou; and Group Chief Corporate Officer, Yanjun Wang. Our management will share strategy and business updates, operating highlights and financial performance for the third quarter of 2021.

This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forrest..

Let There Be Carnage to bring Venom-themed playable content, in-game items, and collectibles to our users. We're also finding other creative ways to holistically engage with our broader community through offline experiences.

This week, Free Fire will make its debut in the fashion world at Sao Paulo Fashion Week, where 20 in-game skins will be brought to live at a fashion show. You would likely breakaways bars to connect with our users across different mediums, and to reinforce Free Fire growing infamous and the important, both online and offline among our community.

Importantly, we continued to enhance the variety of game mode using Free Fire. In the third quarter, we launched 1v1 and the 2v2 mode and have been a significant adoption, of course, in our community. Players enjoy the simplicity of this mode because they offer a more casual and a quicker game with a smaller group of friends.

We are also introducing more diverse game play options within Free Fire [Indiscernible], such as the recently launched Garena. This mode enables users to compete against their friends or other members of the community in various fast-paced casual games.

Another highlight of the quarter was the global celebration around [Indiscernible] fourth anniversary. Among other activities to celebrate this milestone with our community, we worked with global artists to produce a theme song, which has been streamed over 60 million times across various online platforms to-date.

At the end of the third quarter, we introduced the [Indiscernible] max globally to a very strong reception from our community. Free Fire MAX offers an enhanced to Free Fire experience through a higher-quality effects, animations, graphics, and features but retaining the same great game play.

Because we are committed to empowering users everywhere we'll work hard to ensure that players of both Free Fire and the Free Fire MAX complete together seamlessly. To make that possible, we developed proprietary in-house technology to guarantee complete integration between both Free Fire and Free Fire MAX.

This also allows existing users of Free Fire to use the same account of Free Fire MAX and think account data across both apps, with access to all game modes. With Free Fire MAX, we have also incorporated a map editor feature called Craftland.

Players can create their own unique maps and invite their friends to join them in playing within these custom maps. This enables us to tap into the creative power of our community. They have always been the source of our inspiration for the game. And now they have an opportunity to create their own experiences within the game.

It is also a powerful new way for friends to enjoy the game in the space that they have created together, which adds a new and a deeper dimension to our community-building efforts.

While still early, Free Fire MAX will be an important component of the Free Fire platform by continuing to drive more engagement and experiences across our large and diverse user base. The positive community reception to this initiative is reflected in the strong engagement across our markets.

According to App Annie, Free Fire was ranked 2nd globally by average monthly active users for all mobile games on Google Play in the third quarter. Free Fire also continued to be the highest grossing mobile game in Southeast Asia, Latin America, and India.

It has maintained this leading position in Southeast Asia and Latin America for 9 consecutive quarters and in India for 4 consecutive quarters. In the U.S. Free Fire remains the highest grossing mobile battle royal game for the third consecutive quarter.

And it was the second largest grossing mobile game on Google Play across all game categories during the quarter. Given Free Fire's growing global popularity, we see significant opportunities to provide our community with many ways to enjoying Free Fire platform and we continue to invest in building toward a long-lasting global franchise.

We are looking forward to a busy calendar of eSports event towards the end of the year. Free Fire will be hosting the Free Fire Asia Championship and the Free Fire EMEA [Indiscernible] at the end of this month. Additionally, the Reign of Veller international championship will be held in the coming weeks.

We believe these exciting lines up of eSports tournament will further drive the engagement of all our community. We are also very focused on growing our global reach and building against pipeline that insures we can capture the most promising and valuable long-term toward the online games.

Our growing global presence across diverse high-growth markets gives us important local insight and a strong local operational capability. And our in-house development team is tapping into this as they work on both existing games and new ideas.

Moreover, given our proven global track record, we have received more interest from Studios Team to build strategic relationships with us. At such, our pace of investment is and the partnerships, with Game Studios worldwide had stood up. Now, moving to e-commerce.

Shopee continues to grow much more quickly than the overall market as we deliver ever greater value to our sellers and buyers. In the third quarter Shopee, recorded GAAP revenue growth of 134 % from last year to reach $1.5 billion. It also recorded gross orders of $1.7 billion, up 123 % year-on-year.

This is the nice consecutive quarter of triple-digit year-on-year order growth for Shopee. Shopee's GMV was $16.8 billion, an increase of 81 % since last year. With monetization continuing to improve, GAAP revenue as a percentage of total GMV rose to 8.6% from 6.7% in the third quarter of 2020.

The stronger monetization was driven by growth across our revenue streams, including value-added services, transaction-based fees, and advertising revenue. In view of Shopee's performance, we are again raising our full-year 2021 e-commerce guidance. We now expect e-commerce GAAP revenue to be between $5.0 billion and $5.2.

Representing over 135 % growth from 2020 at the midpoint of the revised guidance. Our previous e-commerce GAAP revenue guidance was between $4.7 billion and $4.9 billion. As with Garena, Shopee's focused on deepening engagement with our users is a winning strategy. We are helping sellers to be more competitive.

For example, we have load out more features, tools, and services to help them build engagement with their customers and grow their business. We recently launched a Seller Mission, an incentive program that rewards sellers with privilege as they complete certain tasks.

The program gamified the experience of sellers as it guides them through features and tools on Shopee they can use to become better sellers. We also introduced the tools like leasing optimizer, which help sellers identify leasing that can be improved and how to improve them.

These initiatives help sellers grow on the Shopee platform and it create better experiences for our buyers too. We also recently celebrated the first anniversary of Shopee premium, a delicate base on Shopee for select brand partners in the luxury segment. Since launch, we have doubled the number of Shopee premium brand.

Through a more immersive shopping experience, Shopee premium helps brand share their story and build deeper personalized relationships with buyers. And for our buyers, we've continued to grow out captivating content and activities such as our hugely popular double date sales.

Last week, Shopee had a fantastic double 11 shopping festival with widespread success. It was especially heartening to see uplift in participation from consumers in the rural and the smaller towns as they enjoy the convenience of and the wide assortment on Shopee.

Additionally, our new local sellers also benefited through a substantial increase in sales during the festival period. These shopping festivals showcase the numerous ways in which we serve and engage with our community, and its success exemplifies Shopee's strengthening position as the go-to marketplace for our consumers.

Our focus on engagement and adding value for our community is the key factor in our systems strong user metrics. According to F&E, globally on Google Play, Shopee ranked 1st in the shopping category by total time spending app. And the second by download an average monthly active user in the third quarter.

Shopee also continues to be the top rent app in the shopping category, in both Southeast Asia and Taiwan by average monthly active users, and the total time spending app during the quarter. Shopee was the leading app, across the same metrics in Indonesia where we recorded another quarter of triple-digit year-on-year order growth.

Shopee also continued to make good progress in Brazil. In the third quarter, it was once again ranked first by download and the total time spending app. And second by average monthly active users for the shopping category according to F&E. annuals.

While Brazil is still a young market for us, our local team are focused on better understanding our growing community of local buyers and sellers, and improving the experience we offer to them. We believe that our deepening engagement with the local community is a promising sign of this market's long-term potential for Shopee.

Shopee's total and adjusted EBITDA loss per order across all markets was $0.41 in the third quarter. As we have said previously, we're committed to investing efficiently and growing in a sustainable manner, across all our markets at Shopee [Indiscernible].

And with that in mind, we are pleased to note that the adjusted EBITDA loss per order improved both on a year-on-year and the quarter-on-quarter basis in Southeast Asia and the Taiwan combined, as well as in Shopee's other markets combined.

Looking ahead, we are prudently and efficiently exploring how to maximize our largest addressable opportunities given our growing market position. In the recent months, we launched Shopee in Poland, France, Spain and India.

From time-to-time, we may test waters in new markets where we believe there may be an opportunity to use our experience in highly diverse environment, to reach underserved buyers and sellers.

On the one hand, our core focus remains managing our efficient and sustainable growth in Southeast Asia, Thailand, and Brazil, where we have established and are continuing to grow our strong presents, serving local sellers to the buyers.

On the other hand, the opportunities to become addressed so efficiently leveraging the Shopee platform in existing markets and expanding into new markets have been crazy. We will continue to exercise prudence and maintain flexibility as we pursue the significant growth opportunities with accelerating investments.

Turning to our [Indiscernible] financial services business. The money recorded excellent results in the third quarter. The total payment volume on our Mobile wallet’s services grew by a 111% year-on-year to $4.6 billion. Quarterly paying users of our mobile wallet sources increased to over 39 million, up 120 % year-on-year.

One of our key areas of focus is expanding the number of used cases for our mobile wallet so that we can serve more businesses and add greater value for our users.

In the recent months, we partnered with more online and offline merchants such as Google Play in Malaysia, Blue Bird taxi in Indonesia, Family Mart in Thailand, and the Locate (ph) Cinemart in Vietnam. As we grow the number of use cases, we are naturally seeing an increase in consumer adoption of our mobile wallet.

As more people grow to appreciate the ease and the convenience that our platform offers. And as our user base grows, we see growing interest from merchants wanting to work with them, creating a positive flywheel effect that we believe will drive increasingly efficient growth for SeaMoney.

Besides our mobile wallet business, we have launched early initiatives in other digital financial services, such as buy-now-pay-later, digital bank, and the insurtech. These products are still in the early development phase and we are currently focused on strengthening our models and operations.

In line with our mission to serve the underserved segment in our market, we intend to loan out more of these digital financial products in a thoughtful manner, with our customary focus on long-term sustainable growth. We are excited about significant long-term growth potential of the opportunity that SeaMoney addresses.

And we believe we are well-positioned to serve this opportunity by building on our strong technology core, and our unique insights, and the relationship with consumers and the businesses across our markets. Last but not least, I'm very pleased to announce [Indiscernible] appointment as Chief Group President, effective from January 1, 2022.

Chris is an exceptional leader who has delivered outstanding results for Sea and the deeply involving our core values.

Sea together with the rest of the leadership team and our hugely talented Sea team have not only driven our business forward, but also significantly furthered this mission to better the lives of consumers and small businesses with technology.

Going forward, Chris will continue to directly report to me and operate our Shopee and the SeaMoney businesses. In addition, as Group President, Chris will work closely with me and the rest of the group leadership team on our long-term strategic initiative with an increasing focus on synergy creation across our various businesses.

In closing, our fourth core value at Sea is We Serve, and this continues to inform everything we do. We believe that technology holds the greatest potential to improve people's lives, and we believe that in the current environment, our commitment to serving the unmet needs of our communities through technology has never been more important.

In the quarters ahead, we will continue to focus on connecting communities, enabling consumers, and empowering small businesses so that more people can benefit from the growth of the digital economy. With that, I will invite Tony to discuss our financials..

Thank you, Forrest. And thanks to everyone for joining the call. We have included detailed financial schedules together with the corresponding management analysis in today's press release and Forrest has discussed some of our financial highlights. So, I will focus my comments on the other relevant metrics.

For Sea overall, total GAAP revenue increased 122 % year-on-year to $2.7 billion. This was mainly driven by growth in the scale of our e-commerce business as we continue to deepen the engagement with our users as well as the growth of digital entertainment business; especially ourselves develop in Free Fire.

Digital entertainment bookings grew 29 % year-on-year to $1.2 billion. GAAP revenue was up 93 % year-on-year to $1.1 billion. The growth was primarily driven by the increase of our active user base and deepened paying user penetration as we continue to engage the community through quality content and immersive experiences.

Digital entertainment adjusted EBITDA was $715 million. This represents year-on-year growth of 22 % and it was manageable by top-line growth. On e-commerce, our third quarter GAAP revenue of $1.5 million included GAAP marketplace revenue of $1.2 billion up 151 % year-on-year and GAAP product revenue of $0.3 billion up 82 % year-on-year.

The strong results demonstrated the deepening penetration of e-commerce, and our ability to capture the significant growth opportunities. E-commerce adjusted EBITDA loss was $684 million as we continue on our investment to fully capture the opportunities in our markets.

We remain committed to continue investing in a prudent and a sustainable manner and growing the ecosystem to serve our users better. Digital financial services, GAAP revenue was $132 million, an increase of 818 % year-on-year from $14.4 million in the third quarter of 2020.

The growth was primarily due to increasing traction as we continue to expand our suite of service offerings. Adjusted EBITDA loss was $159 million compared to a loss of $149 million in the same period of 2020. This was primarily due to our continued efforts to drive more audit adoption.

Returning to our consolidated numbers, we recognized a net non-operating loss of $13 million in the third quarter of 2021 compared to a net non-operating loss of $74 million in the third quarter of 2020.

Our non-operating loss in the third quarter of 2021 was primarily due to interest expenses on our convertible notes, partially offset by foreign exchange gains.

We had net income tax expenses of $101 million in the third quarter of 2021, which was primarily due to corporate income tax and withholding tax recognized in our digital entertainment business. Business.

As a result, net loss excluding share-based compensation was $448 million in the third quarter of 2021, as compared to $346 million for the same period in 2020. With that, let me turn the call to Min Ju..

Thank you, Forrest and Tony. Our management team here today, Forrest, Tony, and Yanjun are now ready to open the call for questions.

Operator?.

Thank you. And we will now begin the question-and-answer session. [Operator Instructions]. Our first question today will come from Alicia Yap of Citigroup. Please go ahead..

Hi. Good evening, management. Thanks for taking my questions. Congrats on the solid results. Two questions here. First, I guess Forrest mentioned on the Shopee entering Europe, for example, Poland, and also more countries in that time.

Can you elaborate what is the target you wanted to achieve, especially from the European countries? What kind of KPI that you will monitor to assess that your progress is well achieved and potentially to evaluate to invest more? And then second question is on Free Fire.

With the Free Fire quarterly addition of active user slowed down to single-digit in the third quarter, will this suggests more or less a saturated penetration of the Free Fire user TAM? Or will there be room for further reaccelerated with more new games launch and more new content launch within the Free Fire? So, any color you could share would be appreciated.

Thank you..

a, sustain our existing strong user base in the existing markets and explore new growth opportunities in markets that we haven't deeply penetrated, especially with the launch of Free Fire MAX and new features, including tools for user-generated content such as Craftland and other tools we might introduce and features we might introduce to the game in the future.

We're further focused on building out our strong IP and platform.

Now, with more than 700 million quarterly active users and growing, we believe that this test -- the platform itself can be further enhanced to really include more modes, more features, different ways of entertainment and socializing among our user communities, as well as introducing more online, offline collaboration with Ips, including the Fashion Week that Forrest just mentioned to further build out this IP as well as the platform and to maximizing the long-term potential of Free Fire.

We will continue to focus on that as well as continue to build out our game pipeline with more diversified genres from our self-developed pipeline as well as publishing as well as our investment pipeline. So that's been -- going to be our focus in the near to longer-term. We continue to see long-term potential for the game..

Our next question today will come from Piyush Choudhary of HSBC. Please go ahead..

Yes. Hi. Good evening to the entire management team. Congratulations and thanks for the opportunity. Two questions from me. Firstly, Free Fire MAX was launched in late September.

So, could you give us some insights on user engagement? How is that option in time spent, how different is it from Free Fire, and how does it impact your 2022 outlook? Second question is on the Sea capital.

Could you give us an update how much of initial $1 billion capital is already deployed? And there were some media news around investment in Forte, is that correct? And if yes then what's the strategic rationale for the same? Thank you..

Thank you, Piyush. In terms of Free Fire MAX, it is still at very early stage. We already see some positive and encouraging signs within our expectation of deeper engagement with users who have higher spec phones and that can enjoy higher resolution pictures and more features, et cetera.

But very importantly, we make sure using our proprietary technology to fully integrate Free Fire and Free Fire MAX, so that users playing both versions can play together in the same game and also, users can use the same account to log in to both versions.

And also, within Free Fire MAX, we have introduced some features such as Craftland, which allows people to edit map and customize it and make it available for other users. This is our initial attempt in creating more user generation content tools for our community engagement and bringing more creativity from our communities into the game itself.

So, I think there are a lot of exciting developments that are to be rolled out in Free Fire MAX and as well as in Free Fire. So we are very much looking forward to the fourth quarter and ahead to continue to grow this game. In terms of Sea Capital, what we -- we don't specifically disclose investment amounts.

It's important to focus on supporting our ecosystem as well as innovations as the core mission of not just Sea, but also the different arms of Sea, including Sea Capital, where the team will continue to, as we mentioned before, the theme is to focus on supporting innovation, supporting founding teams, and - who are providing better services and enabling all communities through technology that are generally aligned with our mission to serve all communities with technology, and the Forte investment is part of that effort as well..

Our next question will come from Piyush Mubayi of Goldman Sachs. Please go ahead..

Thank you for taking my question. Yanjun, you talked about normalization, post-COVID. Could you take us through the range of possible outcomes as we come out of COVID, given your footprint across gaming and e-commerce? It's slightly confusing.

If I look through the e-commerce businesses that you're in, and in those jurisdictions, it's likely to be an economic boost that you will see which in theory should be great for e-commerce Company -- your e-commerce footprint.

And when I look at it on the gaming side, while there will be greater within degree that before the ability and that does have repercussions for what you're paying ratios could be. But I can understand in markets like the U.S. it would have a different impact.

If you could take us through what you think the post-COVID world could look like for you, and how -- and what's the right normal number we should be looking at, I'd be grateful. That's my first question. And my second question, again, a big picture question.

You talked initially about helping merchant’s build-outs and leverage the platform to go across the world.

Could you take us through where you think that process is in the build-up of the margin base in countries like Indonesia and compared to where the cycle which we've seen in China, and give us a feel for which innings where in the baseball context? Thank you..

Thank you Piyush. In terms of COVID, I think we are already living in a more normalized time. I believe the Q3 results partly reflect that, in fact. So, we continue to see strong goals from e-commerce sites across various markets. Now, we discussed it before at during, I believe a few quarters earlier, when COVID hit. There are different scenarios.

One is -- on the one hand there is tail-wind coming from social distancing rules where people rely more on online shopping to fulfill their consumption needs because of social distancing rules, as well as for safety measures.

On the other hand, if in the longer run, there is a significant impact on economies, there could be a downward pressure on overall consumption that could also affect e-commerce industry as a whole. And how much of that impact might be felt by us individually is remained to be seen.

Now, looking at our current trends and results, we believe that on the one hand, the step-up in digitalization in our markets, the forming of user behavior to shop online and also sell things online by more of the -- especially the small businesses. And even the brands are permanent -- are here to stay.

While we haven't seen any particular economy being so deeply or permanently impacted by COVID, that there is clearly an impact on consumption. And at least from our perspective, as the market leader, we continue to grow in our market leadership.

Especially in our markets which are generally high-growth markets with low e-commerce penetration, we continue to see long-term growth potential. So, of that front, we are quite optimistic about the long-term growth potential of e-commerce.

Of course, and normalize that stage when we do year-on-year comparison, the comp is internally tough for all e-commerce Company. I think Shopee has done -- our team has done a great job in continuing to grow at a triple-digit rate for so many quarters, and that was a lot of effort.

And we also applaud our seller’s communities and their efforts in working with us. And that naturally leads to the second question on how we grow on merchant base to help them grow more. I think our merchant, especially as we focus on more O&M the small business sellers; they need more hand-holding and also more help in managing their business.

We started with a very basic tool from teaching them how to take a picture of their products to be nicely to be sold online how to describe the products accurately. To be pick it up by the right QR switches. From all the way to manage inventory, how management marketing to maximize our eyes, on how to manage your accounts and finance.

We have all levels of classes for our merchants as well as many Shopee centers setup everywhere that we can help them with tools and develop the online tools and mobile tools, game features, social features, as many ways as we can to reach them very deeply to help them manage their sales.

And of course, on the -- from the platform perspective, we also offer integrated payment and logistic services to make things so much easier for them. Now on international potential, we have been very focused on helping our Indonesia merchants to also globally sell their products and that are in demand.

By, for example, using our international programs that their products can be mapped easily onto a different market's UI without them having to learn different languages and do a lot of treating. And that's done through our in-house technology. There are many tools we have developed to help them by making this as smooth as possible.

On the game side, I think as I mentioned, the post-COVID normalization, as you can see, we have more of a stable user base. But however, even against very tough comps, we see improvements year-on-year and Q-on-Q pretty much across all metrics. I think that has already shown great achievement by our game team.

However, in the longer run, we continue to see growth opportunities both in Free Fire itself with new features, new modes, new collaborations, and new IP's and the introducing to it. As well as our further growing in game pipeline through self-development, publishing, and investment partnerships. We're very positive on the game outlook as well..

And our next question today will come from Venugopal Garre of Bernstein. Please go ahead..

Hi, good evening, everyone, and thanks for the opportunity.

Yanjun my first question is, again, on the expansion into new geographies and I was curious to understand that, given that we've seen a number of countries that you entered in the last couple of months, are we done in terms of the choice of countries that we want to do in terms of global expansion? And certainly, when we absorb the user awareness campaign system entered post the launch, we haven't really seen any major activities around there while you're using probably social media as a platform, even things like Instagram; we don't really see too many followers.

I wanted to understand how are you approaching these, are we wasting our time, quarter, but to what extent are we -- when we have to actually spend incrementally which for the first quarter -- a bit of the cost structure for the e-commerce business, as well as we go forward? There's the first question.

The second one is somewhere down the line in the press release itself, you mentioned on the cost side for e-commerce logistics is one of the reasons for the increase as well.

I wanted to understand from a sustainability perspective, is it more driven by any freight rate increases that we have been seeing off-late globally, especially with the larger cross-border [Indiscernible] midway, given our geographic expansion? Or is it more driven by the value-added reset as you are bringing in [Indiscernible] as well, which of course, all of that comes to the take rate as well.

Thanks..

Okay. Thank you. E-commerce questions regarding global expansion. I think as we mentioned, we may test waters from time-to-time and I think it's to already to focus on those markets and there not much to report. If we open a new market. I'm sure people will hear about it in the markets otherwise. I think there's not much to report on at this point.

Now, if I understand correctly, you're asking whether we have been employing social media tools like Instagram to promote our e-commerce platform, is that the question?.

No. Rather, the question is that we haven't really seen any major brand advertising or any brand ambassadors or major awareness campaigns in each of these geographies.

What we're actually seeing is deploying social media, but we have seen [Indiscernible] for example, you having a lot of phones out there, but we don't really see too many followers for some of these social media and Instagram feeds and stuff like that..

Yes..

So, I wanted to understand from a cost structure point of view, at what stage will you have to kick start fairly intense campaigns to create user awareness because geographies like India is fairly large, so you would have to at some stage allocate some amount of course towards that..

Yes. I think it is still at a very early stage, so we haven't really focused on widespread campaign nationwide. Again, but if you look at our other markets, we believe that we're very well followed on social media and in our Southeast Asia under Latin markets, especially.

For the newer markets, again, I wanted to read too much into the current operations on numbers because it's really at a very nascent stage. In terms of our logistics and cost quarter logistics, I think we as usual, we continue to partner with third-party logistic service providers to serve our sellers and a vast community.

Most of our buyers -- sellers, in fact, are primarily local sellers. So, more focus is on connecting with local 3PLs to make sure the process is smooth and the delivery is timely and reliable for our users. And also, the cost can over time go down and due to efficiency and improvement on operations and deeper connection integration was our platform.

This has not been a change in our overall strategy. While we do have Shopee Express, last mile delivery services in certain markets as a supplement to 3PL capacity. We continue to view it as a holistic from a holistic perspective, to see how overall logistic experience has been for our sellers and buyers.

Whether we need to ramp up more our own Shopee Express delivery, or we can revive more on 3PLs and so on that probably are very open minded and adopt a highly pragmatic approach on this..

Our next question will come from Ranjan Sharma of JPMorgan. Please go ahead..

Hi. Good evening. And thank you for the call. Two questions from my side. Firstly, on the gaming side, you have not changed your guidance. And based on your 9-month results, it's indicating that the gaming portfolio is going to be declining in the fourth quarter, despite the launch of Free Fire MAX.

Is there any chance that make you guide this way or could there be some upside risk to the guidance? The second question is on the e-commerce basket size, seems to be trending down. If you could help us understand what's driving that and if that could be turned around as well? Thank you..

Yes. Thank you, Ranjan. Regarding the gain side, as I mentioned, we are continuing to build out our enfranchise.

Free Fire MAX we primarily see as a user engagement to deepen with the user -- engagement with user communities offer more features and possibilities to use especially those with the phones that have higher specs and that can allow higher resolution maps and features.

This is not for us, especially at this stage, a revenue driver we believe our game guidance, given the end of the year has been a very strong guidance in terms of monetization, given the comp versus last year. And the overall size of the game portfolio we have already achieved and scaling up so rapidly over the course of a few years.

So, I think it's very important for us to also focus on solidifying our user base, and our game content, and pipeline capabilities to focus on long-term growth and long-term maximization of the potential of the Free Fire platform and IP, as well as the diversification of our genres across further stronger spectrum.

In terms of e-commerce AOV, I think it's been slightly trending downwards partly also because of entrance of new markets where it will be -- tend to be the basket size might be smaller with a new market mix. And overall, I think our AOV has been relatively stable at a high-single, low double-digit range.

Sometimes it can fluctuate because of a shopping season or to the analogy of the category mixes. So overall, I think that's being quite stable. So, the AOV mix is not -- overall AOV size is not a target for us. We don't have the KPI to say that we must drive up AOV.

I think what AOV is a right mix for us depends on the markets that we have and our understanding of what users in those markets need, and what categories we serve the users best, and also might evolve over time as we focus on user growth.

On that front, I don't think it's necessary having a higher AOV is a right strategy for e-commerce platform, and singularly focusing on AOV could have a negative impact on the health and the long-term profitability of the e-commerce platform..

This concludes our question-and-answer session. I would like to turn the conference back over to Min Ju Song for any closing remarks..

Thank you. And thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Thank you..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..