Good morning and good evening. Welcome to the Sea Limited First Quarter 2022 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’d now like to turn the conference over to Ms. Min Ju Song.

Please go ahead..

Thank you, and hello, everyone, and welcome to Sea's 2022 First Quarter Earnings Conference Call. I'm 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 flows 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 measures, 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 first quarter of 2022.

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..

Hello, everyone, and thank you for joining today's call. I'm pleased to share that we have made a strong start to 2022. We recorded solid results across our business in the first quarter of 2022, despite challenging comparisons to the same period last year, during heightened COVID-related restrictions.

As a result, we are well on track to achieve our previously shared projections of profitability in our Asia markets, while continuing to scale our businesses and capture market share globally.

During the first quarter, our group GAAP revenue grew 64% year-on-year to reach $2.9 billion, and we generated gross profit of $1.2 billion, an increase of 81% year-on-year. Shopee and SeaMoney continues to enjoy operating leverage and efficiency gains as they scale and strengthen their market leadership positions.

In particular, Shopee's adjusted EBITDA loss per order before allocation of HQ costs in Southeast Asia and Taiwan improved by more than 70% year-on-year to $0.04. This shows that Shopee is well on track to achieve positive adjusted EBITDA before allocation of HQ costs in the region.

In addition, we currently expect Shopee to achieve positive adjusted EBITDA even after allocation of HQ cost by the end of next year for this region. At the same time, Shopee enjoyed very strong growth even against the tough comparisons last year.

Its gross orders grew more than 70% year-on-year and the gas marketplace revenue increased by more than 75% year-on-year, further extending Shopee's market leadership both in terms of transaction volume and commercialization capability.

SeaMoney's adjusted EBITDA loss also narrowed both quarter-on-quarter and year-on-year, while GAAP revenue grew close to 350% compared to last year. Quarterly active users grew more than 78% year-on-year.

This is also a strong indication of SeaMoney being on track to achieve positive cash flow as we previously projected, while at the same time continuing to scale rapidly with efficiency.

With the significant scale, strong leadership and clear synergies achieved by Shopee and SeaMoney in Southeast Asia and Taiwan, our consumer Internet ecosystem in the region is naturally approaching a stage of long-term profitable growth.

While Garena experienced headwinds in its growth post-COVID, we saw some preliminary positive effects from our efforts to improve user engagement in Free Fire. In particular, the monthly user trends for Free Fire began to show some early signs of stabilizing towards the end of the fourth quarter.

We are assessing the long-term trends in user engagement post-COVID to better tailor our strategies and areas of focus. Building ever more engaging content within Free Fire and strengthening our pipeline of new games remain our key priorities.

In the past two years, we successfully navigated the major uncertainties brought by the pandemic to capture the significant growth opportunities presented to us across all businesses. As we enter a new period, we recognize that the current macro trends and uncertainties could affect our region and the world in the near to mid-term.

The experiences, capabilities, resources and further strengthened leadership positions we managed to accumulate and achieve during the past period have put us in a stronger than ever position to navigate such uncertainties and, more importantly, capture opportunities that may also arise in our regions.

As always, we will continue to focus on being humble, pragmatic, and agile, while consistently driving strong execution in serving the large, underserved communities in our regions. With that, let me now discuss each business individually.

In the first quarter, Shopee continued to significantly improve its unit economics, while capturing market share and extending its leadership position across our markets. Online consumption continued to grow on our Shopee platform, resulting in strong year-on-year growth.

Shopee’s GAAP revenue was $1.5 billion, up 64% year-on-year in the first quarter, and gross orders grew 71% from last year to reach $1.9 billion. GMV was $17.4 billion, an increase of 39% year-on-year and growing at a 68% CAGR from the first quarter of 2020, before the pandemic.

Monetization also saw improvement with GAAP marketplace revenue as a percentage of total GMV rising to 7.2% during the quarter compared to 5.7% last year.

It was great to see that Shopee’s gross profit margin improved year-on-year due to the faster growth of transaction-based fees and advertising income, which have higher profit margin compared to revenue generated from other value-added services.

At the same time, gross profit margin of revenue generated from other value-added services also improved quarter-on-quarter. Moreover, we continue to be highly focused on efficiency. Here, I would like to share a bit more on our approach to continually improving cost efficiency.

Our business model optimizes for unit economics through growing operating leverage across our e-commerce ecosystem with scale. We invest in growing a broad base of buyers and sellers across comprehensive core online marketplace categories and deepening engagement.

This promotes user growth, conversion, and retention as well as purchase frequencies, which allows us to efficiently grow order volume and density.

With sufficient and continually improving order volume and density, we aim to achieve cost leadership for our ecosystem to profitably serve the broadest base of buyers and sellers as well as the largest range of consumption categories.

This also allows us to efficiently cross-sell more products and service offerings, including digital financial services, especially to the underserved mass market, a market segment which we believe represents the largest opportunity in our global markets.

We believe this strategy drives significant scale, strong profitability, and deep competitive moats in the long run. Our track record in Southeast Asia and Taiwan is proving the success of this model and our convictions have only further grown with what we have achieved in Brazil within a short period of time.

I am pleased to note that, thanks to our focus on enhancing monetization and optimizing costs, we have once again recorded significant improvements in unit economics in the first quarter. Adjusted EBITDA loss per order before HQ costs improved both year-on-year and quarter-on-quarter for Shopee overall.

In Southeast Asia and Taiwan, adjusted EBITDA loss per order before allocation of HQ costs was $0.04, an improvement from $0.12 in the first quarter of 2021. We also made very healthy progress in Brazil in the first quarter where such loss was $1.52, an improvement of more than 45% year-on-year.

Our efforts on expanding the total addressable market across our key markets are reflected in Shopee continuing to be ranked highly on key engagement metrics among global peers. According to data.ai, Shopee ranked first in the Shopping category globally by downloads in the first quarter.

Shopee also ranked first globally by total time spent in app and second by average monthly active users in the Shopping category on Google Play in the first quarter.

Meanwhile, Shopee was the top ranked app in the Shopping category across both iOS and Google Play by average monthly active users and total time spent in app in each of Southeast Asia and Taiwan, based on data.ai.

In Indonesia, we were also ranked the number one app across these same metrics with gross orders up around 77% year-on-year during the first quarter. In Brazil, Shopee ranked first by downloads and total time spent in app, and second by average monthly active users, for the Shopping category, according to data.ai.

In March and April, Shopee Brazil had the highest number of monthly active users in the Shopping category, as we further extended our leading position. We are also growing our local sellers with over 2 million Brazilian sellers registered on the Shopee platform currently.

They range from SMEs to established brands and we are working across the board to enable them to serve more buyers across more categories, demographics, and consumption occasions.

Our positive traction in Brazil to date underlines our belief that there is a large and highly promising opportunity to serve underserved communities of sellers and buyers in that market. We continue to invest behind this opportunity, while delivering more value to our sellers and buyers.

Moreover, across our core markets, Shopee Mall has continued to power the way forward for our brand partners with innovative solutions and tools to support sustained growth.

In the recent quarter, our more than 36 thousand brand partners saw strong growth momentum and reached new milestones, accounting for around 15% of GMV, compared to 12% a year ago. We have also onboarded more brand partners such as Kiehl’s in Singapore, as well as Kate Spade and Marc Jacobs in Thailand.

Looking ahead, our position is stronger than ever before. Across our core markets, real and sustained e-commerce penetration is expected to continue. At the same time, we are extending our leadership and reaching breakeven in Southeast Asia and Taiwan.

And, just two years after entering Brazil, the world’s sixth largest market by population, we are making rapid progress towards market leadership. We therefore remain focused on high quality execution alongside consistent innovation and investments in our tech capabilities to provide a differentiated experience to our users.

This will further enhance our competitive strengths and improve efficiency to best position Shopee for long-term growth and profitability. Meanwhile, given the current environment of elevated macro uncertainties, we now see a wider range of scenarios and outcomes for Shopee this year.

While we believe, that our previous guidance is still achievable, we are revising our e-commerce guidance to correspondingly reflect our expectations around the upcoming macro uncertainties. We now expect e-commerce GAAP revenue to be between $8.5 billion and $9.1 billion, representing 72% year-on-year growth at the midpoint of the guidance.

Let us turn to digital entertainment. As we flagged last quarter, we have seen softening in user base and bookings compared to the lockdown periods during the pandemic, which was further impacted by Free Fire continuing to be unavailable across app stores in India.

However, despite the pullback from acceleration we saw during the pandemic, when we put our first quarter results into perspective, our quarterly active users have shown strong growth with a CAGR of almost 24% from the first quarter of 2020. Our view regarding Garena and Free Fire being a long-term platform, but digital consumption remains unchanged.

Therefore, we remain focused on attracting returning and deepening engagement with our users through investing in enhanced and diversified content UGC to improved accessibility and other user-friendly features.

This investment alongside with the lower bookings has led to a year-on-year decline in adjusted EBITDA as a percent of bookings for this quarter. But we will continue to take a long-term view on such investments, as they are critical for the sustainability and the diversification of our key gaming franchises on the platform.

Moreover, as we navigate this pace of moderation, we are focused on user base stabilization. We saw some preliminary signs that this is starting to bear fruit with the monthly user trends for Free Fire beginning to show some early signs of stabilizing towards the end of the first quarter.

While these are encouraging signs, the longer-term impact of reopening around online gaming and Free Fire specifically remains to be seen and we will continue to focus on user engagement and user base stabilization.

We are also very pleased to see that Free Fire continues to be one of the most popular games across the world, as we continue to focus on higher quality content and ensuring that Free Fire is accessible to and enjoyable for our large player base.

Indeed, according to data.ai Free Fire remains the number one most downloaded mobile game globally in the first quarter. The game also ranked third globally by average monthly active users for all mobile games on Google Play during the same period.

Our vision of building Free Fire into a long-term gaming franchise and platform remains an ongoing strategy. We are focused on innovating around and investing in Free Fire across more user engagement content and events.

Free Fire's recent partnership with BTS, one of the most popular K-pop group globally is a success, where we work closely with the artist to design new eye-catching items, costumes and actions that has resonate well with players and fans alike. Video speech from a BTS artists and content on our social media channels reached over 150 million views.

Additionally, Craftland our map editor feature saw strong traction through driving greater engagement and interaction across creators and engagements in our community. In the first quarter, hundreds of millions of gamers played new maps on Craftland across billions of games.

User-generated content is a growing key part of Free Fire's ongoing engagement strategy and we plan to continue improving and expanding the Craftland experience. As shared before digital entertainment is a key long-term focus of our business with increasing importance of virtual consumption from the rising digital-native generation.

We are committed to investing behind our existing top-tier franchises from further diversifying our portfolio of games across more new genres.

An example is Moonlight Blade, a third-party massively multiplayer online role-playing game, which will be launching across both mobile and PC in Thailand in the coming months after an earlier launch last year in Taiwan. Our developers have been working on new games across a wide variety of genres.

At the same time, we are exploring publishing partnerships and making early investments in game studios across the world. Our digital financial services business. SeaMoney continued its strong growth into the first quarter of 2022.

We remain focused on driving the adoption of our products and services in a thoughtful and disciplined way while leveraging the multiple synergies across our Shopee and SeaMoney ecosystem. GAAP revenue for the quarter was $236 million, up 360% year-on-year.

Quarterly active users across our SeaMoney products and services grew 78% year-on-year to reach $49 million. The adoption of SeaMoney financial products and services across credit and digital banking were key drivers of revenue growth during the quarter, and we expect this to continue.

As we optimize our models and expand our partnerships with financial institutions, these products are expected to be solid and high-quality value drivers in the long run without the need for significant investments to scale. The total payment volume of our mobile wallet was $5.1 billion in the first quarter, an increase of 49% year-on-year.

Over the past few years, we have successfully leveraged the Shopee ecosystem to build leading mobile wallet positions across our markets. We have also expanded our credit products across more markets accessible to more white-listed users. Our credit portfolio currently serves both consumers and merchants across a variety of products.

Our digital banking initiatives saw strong early traction as well. On a related note, I am proud to share that our application for a digital bank license in Malaysia together with YTL Digital Capital was approved in April.

In Indonesia, which has the most comprehensive set of products and services among our markets, over 30% of the quarterly active users have used multiple SeaMoney products or services in the first quarter.

The size of the opportunity for SeaMoney is massive and has only been expanding as we have grown the suite of products and services we offer to the underserved in our markets. We are excited about the growth prospects of the segment as well as strong sustained ecosystem benefits across both Shopee and SeaMoney.

To conclude, we believe that we are in a much stronger position now compared to a couple of years ago when the pandemic just started, with significantly expanded capabilities, more resources, a proving track record and a much clearer and more certain path to achieve our long-term objectives.

With Shopee, we continue to capture market share and deepen our strong bonds with sellers and consumers across our markets. We have highly promising growth opportunities in front of us, and we continue to invest prudently and with discipline while driving ever-improving efficiency across the business.

With Arena, we are leveraging our strength in content creation and community engagement to ensure the popularity of our platform endures even as the global games industry faces headwinds from market reopenings. Concurrently, we are focused on broadening our portfolio of games across different genres.

And with SeaMoney, we are scaling up our third growth engine in a highly disciplined and efficient way, ensuring that we are ideally placed to capture the significant growth opportunities ahead of new segment.

Building on the strong first quarter performance, we will continue to focus on strong execution with balanced growth and efficiency to deliver solid results. 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 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 64% year-on-year to $2.9 billion. This was mainly driven by the growing adoption of products and services across our e-commerce and digital financial services businesses, as we continue to leverage the synergies across our various platforms.

On e-commerce, our first quarter GAAP revenue of $1.5 billion included GAAP marketplace revenue of $1.3 billion, up 75% year-on-year and GAAP product revenue of $0.3 billion, up 27% year-on-year.

E-commerce adjusted EBITDA loss was $743 million as we continued to deepen e-commerce penetration in our core markets and also gain positive traction in newer markets. Digital entertainment bookings were $0.8 billion compared to $1.1 billion for the first quarter of 2021. GAAP revenue was up 45% year-on-year to $1.1 billion.

The increase in GAAP revenue was primarily due to recognition of accumulated deferred revenue from previous quarters. Digital entertainment adjusted EBITDA was $431 million compared to $717 million for the first quarter of 2021.

Digital Financial Services GAAP revenue was $236 million, an increase of 360% year-on-year from $51 million in the first quarter of 2021. The growth was primarily due to the growing adoption of our financial products and services. Adjusted EBITDA loss was $125 million as we continued our efforts to drive mobile wallet adoption.

Returning to our consolidated numbers. We recognized a net non-operating loss of $6 million in the first quarter of 2022 compared to a net non-operating loss of $23 million in the first quarter of 2021.

We had a net income tax expense of $82 million in the first quarter of 2022, which was primarily due to corporate income tax and withholding tax recognized in our digital entertainment business.

As a result, net loss excluding share-based compensation was $445 million in the first quarter of 2022, as compared to $320 million for the same period in 2021. The net cash used in investing activities amounted to $1.1 billion for the first quarter of 2022.

This was primarily attributable to an increase in loans and receivables of $s10 million to support the growth of digital financial service businesses as well as net placement of $333 million into time deposits and liquid investment products for better cash yield management.

At the end of the first quarter of 2022, we had around $8.8 billion of cash, cash equivalents and short-term investments on our balance sheet. With that, let me turn the call to Min Ju..

Thank you, Forrest and Tony. We are now ready to open the call for questions.

The question will be addressed by Forrest, Tony and Andrew, Operator?.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Alicia Yap from Citigroup. Please go ahead..

Thank you. Good evening, management. Thanks for taking my questions. I have two questions.

The first one is in light of the various cities under the lockdown condition in China, can management share any impact from the lockdown in China for your cross-border business? Is that one of the reasons that caused you to widen your e-commerce guidance? Besides that any other macro conditions that prompt you to become a bit more cautious for your Shopee business? The second question is on your gaming business.

Management mentioned on the prepared remarks there is some improvement in the user engagement in Free Fire, can you share which countries that you're actually seeing the improvement in user trend? Do you think the user trends metrics could further improve or you think this is more or less to stabilizing the user metrics? Any updates on new games in the pipeline that you can share? Thank you..

Thank you, Alicia. Regarding the first question on CB, so far we haven't seen major impact and cross-border is also not a very significant part of our business. Our business is primarily local-to-local.

And the reason to broaden the guidance range for Shopee, as we shared in the earnings, that we see macro trends such as increasing inflation, increasing some disruptions in the supply chain and also rising interest rates across various markets and the world, I think we want to be prudent in looking at it.

But also as shared, we still think the original guidance is achievable for us. However, given the uncertainties, we do want to be able to manage the situation closely and also track the market dynamics more closely as we progress.

So while there are challenges, we also see some bright spots in particular in our region, for example, most of our markets so far has emerged relatively resilient out of COVID and inflation in many of the markets are still relatively in check and also some of our markets are net exporters of commodities and/or have been benefited from the shift in global supply chain in terms of investment -- foreign direct investment in manufacturing, et cetera.

So relatively speaking, we think there are -- while there are challenges and uncertainties, there are also opportunities in the region that we could look to capture. Again, I think the key is just like when we entered COVID there are huge uncertainties and challenges.

But in the end, we emerged as a much bigger and stronger business, much more diversified and close to approaching long-term profitable growth in our key markets. So all these helped us a lot in managing and navigating the new challenges and uncertainties that might face us.

And as a business, I think we continue to focus on being humble, agile and pragmatic and focus on strong execution. I think our track record shows that we almost excel even more clearly in tough situations. And I think we're also in a relatively stronger position compared to many of our peers in navigating that.

So in terms of the game business, we see that they are close to the end of the quarter. There is some stabilization in the user trends in Southeast Asia and some other parts of the world. However, this remains to be seen in terms of the long-term trends post-COVID and still early stage. So we want to caution this is some preliminary signs.

However, I think we'll continue to make efforts in terms of deepening user engagement. And, therefore, we also shared and put things in perspective a sharing our two-year CAGR to show that the significant user base that we gained during the COVID.

For some of them, we have been able to retain and we continue to make effort to retain more of those as we continue to build our game into a long-term platform and we are very focused on the longevity of the -- promoting longevity of Free Fire as increasing our game platform by introducing more diversified content and game modes and types of play and including UGC tools into the game.

At the same time, also trying to further to diversify our game pipeline including publishing games in more markets such as -- as far as mentioned Moonlight Blade to be offered in Thailand shortly. So that's been our effort, ongoing effort on the game side as well..

Our next question comes from Pang Vitt from Goldman Sachs. Please go ahead..

Thank you very much for the opportunity. Two questions for me here.

Can we go back to the guidance again, maybe can you also walk us through the rationale behind it in terms of like, is it largely due to lowering down the GMV assumptions or these also have taken into account like lowering down the segment assumption as well? And does mean with this new guidance what is the implied GMV growth expectation that you can think of? And what should we think of the sequential quarterly trend going forward as well? That's, question number one.

And secondly, in terms of, cash burn and unit economy has improved likely in first quarter. We see healthy improvement of take rate as well.

Can you walk us through the steps that you have taken to achieve this? Is it mainly due to the higher take rate or lower subsidies? And how should we think about balancing between growth and profitability especially in ASEAN with the macro uncertainty in mind? I also have a better understanding, on how your headquarter costs will trend going forward after that's already rising quite significantly in the quarter.

Thank you..

Thank you, Pang. In terms of the Shopee guidance, I think, as I shared just now we're not necessarily lowering it. We are widening the range. We still think the original guidance is potentially achievable for us.

But given the economic trends, we want to be cautious and also as we face uncertainties, we do want to preserve our maximum flexibility in managing our business in line with underlying market dynamics. That could be basically a combination of all things in terms of underlying volume growth and commercialization.

We don't specifically guide on GMV and take rate. But overall, if you look at overall GAAP revenue trends, even at the wider range still growing at more than 70% year-on-year, which is I believe quite high compared to global industry peers and appears in our markets. So, again I think this is something that we are getting in abundance of caution.

And regarding, the unit economics improvement, I think this is both in terms of better commercialization as well as efficiency gains on the cost side as we scale and further strengthen our market leadership.

As we shared, just now in terms of our thinking about unit economics, we think the best way to maximize long-term profitability, scale and defensibility and the overall value of our ecosystem to our communities and our stakeholders including our shareholders, is by growing the order volume and order density.

And through that, we're able to achieve better unit economics over time with scale.

And of course during the process, we focused very much on the efficiency of our investments by effectively capturing users through various social entertainment, tools and marketplaces assortments, better services, et cetera effectively convert them, retain them and improve the frequency purchase frequency over time, so that we can maximize the return on our investment in growing and scaling the business with increasing efficiency.

And eventually, if we're able to break even and enjoy long-term profitable growth, at relatively low order value in terms of average basket size, that makes the platform highly defensible and able to address the largest range of consumers, in the largest range of categories of goods.

That also allows us to effectively cross-sell many different products and services. That makes the platform highly efficient and also improves profitability down the road.

That also allow us -- so far has allowed us to build the largest consumer Internet ecosystem in Southeast Asia and Taiwan and also approaching a stage of long-term profitable growth. So this is basically the consistent approach that we have been executing towards and we have been explaining to the market about.

Regarding the HQ cost trend going forward, as we shared in the earnings that in terms of the most recent quarter HQ costs contributed to about half of the increase in the EBITDA loss in Shopee and most of that is R&D headcount driven.

As we also previously shared that we focus on building our technology capability and our product suite to offer more services and products, and more efficiently and effectively to our large communities of users.

We think in the long run, this will turn into a very strong competitive edge for us and also make the platform even more efficient in serving the users and catering to their needs and offering more products and services to them. So that is a long-term investment objective.

However, again, as we shared, we'll continue to be very focused on efficiency and being highly pragmatic as we observe the market trends and dynamics and measured in our investment to make sure we focus on long-term balanced growth..

[Operator Instructions] Our next question comes from Piyush Choudhary from HSBC Singapore. Please go ahead..

Hi. Good evening to the management and thanks for the opportunity. Two questions. Firstly, in the gaming business, can you talk about progress to expand your portfolio of self-developed games? And we noted that your game developer team has -- in-house game development team has expanded to more than 2000.

Could you tell how many developers are engaged on Free Fire and Free Fire MAX? And second question for Shopee. Can you talk a little bit about this improvement on EBITDA loss per order quarter-on-quarter.

Is Company consciously kind of weeding out non-profitable orders or reducing investment in new market, or this is kind of more a scale effect? And housekeeping on Brazil number of orders and ULC revenue. Thank you..

Yes. So, regarding the self-development pipeline, as we shared before, we always have different types of games at different stages of testing.

Some are being tested anonymously in various markets not under the Garena name to avoid the halo effect of the Garena blend to give us better data, and some at earlier closed beta testing stage within a small circle of selected users and some at earlier -- even earlier stage of being still within the in-house testing stage.

So at any point of time, we do have things being tested. And as we grow the self-development pipeline, as usual we don't announce the game until we formally launched publicly in the market under the Garena name. But however, this has been a focus of the development team.

And I think we have about half of our team focused on new games at different stages, while the rest is still continue to focus on putting more content and also game modes and UGC tools into Free Fire and Free Fire MAX. Again, this is a highly dynamic process.

We can -- and any time we might adjust the team setup and allocation of human and other resources, depending on the demands and needs of our game content pipeline as well as our user community. In terms of the EBITDA last quarter, we're not -- this is not driven by cutting loss-making so-called loss-making orders.

If you look at our basket size has been relatively stable quarter-on-quarter. And our -- in terms of composition of categories have been relatively stable as well. And overall, it's been very balanced growth across all categories of consumption and across different types of orders.

Now we do see increasing orders coming from the mall side, which is also a positive sign, as we have more brands global including some of the global brands we mentioned like Kiehl's Kate Spade joining our platform, but at the same time and contributing more to our GMV.

But at the same time, I think the bigger picture is that as the largest marketplace in our region and I think overall composition of the categories generally reflect the broadest communities we are serving.

And this is also not driven by market exits primarily either as those are very nascent stage the market that we exited anyway didn't contribute too significantly to the cost side either..

The next question....

In terms of Brazil, we look -- we did provide our EBITDA loss per order as well. And as we understand the market, also very focused on understanding how the efficiency gain is progressing in Brazil. In terms of overall growth, it remains to be very robust. We -- our order growth continued to be a very high triple-digit close to 200% year-on-year.

So it's continued to be very high gross rate. And at the same time, we're also very pleased to share that not only we're the number one in downloads and total time spent. Most recently, we are also ranked number one in monthly active user for March and April by data.ai.

And that shows that we are fast closing and increasingly becoming a market leader in terms of user base and also in terms of orders in a market that we entered just two years ago, while continuing to enjoy efficiency gain in the market..

The next question comes from John Choi from Daiwa. Please go ahead..

Well, good evening. Thank you for taking my question. I have two questions. First of all, on your digital finance services a very strong growth. Can management provide some color? I mean, you did say that, Indonesia you guys have 30% of the active users use multiple products.

So, in terms of profitability, or let's say user engagement any economics? Can you kind of share how Indonesia stands out and how this could be extrapolated to other markets? The second question is on Shopee, I think you just mentioned, Brazil has seen very strong growth like close to 200%.

But if you look into like actual user engagement on the categories, or the actual products that the consumers are purchasing, how does this compare to our Southeast Asia or Taiwan? I mean, where do you think you guys have to invest more in Brazil or Latin America? Thank you..

Thank you, John. In Indonesia, yes, you're right that, our SeaMoney business has grown well, and we also offered the most comprehensive suite of products in the market, which is also the largest market in Southeast Asia and Taiwan.

And so we saw a very strong traction, and strong synergies with our Shopee ecosystem in growing the business both in scale, commercialization, and also as we shared before we believe it will be a cash flow – will contribute positive cash flow to the group business in the short to medium term.

And in other markets, we are also rolling out increasing number of SeaMoney products, including continue to strengthen our market leadership on the e-wallet side, and the leveraging that offer more products across credit to both the consumers and our SME merchants, and also the insurance product – Intertek products, and potentially down the road wealth management products, of course in collaboration with financial institutions, and our digital banking products also being rolled out not only in Indonesia.

But as we shared before, we have obtained also a license more recently in Singapore, the Philippines and now in Malaysia. So we will be also looking to serve the large base of communities in various countries. So we do believe, there is a very significant opportunity to be captured.

And our ability to leverage, our large consumer Internet ecosystem, our understanding, deep understanding of the user base, and our easy access to them, and the ability to serve them with technologies, who are underserved because of the limitation of physical infrastructure, and other reasons.

So this is a significant and highly profitable opportunity that we are looking at, and we'll continue to manage the growth of the SeaMoney business, across various regions over time.

And in terms of our Brazil business, the categories that we are focused on for our – for the goods sold on the platform by our - the local Brazilian SME merchants are largely similar to those we have in Southeast Asia, and also the basket size so far is quite similar in line with the group average basket size.

So we continue also to target the underserved mass market in Brazil as we gain efficiency. In terms of the areas of investment, I think, generally also similar to how we scaled our business in Southeast Asia and Taiwan.

We invested in user growth investing in building the platform and a broader range of services and offerings to our users and at the same time continue to improve the user experience through integrated infrastructure logistics as well as payments.

If you noted, we previously also announced that we recently obtained a financial institution license in Brazil to allow us to better serve our users in terms of e-wallet and e-payment side. So I think this is something that's very similar to what we have done in Southeast Asia and Taiwan before seven times. So we are replicating that in Brazil.

Of course each market that we entered into including all the seven markets in Southeast Asia and Taiwan are highly distinct and require deep localization in approaches execution and also the management of the business down to every level of detail.

And that is where I think we excel in managing highly diverse markets across different stages of development and across different cultures and regulatory regimes. And this is something that we'll keep doing. Thank you. .

The next question comes from Jiong Shao from Barclays. Please go ahead. .

Good evening. Thank you very much for taking my questions. My first question is a follow-up question on your guidance and your outlook for your Shopee business. Your GMV growth slow down a bit in December quarter in the March quarter largely because of the tough comp last year.

I was wondering just for your current outlook is Q2, sort of, the potentially the bottom in terms of the year-over-year growth for your GMV and then we start to see recovery in Q3 or the bottom is going to be some time later this year? Related to that previously you talked about take rate may be up a bit less than 200 basis points this year.

Sorry, if I missed you reiterated that earlier. But if you haven't I was wondering if you have any thoughts about that? My second question is on competition. I was wondering given some of the news reports about TikTok monetizing e-commerce in Southeast Asia and Tokopedia went public, Indonesia raised a few billion dollars.

Are you seeing any changes in the competitive landscape in Southeast Asia plus Taiwan? If you haven't could you highlight some of the competitive moat you think you have so to keep you in a leading position if not expand your lead over some of your competitors? Thank you. .

Thank you, Jiong. Regarding the GMV growth rate, we don't provide guidance on that. But as you correctly pointed out, Q1 and Q2 last year were at the height of COVID lockdowns in all regions and it also translated into some of the highest growth rates during that time last year. So we are facing a tougher comp in the first half of the year.

And on the other hand, we don't provide specific guidance on the numbers on GMV or the take rate. In terms of our competitive landscape, I think, we always take competition very seriously.

And -- but at the same time, I think, we came from -- for each of our businesses in particular e-commerce we came from underdog position vis-à-vis very well-established income brands who also much better funded than we were and we rose to the strong market leadership and become multiple times their size over time in our region and at the same time improving our efficiency and now approaching profitability.

So I think eventually it is about our ability to serve our own users and merchants including our merchants and consumers well and leave no large segment of our communities and consumption categories that could have been served by us on served. And this is -- we don't see that as a zero sum game.

We see it as a marathon whereby our success is dependent on our ability to execute continue to pace ourselves well and run well and be ahead of the pack. So this is our consistent approach on competition..

[Operator Instructions] Next question comes from Sheng Wang Ga [ph] from CICC. Please go ahead..

Yes. Hi. Thank you for taking my question. With regards to take rates. We've noted that take rates for commission and marketplaces have actually increased in April and May. Is it a reflection of our strength in each country given that take rates were increasing varying levels down to our Southeast Asia markets? That's my first question.

And the second one is with regards to buy now pay later.

When do we think we'll be able to replicate the success of buy now pay later in our countries -- in countries operations like Philippines and even Brazil?.

Thank you, Sheng. Regarding the take rate I think, this again, we've been gradually raising take rate consistently.

I think we started introducing take rate across various types of merchants and categories of goods many years ago and we're pioneers in fact in many of the markets introducing a take rate and gradually increasing -- we've been gradually increasing the take rate over time across multiple types of streams of revenue.

And as we shared in earnings for the most recent quarter, the increase also largely came from the high margin take rates in terms of transaction based fees as well as advertisement. A lot of that is actually optional for our merchants.

This involving opt-in programs that merchants can choose to pay us a high take rate for more and better services and/or better deals for their consumers. So eventually, this is as the merchants, basically investing in their own business on our marketplace to grow their business. And as a result, we benefit from that.

So I think eventually, this is because our ability to deliver better results, more sales volume and attract more users to other merchants. Their businesses are growing fast. And as a result they are also willing to and happy to invest more in the platform that allow them their business to grow even better and faster on our platform.

In terms of the buy now pay later, so we will -- we have been introduced in the buy now pay later programs across various markets. And I might also introduce it in Brazil, that as demanded by our users, we will be also collaborating with other financial institutions to help grow the program.

But we will continue to remain very prudent and to manage a highly sustainable -- in terms of the sustainable long-term growth of the program, we think it helps the growth of e-commerce business.

And -- but at the same time, we are also cautious about extending credit to only white-listed consumers with whom we can have sufficient data and we continue to focus on improving our underwriting capabilities across the board. So this has been something that we focus on in various markets..

Due to time constraints, 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 again, for joining the call today. 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..