Hi Yuri, thank you for reading and providing the feedback.
Regarding the market place take rate, I calculate this as market place revenue divided by GMV. What is the methodology behind the 11.7% or where have you seen the company refer to this?
I'm referring to the chart on p. 10 of Q1 2024 presentation. Their definition is "GAAP revenue as a percentage of GMV".
I also noticed that they changed the NPL >90 days value for Q4 2023: it was 1.6% in Q4 2023 report, now it's 1.4% in Q1 2024 report. I haven't seen any clarifications.
Another item that I don't understand is the "amounts due from related parties" which went from several tens of millions a year ago to $400mn in Q1 2024. Presumably they deconsolidated a subsidiary in October 2023 (as per 10K 2023), but I couldn't find any further clarifications about the nature of these receivables and their dynamics.
Ah yes, that's a new disclosure from them. They are including product revenue in that number; my figure refers to just the marketplace. Product revenue should not influence the marketplace take rate.
NPL > 90 days in Q4 2023 was just on-book; the figure they quote in Q1 includes both off-book and on-book.
What do you think of Tiktok, Temu and the likes impacting Shopee future? I am considered an old dog now, my family uses Shopee for many years so sticking to the UI UX but wonder what make younger generations choose one over the other?
I think competition will continue to be fierce, but Shopee is well-positioned. The TikTok Shops ban in Indonesia was a real shot in the arm for Sea. They had been losing some ground, but they managed to build out their Live Shopping offering pretty quickly during this period and capitalize on the opportunity presented. Ultimately, the service with the lowest cost and best service will win, so I am glad to see Sea invest heavily in its logistics infrastructure.
I'd be pretty happy to see growth stabilize at +20%, assuming that it can be maintained. During the high growth phase, I was a little concerned that SeaMoney might take on too much credit risk and not reserve appropriately. It doesn't look like this is happening as they actually reduced the provision this quarter, meaning they are not seeing the losses materialize. I would rather see the user base grow but am a little disappointed that they stopped disclosing Total Payment Volume some time ago.
SE for me depends on how the investment in Shopee solidify scale/cost advantage. The shift to inhouse logistics and investment in Live Shopping are exciting but still early days. For now, Shopee's shopping experience is average compared to competitors, search is listed by shops not products (like amazon, and I don't like it but it works), promotion still the main driver of sales than organic. SE's story is better like you discussed but I need to do more work to see if I am comfortable with the execution. Thanks for your piece, it helps a lot.
I've been following Sea for years, so I've seen the rise and fall of the company and feel like this is Sea 2.0. They have learned a lot over the past couple of years and are definitely more focused now. The market opportunity is clear; they just need to execute. Happy to chat about the company if you have any questions.
Thanks for the great update on Sea!
Thanks for the feedback 👍
Thanks for the article! I generally agree with your thesis, have a large position and added more after the results which looked very good indeed.
Regarding the take-rate, isn't it 11.7% rather than 10%? Or are you calculating it differently compared to the company's methodology?
Hi Yuri, thank you for reading and providing the feedback.
Regarding the market place take rate, I calculate this as market place revenue divided by GMV. What is the methodology behind the 11.7% or where have you seen the company refer to this?
I'm referring to the chart on p. 10 of Q1 2024 presentation. Their definition is "GAAP revenue as a percentage of GMV".
I also noticed that they changed the NPL >90 days value for Q4 2023: it was 1.6% in Q4 2023 report, now it's 1.4% in Q1 2024 report. I haven't seen any clarifications.
Another item that I don't understand is the "amounts due from related parties" which went from several tens of millions a year ago to $400mn in Q1 2024. Presumably they deconsolidated a subsidiary in October 2023 (as per 10K 2023), but I couldn't find any further clarifications about the nature of these receivables and their dynamics.
Ah yes, that's a new disclosure from them. They are including product revenue in that number; my figure refers to just the marketplace. Product revenue should not influence the marketplace take rate.
NPL > 90 days in Q4 2023 was just on-book; the figure they quote in Q1 includes both off-book and on-book.
I hope these responses are helpful.
Makes sense, thanks for the clarification!
Do you understand the nature of those "amounts due from related parties"?
They deconsolidated a subsidiary so they now have to report these receivables separately. It's less than 4% of total assets so quite immaterial.
Got it, thanks! I hope there was a legitimate reason for deconsolidation.
Good stuff Wolf, thanks for the work on $SE.
What do you think of Tiktok, Temu and the likes impacting Shopee future? I am considered an old dog now, my family uses Shopee for many years so sticking to the UI UX but wonder what make younger generations choose one over the other?
Thoughts on slowing growth on SeaMoney?
Hi Trung, thanks for the feedback.
I think competition will continue to be fierce, but Shopee is well-positioned. The TikTok Shops ban in Indonesia was a real shot in the arm for Sea. They had been losing some ground, but they managed to build out their Live Shopping offering pretty quickly during this period and capitalize on the opportunity presented. Ultimately, the service with the lowest cost and best service will win, so I am glad to see Sea invest heavily in its logistics infrastructure.
I'd be pretty happy to see growth stabilize at +20%, assuming that it can be maintained. During the high growth phase, I was a little concerned that SeaMoney might take on too much credit risk and not reserve appropriately. It doesn't look like this is happening as they actually reduced the provision this quarter, meaning they are not seeing the losses materialize. I would rather see the user base grow but am a little disappointed that they stopped disclosing Total Payment Volume some time ago.
What are your thoughts on the stock?
SE for me depends on how the investment in Shopee solidify scale/cost advantage. The shift to inhouse logistics and investment in Live Shopping are exciting but still early days. For now, Shopee's shopping experience is average compared to competitors, search is listed by shops not products (like amazon, and I don't like it but it works), promotion still the main driver of sales than organic. SE's story is better like you discussed but I need to do more work to see if I am comfortable with the execution. Thanks for your piece, it helps a lot.
Regards,
Trung
I've been following Sea for years, so I've seen the rise and fall of the company and feel like this is Sea 2.0. They have learned a lot over the past couple of years and are definitely more focused now. The market opportunity is clear; they just need to execute. Happy to chat about the company if you have any questions.
Thank you Wolf! I'll take up the offer once I'm ready :)