Q&A is a session under a company's earnings conference that institutional and retail investors ask some most-concerned questions to the management. On this page, you may find out some valuable info that might affect the stock price in the following weeks. $Sea (SE.US)$
Key Takeaways:
Attitudes: the management is optimistic about Shopee's long-term growth.
Goals: the company changed guidance for gaming to focus on long-term growth.
Products: the company continues to grow Free Fire MAX with higher resolution and more features than Free Fire.
On the gaming side, you have not changed your guidance. And based on your nine months' 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 trends that make you guide this way?
We believe our game guidance given the beginning 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 and 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 a further stronger spectrum.
With the Free Fire quarterly addition of active user slowdown to single digit in the third quarter, will this suggest more or less saturated penetration of Free Fire user TAM? Or will there be room for further reaccelerated with more new games launch?
We've enjoyed a very strong growth, and Free Fire being one of the largest mobile games perhaps in history so far, and we continue to see strong user base. In fact, if we look at our metrics across the board, they have improved not only year on year, but also quarter-on-quarter. So going forward, we're looking to 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. We are further focused on building out our strong IP and platform.
Free Fire MAX was launched in late September. So could you give us some insights on user engagement? How is that option and time spent? How different is it from Free Fire? And how does it impact your 2022 outlook?
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 they can enjoy higher resolution pictures and more features, etc. And also within Free Fire MAX, we have introduced some features such as Craftland, which allows people to add a map and customize it and make it available for other users. This is our initial test in creating more user generation, content tools for our community engagement, and bringing more creativity from our communities into the game itself. So we are very much looking forward to the fourth quarter and ahead to continue to grow this game.
You talked about normalization post COVID, could you take us through the range of possible outcomes as we come out of COVID?
On the one hand, the step-up in digitalization in our markets, the forming of user behavior to shop online and also sell things from online by more of the especially the small businesses and even the brands are permanent here to stay. Meanwhile, we haven't seen any particular economies being so deeply or permanently impacted by COVID that there is clearly an impact on consumption. And at least from our perspective as a 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 on that front, we are quite optimistic about the long-term growth potential of e-commerce.
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 to potentially to evaluate to invest more?
We believe that we have gained a deep operational experience in operating in different markets as well as outstanding of our business model focusing on mobile native, social commerce driven and long-tail high diverse categories. However, being humble is one of our core values. Hopefully, our entrance could add value to the markets and see potential new growth areas that could also further promote the local e-commerce growth together with our peers. However, we haven't set any fixed KPI. I think it's still at a very nascent exploratory stage. We are optimistic of our Shopee's long-term growth because we believe there is a global demand for our business model.
This article is a script from the Q&A session of Sea Limited's earnings call on Nov 16. In order to facilitate reading, we have made appropriate cuts. If you want to know more details, you can click here to re-watch the full page.

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