(Reuters) – Technology company Sea Ltd miscalculated its second-quarter revenue estimates on Tuesday as consumers halted spending on online and discretionary services, sending its U.S.-listed shares down 12% in pre-bell trade.
Tepid spending amid a challenging macroeconomic outlook has put pressure on Sea Shopee’s e-commerce business and caused a sharp decline in its mobile games business.
After a meteoric run in 2020 and part of 2021, with several quarters of triple-digit increases in digital revenue, Sea’s growth has waned as the pandemic-fueled boom in e-commerce and digital entertainment has waned.
Southeast Asia’s largest listed tech company launched a group overhaul last year, slashing its workforce by about 7,000 people, or about 10%, and freezing salaries as its market value fell to less than half its pandemic surge of more than $200 billion.
The overhaul, which included exiting India, Europe and some Latin American markets, helped the company post its first quarterly net profit in December. Earlier this year, Shopee raised the commission fee charged to sellers on its platform.
In the three months ended June 30, sales in the digital entertainment segment, which includes the Garena gaming platform, fell more than 41%, falling for the fifth consecutive quarter. Sales from the financial services business increased by more than 53%.
Revenue grew more than 5% from a year earlier to $3.10 billion, compared to analyst estimates of $3.20 billion, according to Refinitiv data.
E-commerce revenue, which contributes about two-thirds of the company’s bottom line, grew about 21% to $2.1 billion from a year earlier, but it wasn’t expecting $2.25 billion.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Krishna Chandra Eluri)