SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2020 |
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Unaudited Interim Condensed Consolidated Financial Statements |
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Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2019 and September 30, 2020 |
1 – 4 |
Unaudited Interim Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2019 and 2020 |
5 – 6 |
Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss for the Nine Months Ended September 30, 2019 and 2020 |
7 |
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2020 |
8 – 9 |
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders' Equity for the Nine Months Ended September 30, 2019 and 2020 |
10 – 12 |
Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
13 – 40 |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts expressed in thousands of US dollars (“$”)) |
As of December 31, |
As of September 30, |
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Note |
2019 |
2020 |
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$_ |
$_ |
|||||||||||
ASSETS |
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Current assets |
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Cash and cash equivalents |
||||||||||||
Restricted cash |
||||||||||||
Accounts receivable, net of allowance for credit losses of $ |
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Prepaid expenses and other assets, net of allowance for credit losses of $ |
||||||||||||
Inventories, net |
||||||||||||
Short-term investments |
5 |
|||||||||||
Amounts due from related parties |
||||||||||||
Total current assets |
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Non-current assets |
||||||||||||
Property and equipment, net |
4 |
|||||||||||
Operating lease right-of-use assets, net |
||||||||||||
Intangible assets, net |
||||||||||||
Long-term investments, net of allowance for credit loss of and $ |
5 |
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Prepaid expenses and other assets, net of allowance for credit losses of $ |
||||||||||||
Restricted cash |
||||||||||||
Deferred tax assets |
||||||||||||
Goodwill |
3 |
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Total non-current assets |
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Total assets |
SEA LIMITED UNAUDITED INTERIM UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Amounts expressed in thousands of US dollars (“$”)) |
As of December 31, |
As of September 30, |
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Note |
2019 |
2020 |
||||||||||
$_ |
$_ |
|||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
||||||||||||
Accounts payable (including accounts payable of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Advances from customers (including advances from customers of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Amounts due to related parties (including amounts due to related parties of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Short-term borrowings (including short-term borrowings of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Convertible notes (including convertible notes of the Consolidated VIEs without recourse to the primary beneficiaries of and as of December 31, 2019 and September 30, 2020, respectively) |
6 |
|||||||||||
Income tax payable (including income tax payable of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Total current liabilities |
SEA LIMITED UNAUDITED INTERIM UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Amounts expressed in thousands of US dollars (“$”)) |
As of December 31, |
As of September 30, |
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Note |
2019 |
2020 |
||||||||||
$_ |
$_ |
|||||||||||
Non-current liabilities |
||||||||||||
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Long-term borrowings (including long-term borrowings of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Convertible notes (including convertible notes of the Consolidated VIEs without recourse to the primary beneficiaries of and as of December 31, 2019 and September 30, 2020, respectively) |
6 |
|||||||||||
Deferred tax liabilities (including deferred tax liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of and as of December 31, 2019 and September 30, 2020, respectively) |
||||||||||||
Unrecognized tax benefits (including unrecognized tax benefits of the Consolidated VIEs without recourse to the primary beneficiaries of $ |
||||||||||||
Total non-current liabilities |
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Total liabilities |
||||||||||||
Commitments and contingencies |
13 |
SEA LIMITED UNAUDITED INTERIM UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Amounts expressed in thousands of US dollars (“$”)) |
As of December 31, |
As of September 30, |
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Note |
2019 |
2020 |
|||||||
$_ |
$_ |
||||||||
Shareholders’ equity |
|||||||||
Class A Ordinary shares (Par value of US$ |
_ |
||||||||
Class B Ordinary shares (Par value of US$ |
|||||||||
Additional paid-in capital |
|||||||||
Accumulated other comprehensive income (loss) |
( |
) |
|||||||
Statutory reserves |
|||||||||
Accumulated deficit |
( |
) |
( |
) |
|||||
Total Sea Limited shareholders’ equity |
|||||||||
Non-controlling interests |
|||||||||
Total shareholders’ equity |
|||||||||
Total liabilities and shareholders' equity |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts expressed in thousands of US dollars (“$”)) |
For the Nine Months ended September 30, |
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Note |
2019 |
2020 |
|||||||
$_ |
$_ |
||||||||
Revenue |
|||||||||
Service revenue |
|||||||||
Digital entertainment |
|||||||||
E-commerce and other services |
|||||||||
Sales of goods |
|||||||||
Total revenue |
|||||||||
Cost of revenue |
|||||||||
Cost of service |
|||||||||
Digital entertainment |
( |
) |
( |
) |
|||||
E-commerce and other services |
( |
) |
( |
) |
|||||
Cost of goods sold |
( |
) |
( |
) |
|||||
Total cost of revenue |
( |
) |
( |
) |
|||||
Gross profit |
|||||||||
Operating income (expenses) |
|||||||||
Other operating income |
|||||||||
Sales and marketing expenses |
( |
) |
( |
) |
|||||
General and administrative expenses |
( |
) |
( |
) |
|||||
Research and development expenses |
( |
) |
( |
) |
|||||
Total operating expenses |
( |
) |
( |
) |
|||||
Operating loss |
( |
) |
( |
) |
|||||
Interest income |
|||||||||
Interest expense |
( |
) |
( |
) |
|||||
Investment gain, net |
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Changes in fair value of convertible notes |
( |
) |
( |
) |
|||||
Foreign exchange gain (loss) |
( |
) |
|||||||
Loss before income tax and share of results of equity investees |
( |
) |
( |
) |
|||||
Income tax expense |
8 |
( |
) |
( |
) |
||||
Share of results of equity investees |
( |
) |
( |
) |
|||||
Net loss |
( |
) |
( |
) |
|||||
Net (profit) loss attributable to non-controlling interests |
( |
) |
|||||||
Net loss attributable to Sea Limited’s ordinary shareholders |
( |
) |
( |
) |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
For the Nine Months ended September 30, |
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Note |
2019 |
2020 |
||||||||||
$_ |
$_ |
|||||||||||
Loss per share: |
||||||||||||
Basic and diluted |
9 |
( |
) |
( |
) |
|||||||
Weighted average shares used in loss per share computation: |
||||||||||||
Basic and diluted |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts expressed in thousands of US dollars (“$”)) |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Net loss |
( |
) |
( |
) |
||||
Other comprehensive loss, net of tax: |
||||||||
Foreign currency translation adjustments: |
||||||||
Translation loss |
( |
) |
( |
) |
||||
Net change |
( |
) |
( |
) |
||||
Available-for-sale investments: |
||||||||
Change in unrealized loss |
( |
) |
( |
) |
||||
Net change |
( |
) |
( |
) |
||||
Total other comprehensive loss, net of tax |
( |
) |
( |
) |
||||
Total comprehensive (gain) loss attributable to non-controlling interests |
( |
) |
||||||
Total comprehensive loss attributable to Sea Limited’s ordinary shareholders |
( |
) |
( |
) |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts expressed in thousands of US dollars (“$”)) |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Cash flows from operating activities |
||||||||
Net loss |
( |
) |
( |
) |
||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Allowance for credit losses |
||||||||
Amortization of discount on convertible notes |
||||||||
Amortization of intangible assets |
||||||||
Changes in fair value of convertible notes |
||||||||
Deferred income tax |
( |
) |
( |
) |
||||
Depreciation of property and equipment |
||||||||
Gain on disposal of subsidiaries |
( |
) |
||||||
Gain on re-measurement of previously held equity interests |
( |
) |
||||||
Impairment loss on intangible asset |
||||||||
Impairment loss on investments |
||||||||
Loss on debt extinguishment |
||||||||
Net foreign exchange differences |
( |
) |
( |
) |
||||
Share-based compensation |
||||||||
Share of results of equity investees |
||||||||
Others |
||||||||
Operating cash flows before changes in working capital: |
( |
) |
( |
) |
||||
Inventories |
( |
) |
||||||
Accounts receivable |
( |
) |
( |
) |
||||
Prepaid expenses and other assets |
( |
) |
( |
) |
||||
Amounts due from related parties |
( |
) |
||||||
Operating lease right-of-use assets |
( |
) |
( |
) |
||||
Accounts payable |
||||||||
Accrued expenses and other payables |
||||||||
Advances from customers |
||||||||
Operating lease liabilities |
||||||||
Deferred revenue |
||||||||
Income tax payable |
||||||||
Amounts due to related parties |
||||||||
Net cash generated from operating activities |
||||||||
Cash flows from investing activities |
||||||||
Purchase of property and equipment |
( |
) |
( |
) |
||||
Purchase of intangible assets |
( |
) |
( |
) |
||||
Purchase of investments |
( |
) |
( |
) |
||||
Proceeds from disposal of property and equipment |
||||||||
Proceeds from sale and maturity of investments |
||||||||
Distribution from investments |
||||||||
Acquisition of businesses, net of cash acquired |
( |
) |
||||||
Disposal of subsidiaries, net of cash disposed |
||||||||
Change in prepaid expenses and other assets |
( |
) |
||||||
Net cash used in investing activities |
( |
) |
( |
) |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Amounts expressed in thousands of US dollars (“$”)) |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Cash flows from financing activities |
||||||||
Repayment of borrowings |
( |
) |
( |
) |
||||
Proceeds from borrowings |
||||||||
Proceeds from issuance of ordinary shares, net |
||||||||
Contribution by non-controlling interest |
||||||||
Transaction with non-controlling interests |
( |
) |
||||||
Payments for exchange and conversion of convertible notes |
( |
) |
||||||
Proceeds from issuance of convertible notes, net |
||||||||
Change in accrued expenses and other payables |
( |
) |
||||||
Net cash generated from financing activities |
||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash |
||||||||
Net increase in cash, cash equivalents and restricted cash |
||||||||
Cash, cash equivalents and restricted cash at beginning of the period |
||||||||
Cash, cash equivalents and restricted cash at end of the period |
||||||||
Supplement disclosures of cash flow information: |
||||||||
Income taxes paid |
( |
) |
( |
) |
||||
Interest paid |
( |
) |
( |
) |
||||
Interest received |
||||||||
Supplement disclosures of non-cash activities: |
||||||||
Purchase of property and equipment included in accrued expenses and other payables |
( |
) |
||||||
Purchase of intangible assets included in accrued expenses and other payables |
( |
) |
||||||
Purchase of property and equipment included in prepayments |
( |
) |
||||||
Purchase of intangible assets included in prepayments |
( |
) |
||||||
Conversion and exchange of convertible notes into ordinary shares |
( |
) |
( |
) |
||||
Acquisition of a subsidiary by conversion of convertible notes |
||||||||
Proceeds from disposal of a subsidiary included in prepaid expenses and other assets |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Amounts expressed in thousands of US dollars (“$”) except for number of shares) |
No of ordinary shares |
Ordinary shares |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Statutory reserves |
Accumulated deficit |
Total Sea Limited shareholders’ (deficit) equity |
Non-controlling interests |
Total shareholders’ (deficit) equity |
||||||||||||||||||||||||||||
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
|||||||||||||||||||||||||||||
Balance as of January 1, 2019 |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||||||
Comprehensive loss: |
||||||||||||||||||||||||||||||||||||
Net loss for the period |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Foreign currency translation adjustments |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Net change in unrealized gain on available-for-sale investments |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Conversion of convertible notes into Class A ordinary shares |
||||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares, net of issuance costs |
||||||||||||||||||||||||||||||||||||
Capital contributed by non-controlling interest |
– |
|||||||||||||||||||||||||||||||||||
Shares issued to depositary bank |
||||||||||||||||||||||||||||||||||||
Exercise of share options |
||||||||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued |
||||||||||||||||||||||||||||||||||||
Share-based compensation |
– |
|||||||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank |
( |
) |
||||||||||||||||||||||||||||||||||
Balance as of September 30, 2019 |
( |
) |
( |
) |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued) (Amounts expressed in thousands of US dollars (“$”) except for number of shares) |
No of ordinary shares |
Ordinary shares |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Statutory reserves |
Accumulated deficit |
Total Sea Limited shareholders’ equity |
Non-controlling interests |
Total shareholders’ equity |
||||||||||||||||||||||||||||
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
|||||||||||||||||||||||||||||
Balance as of September 30, 2019 |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||
Comprehensive loss: |
||||||||||||||||||||||||||||||||||||
Net loss for the period |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Foreign currency translation adjustments |
– |
|||||||||||||||||||||||||||||||||||
Net change in unrealized gain on available-for-sale investments |
– |
|||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares, net of issuance costs |
– |
|||||||||||||||||||||||||||||||||||
Capital contributed by non-controlling interest |
– |
|||||||||||||||||||||||||||||||||||
Equity component of convertible notes |
– |
|||||||||||||||||||||||||||||||||||
Purchase of capped calls related to issuance of convertible notes |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Shares issued to depositary bank |
||||||||||||||||||||||||||||||||||||
Exercise of share options |
||||||||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued |
||||||||||||||||||||||||||||||||||||
Share-based compensation |
– |
|||||||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank |
( |
) |
||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 |
( |
) |
SEA LIMITED UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued) (Amounts expressed in thousands of US dollars (“$”) except for number of shares) |
No of ordinary shares |
Ordinary shares |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Statutory reserves |
Accumulated deficit |
Total Sea Limited shareholders’ equity |
Non-controlling interests |
Total shareholders’ equity |
||||||||||||||||||||||||||||
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
$_ |
|||||||||||||||||||||||||||||
Balance as of January 1, 2020 |
( |
) |
||||||||||||||||||||||||||||||||||
Comprehensive loss: |
||||||||||||||||||||||||||||||||||||
Net loss for the period |
– |
( |
) |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||
Foreign currency translation adjustments |
– |
( |
) |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||
Net change in unrealized loss on available-for-sale investments |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Acquisition of subsidiary |
– |
|||||||||||||||||||||||||||||||||||
Appropriation of statutory reserves |
– |
( |
) |
|||||||||||||||||||||||||||||||||
Equity component of convertible notes |
– |
|||||||||||||||||||||||||||||||||||
Purchase of capped calls related to issuance of convertible notes |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Conversion and exchange of convertible notes into Class A ordinary shares |
||||||||||||||||||||||||||||||||||||
Transaction with non-controlling interests |
– |
( |
) |
( |
) |
( |
) |
|||||||||||||||||||||||||||||
Disposal of interest in a subsidiary |
– |
( |
) |
( |
) |
|||||||||||||||||||||||||||||||
Shares issued to depositary bank |
||||||||||||||||||||||||||||||||||||
Exercise of share options |
||||||||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued |
( |
) |
||||||||||||||||||||||||||||||||||
Share-based compensation |
– |
|||||||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank |
( |
) |
||||||||||||||||||||||||||||||||||
Balance as of September 30, 2020 |
( |
) |
( |
) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
1. | BASIS OF PRESENTATION |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
1. | BASIS OF PRESENTATION (continued) |
As of December 31, |
As of September 30, |
|||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
ASSETS: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
||||||||
Restricted cash |
||||||||
Accounts receivable, net |
||||||||
Prepaid expenses and other assets |
||||||||
Inventories, net |
||||||||
Short-term investments |
||||||||
Amounts due from related parties |
||||||||
Amounts due from intercompanies (1) |
||||||||
Total current assets |
||||||||
Non-current assets: |
||||||||
Property and equipment, net |
||||||||
Operating lease right-of-use assets, net |
||||||||
Intangible assets, net |
||||||||
Long-term investments |
||||||||
Prepaid expenses and other assets |
||||||||
Restricted cash |
||||||||
Deferred tax assets |
||||||||
Total non-current assets |
||||||||
Total assets (2) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
1. | BASIS OF PRESENTATION (continued) |
As of December 31, |
As of September 30, |
|||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
LIABILITIES: |
||||||||
Current liabilities: |
||||||||
Accounts payable |
||||||||
Accrued expenses and other payables |
||||||||
Advances from customers |
||||||||
Amounts due to related parties |
||||||||
Short-term borrowings |
||||||||
Operating lease liabilities |
||||||||
Deferred revenue |
||||||||
Income taxes payable |
||||||||
Amounts due to intercompanies (1) |
||||||||
Total current liabilities |
||||||||
Non-current liabilities: |
||||||||
Accrued expenses and other payables |
||||||||
Long-term borrowings |
||||||||
Operating lease liabilities |
||||||||
Deferred revenue |
||||||||
Amounts due to intercompanies (1) |
||||||||
Unrecognized tax benefits |
||||||||
Total non-current liabilities |
||||||||
Total liabilities |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Revenue |
||||||||
- Third party customers |
||||||||
- Intercompanies |
||||||||
Net profit (loss) |
( |
) |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Net cash (used in) generated from operating activities |
( |
) |
||||||
Net cash used in investing activities |
( |
) |
( |
) |
||||
Net cash generated from financing activities |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
1. | BASIS OF PRESENTATION (continued) |
(1) |
(2) |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
(a) | Principles of consolidation |
(b) | Use of estimates |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
(c) | Fair value of financial instruments |
(d) | Revenue recognition |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
(e) | Goodwill |
(f) | Allowance for credit losses |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
(f) | Allowance for credit losses (continued) |
(g) | Recent accounting pronouncements |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
3. | ACQUISITIONS AND DISPOSALS |
(a) |
Acquisitions |
$_ |
||||
Cash and cash equivalent |
||||
Prepaid expense and other assets, net of allowance for credit losses of $ |
||||
Long-term investments |
||||
Identifiable intangible assets (i) |
||||
Others |
||||
Total assets acquired |
||||
Accrued expenses, payables and liabilities |
( |
) |
||
Borrowings |
( |
) |
||
Others |
( |
) |
||
Total liabilities assumed |
( |
) |
||
Net assets acquired |
||||
Fulfilled by: |
||||
Cash consideration |
||||
Fair value of non-controlling interests (ii) |
||||
Fair value of previously held interests (iii) |
||||
Goodwill |
(i) |
(ii) |
(iii) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
3. | ACQUISITIONS AND DISPOSALS (continued) |
(b) |
Disposals |
4. | PROPERTY AND EQUIPMENT, NET |
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Computers |
||||||||
Office equipment, furniture and fittings |
||||||||
Leasehold improvements |
||||||||
Motor vehicles |
||||||||
Warehouse equipment |
||||||||
Land use right |
||||||||
Building |
||||||||
Construction-in-progress |
||||||||
Less: accumulated depreciation |
( |
) |
( |
) |
||||
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Cost of revenue |
||||||||
Sales and marketing expenses |
||||||||
General and administrative expenses |
||||||||
Research and development expenses |
||||||||
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
5. | INVESTMENTS |
(a) |
Short-term investments |
(b) |
Long-term investments |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
5. | INVESTMENTS (continued) |
(b) |
Long-term investments (continued) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
5. | INVESTMENTS (continued) |
(b) |
Long-term investments (continued) |
$_ |
||||
Balance at January 1, 2019 |
||||
Additions |
||||
Share of results |
( |
) |
||
Share of other comprehensive loss |
( |
) |
||
Distribution from investment |
( |
) |
||
Disposal |
( |
) |
||
Balance at September 30, 2019 |
||||
Additions |
||||
Share of results |
( |
) |
||
Share of other comprehensive income |
||||
Distribution from investment |
( |
) |
||
Impairment |
( |
) |
||
Balance at December 31, 2019 |
||||
Additions |
||||
Retained interest in a former subsidiary |
||||
Share of results |
( |
) |
||
Share of other comprehensive income |
||||
Distribution from investment |
( |
) |
||
Impairment |
( |
) |
||
Balance at September 30, 2020 |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
6. | CONVERTIBLE NOTES |
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Current: |
||||||||
2017 Convertible Notes |
||||||||
Non-current: |
||||||||
2018 Convertible Notes |
||||||||
2019 Convertible Notes |
||||||||
2020 Convertible Notes |
||||||||
(a) |
2017 Convertible Notes |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
6. | CONVERTIBLE NOTES (continued) |
(b) |
2018 Convertible Notes, 2019 Convertible Notes and 2020 Convertible Notes |
2018 Convertible Notes |
2019 Convertible Notes |
2020 Convertible Notes |
|
Issuance date |
|||
Maturity date |
|||
Principal amount |
$ |
$ |
$ |
Interest rate |
|||
Initial conversion rate |
|||
Agreed conversion date |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
6. | CONVERTIBLE NOTES (continued) |
(b) |
2018 Convertible Notes, 2019 Convertible Notes and 2020 Convertible Notes (continued) |
2018 Convertible Notes |
2019 Convertible Notes |
2020 Convertible Notes |
||||||||||
Liability component |
$ |
$ |
$ |
|||||||||
Effective interest rate |
% |
% |
% |
|||||||||
Equity component |
$ |
$ |
$ |
|||||||||
Debt issuance cost, allocated in proportion to the allocation of proceeds |
$ |
$ |
$ |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
6. | CONVERTIBLE NOTES (continued) |
(b) |
2018 Convertible Notes, 2019 Convertible Notes and 2020 Convertible Notes (continued) |
2019 Convertible Notes |
2020 Convertible Notes |
|||||||
Initial strike price per share |
$ |
$ |
||||||
Initial cap price per share |
$ |
$ |
(c) |
Exchange and conversion of 2018 Convertible Notes |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
7. | SHARE BASED COMPENSATION |
Granted in 2020 |
||||
Risk-free interest rates |
% |
|||
Expected term |
||||
Expected volatility |
% |
|||
Expected dividend yield |
||||
Fair value of share options |
$ |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
7. | SHARE BASED COMPENSATION (continued) |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Share options: |
||||||||
Cost of revenue |
||||||||
Sales and marketing expenses |
||||||||
General and administrative expenses |
||||||||
Research and development expenses |
||||||||
RSAs and RSUs: |
||||||||
Cost of revenue |
||||||||
Sales and marketing expenses |
||||||||
General and administrative expenses |
||||||||
Research and development expenses |
||||||||
SARs: |
||||||||
Cost of revenue |
||||||||
Sales and marketing expenses |
||||||||
General and administrative expenses |
||||||||
Research and development expenses |
||||||||
Total |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
8. | INCOME TAX EXPENSE |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Income tax |
||||||||
Deferred tax |
( |
) |
( |
) |
||||
Withholding tax expense |
||||||||
9. | LOSS PER SHARE |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Numerator: |
||||||||
Net loss attributable to ordinary shareholders |
( |
) |
( |
) |
||||
Denominator: |
||||||||
Weighted-average number of shares outstanding - basic and diluted |
||||||||
Basic and diluted loss per share: |
( |
) |
( |
) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
10. | RELATED PARTY TRANSACTIONS |
(a) |
Related parties (1) |
Name of related parties |
Relationship with the Company |
i) Tencent Limited and its affiliates (“Tencent”) |
(1) |
(b) |
The Company had the following significant related party transactions for the nine months ended September 30, 2019 and 2020, respectively: |
Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Royalty fee and license fee to: |
||||||||
- Tencent |
||||||||
Royalty fee and license fee from: |
||||||||
- Tencent |
||||||||
Rack rental income from: |
||||||||
- Tencent |
||||||||
Services provided by: |
||||||||
- Tencent |
||||||||
Interest expense to: |
||||||||
- Tencent |
||||||||
Conversion of convertible notes (principal amount) by: |
||||||||
- Tencent |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
10. | RELATED PARTY TRANSACTIONS (continued) |
(c) | The Company had the following significant related party balances as of December 31, 2019 and September 30, 2020: |
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Amounts due from related parties: |
||||||||
Current: |
||||||||
- Tencent |
||||||||
Amounts due to related parties: |
||||||||
Current: |
||||||||
- Tencent |
11. | SEGMENT REPORTING |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
11. | SEGMENT REPORTING (continued) |
For the Nine Months ended September 30, 2019 |
||||||||||||||||||||||||
Digital Entertainment $ |
E-Commerce $ |
Digital Financial Services $ |
Other Services $ |
Unallocated expenses (1) $ |
Consolidated $ |
|||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Operating income (loss) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||
Non-operating loss, net |
( |
) |
||||||||||||||||||||||
Income tax expense |
( |
) |
||||||||||||||||||||||
Share of results of equity investees |
( |
) |
||||||||||||||||||||||
Net loss |
( |
) |
For the Nine Months ended September 30, 2020 |
||||||||||||||||||||||||
Digital Entertainment $ |
E-Commerce $ |
Digital Financial Services $ |
Other Services $ |
Unallocated expenses (1) $ |
Consolidated $ |
|||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Operating income (loss) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||
Non-operating loss, net |
( |
) |
||||||||||||||||||||||
Income tax expense |
( |
) |
||||||||||||||||||||||
Share of results of equity investees |
( |
) |
||||||||||||||||||||||
Net loss |
( |
) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
For the Nine Months ended September 30, |
||||||||
2019 |
2020 |
|||||||
$_ |
$_ |
|||||||
Revenue |
||||||||
Southeast Asia |
||||||||
Latin America |
||||||||
Rest of Asia |
||||||||
Rest of the world |
||||||||
Consolidated revenue |
12. | FAIR VALUE MEASUREMENTS |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
12. | FAIR VALUE MEASUREMENTS (continued) |
Fair value measurement at December 31, 2019 |
||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) $ |
Significant other observable inputs (Level 2) $ |
Unobservable inputs (Level 3) $ |
Total $ |
|||||||||||||
Cash equivalents |
||||||||||||||||
Money market funds |
||||||||||||||||
Short-term investments |
||||||||||||||||
Time deposits – non-current |
||||||||||||||||
Available-for-sale investments – non-current |
||||||||||||||||
2017 Convertible Notes |
( |
) |
( |
) |
||||||||||||
Share appreciation rights |
( |
) |
( |
) |
||||||||||||
Fair value measurement at September 30, 2020 |
||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) $ |
Significant other observable inputs (Level 2) $ |
Unobservable inputs (Level 3) $ |
Total $ |
|||||||||||||
Cash equivalents |
||||||||||||||||
Short-term investments |
||||||||||||||||
Available-for-sale investments – non-current |
||||||||||||||||
Other current assets |
||||||||||||||||
Share appreciation rights |
( |
) |
( |
) |
||||||||||||
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
Level 3 instruments measured at fair value on a recurring basis $ |
||||
Assets: |
||||
Available-for-sale investments |
||||
Current: |
||||
Balance at January 1, 2019 |
||||
Investment during the year |
||||
Balance at December 31, 2019 |
||||
Conversion into ordinary shares of investee |
( |
) |
||
Addition |
||||
Balance at September 30, 2020 |
||||
Non-current: |
||||
Balance at January 1, 2019 |
||||
Impairment loss |
( |
) |
||
Fair value loss included in other comprehensive loss |
( |
) |
||
Balance at September 30, 2019 |
||||
Fair value gain included in other comprehensive loss |
||||
Balance at December 31, 2019 |
||||
Allowance for credit loss |
( |
) |
||
Fair value loss included in other comprehensive loss |
( |
) |
||
Balance at September 30, 2020 |
Other current assets |
||||
Balance at January 1, 2019 and December 31, 2019 |
||||
Acquisition of subsidiary |
||||
Additions |
||||
Disposals |
( |
) |
||
Write-down |
( |
) |
||
Exchange differences |
( |
) |
||
Balance at September 30, 2020 |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
12. | FAIR VALUE MEASUREMENTS (continued) |
Level 3 instruments measured at fair value on a recurring basis $ |
||||
Liabilities: |
||||
2017 Convertible Notes |
||||
Balance at January 1, 2019 |
( |
) |
||
Fair value loss |
( |
) |
||
Conversion into Class A ordinary shares |
||||
Balance at September 30, 2019 |
( |
) |
||
Fair value loss |
( |
) |
||
Balance at December 31, 2019 |
( |
) |
||
Fair value loss |
( |
) |
||
Conversion into Class A ordinary shares |
||||
Balance at September 30, 2020 |
SEA LIMITED NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) |
13. | COMMITMENTS AND CONTINGENCIES |