09:34 AM EDT, 08/13/2024 (MT Newswires) -- Sea (SE) second-quarter earnings fell year over year while revenue rose more than expected, driven by the company's e-commerce segment.

Revenue jumped to $3.81 billion during the three months ended June 30 from $3.1 billion a year ago, beating the consensus on Capital IQ of $3.72 billion.

The digital entertainment and e-commerce company's earnings per share during the quarter fell to $0.14 from $0.54 last year. Five analysts surveyed by Capital IQ were expecting the company to earn $0.19 on a GAAP basis. Total operating expenses rose 29% year over year to $1.5 billion, led by a 57% increase in sales and marketing costs.

Revenue from the e-commerce business, or Shopee, jumped 34% year over year to $2.82 billion, led by a roughly 33% gain in marketplace revenue. Core marketplace revenue, which consists of transaction-based fees and advertising, increased about 41% while sales tied to Sea's logistics services, dubbed value-added services, were up 16%.

"Generally, retail and consumer spending trends in the (Southeast Asia) region have remained healthy with domestic consumption continuing to be a main driver of economic performance in many markets," Chief Executive Forrest Li said on a call with analysts, according to a Capital IQ transcript. "This sets a very strong micro foundation for our e-commerce business."

Digital financial services revenue jumped 21% from last year to $519.3 million in the second quarter. Within digital entertainment, revenue declined 18% year over year to $435.6 million, driven by lower recognition of accumulated deferred revenue due to reduced bookings in prior quarters.

Active users within the digital entertainment division rose 19% year over year to 648 million in the second quarter while paying users increased by about 22% to 52.5 million.

"With the strong results delivered in the first half and our outlook for the rest of the year, we expect that Shopee will become adjusted EBITDA positive from the third quarter," Li told analysts. "We are also revising up our guidance for Shopee's 2024 full year (gross merchandise value) growth rate to the mid-20s."

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