Sea Limited (NYSE:SE) Q2 2019 Earnings Conference Call August 20, 2019 7:30 AM ET
Yanjun Wang - Group Chief Corporate Officer
Forrest Li - Chairman & Group Chief Executive Officer
Tony Hou - Group Chief Financial Officer
- 王艳君 - 集团首席企业官
- Forrest Li - 董事长兼集团首席执行官
- Tony Hou - 集团首席财务官
Miang Chuen Koh - Goldman Sachs
Mike Olson - Piper Jaffray
John Blackledge - Cowen
Ranjan Sharma - JPMorgan
Conrad Werner - Macquarie
- Miang Chuen Koh - Goldman Sachs
- Mike Olson - Piper Jaffray
- 约翰布莱克利奇 - 考恩
- Ranjan Sharma - 摩根大通
- 康拉德维尔纳 - 麦格理
Good day and welcome to the Sea Limited Second Quarter 2019 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Yanjun Wang. Mr. Wang please go ahead.
美好的一天，欢迎来到海洋有限公司2019年第二季度业绩电话会议。 所有参与者都将处于只听模式。 [操作员说明]请注意，此事件正在录制中。
Thank you, operator. Good evening and good morning everyone and welcome to Sea's 2019 second quarter earnings conference call. I am Yanjun Wang, Sea's Group Chief Corporate Officer.
Before we continue, I would like to remind you that we may make forward-looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release.
Also this call includes discussions of certain non-GAAP financial measures such as adjusted revenue and adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flow of our major businesses when used as a complement to our GAAP disclosures.
For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section of non-GAAP financial measures in our press release.
On the call with me are Sea's Chairman and Group Chief Executive Officer, Forrest Li; and Group Chief Financial Officer, Tony Hou. Forrest and Tony will share strategy and business updates, operating highlights, and financial performance for the quarter. This will be followed by a Q&A session in which we welcome any questions you have.
With that, let me turn the call over to Forrest.
与我联系的是Sea的董事长兼集团首席执行官Forrest Li;和集团首席财务官Tony Hou。 Forrest和Tony将分享本季度的战略和业务更新，运营亮点和财务业绩。接下来是问答环节，我们欢迎您提出任何问题。
Thanks, Yanjun. Hello everyone and thank you as always for joining today's call. I'm really pleased to report that we had another great quarter. Across the business we saw sustained strong growth and further improvement on the top and bottom lines. For Sea as a whole, our adjusted revenue tripled year-on-year to reach $665.4 million and our adjusted EBITDA improved once again to negative $11 million.
Our results for the quarter show that we continued to drive revenue growth and improved efficiencies across our business. We're increasingly able to fuel our growth with cash generated through operations which we believe positions us well to continue driving long-term sustainable growth.
As you know at the start of the year we set ourselves some very ambitious targets for adjusted revenue growth in 2019. With our very strong performance in the first half of the year, we have decided to raise our guidance for our full year adjusted revenue for both digital entertainment and e-commerce.
For digital entertainment, we now expect full year 2019 adjusted revenue to be between $1.6 billion and $1.7 billion, representing 142.0% to 157.2% growth from 2018. This compares to the previous guidance of between $1.2 billion and $1.3 billion, representing 81.5% to 96.7% year-on-year growth.
We are also increasing our guidance for full year adjusted revenue for e-commerce to between $780 million and $820 million [ph] which represents 168.3% to 182.1% growth from 2018. This compares to the previously stated guidance of between $630 million and $660 million, representing 116.7% to 127.0% year-on-year growth. Our increased full year targets reflect our confidence in both the growth opportunities ahead and in our ability to execute our strategies to capture those opportunities.
Let me start with Garena where we saw healthy growth across key metrics in the second quarter. On the topline adjusted revenue for the digital entertainment business more than tripled year-on-year to $443.2 million. In terms of the bottom-line adjusted EBITDA for digital entertainment was up 443% year-on-year to $263.8 million. Adjusted EBITDA margins further increased to 59.5% for the second quarter of 2019 from 34.9% for the second quarter of 2018.
Our quarterly active user numbers, or QAU, almost doubled from a year ago to reach more than 310.5 million. The paid user ratio which quarterly -- which is quarterly paying users as a percentage of QAUs more than doubled from 4.1% a year ago to 8.4% in the second quarter.
There are three key highlights to Garena's success this quarter. First, we continued to drive strong organic growth in active users globally. In particular, Free Fire, our self-developed smash hit game was the third most downloaded mobile game and the most downloaded battle royale game globally across the Google Play and the iOS App Store in the second quarter according to App Annie.
We are excited to see continued user growth across our core markets of Southeast Asia and Latin America as well as in other growth markets like India, Russia, Turkey, and the Middle East.
我们的季度活跃用户数（QAU）几乎翻了一番，达到了3.105亿。按季度支付的用户比例 - 季度支付用户占QAU的百分比从一年前的4.1％增加一倍以上，到第二季度的8.4％。
Garena本季度的成功有三个关键亮点。首先，我们继续推动全球活跃用户的强劲有机增长。根据App Annie的说法，Free Fire是我们自行开发的热门游戏，是第二季度下载次数最多的手机游戏，也是第二季度Google Play和iOS App Store全球下载量最大的战斗游戏。
Second, we are strengthening our foothold in Latin America. As we mentioned in previous quarters, the huge success of Free Fire in Latin America is opening up opportunities for Garena in this high-growth market of more than 600 million people.
I'm pleased to report that in late July, we launched the Garena Speed Drifters across Latin America. This is the first third-party licensed game that we are publishing in Latin America and it is an important step forward in expanding our footprint in this very exciting market.
Finally, we continue to deepen our engagement with our gamers, while driving monetization across our game portfolio. For example throughout June, we ran a series of themed competition in Free Fire and offered a wide range of in-game items based on campaign themes, which were very popular with our gamers. This translated into both user number and revenue growth for the game.
At the same time our esports and community building efforts are also enhancing engagement across our titles. In Brazil, for example, we hosted our largest ever esports tournament for Free Fire in that market in July which attracted over 12 million views online. During the grand final of the tournament, the peak on current views on YouTube alone exceeded 800,000.
In June and July, we also hosted Arena of Valor World Championship in Vietnam. This was the first time that this global tournament was held in Southeast Asia and it was a huge success. We recorded cumulative online views of over 74 million with over 850,000 concurrent views at the peak. We believe that this showcases Arena of Valor’s popularity as one of the region’s top mobile MOBA games.
Looking to the quarters ahead, our pipeline remains strong. For example, we recently launched pre-registration for Call of Duty: Mobile in our core markets in Southeast Asia. We also see plenty of headroom for our existing titles to continue growing. In particular, as we further deepen engagement with Free Fire’s growing global user base, we believe that this game and the battle royale genre in general are still young and evolving.
For the upcoming quarters, we believe that Garena is in a great position for long-term growth. This is also reflected in our decision to raise the full year outlook for the digital entertainment business.
Turning to Shopee. In the second quarter, we continued to deliver on our strategy to scale with efficiency to capture market share and deepen monetization. Looking first at growth, Shopee further strengthened its market leadership. In the second quarter, it ranked the highest in the Shopping category by both average monthly active users, and by app downloads across the Google Play and iOS App Stores, in both Southeast Asia and Taiwan, and ranked the third in app downloads in the same category globally, according to App Annie.
Gross orders for the quarter increased more than 90% year-on-year to 246.3 million, and GMV for the quarter increased 72.3% year-on-year to $3.8 billion. These data points underline our success in building and sustaining a strong and engaged user base across the region and continuing to capture market share. As we scale, we also continue to improve on growth efficiency. Shopee’s adjusted EBITDA loss per order decreased by $0.46, or 31.3%, compared to the same period in 2018.
我很高兴地报告说，在7月下旬，我们在拉丁美洲推出了Garena Speed Drifters。这是我们在拉丁美洲发布的第一个第三方授权游戏，它是在这个激动人心的市场中扩大我们的足迹的重要一步。
转向Shopee。在第二季度，我们继续实施我们的战略，以提高效率以获取市场份额并加深货币化。首先考虑增长，Shopee进一步加强了其市场领导地位。在第二季度，它在平均每月活跃用户数量和在东南亚和台湾的Google Play和iOS应用商店中的应用下载量排名在购物类别中最高，并且在应用下载中排名第三根据App Annie的说法，全球范畴。
More importantly, we continue to see sustained improvements in monetization and take rate and adjusted revenue more than tripled year-on-year to $177.4 million dollars. Adjusted revenue as a percentage of total GMV increased to 4.6% in the second quarter, up from 2.6% for the same period a year ago. And adjusted marketplace revenue as a percentage of total GMV reached 3.6% in the quarter.
Indonesia, the biggest e-commerce market in Southeast Asia and also Shopee’s biggest market, our growth accelerated in the second quarter as we further extended our market leadership. We reached over 110 million orders for the quarter, which represents a daily average of over 1.2 million orders.
In Taiwan, Shopee continued to record a positive quarterly adjusted EBITDA before allocation of the headquarters’ common expenses for the second quarter. This is a powerful demonstration of the long-term profit potential of our e-commerce model. Our focus for Shopee is not only on the quantity of growth, but also on quality.
We believe that long-term success for Shopee is based on capturing the hearts and minds of shoppers in our region, and translating that into deep and sustained user engagement. That’s why one metric that we track closely is total time in app, which we believe is a measure of our ability to attract, and deepen engagement with our users. By this metric, Shopee was once again number one in the second quarter in Southeast Asia as a whole and in each of our five biggest markets on Android, according to App Annie.
From the beginning, we designed the Shopee experience to be highly engaging and social, by pioneering in-app live chats, games and social features in our region. And we are constantly working on new ways to enhance the user experience. For instance, we rolled out our new livestreaming feature across all of our markets by the second quarter. This feature offers a new and powerful way for consumers to engage with our platform, brands and sellers through live video streams created by Shopee or by the sellers themselves.
As consumers discover new products through this feature, they can make immediate purchases without leaving the stream. We also employed AI and AR technologies to further enhance consumer experience on our platform. For example, our new AI and AR powered tools, which were introduced in partnership with L’Oreal, enable our users to try different shades of make-up or get personalized, professional skincare advice in the Shopee app.
In addition, we leveraged our unique strengths in both digital entertainment and social commerce by introducing esports streaming on the Shopee platform. This has helped us attract and better engage with an even broader audience across market segments. And just last week, we announced the world-famous footballer Cristiano Ronaldo as Shopee’s new brand ambassador in Southeast Asia and Taiwan. Ronaldo is one of the world’s best known athletes and an icon across our region. We are confident that our partnership with him will resonate with consumers and deepen their engagement with the Shopee brand.
我们相信Shopee的长期成功是基于捕捉我们地区购物者的心灵和思想，并将其转化为深刻和持续的用户参与。这就是为什么我们跟踪的一个指标是应用程序的总时间，我们认为这是衡量我们吸引和加深与用户互动的能力的指标。 App Annie表示，根据这一指标，Shopee在整个东南亚第二季度以及Android上五个最大市场中的每一个都再次成为第一。
We believe that our focus on keeping our users engaged and entertained gives Shopee unique strengths in better attracting and retaining users. It also offers us numerous opportunities to better understand our users’ needs and preferences to help them discover more new products on our platform.
To conclude, looking to the second half of the year, we believe we are in a great position to drive sustained growth across both e-commerce and digital entertainment, and to do so with increasing efficiency. That said, we are still very much in growth mode across our businesses. We have a great opportunity ahead of us to grow our markets over the long term and we are very well placed to capture the largest slice of this growing pie.
As we have always said, we believe scale and strong market leadership will translate into long-term profitability. Our results for the second quarter demonstrate that our businesses become increasingly efficient as we scale, and we are committed to continuing scaling up to maximize those efficiencies.
With that, I will invite Tony to share more about the financials.
Thank you, Forrest, and thanks to everyone for joining the call. We have included detailed quarterly financial schedules together with the corresponding management analysis in today’s press release. So, I will focus my comments on the key financial metrics.
For Sea overall, our second quarter total adjusted revenue was $665.4 million, an increase of 203% year-on-year. This was mainly driven by the growth of our digital entertainment business, especially our self-developed game Free Fire and our continuous monetization efforts in our e-commerce business in the past quarters.
Digital entertainment adjusted revenue was $443.2 million, an increase of 219% year-on-year. The growth was primarily driven by the enlarged paying user base as we continue to improve the monetization of our games, especially Free Fire.
Digital entertainment adjusted EBITDA was $263.8 million, an increase of 443% year-on-year mainly due to strong top line growth and our self-developed game accounting for an increased share of revenue. The increase was also partially due to the improved operating efficiencies as shown by the lower sales and marketing expenses as well as general and administrative expenses as a percentage of adjusted revenue.
E-commerce adjusted revenue was $177.4 million, up 202% year-on-year. Within this, marketplace revenue was $137.8 million, up 269% year-on-year, while product revenue was $39.7 million, up 85% year-on-year. E-commerce adjusted EBITDA loss was $248.3 million as we continued our investment to fully capture the market opportunity in the region. We will continue driving the high quality growth by serving the users needs better and improving operational efficiencies in the long run.
Digital financial services adjusted revenue was $2.8 million, a decrease of 18% year-on-year from $3.4 million in the second quarter of 2018 as we focused our efforts on strengthening the infrastructure to support our existing platforms.
Adjusted EBITDA loss was $18.1 million in the second quarter of 2019 compared to a loss of $6.8 million in the same period of 2018. This was primarily due to our continued efforts to integrate our AirPay and Shopee platforms.
Returning to our consolidated numbers, we recognized a net non-operating loss of $29.2 million in the second quarter of 2019 compared to a net non-operating loss of $30.8 million in the second quarter of 2018. We had a net income tax expense of $15.3 million in the second quarter of 2019, which was primarily due to withholding tax and corporate income tax recognized in our digital entertainment segment.
Finally, net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, was $215.1 million in the second quarter of 2019 as compared to $198.7 million for the same period in 2018.
With that, let me turn the call back to Yanjun.
Thank you, Forrest and Tony. We're now ready to open the call for questions. Operator?
Thank you. [Operator Instructions] Our first question today comes from Miang Chuen Koh with Goldman Sachs. Please go ahead.
谢谢。 [操作员说明]今天我们的第一个问题来自Miang Chuen Koh和Goldman Sachs。 请继续。
Miang Chuen Koh
Hi. Thank you for the opportunity. On the gaming business, it appears that the average revenue per paying user fell quite a bit quarter-to-quarter. I recognized, there maybe some dilution for more Free Fire paid users but then again the paying users increased even more Q-on-Q in the first Q and the operating fallen much again on a sequential basis. So just wondering, what drove sort of the larger-than-usual decline in ARPU? And secondly, Free Fire revenues in the quarter, is it possible to give us some indications? And then thirdly, on your expansion plans globally especially in places like LatAm can you give us a sense of whether we should be expecting a lot more headcount increases in some of these regions and how that would affect your OpEx structure in the second half of this year?
And then, if I may as well on the e-commerce side a couple of questions as well. One, the take rate increased 70 basis points Q-o-Q which is quite high. Can we have a sense of how much of this 70 basis points increase was from value-added service and how much was from commissions and advertising? And finally, Indonesia, will Sea start to charge Star Sellers obviously on the C2C marketplace side in July? What exactly do you see from – in the industry perspective that gives you confidence in that and what does it mean for other markets? Sorry that's quite a handful of questions. But thank you.
你好。谢谢你给我的机会。在游戏业务方面，每个付费用户的平均收入似乎每季度下降很多。我认识到，对于更多Free Fire付费用户可能会有一些稀释，但是再次付费用户在第一个Q中增加了更多Q-on-Q，并且操作在顺序基础上再次下降。所以只是想知道，是什么推动了ARPU下降幅度大于平常？其次，本季度的Free Fire收入是否有可能给我们一些指示？第三，关于你在全球范围内的扩张计划，特别是在LatAm这样的地方，你能否让我们了解一下这些地区是否应该期待更多的员工人数增加以及这将如何影响你下半年的运营结构年？
然后，如果我在电子商务方面也可以提出几个问题。一，采取率提高70个基点Q-o-Q相当高。我们是否可以了解这70个基点的增加中有多少来自增值服务，以及多少来自佣金和广告？最后，印度尼西亚将于7月开始在C2C市场方面明显向Sea卖家收取费用吗？您究竟从什么角度看 - 从行业角度来看，这让您对此充满信心，对其他市场意味着什么？对不起，这是一些问题。但是谢谢你。
Thank you, MC. Happy to answer your questions. Regarding the ARPPU trends, I think as we discussed before when we look at esports title that has a large user base and long game life, we tend to focus on different things and different phase. It usually starts with growing the user base, and then gradually ramping up monetization deepen the pay user ratio and then optimize for ARPPU.
So, for Free Fire in particular as you can see we have seen very strong growth both on the user side as well as on the pay user penetration quarter-on-quarter. And this is contributing significantly to the revenue increase as well. And in terms of ARPPU, it is not currently the focus for us. For Free Fire we believe the game is still very young, and has a long runway and we are focusing on broadening the user base as well as continue to deepen the pay user penetration.
For example, one tool that we find pretty helpful in bringing more pay users to our game would be the Elite Pass or the Fire Pass. Although, it has a lower ticket size at $5 a month, but it's a very effective in converting free user to pay user over time. And for that, we've been focusing on promoting more of a Fire Pass user engagement over the period.
So as you can see overall our revenue trend has been very positive and the margin has increased also over time even though we already started with very high margin compared to the game industry as a whole. So we think this is a positive trend and shouldn't be of any concern. And we think in the longer run, there will be growth potential on the revenue as well as ARPPU side both for the game business and for Free Fire in particular.
In terms of Free Fire revenue outlook, as mentioned earlier we think the game is still young and evolving and we're very focused on bringing new contents into the game. We have more than 300 developers in our studio now and about half of them are devoted to creating new content, new innovations for the game to engage the user better.
And more recently we have offered themed competitions and themed virtual items that have been very effective to attract new users. This is a new mode of play that we have introduced. So we are quite confident about Free Fire's revenue and the trend going forward.
As you can see in our revised guidance that we basically are guiding towards a more than 140% to more than 150% year-on-year growth in our game revenue and that is largely attributable to the strength in the Free Fire game performance over the longer run. And also over all our other existing games so we continue to see pretty stable performance. So we are confident of our longer-term game performance in the markets.
In terms of LatAm expansion, we have set up small operations locally in Brazil and Mexico and we are quite careful in expanding into new markets. These teams are focused on local operations being with payment partners and organizing local esports events and community building, as well as local customer services. So our focus will be to gradually ramp up operations.
因此，特别是对于Free Fire，您可以看到我们在用户方面以及按季度付费用户渗透方面都取得了非常强劲的增长。这也为收入增长做出了重大贡献。就ARPPU而言，它目前不是我们关注的焦点。对于Free Fire，我们认为游戏仍然很年轻，并且有很长的跑道，我们专注于扩大用户群并继续加深付费用户渗透率。
例如，我们发现一个非常有助于为我们的游戏带来更多付费用户的工具是Elite Pass或Fire Pass。虽然它的票价较低，每月5美元，但它可以非常有效地将免费用户转换为付费用户。为此，我们一直专注于在此期间推广更多Fire Pass用户参与。
But as you can see from our past practices and track record, our gaming operation has been highly efficient in terms of G&A spending has been fairly low and that gives rise to the high EBITDA margin in our gaming business compared to the industry standard.
Now turning to e-commerce, yes, as you've observed our take rate continue to rise and this is basic -- to us, it's a clear sign that as we scale and continue to gain market leadership and market share across various markets we are also able to ramp up monetization, while we continue to grow.
And in terms of the up-tick in the take rate, the vast majority of that is from the high-margin type of parts of the revenue; i.e. the commission handling fee and advertisement income.
So we think we're on a very healthy growth path over time to monetize over the e-commerce platform. However at this stage, we are very much focused on growing the platform and attracting more users, more sellers as well as building up our assortments and services to the sellers. We are not worried about the potential to monetize it as we have shown. This is a -- had a huge runway to go.
And at this time we are focused on building up our leadership -- market leadership across the markets which is showing in all of the various -- for example, we're the top ranked app in terms of downloads, user time spent, monthly active users in the shopping category in our region. And these are also important indicators of the growth of the platform and the solid leadership it is able to command across the market.
And in terms of the star seller as you correctly pointed out, we have started to charge a commission on the star sellers in Indonesia. Again, we see very robust growth in Indonesia for our e-commerce platform as we continue to extend our market leadership.
In Q2 our daily order volume has exceeded 1.2 million and accelerated growth from quarter-to-quarter. And even though Indonesia is while -- actually our largest market, it is also enjoying of the highest growth rates across different markets. So as a result we are also providing more services and returning greater value to our sellers as they derive the most sales volume and income from our platform and they are happy to pay the rate because they see the value in working with us, in providing them the access to the vast user base, the services, the integrated logistics and payment services we provide them as well as the other services.
And therefore we believe over the long run, we can gradually ramp up -- continue to ramp up monetization across different markets including Indonesia our biggest market where we are commanding a strong -- even stronger leadership now. And we are confident about that approach.
现在转向电子商务，是的，正如你所看到的那样，我们的采取率继续上升，这是基本的 - 对我们来说，这是一个明显的迹象，当我们扩大并继续在各个市场获得市场领导地位和市场份额时，我们在我们继续发展的同时，我们也能够提升盈利能力。
因此，我们认为随着时间的推移，我们正处于一个非常健康的增长道路上，以便通过电子商务平台获利。然而，在这个阶段，我们非常注重发展平台，吸引更多用户，更多卖家以及为卖家建立我们的分类和服务。正如我们所示，我们并不担心将其货币化的可能性。这是一个 - 有一个巨大的跑道去。
此时我们专注于建立我们的领导力 - 市场中的市场领导力，这些领域正在各种各样的领域展示 - 例如，我们在下载，用户花费的时间，月度活跃方面是排名第一的应用程序我们所在地区的购物类别的用户。这些也是该平台增长的重要指标，也是其能够在整个市场中占据领先地位的重要指标。
在第二季度，我们的每日订单量已超过120万，并且按季度加速增长。尽管印度尼西亚虽然是时间 - 实际上是我们最大的市场，但它也是不同市场中增长率最高的国家。因此，我们也提供更多服务，并为我们的卖家带来更大的价值，因为他们从我们的平台获得最大的销量和收入，他们很乐意支付费率，因为他们看到与我们合作的价值，提供他们访问我们提供给他们的庞大用户群，服务，综合物流和支付服务以及其他服务。
因此，从长远来看，我们相信，我们可以逐步提升 - 继续增加不同市场的货币化，包括印度尼西亚这个我们最强大的市场 - 现在我们的强大领导力。我们对这种方法充满信心。
Miang Chuen Koh
Got it. Thank you.
The next question comes from Mike Olson with Piper Jaffray. Please go ahead.
接下来的问题来自Mike Olson和Piper Jaffray。 请继续。
Hey, thanks for taking my questions. So as you just talked about Latin America has been a surprisingly strong region. But outside of Latin America, do you believe there's a significant opportunity in some of these other regions that you mentioned like Eastern Europe, India, Middle East et-cetera? And will you focus on building out those regions with Free Fire first or with other third-party games?
And then just overall, you've mentioned continued opportunities for growth broadly for the business across both major segments. What do you expect your key areas of investment across the company will be in the next few quarters? Will it be new game development or new content for existing games or marketing or subsidies? Or what kinds of things will you be specifically investing in for growth? Thanks.
嘿，谢谢你接受我的问题。 所以你刚才谈到拉丁美洲一直是一个令人惊讶的强大地区。 但是在拉丁美洲之外，您是否认为在东欧，印度，中东等地区提到的其他一些地区存在重大机遇？ 您是否会专注于首先使用Free Fire或其他第三方游戏来构建这些区域？
然后总的来说，你已经提到了两个主要部门的业务持续增长的机会。 您对未来几个季度公司投资的关键领域有何看法？ 是现有游戏或营销或补贴的新游戏开发还是新内容？ 或者你将专门为增长投入什么样的东西？ 谢谢。
Thank you. In terms of expansion into the other high-growth market, we have mentioned before that we see very strong user growth in markets like India, Russia, Turkey, the Middle East for our self-developed game Free Fire. And we believe that with the wealth of user data and deepening user understanding over time, we acquire from this global hit game we are very well-positioned to introduce -- continue to build upon the success of that game to deepen monetization as well as potentially introducing new content and even new IP, whether it's self-developed or third-party to these markets; just like what we did in LatAm.
We started with Free Fire, our self-developed game, grow the user base there, monetize over time. And now we are reaping the fruits of that efforts.
And in addition, we have recently rolled out a second game, which is a third-party licensed game from Tencent Speed Drifters in the market. We believe this approach can also potentially work in the other high-growth markets. And I think given that our unique advantage in being able to operate well and deeply in so many complex diverse, but high-growth young markets across the globe, we are very well-positioned to capitalize on the new opportunities in these emerging markets with the rise of mobile technologies. That enables a lot more new content to be introduced to our users across the world.
And in terms of key areas of investments, we are very much focused on the gaming side, both deepening our development capabilities as well as global expansion. On the other hand, if you take a look at our gaming performance so far, we enjoy very high growth at the very high EBITDA margin. That doesn't mean that we're not investing in games. We're actually investing heavily in terms of human capital. This business we believe is a creativity-based business. It's not about just dumping money to buy growth. It is about deepening understanding of the user making good use of the wealth of user data we have and leverage the experience and understanding of our complex diverse markets to build up content development capabilities and that is very much talent-driven as well as knowledge-driven.
So to that thought, we devote a lot of time and resources in terms of the management timing and management focus continue to develop our game businesses and also in understanding our global markets better to introduce more content globally. On the e-commerce side, as we mentioned, we're in a better-than-ever position to build up our e-commerce ecosystem as our platform continue to scale. As you can see, we're enjoying increasing efficiency. In terms of EBITDA loss per order, this continues to decline over time. And our sales marketing has been fairly stable as a percentage of GMV. But as we mentioned before, shipping subsidy is increasingly a minor part of the sales and marketing.
A large part -- the majority of the sales market spending is now discretionary brand marketing. For example, our partnership with Mr. Cristiano Ronaldo and our sponsorship of Liga 1 in Indonesia, which is the most popular football event nationally. These are very efficient marketing activities delivering high ROI for us and promoting our brand awareness across the region as well as globally. So we will continue to be opportunistic about it and leverage good marketing opportunities to further promote our brand as we become a go-to marketplace in our region.
谢谢。在扩展到另一个高增长市场方面，我们之前已经提到，我们看到印度，俄罗斯，土耳其，中东等市场的用户增长非常强劲，因为我们自行开发的游戏Free Fire。我们相信随着时间的推移，随着用户数据的丰富和用户理解的深入，我们从这个全球热门游戏中获得了我们非常有利的介绍 - 继续在该游戏的成功基础上进一步加深货币化以及潜在的利益引入新内容甚至是新知识产权，无论是自主开发还是第三方进入这些市场;就像我们在LatAm中所做的那样。
很大一部分 - 大部分销售市场支出现在是可自由支配的品牌营销。例如，我们与克里斯蒂亚诺罗纳尔多先生的合作伙伴关系以及我们在印度尼西亚赞助的Liga 1，这是全国最受欢迎的足球赛事。这些是非常有效的营销活动，为我们提供高投资回报率，并在整个地区和全球范围内提升我们的品牌知名度。因此，随着我们成为本地区的首选市场，我们将继续对此投机取巧，并利用良好的营销机会进一步推广我们的品牌。
The next question comes from John Blackledge with Cowen. Please go ahead.
Great. Thanks. A couple of questions on Shopee and one on Garena. How should we think about the -- for Shopee the GMV trajectory in the back half of the year? And if you can talk about kind of market share positioning and any update on the competitive environment across the different markets? And then second on Shopee. The second quarter growth was really strong, obviously particularly order growth. But the AOV was a little lower than we thought. Just any color on what drove the lower AOV and how we should think about that going forward? And then on Garena, just any color on the Free Fire Pass and what's the monetization around that and what that looks like going forward? Thank you.
非常好。 谢谢。 关于Shopee的一些问题和关于Garena的一个问题。 我们应该如何看待Shopee在今年下半年的GMV轨迹？ 如果您可以谈论市场份额的定位以及不同市场竞争环境的任何更新？ 然后是Shopee的第二名。 第二季度增长非常强劲，显然特别是订单增长。 但AOV比我们想象的要低一点。 是什么颜色驱动了较低的AOV以及我们应该如何思考未来？ 然后在Garena上，只有Free Fire Pass上的任何颜色，以及那里的货币化以及前进的样子是什么？ 谢谢。
Thank you. In terms of the Shopee, GMV trajectory as we continue to scale the platform across different markets for Q2 we have 70% [ph] year-on-year growth in GMV and more than 90% year-on-year growth in order. And the GMV growth is slightly lower than order growth is as you mentioned relating to the average order value. And to that, we do have a view on what will be a optimal value or range of optimal value for our markets in building out a general merchandise marketplace e-commerce.
If you look at some of the large e-commerce, general merchandise e-commerce platform such as Taobao, we understand their basket size is also around the mid-teens range. We think that's a good range to have for building a e-commerce platform in all markets as well with the focus on the key categories of fashion, health and beauty, home and living as well as baby products. These are the high-margin now standardized products that lend themselves very well to build up a large diverse seller base and buyer base and eventually the largest e-commerce marketplace in China.
So we believe we will focus on building out these core categories and drive user base as well as drive frequency while maintaining a healthy range of order value. So in particular relating to the Q-on-Q fluctuation, for example there are different reasons the intrinsic factor that could affect the period-to-period order -- average order value. During the Ramadan season for example, we see higher demand in the fashion category, which tend to have a smaller basket size and therefore could affect the order value as a whole. So they are -- these are the intrinsic factors we think as far as we maintain a healthy mix of in terms of the GMV of different categories for our marketplace ecosystem. We are on track to continue to grow the marketplace and extend our leadership further.
So that falls to the next question regarding competition. Now I think it's -- obviously we take competition very seriously and have a deep respect for our peers in the market. And -- but some context I think it's important to note that none of the competition we currently see is new to us. Our peers have been longer established have been in the market for many years before we even started the e-commerce business. And yet, we managed to grow from zero to market leadership with more than 15 billion of annualized GMV and a Q2 4.6% of take rate in less than four years time over such diverse complex markets. None of them are in all the markets that we are in.
So we have local competition, but we don't even have competition across all these markets. So I think our track record has shown that we have been very effective in competition. And we believe we will continue to be so because our competitive advantages are in our understanding of the right timing, right model and right market for the e-commerce marketplace business as well as our ability to execute very well in highly diverse complex markets, with highly localized operations and adapt our business strategies over time based on our deep understanding of local users as well as market conditions in addition to our deep understanding of the efforts of marketplace e-commerce that business model.
因此，我们相信我们将专注于构建这些核心类别，推动用户群和驱动频率，同时保持健康的订单价值范围。因此特别是与Q-on-Q波动有关，例如，可能影响周期 - 阶段顺序的内在因素 - 平均订单价值的原因不同。例如，在斋月期间，我们看到时尚类别的需求增加，这种需求往往具有较小的篮子尺寸，因此可能影响整体的订单价值。所以他们是 - 这是我们认为的内在因素，就我们的市场生态系统的不同类别的GMV而言，我们保持健康的组合。我们有望继续发展市场并进一步扩大我们的领导地位。
所以这是关于竞争的下一个问题。现在我认为 - 显然我们非常重视竞争，并对市场上的同行深表敬意。而且 - 但在某些情况下，我认为值得注意的是，我们目前看到的竞争对我们来说都不是新鲜事。在我们开始电子商务业务之前，我们的同行已经在市场上建立了多年。然而，我们成功地从零增长到市场领先地位，在不同的复杂市场中，不到四年的时间内，年度GMV超过150亿，第二季度采购率为第二季度的4.6％。它们都不在我们所在的所有市场中。
So I think these competitive advantages remain. And we now have additional advantage of being the market leader across markets in e-commerce. And as you can see some of our peers are now following our footsteps in some of their operations. For example, focusing more on mobile, switching from 1P to a marketplace model, and focusing more on the social aspects of it or even in charging student take rates, et cetera.
We have a lot of respect for our peers and their efforts in this regard, and we believe that collectively all these industry players including us growing the pie for all of us as a whole. Given the low penetration rate of online retail currently in our region, we believe there's a huge potential opportunity for all of us to tap. And being the market leader with existing scale and given our growth rate, we believe we have the best opportunity to tap the largest -- to take the largest share of the growing pie over time.
And in terms of Free Fire monetization and outlook, as mentioned before, we believe this Free Fire is a battle royale game. It has a lot of depth in it. It's very young and still evolving. And we're constantly building new content, new modes of playing into this game.
And we believe that as we continue to see organic user growth across markets including our core market in Southeast Asia, Taiwan, in Latin America as well as the new frontier markets in India, Russia, Middle East, Turkey we believe the game has a huge potential and a long runway, and we are now still focusing on continuing to grow the user base as well as deepen the user penetration.
我们非常尊重我们的同行和他们在这方面的努力，我们相信包括我们在内的所有这些行业参与者共同为我们所有人增加了馅饼。鉴于目前我们地区的在线零售普及率较低，我们认为我们所有人都有巨大的潜在机会。作为现有规模的市场领导者和我们的增长率，我们相信我们有最好的机会来挖掘最大的 - 随着时间的推移占据不断增长的最大份额。
就前面提到的Free Fire货币化和前景而言，我们相信这场Free Fire是一场战斗游戏。它有很多深度。它很年轻，而且还在不断发展。我们不断构建新内容，新游戏模式。
The next question comes from Ranjan Sharma with JPMorgan. Please go ahead.
接下来的问题来自Ranjan Sharma和摩根大通。 请继续。
Hi. It's Ranjan from JPMorgan. Thank you for the call. Two questions for my side. Firstly, on the gaming side, you of course had a very strong second quarter, but if I look at this -- if I look at the top end of your gamings revenues guidance, it feels like you don't -- you're not expecting any further growth in quarterly revenues in the third and fourth quarter of this year, despite having two strong launches in Speed Drifters and in Call of Duty. If you can share your thoughts around -- on how you get to this guidance. ARE you expecting any kind of maturity in Free Fire coming through? So that's the first question.
Secondly, in terms of Indonesia, we have seen LinkAja, a local payment business getting access to a number of platforms across the marketplaces. I don't think it's part of Shopee yet. If you can share like if you're looking to add them as well or if you're looking to grow your own Shopee pay business. Thank you.
你好。 这是摩根大通的Ranjan。 谢谢你的来电。 对我来说有两个问题。 首先，在游戏方面，你当然有一个非常强大的第二季度，但如果我看看这个 - 如果我看看你的游戏收入指导的最高端，感觉就像你没有 - 你是 尽管在Speed Drifters和Call of Duty中有两次强势发布，但预计今年第三和第四季度的季度收入不会进一步增长。 如果您可以分享您的想法 - 关于如何获得此指导。 您是否期望在Free Fire中有任何成熟期？ 这是第一个问题。
其次，就印度尼西亚而言，我们已经看到LinkAja，一家本地支付企业，可以访问市场中的多个平台。 我不认为它是Shopee的一部分。 如果您可以分享，如果您想要添加它们，或者您正在寻求发展自己的Shopee支付业务。 谢谢。
Sure. So if you look at our guidance, it is based on the year-on-year growth. It is a very high rate at 142% to 157%. And if you look at our EBITDA -- adjusted EBITDA for this quarter, I believe it's higher than our adjusted EBITDA for last year the entire year. So we are continuing to see very strong growth in our game -- on the games side, and as usual we hope to be able to deliver beyond expectations.
And for the new games, we have launched or start pre-registration for including Speed Drifters in the LatAm market as well as Call of Duty: Mobile in Southeast Asia and Taiwan as mentioned our focus would initially still be on growing the user base, understanding the user preferences for this new genre.
In the case of Drifter, a racing game for the LatAm users. And in case of CODM, a mobile FPS game with a very big IP, but also being newly introduced to our region as being a free to play kind of mode. So there are a lot for us to work on to -- with in collaboration with the developers and to understand our markets better, understand the user preferences, grow the user base before we gradually ramp up monetization.
So in terms of payment, we obviously don't discuss any specific commercial arrangement, but we've been supporting our Shopee platform also with our own payment app and with the integration of our own self-owned e-wallet with the Shopee app over time. We've seen user adoption very encouraging signs of user adoption. And we believe that to show financial services will be one of the largest opportunities in the digital economy of our region, and we stand very well positioned to benefit from the growth of that given our own capabilities track record in that front in building up the e-payment as an infrastructure for our Shopee as well as Garena businesses as well as further growing DFS overall.
当然。因此，如果你看看我们的指导，它是基于同比增长。这是一个非常高的比例，在142％至157％。如果你看一下本季度我们的EBITDA - 调整后的EBITDA，我认为它高于去年全年的调整后EBITDA。所以我们继续看到我们游戏的强劲增长 - 在游戏方面，和往常一样，我们希望能够超越预期。
对于Drifter来说，这是LatAm用户的赛车游戏。在CODM的情况下，一款具有非常大的IP的移动FPS游戏，但也被新引入我们的地区作为一种免费模式。因此，我们有很多工作要做 - 与开发人员合作，更好地了解我们的市场，了解用户偏好，在逐步提升货币化之前扩大用户群。
Thank you for that. Maybe just one quick follow-up. So in terms of Speed Drifters, are you saying that you have not rolled out monetization for the game in Latin America right now?
谢谢你。 也许只是一个快速的跟进。 那么就Speed Drifters而言，你是说你现在还没有为拉丁美洲的游戏推出货币化？
Yes. So, we haven't been focusing on monetization yet.
Okay. Thank you.
The next question comes from Conrad Werner with Macquarie.
Hey thanks a lot. Maybe just a first question on the e-commerce side of the business. The take rates are continuing to show good momentum. You are -- it sounds like you're starting to track some more commissions. Can that trend continue? In other words, I guess, we can assume that take rates should continue to rise in the second half of the year. And if that is the case what's going to drive that? Are you able to put some more commissions into the market given your scale right now?
Then one other question on the e-commerce side of the business, was there any impact on FX from exchange rates on your GMV? In other words, might your GMV have been slightly understated due to exchange rate impacts? Just thinking about the average order value stuff we were talking about before.
And then just last question on the e-commerce. When you say you're leaders in all your markets what metric is that on? Is it on GMV? Or is it on orders or something else? Then maybe just on the digital entertainment side of the business. In the past, you gave a range for what percentage Free Fire was of the total revenues. It was 50% to 60% in the first quarter. Could we just have an update on that? And then also could we get an update on how much of free -- sorry how much of the games business the digital entertainment business was ex-Southeast Asia?
And then maybe just as a last question on the digital entertainment, Beyond Call of Duty and Speed Drifters, I guess, which is a reasonably new title relatively speaking, any other games in the pipeline that we should be looking out for? And are you monetizing Speed Drifters in Southeast Asia to a good degree right now?
And then sorry I know I'm asking a lot of questions here but the last one is just on a group level I know that you're still in investment mode, et cetera, but the margins in the digital entertainment are very good. As you say you're starting to fund the business with internal cash. Could we see group level profitability before the end of the year? Thank you, on an EBITDA basis? Thanks.
嘿，非常感谢。也许只是电子商务方面的第一个问题。采取率继续呈现良好势头。你是 - 听起来你开始追踪更多的佣金。这种趋势会持续吗？换句话说，我猜，我们可以假设下半年的采取率应该继续上升。如果是这样的话会带来什么呢？鉴于您现在的规模，您是否能够将更多佣金投入市场？
然后是关于电子商务的最后一个问题。当你说你是所有市场的领导者时，那个指标是什么？是GMV吗？或者是订单还是其他什么？然后可能只是在数字娱乐方面的业务。在过去，您给出了Free Fire占总收入百分比的范围。第一季度为50％至60％。我们可以对此进行更新吗？然后我们还能获得有关免费多少的最新消息 - 抱歉，数字娱乐业务在前东南亚有多少游戏业务？
然后可能只是关于数字娱乐的最后一个问题，Beyond Call of Duty和Speed Drifters，我想，相对而言，这是一个相当新的标题，我们应该关注的其他任何游戏？你现在正在东南亚的Speed Drifters获得很好的收益吗？
Thank you. So, on the first question regarding the take rate trends, we will continue to gradually ramp-up monetization over time. That is going to be driven by first the scale of our platform as we continue to grow engage with a larger user base, larger seller base and the sellers platform derive more income from the platform. And with their margin with the right mix of categories and focus we believe that there's a -- continue to be a very good potential to gradually ramp up monetization.
And in terms of the composition of the take rate, we believe that one there is potential for higher commission, as well as the handling fees, as well as advertisement income. And at the same time, we are rolling out the full spectrum of services that seller will be very happy to utilize and pay for.
So if you look at Taiwan market for example, okay, this is the first market that we have achieved positive adjusted EBITDA without common expense allocation. And this is a market where we start monetizing first a couple of years ago with advertisement and then followed by the full spectrum of commissions, handling fees, as well as VAS; Value-Added Services.
By now, we have rolled out commissions for all sellers be it mall sellers, preferred sellers or other sellers across border and of course different rates based on the types of sellers and based on the categories in that market. And that has helped to increase the monetization for us.
And at the same time that platform in Taiwan continues to grow at a very healthy rate. And this is what we ideally would like to see gradually roll out in all other markets as well. So by now, we have rolled out commission and handling fee for the mall sellers in all our markets.
And more recently, we have rolled out the commission for star sellers in Indonesia and increased the rate for some of the mall sellers in Thailand, for example. So we believe this trend will continue. And the reason we are able to do that is the value we're delivering to our sellers and buyers in our markets for the infrastructure for e-commerce online retail tends to be underdeveloped.
That also gives us more opportunities and more touchpoints with our sellers and buyers to serve them better. And that means, we also have more opportunities to charge a higher take rate over time. So that is what we believe will gradually roll out. And in terms of ForEx question, I'll invite our CFO Tony to answer that.
谢谢。因此，关于采取率趋势的第一个问题，我们将继续逐步提高货币化率。这将首先取决于我们平台的规模，随着我们不断增长，我们将与更大的用户群，更大的卖家基础以及卖家平台从平台获得更多收入。由于他们的利润与适当的类别和焦点组合，我们相信有一个 - 继续是一个非常好的潜力，逐步提高货币化。
Yes, sure. So we constantly monitor the constant currency key metrics like GMV and revenue growth. And then actually due to the appreciation of U.S. dollar against some of our region's currencies like Indonesian Rupiah and Taiwan dollars, the growth profile had we choose to present using constant currency would be better than using the actual exchange rate. And having said that, we will be -- continue monitoring the gap and we'll choose to present the constant currency, if the gap is becoming larger.
是的，当然。 因此，我们会不断监控GMV和收入增长等不变货币关键指标。 然后实际上由于美元升值对我们地区的一些货币如印尼盾和台币，我们选择使用固定货币的增长情况将优于使用实际汇率。 话虽如此，我们将继续监测差距，如果差距越来越大，我们将选择提供固定汇率。
Okay. Regarding the -- in terms of the metrics we use to measure market leadership, now we use -- we look at array of metrics to see how well our e-commerce business is growing. In some of the market, obviously our leadership is so clear, so strong that whatever metrics you use pretty much, we are the clear leader. In other metrics, there might be -- people might say this market has a different kind of GMV metrics et cetera.
Now the reason we look at the range of metrics based on the disclosure in our PR including the order number, the download, the active user, time spent, in app et cetera is because looking at GMV alone can be misleading for the business as a whole. So if we tell our people to just look at GMV, the outcome might not be ideal in growing the e-commerce business, because the team will be trying to focus on growing the basket size with the higher ticket items in those more standardized goods, the lower-margin, lower-competitive modes categories such as virtual goods, electronics or even wholesale stuff.
These are easy to grow GMV. And -- but they don't lead to a healthy e-commerce platform with the core category of focus that we mentioned again and again. These are fashion, health and beauty, home and living and baby products. That's why when we look at GMV or the size of GMV, we have to ask the next-level question. What's the basket size? And what's the order number? Are you growing the GMV by growing the basket size and skewing towards the different categories of goods versus the core e-commerce marketplace categories? Or are you truly growing the order? And these orders are sustainable, high-value, high-margin orders that are real and will come back again. So, these are the categories we focus on and we look at actual orders that we believe are recurring and then can allow us to charge a high take rate, allow us to build a healthy e-commerce platform with diverse seller and user base and eventually an ecosystem around it. So that's why we look at an array of different things.
Another example will be time spent in app. We focus on that because we have a deep understanding of our young users in our region. These are social-community-based native generation, native to the mobile technologies. And they like to socialize and they like to talk to each other, engage with each other and that's how they express themselves, live their lives and also do their shopping transactions.
So, on that front we have built in a lot of social gamification features, live streaming, AR features, even esports stream for example, leveraging our strength in the esports front to engage our users and build a community and follow in that. That also helps to retain users better as well as lower our user acquisition costs and make our scale much -- scaling much more efficient over time. So therefore, when we look at the market leadership, we look at a host of metrics together and the healthiness -- health of the ecosystem as a whole. By that, we have disclosed consistently that we are the market leader. And for example in Indonesia, we have mentioned that we are the market leader by order for several quarters already and with a specific order number being disclosed.
好的。关于 - 我们用来衡量市场领导力的指标，现在我们使用 - 我们会查看一系列指标，以了解我们的电子商务业务增长情况。在某些市场中，显然我们的领导力是如此清晰，如此强大，以至于无论您使用什么指标，我们都是明确的领导者。在其他指标中，可能会有 - 人们可能会说这个市场有不同类型的GMV指标等等。
这些很容易种植GMV。而且 - 但它们并没有带来一个健康的电子商务平台，我们一再提到核心类别的焦点。这些是时尚，健康和美容，家居和生活以及婴儿产品。这就是为什么当我们看GMV或GMV的大小时，我们不得不问下一个问题。什么是篮子大小？什么是订单号？您是否通过增加篮子规模来增加GMV并且倾向于不同类别的商品而不是核心电子商务市场类别？或者你真的在增加订单？而这些订单是可持续的，高价值的，高利润的订单，这些订单是真实的并且会再次出现。所以，这些是我们关注的类别，我们看看我们认为经常发生的实际订单，然后可以让我们收取高额费用，让我们建立一个拥有多元化卖家和用户群的健康电子商务平台，最终围绕它的生态系统。所以这就是为什么我们要看一系列不同的东西。
因此，在这方面，我们已经构建了许多社交游戏化功能，实时流媒体，AR功能，甚至电子竞技流，例如，利用我们在电子竞技前线的实力来吸引用户并建立社区并遵循其中。这也有助于更好地留住用户，同时降低用户获取成本并使我们的规模更大 - 随着时间的推移，扩展效率更高。因此，当我们看待市场领导时，我们会综合考虑一系列指标和健康 - 整个生态系统的健康状况。由此，我们一直披露我们是市场领导者。例如在印度尼西亚，我们已经提到我们已经是几个季度的订单并且具有特定的订单号被披露的市场领导者。
Going back to digital entertainment. As you can probably imagine, Free Fire continue to be a large part of the revenue although we don't specifically disclose percentage. But it's been an increasing contribution from Free Fire in the revenue mix. And in terms of region outside of Southeast Asia also without disclosing the specific percentage of -- for competitive reason, this is increasingly a significant part of our revenue as we diversify our game businesses.
Again as we mentioned, if you look at the -- our core market now just not just including Southeast Asia and Taiwan, we also refer to LatAm as our core -- part of our core market collectively there are about 1.2 billion to 1.3 billion population. That's almost the size of population of China, but with even younger population profile and higher population growth. So it's a very attractive demographic feature. And we're probably the best – stand in the best position given our track record in capitalizing on such high growth, but highly diverse and complex emerging markets.
In terms of our pipeline, again for competitive reasons we don't disclose specifics about pipeline. But as you can imagine, while we said that, we devote half our studio to building on Free Fire, the remaining half we devote to building up our self development pipeline in small teams. Actually, it doesn't take a lot of people to come up with a prototype of a new game.
When we built up Free Fire initially, there was a team of four or five people. And so we continue to work with all the game talent, we can find in the market and build up that team and let them run with their creativity and come up with all kinds of potential ideas that we could build into our game portfolio. And at the same time we work with top studios in the world. If you look at our track record we pretty much work with everybody in the U.S., Japan, Korea as well as China. And we I think given our wealth of user data from all the emerging markets globally with the hugely successful Free Fire game, I think we are very well-positioned to introduce new content into those markets, whether it's self-developed or licensed from third parties.
And in terms of the group level EBITDA as you rightly pointed out, we are seeing increasingly less loss in adjusted EBITDA and increasingly we are funding growth with internal cash generated. Obviously, do we – if we want to breakeven, can we? Yeah, we can, right? But – as I said before, it's not the focus of the business as we are in a better than ever position to grow our ecosystem of digital economy of consumer Internet platform with some of the largest opportunities that we ever see in the region and beyond in digital entertainment, in e-commerce additional financial services. And you don't have these kinds of opportunities coming along that easily for many generations. There maybe one-time we believe that you're in the historical moment where we can capture that growth in the right region where there is still low penetration, but high growth potential.
回到数字娱乐。正如您可能想象的那样，Free Fire仍然是收入的很大一部分，尽管我们没有具体披露百分比。但是Free Fire在收入组合中的贡献越来越大。就东南亚以外的地区而言，也没有透露具体百分比 - 出于竞争原因，随着我们的游戏业务多样化，这越来越成为我们收入的重要组成部分。
正如我们所提到的那样，如果你看看 - 我们的核心市场现在不只是包括东南亚和台湾，我们也将LatAm称为我们的核心 - 我们的核心市场的一部分，总共有大约12亿到13亿人口。这几乎与中国人口规模相当，但人口更加年轻，人口增长更快。所以这是一个非常有吸引力的人口统计特征。鉴于我们在利用如此高增长但高度多样化和复杂的新兴市场方面的良好记录，我们可能是最好的 - 站在最佳位置。
当我们最初建立Free Fire时，有一个由四到五人组成的团队。因此，我们继续与所有游戏人才合作，我们可以在市场中找到并建立团队，让他们运用他们的创造力，并提出我们可以构建到我们的游戏组合中的各种潜在想法。与此同时，我们与世界顶级工作室合作。如果你看看我们的记录，我们几乎与美国，日本，韩国以及中国的每个人合作。我们认为，鉴于我们拥有来自全球所有新兴市场的丰富用户数据以及非常成功的Free Fire游戏，我认为我们非常有能力向这些市场推出新内容，无论是自行开发还是从第三方获得许可。
就您正确指出的集团EBITDA而言，我们看到调整后的EBITDA损失越来越少，而且我们越来越多地通过内部现金产生资金增长。显然，我们 - 如果我们想要盈亏平衡，我们可以吗？是的，我们可以，对吧？但是 - 正如我之前所说，这不是业务的重点，因为我们比以往任何时候都更好地发展我们的消费者互联网平台数字经济生态系统，我们在该地区及其他地区看到了一些最大的机会。数字娱乐，电子商务中的附加金融服务。而且你很多时候都没有这种机会。也许有一次我们相信你正处于这样一个历史性的时刻，我们可以在正确的地区捕捉到这种增长，而这一地区的渗透率仍然很低，但增长潜力很大。
And we believe given our strong cash position, given our cash also from the game business that it can fill our internal investments, we believe we want to invest in the long-term growth of our ecosystem and will not trade that for short-term profitability.
And in the longer run, when we do achieve clear leadership and build out the entire ecosystem that we envision for ourselves, for our employees, and all the stakeholders we believe it's a much more valuable business.
This concludes our question-and-answer session. I would now like to turn the conference back over to Yanjun Wang for any closing remarks.
Thank you for joining the call today and we're happy to keep talking with our investors, analysts in case you have any further questions. And we look forward to speaking to you all again next quarter.
This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
这次会议现已结束。 感谢您参加今天的演讲。 您现在可以断开连接。
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