Good morning, and good evening to all, and welcome to the Sea Limited Second Quarter 2024 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mr. MC Koh to begin the conference. Please go ahead.

Hello, everyone, and welcome to Sea's 2024 second quarter earnings conference call. I am MC, Sea's Investor Relations Director. On this call, 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 a discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows 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 of the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. I have with me Sea's Chairman and Chief Executive Officer, Forrest Li; President, Chris Feng; and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights and financial performance for the second quarter of 2024. 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.

Hello, everyone, and thank you for joining today's call. I'm happy to report that it has been a solid quarter for us with our strong momentum from Q1 continuing into Q2. All three of our businesses have shown both strong growth and higher profitability. Before I dive into each business's results, I wanted to share some observations about Southeast Asia's market. Generally, retail and consumer spending trends in the region have remained healthy, with domestic consumption continuing to be a main driver of economic performance in many markets. This sets a very strong macro foundation for our e-commerce business. We are happy with Shopee's market share in Southeast Asia and our sizable lead over our peers in the region. We are seeing more market share consolidation and an industry-wide take rate increase. We believe this will move the industry toward profitability and sustainability, and we welcome this trend. 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. We are also revising up our guidance for Shopee's 2024 full-year GMV growth rate to the mid-20s. With that, let me take you through each business's performance in more detail. Starting with e-commerce. As we have shared before, Shopee's operational priorities are to deepen our competitive moats on three fronts: enhancing our price competitiveness, improving service quality to customers, and strengthening our content ecosystem. This strategy is paying off. Over the past two quarters, Shopee has been able to post healthy, sustainable growth while also improving its profit profile. One area we are placing greater focus on is improving our ad take rate. Currently, our ad take rate is lower than the industry average we observe in more mature e-commerce markets. To us, this represents a good opportunity to improve our monetization. Over the quarter, we have made it easier and more attractive for sellers to join our ad platform. We also have a dedicated tech team working on improving our ad bidding algorithms to help sellers achieve higher returns from their advertising spend. So far, the results have been encouraging. The number of sellers who pay for ads has increased by more than 20% year-on-year this quarter. We believe there is still plenty of upside, and we will continue to push on this front. We have also launched Live Ads across our Asian markets, allowing streamers, including both merchants and creators, to insert ads into Shopee Live. This feature has been very well received. In Indonesia, in June, one in four active streamers paid for Live Ads. This feature helps streamers boost their sales efficiency while increasing our ad take rate, enhancing our content ecosystem and improving our live streaming unique economics. On improving our service quality to customers, our logistics capabilities continue to differentiate us. In this way, 50% of buyers in Java, Indonesia cited faster delivery as their reason for choosing Shopee. We have continued to integrate more closely with our many logistics partners to widen our coverage and deliver packages faster. SPX Express, in particular, has managed to improve delivery speed while also reducing its costs. In the second quarter, more than 70% of SPX Express orders in Asia were delivered within three days of order placement, with cost per order declining 8% year-on-year. Another initiative to enhance customer service quality has been improving the buyer return refund process, a common pain point in e-commerce. Earlier this year, we launched a change of mind returns feature in our Asian markets, letting buyers initiate no-questions-asked returns within 15 days. We paired this with data-driven test improvements to make the overall return refund process highly predictive and efficient. As a result, in the second quarter, more than half of our return and refund cases in Asia were resolved within one day. Making this process easy and fast makes buyers more willing to complete purchases, driving up user stickiness and repurchase frequency. In Malaysia, we saw a more than 10% increase in average basket size among buyers who raised change of mind return requests compared to before the feature was launched. I share these examples to demonstrate how we consistently execute on our operational priorities every quarter. We believe this approach will strengthen our market leadership in the long term. Next, turning to Digital Financial Services. SeaMoney has continued its strong momentum in growing its loan book and profit while remaining prudent on risk management. Both revenue and adjusted EBITDA have grown very well year-on-year. Consumer and SME credit business continues to be the primary driver of SeaMoney's revenue and profit growth. We are making good progress on deepening our credit product penetration both On-Shopee and Off-Shopee. Our large Shopee user base is a unique advantage. It enables us to acquire new customers very cost-effectively by promoting the right products at the right time to the right users. In the second quarter, we registered over four million first-time borrowers of our credit products, a figure that has more than doubled compared to one year ago. We have also expanded our Off-Shopee credit use cases. In Indonesia, we partnered with over 1,000 electronic stores to introduce customized SPayLater loans for mobile phone sales. We were the first player in the market to provide instant credit approval for this category at scale. We will continue to explore more credit use cases in our markets. With all these efforts, we have grown our loan book size to $3.5 billion at the end of June, up almost 40% year-on-year. Notably, our non-performing loans metric held steady at the end of the quarter. In fact, it improved slightly from the previous quarter. We now have 21 million active consumers and SME loans users, up almost 60% year-on-year. Looking forward, we will continue to invest in growing our user base efficiently and effectively as our markets are still underpenetrated and present sizable opportunities. A large user base will be a cornerstone of future growth for SeaMoney, especially as we introduce more product offerings. Finally, turning to our Digital Entertainment business. Garena's two years of hard work undertaking a user-centric approach are paying off. We have delivered a strong quarter with more than 20% year-on-year growth in bookings, mainly contributed by Free Fire. At the end of June, Free Fire released a Seventh Anniversary version update, our largest in-game event of the year. We brought back classic weapons, made a documentary on Free Fire history, and hosted a Story Wall where users could share their past experiences with the game. The campaign was very successful. Our players really enjoyed revisiting their fond memories of the game's early years. Free Fire's unique strength is its large, highly engaged, and loyal gamer base. I'm very proud to share that every single day throughout Q2, Free Fire had more than 100 million daily active players. This reinforces our conviction that Free Fire is an evergreen franchise. Free Fire also managed to keep growing, thanks to the strong word-of-mouth effect we see from our large user base. According to Sensor Tower, Free Fire was the most downloaded mobile game globally in the second quarter. Free Fire's organic social pool is highly valuable. Especially in today's world, getting users to download and try new content can be hard and costly. We are also excited about launching Need for Speed: Mobile in Taiwan, Hong Kong, and Macau later this year in partnership with Tencent and Electronic Arts. We are pleased to be able to bring this high-quality game with a classic IP to our gamer community. To conclude, we are happy with the strong results that the three businesses have achieved in the first half. Thank you as always for your support. Before I hand over the call, I'm pleased to announce that two new Independent Directors have joined our Board. Dr. Silvio Savarese is a leading expert in AI; and Ms. Jessica Tan is a highly accomplished leader in financial services. I'm glad that Silvio and Jessica are willing to lend us their deep expertise and guidance on these two areas, which will be critical in shaping Sea's future. In addition, Tony will be stepping down from our Board and will continue to serve as our CFO. With these changes, our seven-member Board has a majority of independent directors. Thank you very much. With that, I invite Tony to discuss our financials.

Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 23% year-on-year to $3.8 billion in the second quarter of 2024. This was primarily driven by GMV growth of our e-commerce business and the growth of our Digital Financial Services business. Our total adjusted EBITDA was $448 million in the second quarter of 2024 compared to an adjusted EBITDA of $510 million in the second quarter of 2023. On e-commerce, Shopee's gross orders grew 40% and GMV increased by 29% year-on-year. Our second quarter GAAP revenue of $2.8 billion included GAAP marketplace revenue of $2.5 billion, up 33% year-on-year, and GAAP product revenue of $0.3 billion. Within GAAP marketplace revenue, core marketplace revenue mainly consisting of transaction-based fees and advertising revenues was $1.8 billion, up 41% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistics services was $0.7 billion, up 16% year-on-year. E-commerce adjusted EBITDA improved quarter-on-quarter with losses narrowing to $9 million in the second quarter of 2024 compared to an adjusted EBITDA loss of $22 million in the first quarter of 2024 and an adjusted EBITDA of $150 million in the second quarter of 2023. For our Asia markets, we continued to achieve positive adjusted EBITDA following our first quarter of 2024 results, recording $4 million during the quarter compared to an adjusted EBITDA of $204 million in the second quarter of 2023. In our other markets, the adjusted EBITDA loss was $30 million, narrowing meaningfully from last year when losses were $54 million. In Brazil, unit economics continued to improve as we achieved a positive contribution margin per order of $0.09 for the quarter as compared to a loss of $0.24 in the second quarter of 2023. Digital Financial Services GAAP revenue was up by 21% year-on-year to $519 million. Adjusted EBITDA was up by 20% year-on-year to $165 million. As of the end of June, our consumer and SME loans principal outstanding reached $3.5 billion, up almost 40% year-on-year and 8% quarter-on-quarter. Non-performing loans past due by more than 90 days as a percentage of total consumer and SME loans was 1.3% at the end of the quarter. Digital Entertainment bookings were $537 million, up 21% year-on-year and 5% quarter-on-quarter. GAAP revenue was $436 million. Adjusted EBITDA was $303 million. Returning to our consolidated numbers. We recognized a net non-operating income of $56 million in the second quarter of 2024 compared to a net non-operating income of $108 million in the second quarter of 2023. We had a net income tax expense of $61 million in the second quarter of 2024 compared to net income tax expense of $62 million in the second quarter of 2023. As a result, net income was $80 million in the second quarter of 2024 as compared to net income of $331 million in the second quarter of 2023.

Thank you, Forrest and Tony. We're now ready to open the call to questions. Operator?

Thank you. We will now begin the question-and-answer session. Your first question comes from the line of Pang Vittayaamnuaykoon with Goldman Sachs. Your line is open.

Good afternoon, management. Thank you very much for the opportunity. Two questions from my side both on e-commerce. Number one, could you please comment on the latest competitive landscape you have observed? We are seeing all players, including yourself, push for further rationalization into the third quarter, especially on the merchant front. How should this translate into your results and your updated guidance? In another word, what factors do you include in your revised guidance? That's question number one. Question number two, specifically on margins, what type of near and medium-term margins can we expect Shopee to deliver? And how do you plan to achieve that? Any update on long-term margin expectations as well?

Yes, on the competitive landscape, I think as Forrest mentioned in the opening, we do see a more stable competitive environment in the past few months. And as you mentioned, we see positive movement in terms of the take rate from various players in our market. I think we welcome that as a signal of a more stable environment from a competition perspective. Our longer-term view on the profitability target stays unchanged at 2% to 3% of EBITDA as we shared before. However, we believe the market is still quite dynamic. In the short term, we will likely prioritize the profitability of the businesses. We were, as we shared in our guidance in Q3, deliver profit as the Shopee business is. But at the same time, we also like to grow, as there is still good potential in the market we operate in. We would like to ensure that as a business, we can outgrow the market while maximizing profit in the near term. If we look a little bit to the medium term, we do expect the overall competitive landscape in our market to continue to evolve and come into a more rational stage, even compared to where we are right now, which will drive the overall industry profitability to improve. If you look at the overall market, as we mentioned, is still rather dynamic with a more stable competitive environment. But there are things we can control and things we cannot control. We will focus on the things we can control. For example, we shared in the opening, we want to establish better pricing, improve user experience, and enhance content supply to our users. Together with the larger scale compared to our competitors, all those things will help us to always be better positioned to deliver better value to our consumers and ultimately achieve better unit economics, which will lead to market share gains over time.

Your next question comes from the line of Piyush Choudhary with HSBC. Your line is open.

Yeah. Hi. Thanks for the opportunity and congrats to the management team on a good set of results. Two questions, again, both on e-commerce. As you mentioned earlier, you have been increasing take rates and the industry has also increased take rates during 1H. Is it possible to further increase the take rates? And are you able to reduce the shipping subsidies? That's the first question. Secondly, can you talk about the unit economics of the live-streaming business? Has it turned profitable now in some countries? How is the contribution margin for the live streaming segment? Thank you.

For the take rate, we do believe there are opportunities to further increase the take rate. I think part of that comes from commissions and fees. As you may have observed, we have increased meaningfully in the past few quarters. I think there are still opportunities for further increases, although probably not to the same magnitude that we saw in the early part of the year. There's another part of the take rate, which we believe has a sizable opportunity on the ad side. As we shared in the opening, we are focusing a lot on the ad side. We spent quite a bit of effort on building infrastructure for the ad side in the past few quarters, such as building a standard platform for our recommendation and search. We also created a standard algorithm and platform for our ad system and organic traffic allocations. All these will help us to allocate traffic more flexibly and efficiently. This enables us to offer better ad products to the seller side as well, which we are rolling out in the next few quarters. We believe all these efforts will help us improve the ad take rate in the coming quarters. Regarding the unit economics for live streaming, we see improvements quarter-on-quarter across all markets. Some markets are profitable, while others are still improving. Generally, we believe the trend will continue for our live streaming businesses.

Your next question comes from the line of Marissa Putri with UBS. Your line is open.

Hi, management. So I have two questions. Firstly, on e-commerce. So you've just reported your first contribution margin positive from Brazil, and I think still with ambitions to be number two in the market. How do you plan to achieve this? Should we think of the improved profitability as sustainable? And number two, just to make sure that I'm getting your guidance correctly. So the adjusted EBITDA positive will be just for standalone Q3 EBITDA, but not overall nine months EBITDA positive in Q3. Thanks.

For the Brazil business, we are very happy about the improvement in margins in the market. As we shared in the earnings report, the contribution margin for the Brazil market is positive already. We also see good potential in the Brazil market. The core for us in Brazil is, I think, number one, we are able to consistently reduce our shipping costs in the market through our own largest networks. Number two, we are also improving the user experience in the market, thankfully, over the past quarters. I think in combination, this drives better user retention and also better unit economics in the market. The other factor that is important for our Brazil market, besides the user experience and unit economic improvement, is the ability for us to increase our penetration of higher basket categories over time. We believe there is sizable potential to further increase our market share penetration in those categories. Traditionally, we have not been as strong compared to some of the other players in the market. So with all that, we do feel that there is meaningful potential for us to grow further in the Brazil market, and we can see the levers we have and are working on those levers. Regarding the EBITDA guidance, what we refer to is the third-quarter EBITDA positive. I think that understanding is correct.

Your next question comes from the line of Alicia Yap with Citigroup. Your line is open.

Hi. Thank you. Good evening, management. Thanks for taking my questions. Two questions. First, can management share the update on the progress of acquiring users on the non-Shopee platform for the DFS business and the GTV growth for the non-Shopee platform? Will this be more from offline transactions like those offline retailers and restaurant partners, or is Sea actually open to working with any online partners, including, for example, online travel agents? So this is for the DFS question. The second question is related to Shopee Express. So how will we further optimize the operational efficiency and improve the cost structure for the logistics business in the coming quarters? Thank you.

On the first question, our credit loan portfolio consists of a few components. We have Shopee PayLater, which is closely linked to Shopee and is used in Shopee transactions. Additionally, there is buying cash flow, which is independent of Shopee, allowing users to take out loans. We also offer offline payment options through SPayLater, which can be used both offline and online through our ShopeePay network. We're developing various use cases for offline usage, such as the headphone purchases I mentioned earlier, and we see potential for future specialized services, like home appliance purchases, to be available both offline and online. Therefore, it’s a mix of both online and offline uses. In some markets, users can already utilize our Shopee PayLater and SPayLater solutions for payments on online travel websites. We're collaborating with numerous online and offline partners to expand the use of SPayLater, and we anticipate growth in these partnerships over time. Regarding Shopee Express, we have several strategies to enhance the efficiency of SPX. First, there is significant potential to expand our scale, which can help reduce costs and improve efficiency. Second, we're focusing on increasing coverage density by adding more hubs, utilizing both traditional and mobile hubs through innovative low-cost deployment. In Q2, we introduced about 900 hubs, including five mobile hubs with cost-effective operations. Third, we are incorporating more automation in our sorting processes, whether through fully automated machines or hybrid solutions for smaller centers, which will boost productivity. We're implementing similar automation in our first-mile and last-mile hubs as we expand. Fourth, advancing our technology is crucial. For instance, we're enhancing sorting algorithms for our last-mile drivers, and we've seen positive results in Brazil, although it’s more complicated in some Asian markets. We're gradually rolling out tailored solutions in various countries. Lastly, our off-boarding process is vital and involves several steps from pickup to final delivery. While it may seem simple, it involves numerous handovers and decisions, such as determining when to schedule line haul and whether to send to a primary hub or to a secondary sorting center. Optimizing this process will help us improve overall efficiency. There are other areas we are working on, but I wanted to highlight some key opportunities for improvements in our logistics operations.

Your next question comes from the line of Ellie Jiang with Macquarie. Your line is open.

Hey, good evening. Thank you management for taking my question. I have two. Number one is a follow-up on e-commerce. I just wanted to ask about the ad take rate the management commented. We talked about sizable opportunities ahead. But if we look in the next several years, what kind of timeline do we really anticipate to ramp up this ad revenue and potentially get to a level that's similar to the mature market players? And so for example, what will it take for us to stimulate more ad spending from the merchants? Would it be more efficient marketing tools or higher ticket-sized item sales? And the second question is on the gaming segment. It seems like Free Fire is really generating momentum, and according to some third-party trackers, the momentum remains quite strong quarter-to-date. So can you comment on the visibility or sustainability for the second half outlook? And for the potential kind of Need for Speed distribution that we partner with Tencent, what kind of financial contribution would that bring in the second half as well? Thank you.

On the ad take rate, I believe that we will start to see benefits in the next few quarters; it probably won't take a few years. I think we're discussing quarters here. I think the basic product will take some time for the sellers to adopt, especially as different sellers adapt differently to it. We have to optimize for different markets. Also, improvements will come from enhanced efficiency in how sellers utilize ad products and how we as a platform can allocate traffic in a more effective manner, giving sellers more upsides without sacrificing the overall platform conversion rate. This is essentially the technology we've built in the past few quarters, and we're trying to roll out and optimize in the coming quarters.

On the gaming side, as you mentioned, we are very happy and motivated by the trends we've observed with Free Fire. This applies to pretty much all metrics, including new users, the existing user retention rate, and some monetization metrics such as paying ratios and overall growth rate. This demonstrates that our past decisions and current focus have yielded the right outcomes. We will continue to maintain this focus. We are also dedicated to ongoing content updates. In the past two quarters, we have launched several very successful new content releases and associated festival campaigns along with unique gameplay experiences. We will continue to do so in the coming period. Several big updates are already in the pipeline, and we have strong confidence in their success. We also see Free Fire as more than just an evergreen franchise; it is a platform. We believe that Free Fire can reach over 100 million users globally on any single day, which is a substantial scale. Although the game is named Free Fire, within the game, users can experience various types of gameplay. We are exploring AI tools in both production and game development to enhance cost efficiency and improve production speed and quality. At the same time, we seek to provide new gaming experiences. Furthermore, we are focusing on building game creation tools within the Free Fire ecosystem, which includes collaboration with third-party developers to create diverse experiences under the Free Fire platform to further enhance our user engagement and monetization. We remain confident about the growth momentum for the rest of the year. However, we recognize that the gaming business can be impacted by seasonality related to school holidays and specific festivals in certain markets. Looking at the year as a whole, we continue to project double-digit growth for Free Fire, both in terms of monetization and user growth. We're excited about our collaborations with partners like EA and Tencent for new game launches. However, it is still early to comment on the revenue contribution as we monitor user feedback and statistics after the launch. We will provide updates as soon as we have more data on how significant these new games could be.

Your next question comes from the line of Divya Kothiyal with Morgan Stanley. Your line is open.

Yeah. Thank you very much. My first question is just on your views on the higher risk from competition from cross-border e-commerce in ASEAN. I mean, given the traction that teams have seen in recent months in the Philippines and Malaysia and their recent entry in Thailand, do you think that this could also become a credible competitor the way TikTok kind of came to this geography? And how are we planning to respond to this, especially concerning our positive adjusted EBITDA guidance for the third quarter? My second question is on e-commerce GMV. Is the higher guidance coming more from surprises in Brazil or from ASEAN? And if you can comment on the trends that you're seeing in July and August, given that the second half is slightly tougher base than the first half. Are we seeing any sort of tapering there? Thank you.

For the cross-border players, specifically referencing Temu's businesses entering Asia, we have great respect for what Pinduoduo and Temu have achieved in the past years. However, for our market, we'll monitor but from what we see so far, I believe the impact on our business is limited for two reasons. One is that cross-border by nature is a smaller part of our businesses in our market. If you look at markets like the Philippines, Thailand, or Malaysia, the majority of e-commerce transactions happen to be domestic selling rather than cross-border selling. There are many reasons contributing to this. The landscape has evolved to achieve better efficiency and cost structures that domestic e-commerce offers. Secondly, Temu's pricing advantage in the US or European markets doesn’t extend to our market. Our pricing in the markets you mentioned is actually very competitive compared to them, mainly due to our long-term competitive environment. We have built a competitive seller landscape domestically for a long time. Moreover, operating costs in our market domestically are lower than in China, making us more competitive there. Regarding your second question about GMV guidance, we see strong growth, better than previous guidance in both the Asian market and Brazil. Just in terms of size, Brazil compared to Asia is relatively smaller overall, so one market will not dramatically influence the number. Our recent guidance reflects improvements from both Asia and Brazil.

Your next question comes from the line of Sachin Salgaonkar with Bank of America. Your line is open.

Hi. Thank you for the opportunity, and congrats on a good set of numbers. I have two questions. First, one on gaming and second on e-commerce. On gaming, again, when we look at your numbers, one gets a sense that your bookings are up and your users are up, but revenue is down. We see this trend for the last couple of quarters where ARPU continues to decline. What happened this quarter was that margins were almost at an all-time high. I would like to understand if this is a specific trend we should expect moving ahead, with ARPU continuing to decline and margins improving or at least remaining at these levels. The second question is, I understand your earlier comments on competition being rational, but I wanted to double-click on a couple of markets. One, Taiwan, where we have a new competitor, Coupang, which is aggressive. So I would love to know your thoughts on overall competitive intensity in that market. And second, in Indonesia, where one of the players had increased subsidies in the market. So any specific response from you to that? How are you viewing the increased subsidies?

Thanks for the questions. I think on the first question about GAAP revenue: while the bookings have improved both Q-o-Q and year-over-year, because of GAAP treatment we have to defer more revenues into future quarters. This explains the variations in GAAP revenue. Regarding ARPU, it's relatively stable. It may fluctuate slightly, but it's more influenced by market mix. We don't see significant Q-o-Q fluctuations for this quarter. Addressing your competitive landscape in Taiwan, we continue to enjoy a dominant market position. While we see some new entrants, the impact on our business stage is presently small. The core strategy is to shorten delivery times via our SPX network, ensuring that we provide cheaper delivery solutions compared to competitors. This is a key part of our business strategy. Regarding Indonesia, different players have varied approaches. We prefer focusing on longer-term market trends rather than short-term fluctuations in subsidies.

Your next question comes from the line of Thomas Chong with Jefferies. Your line is open.

Hi. Good evening. Thanks management for taking my question. My first question is about our DFS business. Just now, I think our management commented a lot about BNPL, cash loan, and off-Shopee PayLater. I just want to get some color with regard to the margin trend for different categories. Any color about the margin profile would be great. And on the other hand, I think, given the macro uncertainties we are seeing globally, how should we think about the risk management, in particular, the ticket size and the tenure, etc.? And my second question is more about the overall business. Given our different business segments are experiencing significant growth momentum, how should we think about the longer-term revenue mix profile? Should we expect DFS to become more meaningful in the long-term? Thank you.

On the first one regarding margin trends, in particular, our new markets show considerable growth outlook. Tracking history, we started our lending products in Indonesia and have since expanded to markets like the Philippines, Malaysia, Thailand, Vietnam, and Brazil. You will notice that larger newer markets typically show faster growth than more mature markets. We are satisfied with growth figures from our new markets, like Thailand and Brazil, seeing robust growth there. Regarding macro uncertainties, our lending products generally have shorter durations and smaller ticket sizes, which provide us with greater responsiveness. We feel quite comfortable managing our portfolio and adapting to changing conditions. In terms of long-term revenue mix, each of our segments has momentum. We continue focusing on growth while ensuring that all segments contribute significantly, including Financial Services. We anticipate some variations in GAAP revenue recognition but remain optimistic about overall growth as we optimize across our businesses.

Regarding the long-term revenue mix across our three businesses, if you look at each of the three businesses, I think each of them currently has some tailwinds. Our e-commerce segment’s GMV growth is robust, driving potential revenue growth. While our focus on take rates, both on commissions and ad placements, is positioned as a significant revenue contributor. For the Financial Services business, as we shared, we will deepen our penetration within the Shopee ecosystem, while seeing that the loan book size grows nicely with overall Shopee GMV. For Gaming, as we shared earlier, we found the right formula for growing Free Fire, and we are observing a very strong momentum. At this point, while it’s difficult to speculate, we don’t expect one segment to drop significantly while others rise; we are focused on growing all three segments as much as we can. However, as Tony mentioned, the financial reporting can show delay effects, effectively misleading any substantial growth in the gaming business despite its ongoing success.

Your next question comes from the line of Jiong Shao of Barclays. Your line is open.

Thank you very much for taking my questions. I have a couple of follow-ups. One is back on the take rate. You talked about increasing the advertising take rate to the global comps, global benchmark in a matter of quarters, not years. In your opening remarks, you also talked about your commission take rate, which I think is below the global comps. Even though it's good that you guys and your peers are raising your take rate, your commission take rate is still quite a bit below Amazon's and eBay's. I was just wondering if there are structural reasons why you think that longer term your commission take rate won't be close to global peers, and is there any timing to reach that goal? The second follow-up is back to gaming bookings. I know you talked quite a bit about the strong booking growth, which was amazing in the second quarter, in particular. Previously, you mentioned a double-digit booking growth for this year for Free Fire. I think the assumption was sort of low teens, but given the particular strength you've seen in the last couple of quarters, can we expect the implied booking growth for Free Fire in 2024 to potentially be going higher? If not, why not? Thank you.

For the take rate question, on the ad take rate, we expect to see potential growth in the next few quarters and potentially longer-term. However, different markets may see varied results due to different elements in play. Regarding commissions, there are no significant reasons to suggest that they will remain below global peers permanently. We aim to achieve a level comparable to those competitors in due time, though specifics can't be nailed down yet.

With regards to Free Fire bookings outlook for the rest of the year, we are indeed observing substantial momentum and growth across the board. However, we prefer to remain cautious for future estimations in the double-digit range. Given recent strength, we do plan to update the market if we continue seeing this trend, but the conservative approach is our priority.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. MC Koh for any closing remarks.

Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.