Earnings Call Transcript - SE Q1 2024

Miang Chuen Koh, Investor Relations Director

Hello, everyone, and welcome to Sea's 2024 First Quarter Earnings Conference Call. I'm M.C., 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 with 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 first quarter 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.

Forrest Li, Chairman and CEO

Hello, everyone, and thank you for joining today's call. I'm pleased to share that we are kicking off 2024 with a strong quarter. All our three businesses have delivered solid growth with an improved profit profile. The macro environment in the past few years has been challenging. Many of you have been with us through this journey. Going through this period has made us leaner, fitter, and savvier. While we will always face new challenges, we are now much more confident in our ability to weather headwinds well and adapt quickly to changing environments. With that, let me take you through each business performance. Starting with e-commerce. We are pleased to report that Shopee delivered strong growth this quarter, achieving its highest ever quarterly order GMV and revenue. In the first quarter, on a year-on-year basis, gross orders were up 57%, GMV was up 36% and revenue was up 33%. Unit economics have also improved. Our overall adjusted EBITDA loss narrowed to $22 million. And our Asian market achieved a positive adjusted EBITDA of $11 million this quarter. Shopee's operational priorities for 2024 continue to be enhancing our price competitiveness, strengthening our content ecosystem and improving service quality for our buyers. We are making good progress on all these fronts. On enhancing our price competitiveness, we continue to help sellers with upstream supply chain access to sell more easily on Shopee. On strengthening our content ecosystem, Shopee has become the largest live streaming e-commerce platform in Indonesia based on average daily live streaming order in the first quarter. Live streaming e-commerce unit economics also continued to improve quarter-on-quarter. On improving service quality for buyers, our integrated logistics capability has become a key differentiating factor of our service quality. We have put a lot of hard work into SPX Express. And today, it is one of the fastest and most intensive logistics operators in our market, quickly enhancing our customer experience. In the first quarter, more than 70% of SPX Express orders in Asia were delivered within 3 days of order placement. And because of the scale we have achieved in our market, we have managed to steadily reduce its cost. SPX Express's cost per order decreased by 15% for Asia and 23% for Brazil year-on-year in the first quarter. Having SPX Express in the Shopee ecosystem also allows us to efficiently roll out new features that benefit our buyers, such as the on-time guarantee program that we launched in Southeast Asia. This program provides a guaranteed delivery time for orders, and this certainty is well appreciated by our buyers. Another initiative we implemented is having Shopee directly manage the return and refund process. This has resulted in a 30% year-on-year increase in resolution time. In the first quarter, about 45% of cases were resolved within one day. So, taken together, these efforts increased operational efficiency, improved customer experience and reinforced Shopee's reputation as a reliable shopping destination. We will continue to push more on these operational priorities in the coming quarter and year. We expect these efforts to further differentiate Shopee from its competition and bring greater value to both our buyers and sellers. Next, turning to Digital Financial Services. We are pleased to report that SeaMoney has continued its strong growth momentum and profitability into 2024 while maintaining prudent risk management. Our efforts on user acquisition have produced significant growth in both user numbers and the loan book size. In the first quarter, our Digital Financial Services revenue grew 21%, and adjusted EBITDA grew 50% year-on-year. Consumer and SME loan active users, defined as those with loans outstanding by the end of the quarter, increased 42% year-on-year to more than 18 million this quarter. As of March 31, 2024, our consumer and SME loan principal outstanding reached $3.3 billion, up 29% year-on-year and up 5% quarter-on-quarter. The credit business is currently the primary driver of SeaMoney's revenue and profit growth. Our credit business benefits from Shopee's transaction model and user base. In addition, we are also seeing strong growth in off-Shopee loans, which include cash loans and off-Shopee SPayLater consumption loans. By the end of the first quarter, off-Shopee loans accounted for over 40% of our total consumer and SME loans outstanding. Going forward, we see further upside to improve our off-Shopee penetration across different markets as we continue to grow. As we build up our credit business, we continue to maintain a prudent approach to risk management. We generally begin by granting low credit limits, short-tenure loans to users to build their credit history. For users with a good track record, we gradually increase the credit limit, loan tenure and credit product offering. As we gain more users and more data, we continuously fine-tune the risk model for each market. This allows us to grow our business while maintaining good risk control. Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans remained stable at 1.4%. We anticipate further growth for our Digital Financial Services business throughout the year. As we healthily grow our user base, we will be able to offer a broader set of financial services to meet our users' needs in the future. Finally, turning to our Digital Entertainment business. We are pleased to share that Garena expects to positive growth, with bookings up 11% year-on-year. This was led by Free Fire's strong performance across markets. In the first quarter, Free Fire's average MAU increased 24% year-on-year. Our operational priorities for Free Fire will remain consistent in 2024, improving user acquisition, engagement, and retention. We continue to introduce play modes, redesign features, and launch new content at a high frequency, allowing Free Fire to sustain high player engagement with its huge user base. In January, we launched Chaos, a major version update allowing players to vote for key events in the game's setting. This interactive feature has made Chaos highly successful. And in April, we launched the Mechadrake version update, allowing players to team up to combat a mechanical monster in addition to the Euro PvP gameplay. Our constant efforts to understand the users' needs, address key issues from a product perspective, and frequently introduce fresh and exciting content are paying off. In its seventh year, Free Fire is still one of the largest mobile games in the world by user scale and remains highly effective in attracting new users. According to Sensor Tower, Free Fire was the most downloaded mobile game globally in the first quarter. Given this track record of being able to sustain and grow Free Fire's massive global user base, we are confident of building Free Fire into an evergreen franchise. To conclude, we have a clear roadmap for profitable growth. Our results in the first quarter have given us a strong start to 2024, and we are well on track to deliver our full-year guidance.

Tony Hou, CFO

Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 23% year-on-year to $3.7 billion. This was primarily driven by GMV growth of our e-commerce business and the growth of our credit business. Our total adjusted EBITDA was $401 million in the first quarter of 2024 compared to an adjusted EBITDA of $507 million in the first quarter of 2023. On e-commerce, our first quarter GAAP revenue of $2.7 billion included GAAP marketplace revenue of $2.4 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 $1.7 billion, up 47% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistics services, was $0.7 billion, up 8% year-on-year. E-commerce adjusted EBITDA loss was $22 million in the first quarter of 2024 compared to an adjusted EBITDA of $208 million in the first quarter of 2023. For our Asian markets, we had an adjusted EBITDA of $11 million during the quarter compared to an adjusted EBITDA of $276 million in the first quarter of 2023. In our other markets, the adjusted EBITDA loss was $33 million, narrowing meaningfully from last year, when losses were $68 million. Contribution margin loss per order in Brazil improved by nearly 88% year-on-year to reach negative $0.04. Digital Financial Services GAAP revenue was up by 21% year-on-year to $499 million. Adjusted EBITDA was up by 50% year-on-year to $149 million. Digital Entertainment bookings were $512 million. GAAP revenue was $458 million. Adjusted EBITDA was $292 million. Returning to our consolidated numbers. We recognized a net nonoperating loss of $18 million in the first quarter of 2024 compared to a net nonoperating income of $23 million in the first quarter of 2023. We had a net income tax expense of $79 million in the first quarter of 2024 compared to a net income tax expense of $62 million in the first quarter of 2023. As a result, net loss was $23 million in the first quarter of 2024 as compared to net income of $87 million in the first quarter of 2023.

Miang Chuen Koh, Investor Relations Director

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

Operator, Operator

The first question comes from the line of Pang Vitt of Goldman Sachs.

Pang Vittayaamnuaykoon, Analyst

Good morning, good evening management team, and congratulations for a solid set of results. Two questions from me. Number one, how do you derive confidence that you will be able to drive sustainable growth, especially once you start to lower the subsidies and move towards profitability? If your competitors decide to turn more aggressive, is there a way for you to react towards that? That's question number one. On number two, on gaming, given a very strong first quarter trends and results, how are you seeing trends towards the second quarter and rest of the year? Can you provide color on what exactly you have done in order to derive growth? And any thoughts on the run rate of margin going forward as well?

Chris Feng, President

It's Chris here. I will take the first question on the e-commerce side. I think for us, the most important thing is to work on the long-term competitive moat for e-commerce. I think to us, as I shared in the previous call, is number one, that cost to serve to make sure that we can serve the transactions to our buyers and sellers at a lower cost. Number two is the price competition of the product to make sure that the price for the same product on our platform is always better than the other platforms. To do that we have to work closely with the sellers, especially upstream in the value chains, to ensure that we can offer a lower price to the buyers always. Number three is the quality of services. As I mentioned quite a few times, that these are the key areas we're focusing on to improve not only the delivery services to our consumers but also the return services and the customer service experiences, etc. I think all these three things will contribute to our long-term competitiveness for our e-commerce business. As long as we can do this well, we believe that we can deliver better value to our buyers and sellers, allowing us to grow better than the market that we operate in. At the same time, if you look at the past few months, we do observe that the overall market is in a more stable situation regarding the competition point that you mentioned. And if the competitor does get more aggressive, I think we have to evaluate exactly what they did and how they did it. We will look at market by market, category by category to evaluate what's the best response we have. But all in all, in the long term, the three things I mentioned earlier, the long-term company moat will create value for our market, for our consumers, and our sellers. We do believe that as long as we do well on that, we should be able to grow well regardless of what competitors do in the short term. I think that will bring us to a better position in the market over the years. Of course, there might be fluctuations in the short term, up and down, but it shouldn't change the long-term picture.

Forrest Li, Chairman and CEO

On the gaming side, we are very pleased with our Q1 achievements, which reflect strong results and positive trends that have continued into Q2. We remain optimistic for the rest of the year. As mentioned last quarter, we anticipate double-digit growth for Free Fire throughout the year. The current growth reflects not only our recent efforts but also the work we've done over the past two years. Despite facing challenges and significant headwinds, particularly following COVID, we have maintained our ambition to establish Free Fire as a lasting franchise. This commitment led us to prioritize user experience over quick monetization, avoiding strategies that could harm the game's longevity. We have engaged in extensive research, including study trips, surveys, and discussions with gamers to understand their preferences and criticisms regarding Free Fire. This developmental focus has allowed us to refine the game based on valuable player feedback. What we’re witnessing now is the culmination of these efforts. Additionally, we have noted that the market is stabilizing post-COVID, with gamers returning to gameplay and rejoining Free Fire across all operating markets. In summary, given the market dynamics and our initiatives for Free Fire, we believe we have a strong product-market fit, and we plan to continue expanding Free Fire's user base and monetization throughout the year.

Operator, Operator

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

Alicia Yap, Analyst

I have a question related to Shopee. Just wondered, were you willing to return to loss-making to defend your market share if the competition is indeed getting more aggressive? What other levers can you further pull to allow you to defend your share while also maintaining your profitability trend? And if we look at the commission take rate, excluding the advertising, how much more room can we actually still raise the commission take rate across different countries?

Tony Hou, CFO

On the commission take rate, generally, we still see there is a meaningful room to increase the commission take rate, although probably not as aggressive as last year in terms of increase. We also see there is meaningful room on the ad take rate that we can look at. I shared this in the previous call as well that we believe that our ad take rate is still slightly lower than our peers in other markets. So there is some meaningful room there. In terms of the competition, similar to the previous question, the most important thing is to focus on the long-term core competitiveness, including pricing competitiveness and service experience. All of these things will provide a long-term advantage that will help us outperform competitors. In the short term, we have observed that the competition environment has been more stable in the past few months. If that changes, we will study it country by country, category by category. We will evaluate the best way to respond to that.

Operator, Operator

Your next question comes from the line of Navin Killa from UBS.

Navin Killa, Analyst

I have a couple of questions. First, I would like to understand the strength in the GMV for e-commerce. How much of that is due to seasonality, especially with the movement we have observed around Lebaran this year? Given this context, I noticed that you haven't adjusted your GMV guidance of high teens growth. I’m curious about your thoughts on that. My second question is regarding the logistics strategy. We are starting to see some positive results. Could you share some figures on the percentage of orders delivered on your own platform? How do you envision that number changing in the medium to long term?

Tony Hou, CFO

For the GMV, as Forrest said in the opening, in Q1, we did see very strong GMV growth. Part of that is attributed to seasonality. This year, we have both Lunar New Year and Ramadan occurring in Q1. Ramadan holiday falls into Q2, which is a different pattern from the past few years. But we don't think that's the only reason; it is part of the contributing factors. Another part of the reason is the execution work we have done in the past few quarters is starting to benefit us in terms of both top-line growth and bottom-line improvement. The exact split is probably hard to determine. However, it is not only seasonality but also the hard work we've been doing that is giving us benefits on both the top line and bottom line. For logistics in Asia, we do deliver more than half of our orders through our own SPX Express. In Brazil, we probably have more than 70% now, and we will be looking at increasing that percentage over time.

Operator, Operator

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

Divya Kothiyal, Analyst

My first question is on the e-commerce business. Could you talk about the drivers for the 23% quarter-on-quarter reduction that we've seen in sales and marketing expense for this segment, especially with regards to where we are in terms of unit economics for live streaming e-commerce versus marketplace? And also if you can comment on which scenario do you think we can get back to the profitability levels of over 1% of GMV that we were able to achieve in the beginning of last year? My second question is on the DFS business. The marketing spends have remained elevated in this quarter. Could you talk about what parts of SeaMoney are these being allocated to? And what kind of traction you're seeing? And would it be fair to say that this segment's top-line growth may actually deviate from the e-commerce growth going forward as you build new cases?

Tony Hou, CFO

Yes. On the e-commerce side of the question, we do see a sizable reduction in sales and marketing. Part of that is attributed to better user experience from live stream that we see from Q4 to Q1. However, it is also contributed to general better performance in the marketplace overall. For live streaming, our live stream volumes are still growing in most of our markets. But the user engagement has improved significantly for various markets. I believe in the coming quarters, we will see similar patterns where user engagement will continue to improve for live streaming. In terms of the EBITDA for GMV, I think we will eventually achieve the profit margin targets. The 1% figure you mentioned is reasonable to look at. In the long term, we believe that 2% to 3% is a meaningful target to aim at. Just to add a little on the previous question regarding the guidance for high-teen growth on the GMV for e-commerce. The numbers we see in Q1 have given us much stronger confidence in achieving high single-digit GMV growth, maybe even in the second half of the year. We have seen good trends in the latest markets as well. We will monitor the numbers and update the market when we see through the quarter. Many factors impact the numbers, including seasonality and currency exchange rates. However, we will update the market when we have more clarity. Regarding DFS, for DFS we do believe that a significant part of DFS is driven by the credit businesses. As we shared in the opening, the credit businesses are currently substantially contributing to the growth alongside Shopee PayLater.

Operator, Operator

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

Sachin Salgaonkar, Analyst

Congrats on a good set of numbers. I have two questions. First question is on Shopee EBITDA. You already achieved EBITDA breakeven in Shopee for Southeast Asia. Should we think this is sustainable going ahead? Can we expect improvement in EBITDA here? Or was there some seasonality factor specifically in this quarter? Should we expect some volatility in EBITDA or should we anticipate it to continue to improve? And second question is on average revenue per user in the gaming business. We saw it being lower than historical trends. So I just wanted to check if anything specific happened in the quarter? Or is this a new trend going ahead?

Tony Hou, CFO

Thank you. On the EBITDA side, it is partially driven by seasonality, as in most of the markets we are contribution margin positive. A higher top-line will assist us with EBITDA as well. Similarly, we are observing market trends month-to-month during the quarter. As we approach the current quarter, we have shared strong guidance. If there are any changes, we will share those with the market, yes.

Forrest Li, Chairman and CEO

For the game, I think that simply reflects we have attracted many new users to our game, specifically Free Fire. Even though Free Fire has been in its seventh year, we are successfully attracting new players. We believe the game can sustain for a very long time. When we have new gamers coming into the game, their average spending compared to more experienced players is relatively low. The more they play, the better engagement they have, which means there is a higher chance of monetization. So, I think that reflects a strong user growth for Free Fire in Q1.

Operator, Operator

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

Piyush Choudhary, Analyst

And congratulations for a strong set of results. Two questions. Firstly, again, going back to 2024 guidance, after such strong performance, why has the Shopee guidance of turning EBITDA positive in 2H not been revised upwards? Do you expect volatility in the upcoming quarter? If you can comment on the competitive intensity in Indonesia and across ASEAN after the merger of TikTok and Tokopedia, has there been an increase in competition and thus you're keeping guidance unchanged? Any color over there will be helpful. That is the first question. Secondly, in DFS, has it been higher customer acquisition cost or even higher funding costs, which has led to margin drop? If you can talk a little about the outlook for the margins in DFS?

Tony Hou, CFO

On competition, we have seen the market has been relatively stable in terms of competition. We didn't see any particular signs of changes. To be honest, we cannot predict what the competitors are doing, but we haven't observed any notable shifts in competition. Regarding guidance, again, we are very encouraged by the numbers we see in Q1. We are confident on achieving what we shared. We are about 1.5 months into Q2, and we will look closely at the market. In times when we gain more insight, we will share guidance with the market on forward-looking considerations. There is no particular reason for holding back the guidance based on competition or other factors. For the DFS question, the margin fluctuations are more coming from customer acquisition costs rather than on the funding costs. In fact, our funding cost is actually improving quarter-on-quarter. Again, the acquisition cost depends on market dynamics and how much we spend on acquiring users versus their future contributions. It also relates to new product launches in various markets.

Operator, Operator

Your next question comes from the line of Ranjan Sharma from JPMorgan.

Ranjan Sharma, Analyst

Two questions, please. Firstly, on the sales and marketing expense, it seems to have reduced to 2.9% of GMV for the e-commerce business. Based on your comments on competition, should we expect the same level of spend in the second quarter as well? The second question is on the fintech side. If you can shed some color on how much of the loan book is coming from Brazil or whether that will be our focus for the lending business given the strategy of some of your competitors in the market?

Tony Hou, CFO

Yes. On the sales and marketing spend for e-commerce, we do see a reduction in Q1 for a variety of reasons. Part of that is due to improved user engagement we have seen moving from Q4 to Q1, especially relating to live streaming. Additionally, there's been better performance across the marketplace. I believe we will continue optimizing our sales and marketing spending in the coming quarters. Although there may be some fluctuations month-to-month, due to external factors such as currency exchange rates, we do foresee a downward general trend. Regarding the loan book, we do have high aspirations for Brazil. We believe it can be a strong market for our digital financial services. However, we only entered Brazil mid-last year, which limits the time we have had to build our loan book there. However, Brazil represents substantial growth potential in the future.

Operator, Operator

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

Jiong Shao, Analyst

Congrats on the strong results. Two quick follow-ups on the e-commerce side. One is, could you talk about the leading improvement in unit economics throughout the quarter? And related to that, what percentage of orders now comes from live streaming? I think that's the first question, which is why people are asking why Q2 is not a breakeven point for you. And then I had a follow-up question on the Shopee Express SPX business. You talked about over 50% orders in Asia done through Shopee Express and 70% in Brazil. Do you have a target number for fulfillment through Shopee Express, and how does the unit economics or contribution margin for orders fulfilled through SPX compare to your averages? Any information or color or data point would be greatly appreciated.

Tony Hou, CFO

For live streaming, in terms of the percentage of orders, it is stable compared to last quarter. We had around 15% in South Asia last quarter, which remains steady. The bucket size has increased due to optimized category mix and improved user engagement. Regarding the drivers for the unit economics improvement, as I previously shared, it's due to both live streaming improvements and general marketplace enhancement. In addition, we have also seen better logistics costs improve over time, driving down our overall cost. As for the percentage of orders fulfilled through our own logistics, each market may evolve slightly, so we do not have a fixed target for all markets. However, on average, we anticipate a larger share of logistics will shift to our own SPX, and we expect it to increase from what it presently stands. Regarding unit economics for these orders, our cost per order for SPX is lower than for third-party logistics, which contributes to the overall unit economic improvement you see here. The degree to which this varies is slightly different market by market, but the trend has been stable across most regions.

Operator, Operator

Your next question comes from the line of Pang Vitt from Goldman Sachs. Please go ahead.

Pang Vittayaamnuaykoon, Analyst

Thank you very much. And two follow-up questions from my side. Firstly, on the logistics for Shopee Express as well, you did share that you see greater unit economics for Shopee Express versus third-party logistics. Can you explain or walk us through a little bit on how you've done it differently and how you are able to achieve this better unit economics and efficiencies versus third-party logistics as well? That's question number one. Question number two, earlier, you mentioned that there is still room for advertisement take rates, especially compared to global peers for Shopee. Can you share what the current ad take rate looks like for Shopee and what the long-term targets may be?

Tony Hou, CFO

Yes. On the logistics front, several reasons contribute to improved unit economics. First is that we retain our margin that third-party logistics (3PL) typically take. Even without that, we are still better off for a few reasons. One is improved capital expenditure (CapEx) planning. We can forecast how our business evolves not just in overall volume but also in volume split by regions and routes, optimizing our CapEx and operating model. Secondly, having a good forecast allows us to plan operations more effectively. For example, knowing order volumes better enables us to strategize workforce allocation and pickup methods. Furthermore, we can influence seller behaviors upstream to optimize logistics processes. Lastly, as a technology company, we leverage better analytics capabilities to enhance our supply chain efficiencies, resulting in better service levels and differentiated offerings. For example, rolling out new on-time guarantee deliveries requires us to forecast end-to-end logistics accurately, which we can achieve given our ability to plan collaboratively across the value chain. In total, these elements contribute to our ability to achieve better overall economics and service levels. Regarding the ad take rate, we do not disclose the actual numbers. However, we can share that compared to our global peers, we are meaningfully lower than them. We still have several percentage points to catch up to them, indicating significant room for ad take rate increases. We believe this can be achieved through several strategies, including increasing seller participation in ad utilization. To do this, we need to develop simpler ad products to ease the adoption for sellers. We will also increase ad efficiencies through technology. We are investing in improving conversion rates for our ad products, so we can serve more ads effectively without compromising user experience. Lastly, we will work on balancing organic and ad-driven traffic more effectively by enhancing our product metrics based on conversion rates and skews presented within the app. Collectively, we see a meaningful potential to increase the ad take rate over the next few quarters.

Operator, Operator

Your next follow-up question comes from Navin Killa from UBS.

Navin Killa, Analyst

I just wanted to ask a question with regards to your cash, which obviously remains strong and continues to grow. I know several of your peers have started talking about buybacks and have even announced buybacks. What's your thinking on the use of the cash balance?

Tony Hou, CFO

Yes. Thanks for the question. We currently don't have any plans for buybacks or similar initiatives. Our operational results are strong, and we are quite confident in our outlook for each of the business lines we operate.

Operator, Operator

Your next follow-up question comes from Alicia Yap from Citigroup.

Alicia Yap, Analyst

Two for me here. One is on the DFS. Can management share the ranking of growth by product or services line and the ranking by revenue or profitability contribution for your fintech products this quarter? And then second, I'm not sure if I missed it, but assuming if you will be relaunched in India sometime in the future, what could be the incremental upside to the user and the bookings if this becomes a reality?

Tony Hou, CFO

For our DFS businesses, we have several main products. The SPL, Shopee PayLater, and Buy Cash Loans (BCL), among others. Currently, SPL remains the largest contributor in terms of outstanding amounts. However, in terms of EBITDA contribution, BCL has a higher user engagement than SPL. This gives a rough idea of the contribution of our DFS segments. As for Free Fire's relaunch in India, we are actively working with various stakeholders, including regulators and potential local partners, to determine the best plan for re-entering the market. If successful, it could provide meaningful potential upside in terms of users and bookings, especially given India's vast market size. However, our guidance and outlook for the rest of the year regarding our double-digit growth does not account for the potential relaunch in India; this is based solely on our current trends.

Miang Chuen Koh, Investor Relations Director

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

Operator, Operator

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