Thread by @EMparadigmshift

$SE Shopee 🛍 + its path to profitability ➡️ a thread🧵

1️⃣ Shopee 🛍 headline EBITDA losses (between $250m and $310m in each of the past several Qs) at a business level are, in isolation, misleading ➡️ they do not tell the full picture 🖼

Here's why ➡️

2️⃣ It is important instead to 👀 unit economics ➡️ at order level. As its comp position has 💪 in recent Qs – it was ranked no. 1 🥇in key download and engagement metrics in Q2 20 ➡️ EBITDA loss per order has continued to narrow Q on Q, from $2.07 in Q4 16 to $0.50 in Q2 20. $SE

3️⃣ Shopee 🛍 has increased its take-rate over the past 3 years from 0.1% (Q1 17) to 6.3% in (Q2 20)

🔹This number is "inflated" by the inclusion of VAS (logistics services to cross-border sellers) and handling fees

🔹Global peers' take-rates are ➡️ 5-15%: so significant room for growth 📊as Shopee 🛍 strengthens competitive position and builds its service offering for sellers $SE

4️⃣ Shopee 🛍 is already EBITDA positive in Taiwan and this is likely to extend to other markets one by one. If Indonesia🇮🇩 is next to reach this milestone, it would be extremely bullish (as the largest market) $SE

5️⃣ Shopee 🛍 is often labelled as subsidizing revs. This was the case in the early years but ➡️ it worked. Now, S&M expenses as a % of GMV is trending down, from 10% in Q1 18 to 3.3% in Q2 20. Invest are being made in the infra ⚒💳🚚 of its marketplace. This is moat building ⛏

6️⃣ SEA 🗺 is currently in the "land grab" phase - customer acquisition is cheap: single digit $ - and mgt has consistently re-iterated that a new customer🗣 is profitable🧾on an individual level with a few months $SE

7️⃣ $SE revenue growth acceleration 📈 in the past few Qs (187% in Q2 2020) + recent increases in take-rates in Indonesia🇮🇩 both indicate that Shopee 🛍 has reached escape velocity 🚀🔚