Sea Limited’s gaming arm, Garena, had a quiet quarter on sales and a loud one on profit. Bookings rose 5.9% to $890 million in the third quarter, reported November 10. Adjusted EBITDA jumped 45.9% to $458.2 million. For every dollar players spent, Garena kept about 51 cents as adjusted profit.
That’s an unusual business. Garena runs essentially one megahit, Free Fire, the battle royale built for cheap Android phones that dominates in Southeast Asia, Latin America and India. Arena of Valor, its MOBA, adds a second leg. Both are years old. Neither needs a big new development budget to keep earning.
Why revenue grew faster than bookings
GAAP revenue rose 28.6% to $840.1 million, far faster than bookings. The gap is accounting, not extra spending. Garena books in-game purchases up front but recognizes revenue over the expected life of the items. A year ago, deferred revenue grew by $187.6 million in the quarter. This year it grew by just $49.9 million. Less money parked on the balance sheet means more of it lands in reported revenue.
Bookings are the cleaner read of player spending, and those grew in single digits from a high base. Forrest Li, Sea’s chairman and CEO, credited Free Fire with strong bookings growth and said Arena of Valor kept up its momentum after its tenth anniversary celebrations in January.
Garena is the profit engine, Shopee is the growth
Sea as a whole posted record revenue of $8.6 billion, up 43.4%, and net income of $502.5 million. Most of that growth came from Shopee, its e-commerce platform, and Monee, its lending and payments arm. Shopee posted its most profitable quarter yet, with adjusted EBITDA of $269.2 million.
Garena still out-earns Shopee at the EBITDA line on about a seventh of the revenue. That’s the role it plays inside Sea: a steady cash generator funding growth elsewhere. Sea also announced a new $1 billion share buyback.
The risk in one game
Analysts on the call pointed at the obvious weakness. Garena depends on a small number of titles, and Free Fire carries most of the weight. Mobile shooters have long lives, but not endless ones. Garena’s bet is to keep Free Fire fresh with collaborations, events and regional pushes rather than find a second hit.
It’s working for now. For contrast with the big console and PC publishers, see how Take-Two’s bookings fell 18% ahead of GTA VI, where one launch decides the year.