Good morning, and good evening. Welcome to the Sea Limited second quarter 2020 results conference call. All participants will be in listen only mode. Should you need assistants, please signal a conference specialist by pressing the star key followed by zero. After today presentation there will be an opportunity to ask question. Please note that this event is being recorded. I would now like to turn the conference over to Ms. Yanjun Wang. Please go ahead.
Thank you, operator. Good evening and good morning, everyone, and welcome to Sea's 2020 second quarter earnings conference call. I'm 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 on press release. Also, this call includes discussions of certain non-GAAP financial measures such as adjusted revenues, adjusted EBITDA, and net loss, excluding share-based compensation and changes in fair value of the 2017 convertible notes. We believe these measures can enhance our investors' understanding of the actual cash flow of our major businesses when used as complements 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 here with me 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.
Thank you, Yanjun. Hello, everyone, and thank you as always for joining today's call. Over the last few months, our teams have continued to work hard to support local consumers and small businesses during this challenging time. At every level of the business, our teams have strengthened their efforts to help our communities to benefit from the digitalization of the economy. We also focused on contributing to economic recovery across our markets through various local initiatives as well as government-led efforts. Against this backdrop, I'm pleased to share that Sea is reporting very strong results for the second quarter. We also enjoy accelerating growth across all three of the key pillars of our business. As we noted last quarter, we have been witnessing a profound structural shift to digitalization across our markets.
Even as movement restrictions are being loosened or lifted in many markets, we continue to see strong user growth and the deepening of user engagement across our platforms. This is well aligned with our view that the structural shift to digitalization will be long-lasting. We further believe that we are very well positioned to capture the accelerated growth opportunities created by the rapid expansion of the digital economy. This is also reflected in our very strong results for the second quarter. Let me highlight a few key performance metrics for the quarter. On a group level, I'm particularly pleased to note that we recorded positive adjusted EBITDA of $7.7 million. Our quarterly adjusted revenue grew 93% year-on-year to reach $1.3 billion. Our gross profit grew by 106% year-on-year to reach $200.8 million.
We believe the strong top-line growth and continued bottom-line improvement demonstrate our ability to deploy our capital in a highly effective and efficient manner. It also speaks to the fundamental strength of our business model, which allows us to fund our rapid growth substantially through cash generated from operations. Let me talk about each of our business lines, starting with digital entertainment. Garena had another excellent quarter and achieved several historical highs. We reached more people than ever before, with close to half a billion active users around the globe playing Garena games during the quarter. That represents an increase of 61% year-on-year. As we rolled out more new content than ever to entertain and engage our users, our paying user ratio improved further to 50%. Our quarterly paying user number grew at a very strong rate of 91% year-on-year to reach 49.9 million.
As a result of this strong user and paying user growth, adjusted revenue for the quarter reached $716.2 million, up 62% year-on-year. Our adjusted EBITDA margin also reached a new record high of 61%. I want to highlight in particular the very strong performance of Free Fire. It continues to set new records in user growth and engagement. Free Fire recently hit a new record high in terms of peak daily active users of more than 100 million. According to App Annie, in the second quarter, Free Fire continued to be the top grossing game in both Latin America and Southeast Asia across both iOS and Android. Thanks to Free Fire's enduring global appeal, it also ranked as the third most downloaded game worldwide across iOS and Android in the quarter.
A key driver of Free Fire's success is our ability to create captivating content that engages our global user community. For example, we have observed that users enjoy the unique creative themes and the storyline we deploy for each of Free Fire's Elite Pass seasons. One of the most popular Elite Pass concepts of the last few months was Rampage II: Uprising. This was a reboot of Rampage, one of the best received in-game campaigns of last year. For this year's Rampage event, we introduced the new four-way war strategy mode, which proved very popular with our users. We are excited to see the positive user sentiment around the return of Rampage. We believe that recurring events with new creative content such as this help to build user affinity with our game and sustain long-term user engagement.
We are also partnering with other global IP holders to create memorable content experiences for our users. For example, in July, we announced a partnership with Netflix for a special in-game crossover with its global hit show, Money Heist. For this, we have worked with Netflix to create a Money Heist themed in-game takeover, which is expected to be launched in September. Users will be able to enjoy a new game mode inspired by the plot of Money Heist, and can purchase virtual skins modeled after the iconic outfits in the TV series. To further enhance user engagement, we have successfully migrated our esports activity online over the last few months. For example, in recent months, we held large-scale esports events in both Asia and Latin America.
In June, we held a Free Fire Asia All Stars event featuring both professional players and popular online influencers from India, Indonesia, Thailand, and Vietnam competing across several tournaments. In early August, we hosted an online esports event in Latin America called Free Fire Gigantes, featuring the top teams from our pro leagues on the Brazil and the Latin America servers. We continue to see strong momentum in user engagement entering into the third quarter, even as many of our markets eased their restrictions on movement recently. In fact, in July, Garena hit a new record high in monthly adjusted revenue. Free Fire also hit a new record in monthly paying users in the same month, which more than doubled year on year. Looking ahead, we remain fully focused on bringing innovative content and enjoyable experiences to our users.
We are confident that high quality and highly engaging content will strengthen their engagement and affinities with our game. This will continue to be the key driver of Garena's long-term success. Let's turn to Shopee. We recorded accelerated growth across key metrics and in each of our markets as more consumers and sellers turn to Shopee as their go-to shopping and selling destination. Last quarter, we spoke about the rapidly changing needs of consumers and sellers in our region who are embracing e-commerce at an unprecedented pace. We also discussed the efforts we were making to quickly adapt and scale up our services to address these evolving needs. Our very strong results for the second quarter further demonstrate the sustained deepening penetration of e-commerce and our ability to capture this growth.
In the second quarter, we recorded accelerated growth in gross orders, which increased by 150% year-on-year to reach 615.9 million, compared to 111% in the first quarter. Moreover, gross orders for Shopee Mall increased at an even faster pace of more than 210% year-on-year as more and more global and local brands partnered with us to cater to their increasing and evolving demand for online solutions. In Indonesia, our largest market, our year-on-year growth rate in terms of orders further accelerated. We recorded over 250 million orders for the market in the second quarter, or a daily average of over 2.8 million orders, an increase of over 130% year-on-year. We also saw significantly accelerated year-on-year growth in GMV, which exceeded $8 billion. This represents a year-on-year growth rate of 110% compared to 74% in the first quarter.
According to App Annie, in the second quarter, Shopee continued to rank first across Southeast Asia by downloads, monthly active users, and the total time in-app on Android. In Indonesia, Shopee extended its lead, and once again ranked first in the shopping category by downloads, monthly active users, and the total time in-app on Android. In terms of monetization, adjusted revenue grew by 188% year-on-year to reach $510.6 million. I'm pleased to note that our monetization rates have largely recovered to pre-pandemic levels. Adjusted revenue as a percentage of the total GMV increased to 6.4% from 5.1% for the previous quarter. Adjusted marketplace revenue as a percentage of total GMV was 4.7% in the second quarter of 2020, compared to 3.8% in the first quarter. Meanwhile, we drove further improvement in operating efficiency, even as we significantly scaled up our operations.
Adjusted EBITDA loss per order decreased by 51% year-on-year to $0.50, compared to $1.01 for the second quarter of 2019 and $0.60 in the first quarter. While we gradually ramped up monetization, we continued to provide strong support to our seller communities most affected by the pandemic through fee relief and other financial and operational assistance. In many of our markets, we have launched or scaled up support programs for local SME sellers during the quarter, offering financial and marketing aid to help them reach new audiences. We have also devoted significant effort to create more opportunities for local entrepreneurs and small businesses to grow their presence online. In Thailand, for example, we have partnered with the government to develop and roll out training and support programs targeting farmers.
Our program aims to reach 1.5 million farmers in the coming years to enable them to start and scale their business on Shopee. Similarly, in Malaysia, we organized a special online sale festival for durian producers to ensure they could get their fruit to consumers while fresh. These are all part of our commitment to driving economic recovery in our local communities. In terms of engagement with our consumers, in the second quarter, we continued to enhance the highly social user experience that Shopee is known for. Our live streaming feature is growing in popularity, and we are expanding the types of content that we offer to our users. For example, in late June, we partnered with the organizers of KCON, the most popular festival of K-pop music, to stream their hugely popular annual concert series exclusively on Shopee.
At the same time, we are expanding our ability to support the needs of sellers and brands across the region. In July, we partnered with Google to launch a new service called Google Ads with Shopee. This integration enables brands on Shopee to create Google Shopping ads directly in the Shopee Brand Suite. We also enhanced our in-app Shopee Feed with a new feature called Shopee Story. This allows brands and sellers to create and share short-form video content with their followers on Shopee Feed. In summary, the very strong results for the second quarter are underpinned by two key drivers. First, e-commerce penetration continued to deepen across markets and demographics. This momentum continued into the third quarter, even as most of our markets have emerged from lockdowns.
Second, with our strong market leadership and our ability to adapt quickly and effectively, Shopee is capturing, and we believe will continue to capture, an outsized proportion of the growth opportunity. With that in mind, we will continue to focus on investing with efficiency in the long-term growth of Shopee to further strengthen our market leadership. We continue to firmly believe that this will lead to much greater returns over the long run. Finally, our digital financial services business, SeaMoney, also enjoyed further accelerated growth in the second quarter. Accelerating digitalization is driving increased need for quick and convenient online and contactless payment options, as well as other digital financial services. We further believe that SeaMoney is in an ideal position to capture a significant proportion of that growth opportunity.
SeaMoney's focus continues to be leveraging on this strategic leadership position in some of the largest use cases for digital payment in e-commerce and digital entertainment. We believe its impressive growth in the second quarter underlines the strength of this strategy. Our mobile wallet total payment volume increased to more than $1.6 billion for the second quarter, compared to more than $1 billion in the first quarter. Quarterly paying users for our mobile wallet services grew by about 60% quarter-on-quarter to more than 16 million. In particular, we are encouraged to see more Shopee users embracing the ease and the convenience of our mobile wallet. In the month of July in Indonesia, our mobile wallet services were used to pay for more than 45% of gross orders on the Shopee platform.
As we scale up the SeaMoney business, we are applying the same rigorous discipline and focus on efficiency that is the hallmark of this business. Even as we recorded a huge jump in user numbers and the TPV for the quarter, our adjusted EBITDA loss for this segment remained relatively flat quarter-on-quarter. We see significant growth ahead in the digital payment and the digital financial services segment, driven by the rapid expansion of the digital economy in our region. Our results for the quarter clearly demonstrate that SeaMoney is in a great position to address the needs of users across the region. We will continue to invest efficiently in scaling up the SeaMoney business to solidify our leadership position across our markets. To conclude, we are moving into the second half of 2020 firing on all cylinders.
Each of our businesses is successfully adapting to capture the immediate growth opportunity in front of us. Each of them is also ideally positioned for the long term with a significant runway ahead. We saw sustained and growing user engagement across our platforms through the second quarter and beyond. This gives us further confidence that the rapid shift to digital lifestyles is, in fact, a permanent and irreversible change that will drive significant growth opportunity for Sea over the long run. We are very focused on maximizing this opportunity. We will continue to invest in products and services that will win the heart and the mind of our users. With that, I will invite Tony to discuss our financials.
Thank you, Forrest. 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. Forrest has discussed some of our financial highlights, so I will focus my comments on the other key financial metrics. For Sea overall, total adjusted revenue grew by 93% year-on-year to $1.3 billion, which was mainly driven by the growth of our digital entertainment business, especially our self-developed game, Free Fire, and our continued monetization efforts in our e-commerce business in the past quarters. The 62% year-on-year growth in digital entertainment adjusted revenue to $716.2 million was primarily driven by the increase of our active user base and deepened paying user penetration, and in particular, the continued success of our self-developed game, Free Fire.
Digital entertainment adjusted EBITDA was $436.2 million, an increase of 65% year-on-year, mainly due to strong top-line growth and our self-developed game accounting for an increased share of revenue. Our e-commerce adjusted revenue of $510.6 million included adjusted marketplace revenue of $378.7 million, up 175% year-on-year, and adjusted product revenue of $131.9 million, up 233% year-on-year. The strong results demonstrated the deepening penetration of e-commerce and our ability to capture these accelerated growth opportunities created by the rapid expansion of the digital economy. E-commerce adjusted EBITDA loss was $305.5 million as we continued our investment to fully capture the market opportunity in the region. We will continue to invest prudently and drive high quality growth by serving the users' needs better in the long run.
Digital Financial Services adjusted revenue was $11.9 million, an increase of 328% year-on-year from $2.8 million in the second quarter of 2019. Adjusted EBITDA loss was $110.1 million in the second quarter of 2020, compared to a loss of $18.1 million in the same period of 2019. This was primarily due to our continued efforts to deepen the integration of our mobile wallet services with our Shopee platform across different markets. We have also been expanding the suite of online and offline third-party use cases and partnerships. Returning to our consolidated numbers, we recognized a net non-operating income of $7.6 million in the second quarter of 2020, compared to a net non-operating loss of $29.2 million in the second quarter of 2019.
Non-operating gain in the second quarter of 2020 was primarily due to a gain from the sale of a controlling equity stake and remeasurement of our remaining stake in an operating entity in our other services segment, partially offset by higher interest expenses. The revenue from the entity disposed of contributed to a large portion of the revenue of our other services segments in the past, and the entity is no longer consolidated following such disposal. Our non-operating loss in the second quarter of 2019 was primarily due to a fair value loss of $31.8 million arising from the fair value accounting treatment for the 2017 convertible notes. We had a net income tax expense of $27.8 million in the second quarter of 2020, which was primarily due to withholding tax and corporate income tax recognized in our digital entertainment business.
As a result, net loss, excluding the share-based compensation and changes in fair value of the 2017 convertible notes, was $317.7 million in the second quarter of 2020 as compared to $215.1 million for the same period in 2019. 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.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw from the question queue, please press star then two. In the interest of time, we will take a maximum of two questions at a time from each caller. If you wish to ask more questions, please request to join the question queue again after your first question has been addressed. The first question comes from Thomas Chong of Jefferies. Please go ahead.
Hi. Good evening. Thanks, management, for taking my questions, and congratulations on a very strong set of results. My question is about our annual or our full-year outlook. Given the fact that our performance is so strong in the first half, how should we think about the full-year online games revenue growth as well as the e-commerce revenue growth? My second question is about the competitive landscape in online shopping. Can you comment about any change in terms of the trend that we would anticipate in the second half and next year? Thank you.
Thank you, Thomas. In terms of our full-year outlook, on the gaming side, as you can see from our past results, we've seen very strong momentum of growth in terms of active user, paying user, and also time spent on games, with a sustained ARPPU at $14.4. We continue to see such growth across our different regions in Southeast Asia, Latin America, as well as other frontier markets where we have a strong footprint in. That's both true for our active user base as well as paying user base with sustained ARPPU. Therefore, we believe we will continue to benefit from the tailwinds in terms of the deepening digitization as well as people looking for entertainment online during the social distancing requirements in the middle of the pandemic. The situation is still evolving.
We are continuing to observe, and at this stage, it's hard for us to pinpoint the exact number in terms of full-year guidance yet, but we are very confident of our performance. That one is for sure. In terms of the exact number, we will look to report back later when we have more information. As we mentioned, for July, our paying user for Free Fire has doubled again year on year. July also is a historical high in terms of adjusted revenue for our game business. Therefore, the trend still is quite positive, and we will continue to observe how it goes.
In terms of the e-commerce segment, again, we are seeing very strong tailwinds as we expand our market leadership in each market we are in terms of year-on-year growth in GMV, in order, active user, time spent, frequency, all the metrics we've seen very high growth rates. This is continuing into the third quarter. As you know, in most of our markets, the social distancing or strict lockdown has been lifted in the middle of the second quarter. Despite the lifting of such a movement restriction, we continue to see very strong momentum in e-commerce adoption. That is true also for example, in terms of brands moving online. We mentioned we have more than 200% year-on-year growth in orders from our Shopee Mall.
We also see other professional sellers increasing their sales online and increasingly move their entire sales onto our platform as we are the go-to platform for sellers as well as buyers in our region. That also goes to the competitive landscape in our markets. I think it's been quite clear from the past performance that we are fast gaining market share. While the deepening of penetration is ongoing as the clear market leader, we've taken a disproportionate share of the market growth. This also manifests in our ability to further deepen in monetization during this period of time. As we mentioned before, that we will continue to gradually ramp up monetization over time. We've been doing this. At the same time, we're giving relief to our sellers and helping new sellers onboard our platform, etc .
Therefore, you can see from the past results that we're gaining market share in terms of both our growth, but also our buying power.
Thank you.
As a reminder, please limit yourself to two questions. The next question comes from Miang Chuen Koh of Goldman Sachs. Please go ahead.
Hey. Hi, evening. Congrats on the results. Firstly, on gaming, can management provide some color on Free Fire's contribution to total revenues? What is the latest traction in India for second quarter, alongside any comments or data points you can share around new games, such as Fantasy Town, which was launched very recently. Secondly, on e-commerce, you talk about GMV growth remaining strong in the quarter. Can you elaborate a little bit more on this? Surely there must be some deceleration in growth as offline is gradually coming back. Is that sort of fair to say? Is it possible to break down the take rate for us in second quarter? How much was from value-added services, commission, advertising, etc ? Thank you.
Thank you, Miang. We definitely see very strong growth on Free Fire, and I think the very strong growth as a gaming site overall is largely driven by Free Fire across various markets. We don't give the specific breakdown. Overall, we continue to see Free Fire being the biggest game in our portfolio. In terms of Fantasy Town, it is a casual farming simulation game we recently licensed. This is really as an effort by our game team to expand our portfolio of games into some of the casual genres as well. It's very preliminary, so we don't have too much to share. I think it's always a good sign as we continue to diversify our portfolio. In terms of the Shopee growth, I think if you look at our markets in a market-by-market analysis, I think as I shared in Q1 before, it really depends.
For some markets where it's more affected by social distancing rules or strict lockdown or longer period of strict lockdown, you see a more accelerated growth compared to markets that are less affected. For example, in some of our markets like the Philippines, where you see a resurgence of cases, a reimposition of stricter lockdown, we even see further accelerated growth going into Q3 compared to Q2. In some other markets, we see sustained high growth that is at a much higher level compared to pre-COVID period. That actually applies to most of our markets. In markets like Taiwan and Vietnam, where so far there haven't been many cases, or they imposed a very short period and very limited lockdown, the effect has always been more moderated.
Even in a market like Taiwan, where there were never a lot of cases and was never a lockdown, this year, we see meaningfully heightened growth compared to last year. Again, it speaks to, A, our ability and operational strength, organizational strength in navigating a pandemic situation and capturing the growth that comes with the lockdown. At the same time, shows that in markets where it's less affected by lockdown, given our market leadership, we continue to enjoy accelerated growth well ahead of the general market growth rates and capturing further market share. This goes back to the strength of our business model as well.
Yeah. Any comments on Take Rate?
In terms of Take Rate breakdown in Q2, I think it's consistent with our past quarters that most of our Take Rate or adjusted revenue came from the high-margin streams of revenue, including commissions, handling fees, as well as the advertisement.
Got it. Thank you.
Thank you.
The next question is from Alicia Yap of Citigroup. Please go ahead.
Hi. Thank you. Good evening, Forrest, Tony, Yanjun, and management team. Congratulations on the strong set of results, and thanks for taking my questions. I have some questions on the Shopee business. I wonder if management, if you wanted to highlight two to three key points that you have learned, the most changers in terms of user behavior on the purchasing category frequency or even the merchants' attitude, and also the category mix in terms of the GMV contribution this year post-COVID versus previously you anticipated in terms of the mix. Second questions, wanted to ask about the change of the accounting reporting method that you highlight in the press release. Can you elaborate a little bit the reasons for the change and also the timing?
Why don't we wait a little bit until the end of the 2020 on the full-year results, then we have a change? Also, is that implying the full-year revenue guidance that you previously provide, which is on the adjusted revenue basis that is no longer valid, that we should not be referenced to? Thank you.
Thank you, Alicia. In terms of the Shopee user behavior, I think we see very strong momentum on all fronts. One is active buyer number, active seller number, and buy frequency and time spent have been increasing. For example, in terms of buy frequency, before we reported more than four times, we're seeing more than five times a month on average. In some of the markets, like Indonesia, it's getting close to six times a month. This is sustaining into even after the lockdown period. In terms of category mix, we reported before in Q1 that we saw strong surges in terms of hygiene-related products as well as home and living products, which is also related to working from home requirements. We continue to see that in large part of Q2.
As life gets a bit back to normal in Q3 with easing of certain movement restrictions, we start to see fashion to pick up again. Therefore, I think that in terms of category growth, I think quite strong across the different core categories that we have. In terms of adjusted revenue reporting, the reason we're making this change is that in connection with the ordinary course review of the SEC of filers' annual report, we received two questions from SEC. One is relating to the MD&A section of the annual report to add a little bit more color on operating cash flow differences, and which we have provided supplemental information to the SEC. The other one is regarding the reporting of adjusted revenue in our earnings release.
We have also, as we mentioned in the earnings release, determined that we will not be reporting adjusted revenue for the gaming segment. Instead, we'll be using bookings, which is again, GAAP revenue, plus changes in deferred revenue as the operating metric. Going forward, that shouldn't change the guidance that we gave before for the gaming segment. In terms of the e-commerce and other segments, we will also not report adjusted revenue, and instead we'll just be reporting GAAP revenue. For the full year guidance for e-commerce, we will continue to provide the sales incentives net off so that you can use that to add to the GAAP revenue for e-commerce and other segments. Sorry, for e-commerce segment, to compare against the full year guidance on adjusted revenue we previously gave. With one round of response to SEC already feel very satisfied and closed their case.
The response letter and correspondence with SEC will come out in about a month's time. We should expect to see it in September.
The next question is from Piyush Choudhary of HSBC. Please go ahead.
Yeah, hi. Congratulations to the management. Two questions. Firstly, your adjusted marketplace revenue as a percentage of GMV has increased to 4.7% this quarter. Can you elaborate what drove the increase and the medium-term outlook for the same? Secondly, on the logistics, is third-party logistics a bottleneck for growth? What's your long-term strategy over here? Is Shopee looking to invest in its own managed logistic team? Thank you.
Thank you for the question. In terms of adjusted revenue growth, it's again, mainly driven by our commission as well as advertisement, and also the product revenue, which are the three main components of the marketplace adjusted revenue. In terms of commission also, given the recovery of cross-border side, as well as the increased demand from Shopee Mall, with more brands joining us, we continue to see positive trends. We, in fact, also see more users, more sellers, using our advertisement programs, and fulfilled by Shopee programs to serve their buyers better, during this pandemic. That also helped to drive the growth rate higher, the take rate higher. Sorry. As we mentioned, we'll continue to gradually ramp up monetization over time. In terms of 3PL, I think, given the pandemic situation, so far we've seen very strong performance by our 3PL partners across different markets.
They made a huge effort, in close collaboration with us, to deliver as many packages as possible to our users, as shown in the heightened growth of our order volume in Q2 and enduring into the Q3. I think this is basically a demonstration of our strength of the relationship with them and, in terms of our operational network, with 3PL. We continue to work across different top 3PLs in different markets, as well as supplementing the capacity with our own express delivery team. We will continue to provide good services to our buyers, despite the movement restrictions being posed.
The next question is from John Blackledge of Cowen. Please go ahead.
Great. Thanks. Two questions. First, on Shopee. Despite the huge accelerating growth this quarter, you still showed a negative 17% incremental EBITDA margins, albeit it was much less than the 2Q 2019 negative EBITDA incremental margins. Just curious, what are the key investments driving the negative leverage? Then on SeaMoney, can you frame the longer term opportunity for the SeaMoney business? The mobile wallet users rose 50% year-over-year. Just discuss how you're driving the strong user growth. Thank you.
Sure. In terms of e-commerce, we continue to invest in its growth. If you look at our EBITDA loss per order as being fast dropping from $1 a year ago to $0.60 last quarter and to $0.50 per order this quarter. Therefore, we think we are gaining efficiency, continue to gain efficiency as we invest in the rapid growth of Shopee. At the same time, we see deepening monetization over time. As we always said, we believe the business model is very clear and has proven by all major marketplace e-commerce players in the world that profitability model for marketplace e-commerce is very strong. Especially for strong market leader. Therefore, we are investing in the long-term growth of this segment, to continue to strengthen our market leadership, to build deeper competitive moat, as well as to maximize our long-term profitability down the road.
In terms of the SeaMoney, as we mentioned, it's showing very strong growth during this period as well. We have the largest online use cases, natural use cases allow us to not only build a mobile wallet with efficiency, but also to drive other digital financial services across the different markets with strong user affinity, the data, and the sophistication of the use case we have. I think this is a very strong synergies across our three core businesses that we are enjoying, therefore it's driving very fast adoption of SeaMoney wallet, as well as in terms of the growth of paying users we are seeing.
We will continue to drive the growth of SeaMoney primarily through our own large and sophisticated use cases that in terms of a long-term potential, we think is definitely very big, given that this demand for digital payments and digital financial services is huge in our market, given the under-banking population, and under-penetration of traditional financial services. What we can do, we have a clear ability in doing, is use technology to promote the financial services acceptance to serve more population in our markets, and there is a very natural demand for it. The current pandemic just further accelerated the penetration of digital financial services and the mobile wallet for everybody as people all look for alternative ways of paying for things online, as well as contactless payment methods.
The next question is from Ranjan Sharma of JP Morgan. Please go ahead.
Hi, good evening. Thank you for the presentation, and congratulations on the results. Two questions from my side. Firstly, on e-commerce. Talking about the competitive environment, what we understand is that some of your peers might not be on a strong footing in terms of raising capital or competing in the market. If you can share your thoughts around potential M&A in this space, and how you would approach any potential opportunities. Secondly, you shared a bit about SeaMoney. Maybe you can also compare to other fintech companies, especially offerings from other super apps in the region, and how you differ. Just to sense, what is going to drive adoption for SeaMoney over the other apps, and are we going to see extended periods of sales and marketing and losses for SeaMoney? Thank you.
Sure. In terms of a competitive landscape, I think we are in a very strong position that, A, we are growing fast and faster, quarter-on-quarter even, and we are also further strengthening our market leadership position. As we have demonstrated, we are self-funding our growth in e-commerce. Now, if you look at certain other competitors who are both losing money and therefore dependent on external funding for it and losing market share, I can see why it could be very difficult to fundraise. I think this has put us in a even stronger competitive position. While we are open-minded about all possibilities, we will continue to assess the competitive landscape carefully and focus on strengthening our own operations and serving our sellers and buyers better. I think this is the best focus long-term for us in growing our marketplace.
In terms of the digital financial services, SeaMoney, I think what really gave us a strength or I would say competitive strength in the sense that we have very large, and perhaps the largest online use case, which is the e-commerce as well as digital entertainment. Especially on the e-commerce side, it is not only big, but it is also closest to people's wallets and purchase behavior that allow us to have the right amount of data to build more financial services on top of digital payment. We think the e-wallet is not the only kind of services. We would like to provide a comprehensive suite of services to our users to offer them more options online. This is the strength we have in building that. Second, we are able to, again, self-fund our growth in SeaMoney.
As you can see, we have been very focused on investment efficiency and scaling with the right amount of investment at the right time, with the right market condition and then maximizing the leverage we have of our own use cases. I think this really set us apart. A super app as a concept, it is a concept people talk about, but I think there are a lot of execution of details. It's not about lumping everything together in one app and just hoping that a user will somehow use all of those. You need to make sure that from a user experience, operational business model perspective, everything makes sense together and can add to each other and create synergies across different functionalities. That's what we are very much focused on.
The next question is from Varun Ahuja of Credit Suisse. Please go ahead.
Hi. Thanks for the opportunity, congrats on a good set of numbers. Two questions from me. First, if you can give some color on the sales and marketing spend that you've been doing this quarter in terms of how the qualitative trend has been on shipping subsidies, how much is still on brand promotion and discretionary spending, that will be helpful. Secondly, on digital financial services, you mentioned that the total payment transaction is $1.6 billion, which is around 20% of the full e-commerce GMV for this quarter, and it looks like mostly it is in Indonesia. If you look at the genesis of payment business, it was pretty much strong in Thailand and Vietnam.
Just wanted to understand how the take-up of payment has been, because infrastructure-wise, that was one of the early markets for you to doing well, but looks like Indonesia has kind of taken over. Just wanted to understand how you're looking at this segment. Lastly, if I can sneak in on category mix, if you can give more colors on how much is grocery now versus some of the other categories which have been strong at fashion or health and beauty will be helpful. Thank you.
Sure. Thank you. In terms of sales marketing spend for e-commerce, discretionary brand spending is already the biggest component for Q2. In fact, we've been increasingly efficient on shipping subsidy. While our buyers continue to enjoy that, it is increasingly being funded by free shipping and other programs we have for sellers, as well as rebates from 3PLs. We also did take advantage of the air time during the social lockdown where more users are watching TV or spending time online to do more of a brand marketing. This is also in line with the Ramadan season in Indonesia and Malaysia. Therefore you see more of that from the brand discretionary spend. Again, this is highly discretionary and could vary from period to period.
In terms of DFS, I think Indonesia being the first country where we rolled it out, and in terms of integration with the Shopee platform. We also have been working on Thailand, Vietnam, as well as other markets. We see, over time, strong adoption in the other markets as well. I think the strategy as well as the operational approach needs to be tailored for each market. As we've demonstrated in terms of running our e-commerce business, this is actually one of our strength, is to hyper localize our operations as well as the design of the product for each market. We'll continue to do that, and we continue to see strong growth contribution from all the other markets as well, in addition to Indonesia.
In terms of category mix for the quarter, as mentioned earlier, we see stronger demand for home and living and hygiene products as well as FMCG products during the quarter, which is probably explained by the social distancing and lockdown rules. At the same time, we saw fashion and health and beauty start to re-accelerate going into the third quarter as many of the lockdown rules have been eased, with continued strength in other categories as well. FMCG still remains a very small part of our category mix. Our main category mix hasn't really changed that much.
This concludes our question and answer session. I would like to turn the conference back over to Ms. Yanjun Wang for closing remarks.
Thank you everyone for joining today's call. We look forward to speaking to you all again next quarter. Please take care.
The conference has now concluded. Thank Thank you for attending today's presentation. You may now disconnect.