SEA LIMITED Sea Limited Reports Fourth Quarter and Full Year 2023 Results
Singapore, March 4, 2024 - Sea Limited (NYSE: SE) ("Sea" or the "Company") today announced its financial results for the fourth quarter and full year ended December 31, 2023.
"I am happy to share that we have achieved our first full year of annual profit since our IPO," said Forrest Li, Sea's Chairman and Chief Executive Officer. "In 2023, we achieved profitability, strengthened our market leadership for our e-commerce business, grew our digital financial services business, and stabilized the performance of our digital entertainment business. We have emerged with a much stronger balance sheet with our cash position increasing to 8.5 billion dollars as of the end of 2023, demonstrating the discipline and prudence we have applied in our investments over the past year. Looking ahead, we expect 2024 to be another profitable year."
"Despite an environment of intensified competition in Southeast Asia, we believe Shopee had a meaningful gain in market share between the start and the end of 2023. We are happy to have solidified Shopee's market share in the region, and we intend to maintain our market share in 2024. We expect Shopee's full-year GMV growth to be in the high teens range and its adjusted EBITDA to turn positive in the second half of this year."
"For SeaMoney, 2023 was the first year of positive profit, primarily attributed to our consumer and SME credit business. In 2024, we will continue to invest in user acquisition for our credit business, both on and off Shopee platform as we see significant upside in our markets. As we scale, we will remain prudent on risk management."
"For Garena, I am happy to share that we are seeing improved user acquisition and retention trends for Free Fire. In 2023, Free Fire was the most downloaded mobile game globally according to Sensor Tower. We are pleased that these positive trends are continuing into 2024. In February, Free Fire achieved more than 100 million peak daily active users. It remains one of the largest mobile games in the world. With this positive momentum, we currently expect Free Fire to grow double-digitsyear-on-year for both user base and bookings in 2024."
"We are pleased to see positive trends in both growth and profitability for all three of our businesses. Looking ahead, we will continue to invest for the future with discipline and focus."
Fourth Quarter 2023 Highlights
- Group
- Total GAAP revenue was US$3.6 billion, up 4.8% year-on-year.
- Total gross profit was US$1.5 billion, as compared to total gross profit of US$1.7 billion for the fourth quarter of 2022.
- Total net loss was US$(111.6) million, as compared to total net income of US$422.8 million for the fourth quarter of 2022.
- Total adjusted EBITDA1 was US$126.7 million, as compared to US$495.7 million for the fourth quarter of 2022.
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- E-commerce
- GAAP revenue was US$2.6 billion, up 23.2% year-on-year.
- GAAP revenue included US$2.3 billion of GAAP marketplace revenue, which consists of core marketplace revenue and value-added services revenue and increased by 23.2% year-on-year.
- Core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was up 40.6% year-on-year to US$1.6 billion as a result of platform growth and improved monetization.
- Value-addedservices revenue, mainly consisting of revenues related to logistics services, was down 5.3% year-on-year to US$657.9 million as a
result of higher revenue net-off against shipping subsidies.
- Adjusted EBITDA1 was US$(225.3) million, as compared to US$196.1 million for the fourth quarter of 2022 and US$(346.5) million for the third quarter of 2023. Adjusted EBITDA improved meaningfully quarter-on-quarter for both Asia and Other markets.
- Asia markets recorded adjusted EBITDA of US$(192.9) million in the quarter, as compared to US$320.0 million for the fourth quarter of 2022 and US$(306.2) million for the third quarter of 2023.
- Other markets recorded adjusted EBITDA of US$(32.4) million in the quarter, as compared to US$(123.9) million for the fourth quarter of 2022 and US$(40.3) million for the third quarter of 2023.
- In Brazil, unit economics continued to improve, with contribution margin4
loss per order improving 88.9% year-on-year to US$(0.05) for the quarter.
- Gross orders totaled 2.5 billion for the quarter, increasing by 46.0% year-on-year
and 13.4% quarter-on-quarter.
- GMV was US$23.1 billion for the quarter, increasing by 28.6% year-on-year and 15.3% quarter-on-quarter.
- Digital Financial Services
- GAAP revenue was US$472.4 million, up 24.3% year-on-year.
- Adjusted EBITDA1 was US$148.5 million, up 96.4% year-on-year.
- Digital financial services revenue and operating income are primarily attributed to the consumer and SME credit business. As of December 31, 2023, consumer and SME loans principal outstanding was US$3.1 billion, up 27.0% year-on-year. This consists of US$2.5 billion on-book and US$0.6 billion off-book loans principal
- Non-performingloans past due by more than 90 days as a percentage of consumer and SME loans on-book was 1.6%, stable quarter-on-quarter.
- Digital Entertainment
- GAAP revenue was US$510.8 million, as compared to US$592.2 million for the
previous quarter.
- Bookings6 were US$456.3 million, up 1.9% quarter-on-quarter.
- Adjusted EBITDA1 was US$217.4 million, as compared to US$234.0 million for the previous quarter.
- Adjusted EBITDA represented 47.6% of bookings for the fourth quarter of 2023, as compared to 52.2% for the previous quarter.
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- Quarterly active users were 528.7 million, as compared to 544.1 million for the previous quarter.
- Quarterly paying users were 39.7 million, as compared to 40.5 million for the previous quarter. Paying user ratio was 7.5%, remaining stable quarter-on-quarter.
- Average bookings per user were US$0.86, up 4.8% quarter-on-quarter.
Full Year 2023 Highlights
- Group
- Total GAAP revenue was US$13.1 billion, up 4.9% year-on-year.
- Total gross profit was US$5.8 billion, up 12.5% year-on-year.
- Total net income was US$162.7 million, as compared to total net loss of US$(1.7) billion for the full year of 2022.
- Total adjusted EBITDA1 was US$1.2 billion, as compared to US$(878.1) million for the full year of 2022.
- E-commerce
- GAAP revenue was US$9.0 billion, up 23.5% year-on-year.
- GAAP revenue included US$7.9 billion of GAAP marketplace revenue, up 27.4% year-on-year.
- Adjusted EBITDA1 was US$(213.8) million, as compared to US$(1.7) billion for the full year of 2022.
- Gross orders totaled 8.2 billion, up 8.8% year-on-year.
- GMV was US$78.5 billion, up 6.8% year-on-year.
- Digital Financial Services
- GAAP revenue was US$1.8 billion, up 44.0% year-on-year.
- Adjusted EBITDA1 was US$550.1 million, as compared to US$(228.6) million for the full year of 2022.
- Digital Entertainment
- GAAP revenue was US$2.2 billion, as compared to US$3.9 billion for the full year of 2022.
- Bookings6 were US$1.8 billion, as compared to US$2.8 billion for the full year of 2022.
- Adjusted EBITDA1 was US$920.9 million, as compared to US$1.3 billion for the full year of 2022.
- Adjusted EBITDA represented 50.9% of bookings for the full year of 2023, as compared to 47.7% for the full year of 2022.
- For a discussion of the use of non-GAAP financial measures, see "Non-GAAP Financial Measures".
- Other treasury investments currently consist of group treasury related investments, such as available-for-sale sovereign bonds and corporate bonds, classified as part of long-term investments.
- Includes proceeds of approximately US$370 million from lower securities purchased under agreements to resell relating to our banking operations.
- Contribution margin refers to adjusted EBITDA before allocation of HQ costs.
- Off-bookloans principal outstanding mainly refers to channeling arrangements, which is lending by other financial institutions on our platform.
- GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue. This operating metric is used as an approximation of cash spent by our users in the applicable period that is attributable to our digital entertainment segment.
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Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars "$" except for per share data)
For the Three Months | For the Full Year | ||||||
ended December 31, | ended December 31, | ||||||
2022 | 2023 | 2022 | 2023 | ||||
$ | $ | YOY% | $ | $ | YOY% | ||
Revenue | |||||||
Service revenue | |||||||
Digital Entertainment | 948,857 | 510,773 | (46.2)% | 3,877,163 | 2,172,009 | (44.0)% | |
E-commerce and other services | 2,231,133 | 2,771,267 | 24.2% | 7,463,173 | 9,770,376 | 30.9% | |
Sales of goods | 271,594 | 334,588 | 23.2% | 1,109,369 | 1,121,175 | 1.1% | |
3,451,584 | 3,616,628 | 4.8% | 12,449,705 | 13,063,560 | 4.9% | ||
Cost of revenue | |||||||
Cost of service | |||||||
Digital Entertainment | (242,470) | (161,360) | (33.5)% | (1,077,017) | (672,481) | (37.6)% | |
E-commerce and other services | (1,282,174) | (1,621,218) | 26.4% | (5,194,065) | (5,530,043) | 6.5% | |
Cost of goods sold | (229,627) | (309,263) | 34.7% | (993,346) | (1,027,389) | 3.4% | |
(1,754,271) | (2,091,841) | 19.2% | (7,264,428) | (7,229,913) | (0.5)% | ||
Gross profit | 1,697,313 | 1,524,787 | (10.2)% | 5,185,277 | 5,833,647 | 12.5% | |
Other operating income | 68,453 | 58,524 | (14.5)% | 279,184 | 221,021 | (20.8)% | |
Sales and marketing expenses | (473,620) | (967,433) | 104.3% | (3,269,223) | (2,779,223) | (15.0)% | |
General and administrative expenses | (352,321) | (232,603) | (34.0)% | (1,437,612) | (1,134,724) | (21.1)% | |
Provision for credit losses | (175,103) | (159,988) | (8.6)% | (513,690) | (633,942) | 23.4% | |
Research and development expenses | (244,195) | (279,806) | 14.6% | (1,376,501) | (1,164,126) | (15.4)% | |
Impairment of goodwill | (177,663) | - | - | (354,943) | (117,875) | (66.8)% | |
Total operating expenses | (1,354,449) | (1,581,306) | 16.7% | (6,672,785) | (5,608,869) | (15.9)% | |
Operating income (loss) | 342,864 | (56,519) | (116.5)% | (1,487,508) | 224,778 | (115.1)% | |
Non-operating income (loss), net | 34,973 | 31,654 | (9.5)% | (13,025) | 207,616 | (1,694.0)% | |
Income tax credit (expense) | 43,461 | (76,894) | (276.9)% | (168,395) | (262,680) | 56.0% | |
Share of results of equity investees | 1,540 | (9,856) | (740.0)% | 11,156 | (7,032) | (163.0)% | |
Net income (loss) | 422,838 | (111,615) | (126.4)% | (1,657,772) | 162,682 | (109.8)% | |
Earnings (Loss) per share attributable to | |||||||
Sea Limited's ordinary shareholders: | |||||||
Basic | 0.76 | (0.19) | (125.0)% | (2.96) | 0.27 | (109.1)% | |
Diluted | 0.72 | (0.19) | (126.4)% | (2.96) | 0.25 | (108.4)% | |
Change in deferred revenue of | |||||||
Digital Entertainment | (405,262) | (54,459) | (86.6)% | (1,125,294) | (362,397) | (67.8)% | |
Adjusted EBITDA for Digital | |||||||
Entertainment (1) | 258,233 | 217,411 | (15.8)% | 1,313,091 | 920,923 | (29.9)% | |
Adjusted EBITDA for E-commerce(1) | 196,146 | (225,332) | (214.9)% | (1,690,554) | (213,774) | (87.4)% | |
Adjusted EBITDA for Digital | |||||||
Financial Services (1) | 75,601 | 148,482 | 96.4% | (228,560) | 550,112 | (340.7)% | |
Adjusted EBITDA for Other Services (1) | (25,437) | (6,979) | (72.6)% | (239,149) | (44,880) | (81.2)% | |
Unallocated expenses (2) | (8,887) | (6,877) | (22.6)% | (32,962) | (33,199) | 0.7% | |
Total adjusted EBITDA (1) | 495,656 | 126,705 | (74.4)% | (878,134) | 1,179,182 | (234.3)% |
- For a discussion of the use of non-GAAP financial measures, see "Non-GAAP Financial Measures".
- Unallocated expenses within total adjusted EBITDA are mainly related to general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are
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excluded from segment results as they are not reviewed by the Chief Operating Decision Maker ("CODM") as part of segment performance.
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Three Months Ended December 31, 2023 Compared to Three Months Ended December 31, 2022
Revenue
Our total GAAP revenue increased by 4.8% to US$3.6 billion in the fourth quarter of 2023 from US$3.5 billion in the fourth quarter of 2022.
- Digital Entertainment: GAAP revenue was US$510.8 million compared to US$948.9 million in the fourth quarter of 2022, primarily attributable to moderation in user monetization year-on-year.
- E-commerceand other services: GAAP revenue increased by 24.2% to US$2.8 billion in the fourth quarter of 2023 from US$2.2 billion in the fourth quarter of 2022, primarily driven by the GMV growth of our e-commerce business and the growth of our credit business year-on-year.
- Sales of goods: GAAP revenue increased by 23.2% to US$334.6 million in the fourth quarter of 2023 from US$271.6 million in the fourth quarter of 2022.
Cost of Revenue
Our total cost of revenue was US$2.1 billion in the fourth quarter of 2023, as compared to US$1.8 billion in the fourth quarter of 2022.
- Digital Entertainment: Cost of revenue decreased by 33.5% to US$161.4 million in the fourth quarter of 2023 from US$242.5 million in the fourth quarter of 2022.
- E-commerceand other services: Cost of revenue for e-commerce and other services segment combined was US$1.6 billion in the fourth quarter of 2023, as compared to US$1.3 billion in the fourth quarter of 2022, primarily driven by higher costs of logistics from order growth.
- Cost of goods sold: Cost of goods sold increased by 34.7% to US$309.3 million in the fourth quarter of 2023 from US$229.6 million in the fourth quarter of 2022.
Other Operating Income
Other operating income was US$58.5 million and US$68.5 million in the fourth quarter of 2023 and 2022, respectively. Other operating income mainly consists of rebates from e-commerce related logistics services providers.
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Sales and Marketing Expenses
Our total sales and marketing expenses increased by 104.3% to US$967.4 million in the fourth quarter of 2023 from US$473.6 million in the fourth quarter of 2022. The table below sets forth breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars ("$").
For the Three Months | |||
ended December 31, | |||
2022 | 2023 | YOY% | |
Sales and Marketing Expenses | |||
$ | $ | ||
Digital Entertainment | 43,262 | 29,926 | (30.8)% |
E-commerce | 379,369 | 878,985 | 131.7% |
Digital Financial Services | 29,918 | 51,927 | 73.6% |
General and Administrative Expenses
Our general and administrative expenses decreased by 34.0% to US$232.6 million in the fourth quarter of 2023 from US$352.3 million in the fourth quarter of 2022.
Provision for Credit Losses
Our provision for credit losses decreased by 8.6% to US$160.0 million in the fourth quarter of 2023 from US$175.1 million in the fourth quarter of 2022.
Research and Development Expenses
Our research and development expenses increased by 14.6% to US$279.8 million in the fourth quarter of 2023 from US$244.2 million in the fourth quarter of 2022.
Impairment of Goodwill
We recorded nil impairment of goodwill in the fourth quarter of 2023, compared to US$177.7 million in the fourth quarter of 2022.
Non-operating Income or Losses, Net
Non-operating income or losses mainly consist of interest income, interest expense, investment gain (loss), foreign exchange gain (loss) and gain (loss) on debt extinguishment. We recorded a net non-operating income of US$31.7 million in the fourth quarter of 2023, as compared to a net non- operating income of US$35.0 million in the fourth quarter of 2022.
We recognized a gain on debt extinguishment of US$38.6 million in the fourth quarter of 2023 as the Company repurchased US$244.5 million aggregate principal amount of the 0.25% convertible senior notes due 2026 (the "2026 CB"), for a cash consideration of US$204.6 million. As of December 31, 2023, approximately US$1.8 billion aggregate principal amount of the 2026 CB remained outstanding.
Income Tax Expenses or Credit
We had a net income tax expense of US$76.9 million in the fourth quarter of 2023, as compared to net income tax credit of US$43.5 million in the fourth quarter of 2022.
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Net Loss or Income
As a result of the foregoing, we had net loss of US$(111.6) million in the fourth quarter of 2023, as compared to net income of US$422.8 million in the fourth quarter of 2022.
Basic and Diluted Loss or Earnings Per Share Attributable to Sea Limited's Ordinary Shareholders
Basic loss per share attributable to Sea Limited's ordinary shareholders was US$(0.19) in the fourth quarter of 2023, compared to basic earnings per share attributable to Sea Limited's ordinary shareholders of US$0.76 in the fourth quarter of 2022.
Diluted loss per share attributable to Sea Limited's ordinary shareholders was US$(0.19) in the fourth quarter of 2023, compared to diluted earnings per share attributable to Sea Limited's ordinary shareholders of US$0.72 in the fourth quarter of 2022.
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Full Year Ended December 31, 2023 Compared to Full Year Ended December 31, 2022
Revenue
Our total GAAP revenue increased by 4.9% to US$13.1 billion for the full year ended December 31, 2023 from US$12.4 billion for the full year ended December 31, 2022.
- Digital Entertainment: GAAP revenue was US$2.2 billion for the full year ended December 31, 2023 from US$3.9 billion for the full year ended December 31, 2022, primarily attributable to the moderation in user engagement and monetization.
- E-commerceand other services: GAAP revenue increased by 30.9% to US$9.8 billion for the full year ended December 31, 2023 from US$7.5 billion for the full year ended December 31, 2022, primarily driven by the improved monetization in our e-commerce business and the growth of our credit business.
- Sales of goods: GAAP revenue was US$1.1 billion for the full year ended December 31, 2023, relatively stable year-on-year.
Cost of Revenue
Our total cost of revenue was US$7.2 billion for the full year ended December 31, 2023, as compared to US$7.3 billion for the full year ended December 31, 2022.
- Digital Entertainment: Cost of revenue decreased by 37.6% to US$672.5 million for the full year ended December 31, 2023 from US$1.1 billion for the full year ended December 31, 2022.
- E-commerceand other services: Cost of revenue for our e-commerce and other services segment combined increased by 6.5% to US$5.5 billion for the full year ended December 31, 2023 from US$5.2 billion for the full year ended December 31, 2022, primarily driven by higher costs of logistics from order growth.
- Cost of goods sold: Cost of goods sold was US$1.0 billion for the full year ended December 31, 2023.
Other Operating Income
Our other operating income was US$221.0 million for the full year ended December 31, 2023 from US$279.2 million for the full year ended December 31, 2022. Other operating income mainly consists of rebates from e-commerce related logistics services providers.
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Sales and Marketing Expenses
Our total sales and marketing expenses decreased by 15.0% to US$2.8 billion for the full year ended December 31, 2023 from US$3.3 billion for the full year ended December 31, 2022. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars ("$").
For the Full Year | |||
ended December 31, | |||
2022 | 2023 | YOY% | |
Sales and Marketing Expenses | |||
$ | $ | ||
Digital Entertainment | 268,061 | 104,721 | (60.9)% |
E-commerce | 2,328,636 | 2,510,693 | 7.8% |
Digital Financial Services | 508,089 | 116,445 | (77.1)% |
General and Administrative Expenses
Our general and administrative expenses decreased by 21.1% to US$1.1 billion for the full year ended December 31, 2023 from US$1.4 billion for the full year ended December 31, 2022.
Provision for Credit Losses
Our provision for credit losses increased by 23.4% to US$633.9 million for the full year ended December 31, 2023 from US$513.7 million for the full year ended December 31, 2022.
Research and Development Expenses
Our research and development expenses decreased by 15.4% to US$1.2 billion for the full year ended December 31, 2023 from US$1.4 billion for the full year ended December 31, 2022.
Impairment of Goodwill
We recorded an impairment of goodwill of US$117.9 million for the full year ended December 31, 2023, as compared to US$354.9 million for the full year ended December 31, 2022.
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Sea Ltd. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 07:38:03 UTC.
