SINGAPORE–(BUSINESS WIRE)–Sea Limited (NYSE: SE) (�Sea or the Company) today announced its financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights
Full Year 2020 Highlights
Digital Financial Services Update
In the fourth quarter, we continued to see strong growth in the adoption of SeaMoneys offerings. Our mobile wallet total payment volume exceeded US$2.9 billion for the quarter and US$7.8 billion for the full year of 2020. Moreover, quarterly paying users for our mobile wallet services surpassed 23.2 million in the fourth quarter with monthly paying users in Indonesia surpassing 10 million during the quarter.
We also continued to expand our suite of online and offline third-party use cases and partnerships. We recently expanded our partnership with Google to offer our mobile wallet as a payment option for the Google Play Store in Indonesia, following our partnership with Google in Thailand from March 2020.
Other Updates
Sea has acquired 100% of Composite Capital Management (Composite), a Hong Kong-licensed global investment management firm. Composite was founded and is led by David Ma. Its team has a demonstrated track record of successful, long-term investing, and a deep understanding of industry trends and relevant sectors globally.
Concurrent with this acquisition, we are establishing Sea Capital, a platform to manage Seas overall investment efforts. David Ma will serve as the Chief Investment Officer of Sea Capital and will report directly to Seas Chairman and Group Chief Executive Officer, Forrest Li. Sea Capital will focus on partnering with entrepreneurs using technology to better serve consumers and small businesses. Through Sea Capital, we intend to invest into and support the growth of our broader ecosystem to create value for our users, business partners, and communities. In line with this commitment, we are allocating an initial US$1 billion to be deployed by Sea Capital over the next few years. We believe the addition of the Composite team and the establishment of Sea Capital will further enhance our investment and capital allocation capabilities in support of Seas long-term growth strategies.
Separately, Dr. Yan Shuicheng has joined Sea as Group Chief Scientist to build and lead Sea AI Labs. Dr. Yan is a leading expert in the field of artificial intelligence, with a particular focus on computer vision, machine learning and multimedia analysis. He is an ACM Fellow and Fellow of Academy of Engineering Singapore.
Sea AI Labs intends to attract and collaborate with top talent in artificial intelligence with the goal of exploring and developing long-term insights and technologies related to our existing businesses and new opportunities beyond. Dr. Yan and Sea AI Labs will strengthen our capabilities in innovation and research, in line with our commitment to advancing technology to drive the development of the digital economy across our regions.
Guidance
For the full year of 2021, we currently expect bookings for digital entertainment to be between US$4.3 billion and US$4.5 billion. The midpoint of the guidance represents an increase of 38.1% from 2020.
We also expect GAAP revenue for e-commerce to be between US$4.5 billion and US$4.7 billion. The midpoint of the guidance represents an increase of 112.3% from 2020.
1 For definitions of total adjusted EBITDA and adjusted EBITDA for digital entertainment and e-commerce segments, please refer to the Non-GAAP Financial Measures section.
2 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.
3 Rankings data for App Annie is based on combined data from the Google Play and iOS App Stores, unless otherwise stated. Southeast Asia rankings are based on Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Latin America rankings are based on Argentina, Brazil, Chile, Colombia, Mexico, and Uruguay.
4 GAAP marketplace revenue mainly consists of transaction-based fees and advertising income and revenue generated from other value-added services.
5 GAAP product revenue mainly consists of revenue generated from direct sales.
Unaudited Summary of Financial Results
(Amounts are expressed in thousands of US dollars $ except for per share data)
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| For the Three Months ended December 31, |
| For the Full Year ended December 31, |
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| 2019 | 2020 |
| 2019 | 2020 |
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| $ | $ | YOY% | $ | $ | YOY% | ||||||
| Revenue |
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| Service revenue |
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| Digital Entertainment | 404,082 | 693,362 | 71.6% | 1,136,017 | 2,015,972 | 77.5% | ||||||
| E-commerce and other services | 296,515 | 656,566 | 121.4% | 822,659 | 1,777,330 | 116.0% | ||||||
| Sales of goods | 76,627 | 216,622 | 182.7% | 216,702 | 582,362 | 168.7% | ||||||
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| 777,224 | 1,566,550 | 101.6% | 2,175,378 | 4,375,664 | 101.1% | ||||||
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| Cost of revenue |
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| Cost of service |
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| Digital Entertainment | (139,117) | (208,360) | 49.8% | (435,905) | (702,329) | 61.1% | ||||||
| E-commerce and other services | (294,685) | (611,637) | 107.6% | (907,518) | (1,743,773) | 92.1% | ||||||
| Cost of goods sold | (78,570) | (212,841) | 170.9% | (227,035) | (580,657) | 155.8% | ||||||
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| (512,372) | (1,032,838) | 101.6% | (1,570,458) | (3,026,759) | 92.7% | ||||||
| Gross profit | 264,852 | 533,712 | 101.5% | 604,920 | 1,348,905 | 123.0% | ||||||
| Other operating income | 6,015 | 72,697 | 1,108.6% | 15,890 | 189,645 | 1,093.5% | ||||||
| Sales and marketing expenses | (341,740) | (665,222) | 94.7% | (969,543) | (1,830,875) | 88.8% | ||||||
| General and administrative expenses | (109,705) | (189,005) | 72.3% | (385,865) | (657,215) | 70.3% | ||||||
| Research and development expenses | (49,467) | (109,507) | 121.4% | (156,634) | (353,785) | 125.9% | ||||||
| Total operating expenses | (494,897) | (891,037) | 80.0% | (1,496,152) | (2,652,230) | 77.3% | ||||||
| Operating loss | (230,045) | (357,325) | 55.3% | (891,232) | (1,303,325) | 46.2% | ||||||
| Non-operating loss, net | (15,183) | (124,459) | 719.7% | (477,387)(1) | (179,913) | (62.3)% | ||||||
| Income tax expense | (36,011) | (44,166) | 22.6% | (85,864) | (141,640) | 65.0% | ||||||
| Share of results of equity investees | (681) | 1,381 | (302.8)% | (3,239) | 721 | (122.3)% | ||||||
| Net loss | (281,920) | (524,569) | 86.1% | (1,457,722) | (1,624,157) | 11.4% | ||||||
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Net loss excluding share-based | (240,210) | (430,722) | 79.3% | (867,776) | (1,333,824) | 53.7% | ||||||
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Basic and diluted loss per share based on | (0.53) | (0.87) | 64.2% | (2.00) | (2.78) | 39.0% | ||||||
| Change in deferred revenue of Digital |
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| Entertainment | 75,794 | 319,720 | 321.8% | 631,355 | 1,170,399 | 85.4% | ||||||
| E-commerce sales incentives net-off | 55,679 | 119,344 | 114.3% | 107,828 | 301,254 | 179.4% | ||||||
| Adjusted EBITDA for Digital |
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| Entertainment (2) | 266,407 | 663,539 | 149.1% | 1,021,941 | 1,982,734 | 94.0% | ||||||
| Adjusted EBITDA for E-commerce (2) | (306,150) | (427,474) | 39.6% | (1,043,366) | (1,306,908) | 25.3% | ||||||
| Adjusted EBITDA for Digital | ||||||||||||
| Financial Services (2) | (49,761) | (171,263) | 244.2% | (113,445) | (511,092) | 350.5% | ||||||
| Adjusted EBITDA for Other Services (2) | (8,022) | (12,668) | 57.9% | (27,996) | (39,551) | 41.3% | ||||||
| Unallocated expenses (3) | (7,353) | (3,407) | (53.7)% | (15,743) | (18,198) | 15.6% | ||||||
| Total adjusted EBITDA (2) | (104,879) | 48,727 | (146.5)% | (178,609) | 106,985 | (159.9)% | ||||||
(1) This was primarily due to fair value loss of $472.9 million on the 2017 convertible notes as our share prices significantly exceeded the conversion prices of the 2017 convertible notes.
(2) For a discussion of the use of non-GAAP financial measures, see Non-GAAP Financial Measures.
(3) Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed by the Chief Operating Decision Maker (CODM) as part of segment performance.
Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019
Revenue
Our total GAAP revenue increased by 101.6% to US$1.6 billion in the fourth quarter of 2020 from US$777.2 million in the fourth quarter of 2019. The increase was mainly driven by the growth in each of the segments detailed as follows:
Cost of Revenue
Our total cost of revenue increased by 101.6% to US$1.0 billion in the fourth quarter of 2020 from US$512.4 million in the fourth quarter of 2019.
Other Operating Income
Our other operating income increased by 1,108.6% to US$72.7 million in the fourth quarter of 2020 from US$6.0 million in the fourth quarter of 2019. The increase in our other operating income was mainly due to the rebates from e-commerce related logistic services provided by third parties.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 94.7% to US$665.2 million in the fourth quarter of 2020 from US$341.7 million in the fourth quarter of 2019. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars ($).
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| For the Three Months ended December 31, |
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| 2019 |
| 2020 | YOY% | |||||||||||||||
| Sales and Marketing Expenses | $ |
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| Digital Entertainment | 44,547 |
| 61,191 | 37.4% | |||||||||||||||
| E-commerce | 254,710 |
| 438,475 | 72.1% | |||||||||||||||
| Digital Financial Services | 38,830 |
| 152,359 | 292.4% | |||||||||||||||
General and Administrative Expenses
Our general and administrative expenses increased by 72.3% to US$189.0 million in the fourth quarter of 2020 from US$109.7 million in the fourth quarter of 2019. This increase was primarily due to higher staff compensation and benefit costs as well as increase in office facilities and related expenses.
Research and Development Expenses
Our research and development expenses increased by 121.4% to US$109.5 million in the fourth quarter of 2020 from US$49.5 million in the fourth quarter of 2019, primarily due to the increase in research and development staff force.
Non-operating Income or Losses, Net
Non-operating income or losses consist of interest income, interest expense, investment gain (loss), fair value change for the 2017 convertible notes and foreign exchange gain (loss). We recorded a net non-operating loss of US$124.5 million in the fourth quarter of 2020, compared to a net non-operating loss of US$15.2 million in the fourth quarter of 2019. Our non-operating loss in the fourth quarter of 2020 was primarily due to investment loss arising mainly from the impairment of a private investment made in the prior years, and interest expense on convertible notes.
Income Tax Expense
We had a net income tax expense of US$44.2 million and US$36.0 million in the fourth quarter of 2020 and 2019, respectively. The income tax expense in the fourth quarter of 2020 was primarily due to corporate income tax and withholding tax expenses incurred by our digital entertainment segment.
Net Loss
As a result of the foregoing, we had net losses of US$524.6 million and US$281.9 million in the fourth quarter of 2020 and 2019, respectively.
Net Loss Excluding Share-based Compensation and Changes in Fair Value of the 2017 Convertible Notes
Net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, was US$430.7 million and US$240.2 million in the fourth quarter of 2020 and 2019, respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding Share-based Compensation and Changes in Fair Value of the 2017 Convertible Notes Attributable to Sea Limiteds Ordinary Shareholders
Basic and diluted loss per share based on net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes, was US$0.87 and US$0.53 in the fourth quarter of 2020 and 2019, respectively.
Full Year Ended December 31, 2020 Compared to Full Year Ended December 31, 2019
Revenue
Our total GAAP revenue increased by 101.1% to US$4.4 billion for the full year ended December 31, 2020 from US$2.2 billion for the full year ended December 31, 2019. The increase was mainly driven by the growth in each of the segments detailed as follows:
Cost of Revenue
Our total cost of revenue increased by 92.7% to US$3.0 billion for the full year ended December 31, 2020 from US$1.6 billion for the full year ended December 31, 2019.
Other Operating Income
Our other operating income increased by 1,093.5% to US$189.6 million for the full year ended December 31, 2020 from US$15.9 million for the full year ended December 31, 2019. The increase in our other operating income was mainly due to the rebates from e-commerce related logistic services provided by third parties.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 88.
Contacts
For enquiries:
Investors / analysts: ir@sea.com
Media: Martin Reidy, media@sea.com
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