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, 2021.
In 2021, we continued to focus on sustainable growth and serving the fast growing and evolving demands and needs of our communities. With our growing scale, market leadership and strong cash balance, we believe we are well placed to increasingly leverage efficiencies across our ecosystem for growth and manage the levers of our business to reach profitability across more markets and segments in 2022 and beyond, said Forrest Li, Seas Chairman and Group Chief Executive Officer.
We currently expect Shopee to achieve positive adjusted EBITDA before HQ costs allocation in Southeast Asia and Taiwan by this year and SeaMoney to achieve positive cashflow by next year. As a result, we believe that by 2025, cash generated by Shopee and SeaMoney collectively will enable these two businesses to substantially self-fund their long-term growth.
In addition to Shopees strong and growing market leadership in Southeast Asia and Taiwan, we are very excited to see Shopee fast gaining traction in Brazil, the sixth largest country by population in the world and our new growth market. Just two years after entering the market, Shopee Brazil recorded more than 140 million gross orders in the fourth quarter, growing at close to 400% year-on-year. At the same time, unit economics for Brazil substantially improved with adjusted EBITDA loss per order before HQ costs allocation lowered by more than 40% year-on-year.
We are also very pleased to see SeaMoney continuing to scale rapidly with fast growing user base, expanding product offerings, and further enhanced commercialization. It has truly become another strong growth engine for us. We are excited to provide guidance on its full year GAAP revenue for the first time.
And while there are some headwinds impacting our digital entertainment business in the near term, we continue to remain extremely focused on developing Garenas global platform, which we see as a key strategic asset in the long run.
As we look ahead, it is clear that consumer activities and experiences are increasingly converging online at the intersection of content, commerce, and community. We believe our ecosystem comprises a complete consumer tech and innovation stack that is distinctively relevant to the new opportunities being presented. Therefore, we will continue to focus on best positioning Sea in the long run to best serve the changing needs of fast growing digital-native generations.
Fourth Quarter 2021 Highlights
Full Year 2021 Highlights
2022 Guidance
For the full year of 2022, we currently expect bookings for digital entertainment to be between US$2.9 billion and US$3.1 billion. With many economies reopening further in the fourth quarter and into this year, we have observed some moderation in online activities and fluctuations in user engagement. Moreover, due to unanticipated government actions, Free Fire is currently unavailable in the Google Play and iOS app stores in India. The guidance takes into consideration these headwind factors. The midpoint of the guidance of US$3.0 billion reflects our current expectations that our bookings for 2022 will be close to the level in 2020 while also considering the uncertainty in India.
We expect GAAP revenue for e-commerce to be between US$8.9 billion and US$9.1 billion. The midpoint of the guidance represents an increase of 75.7% from 2021.
We expect GAAP revenue for digital financial services to be between US$1.1 billion and US$1.3 billion. The midpoint of the guidance represents an increase of 155.4% from 2021.
| 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 data.ai 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. |
| 6 | Quarterly active users for digital financial services segment are defined as users who had at least one financial transaction with SeaMoney products and services during the quarter. Transactions include payments or receipts with our mobile wallet, loan disbursements, maintenance of balance in our banks or purchase of insurance policies on the Shopee platform. |
| 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 |
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For the Full Year |
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| 2020 | 2021 |
| 2020 | 2021 |
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| $ | $ | YOY% | $ | $ | YOY% | ||||||||||||
| Revenue |
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| Service revenue |
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| Digital Entertainment | 693,362 |
| 1,415,044 |
| 104.1 | % | 2,015,972 |
| 4,320,013 |
| 114.3 | % | ||||||
| E-commerce and other services | 656,566 |
| 1,482,665 |
| 125.8 | % | 1,777,330 |
| 4,564,617 |
| 156.8 | % | ||||||
| Sales of goods | 216,622 |
| 324,405 |
| 49.8 | % | 582,362 |
| 1,070,560 |
| 83.8 | % | ||||||
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| 1,566,550 |
| 3,222,114 |
| 105.7 | % | 4,375,664 |
| 9,955,190 |
| 127.5 | % | ||||||
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| Cost of revenue |
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| Cost of service |
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| Digital Entertainment | (208,360 | ) | (374,783 | ) | 79.9 | % | (702,329 | ) | (1,230,082 | ) | 75.1 | % | ||||||
| E-commerce and other services | (611,637 | ) | (1,235,351 | ) | 102.0 | % | (1,743,773 | ) | (3,825,826 | ) | 119.4 | % | ||||||
| Cost of goods sold | (212,841 | ) | (301,252 | ) | 41.5 | % | (580,657 | ) | (1,003,547 | ) | 72.8 | % | ||||||
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| (1,032,838 | ) | (1,911,386 | ) | 85.1 | % | (3,026,759 | ) | (6,059,455 | ) | 100.2 | % | ||||||
| Gross profit | 533,712 |
| 1,310,728 |
| 145.6 | % | 1,348,905 |
| 3,895,735 |
| 188.8 | % | ||||||
| Other operating income | 72,697 |
| 72,294 |
| (0.6 | )% | 189,645 |
| 287,946 |
| 51.8 | % | ||||||
| Sales and marketing expenses | (665,222 | ) | (1,219,858 | ) | 83.4 | % | (1,830,875 | ) | (3,829,743 | ) | 109.2 | % | ||||||
| General and administrative expenses | (189,005 | ) | (318,597 | ) | 68.6 | % | (657,215 | ) | (1,105,295 | ) | 68.2 | % | ||||||
| Research and development expenses | (109,507 | ) | (286,642 | ) | 161.8 | % | (353,785 | ) | (831,703 | ) | 135.1 | % | ||||||
| Total operating expenses | (891,037 | ) | (1,752,803 | ) | 96.7 | % | (2,652,230 | ) | (5,478,795 | ) | 106.6 | % | ||||||
| Operating loss | (357,325 | ) | (442,075 | ) | 23.7 | % | (1,303,325 | ) | (1,583,060 | ) | 21.5 | % | ||||||
| Non-operating loss, net | (124,459 | ) | (70,995 | ) | (43.0 | )% | (179,913 | ) | (132,124 | ) | (26.6 | )% | ||||||
| Income tax expense | (44,166 | ) | (105,609 | ) | 139.1 | % | (141,640 | ) | (332,865 | ) | 135.0 | % | ||||||
| Share of results of equity investees | 1,381 |
| 2,390 |
| 73.1 | % | 721 |
| 5,019 |
| 596.1 | % | ||||||
| Net loss | (524,569 | ) | (616,289 | ) | 17.5 | % | (1,624,157 | ) | (2,043,030 | ) | 25.8 | % | ||||||
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Net loss excluding share-based | (430,722 | ) | (483,492 | ) | 12.3 | % | (1,333,911 | ) | (1,572,706 | ) | 17.9 | % | ||||||
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Basic and diluted loss per share based on | (0.87 | ) | (0.88 | ) | 1.1 | % | (2.78 | ) | (2.96 | ) | 6.5 | % | ||||||
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Change in deferred revenue of Digital | 319,720 |
| (333,300 | ) | (204.2 | )% | 1,170,399 |
| 276,352 |
| (76.4 | )% | ||||||
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Adjusted EBITDA for Digital | 663,539 |
| 602,565 |
| (9.2 | )% | 1,982,734 |
| 2,775,957 |
| 40.0 | % | ||||||
| Adjusted EBITDA for E-commerce (1) | (427,474 | ) | (877,737 | ) | 105.3 | % | (1,306,908 | ) | (2,554,221 | ) | 95.4 | % | ||||||
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Adjusted EBITDA for Digital | (171,263 | ) | (149,813 | ) | (12.5 | )% | (511,092 | ) | (616,924 | ) | 20.7 | % | ||||||
| Adjusted EBITDA for Other Services (1) | (12,668 | ) | (56,859 | ) | 348.8 | % | (39,551 | ) | (170,211 | ) | 330.4 | % | ||||||
| Unallocated expenses (2) | (3,407 | ) | (10,296 | ) | 202.2 | % | (18,198 | ) | (28,196 | ) | 54.9 | % | ||||||
| Total adjusted EBITDA (1) | 48,727 |
| (492,140 | ) | (1,110.0 | )% | 106,985 |
| (593,595 | ) | (654.8 | )% | ||||||
(1) For a discussion of the use of non-GAAP financial measures, see Non-GAAP Financial Measures.
(2) 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, 2021 Compared to Three Months Ended December 31, 2020
Revenue
Our total GAAP revenue increased by 105.7% to US$3.2 billion in the fourth quarter of 2021 from US$1.6 billion in the fourth quarter of 2020. 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 85.1% to US$1.9 billion in the fourth quarter of 2021 from US$1.0 billion in the fourth quarter of 2020.
Other Operating Income
Our other operating income was US$72.3 million and US$72.7 million in the fourth quarter of 2021 and 2020, respectively. Other operating income mainly consists of rebates from e-commerce related logistics services providers.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 83.4% to US$1.2 billion in the fourth quarter of 2021 from US$665.2 million in the fourth quarter of 2020. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars ($).
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For the Three Months |
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| 2020 |
| 2021 | YOY% | |||
| Sales and Marketing Expenses | $ |
| $ |
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| Digital Entertainment | 61,191 |
| 109,625 | 79.2 | % | ||
| E-commerce | 438,475 |
| 840,727 | 91.7 | % | ||
| Digital Financial Services | 152,359 |
| 228,729 | 50.1 | % | ||
General and Administrative Expenses
Our general and administrative expenses increased by 68.6% to US$318.6 million in the fourth quarter of 2021 from US$189.0 million in the fourth quarter of 2020. This increase was primarily due to higher staff compensation and benefit costs from increased staff to support the business growth, office facilities and related expenses, as well as credit losses for our digital financial services business.
Research and Development Expenses
Our research and development expenses increased by 161.8% to US$286.6 million in the fourth quarter of 2021 from US$109.5 million in the fourth quarter of 2020, 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), and foreign exchange gain (loss). We recorded a net non-operating loss of US$71.0 million in the fourth quarter of 2021, compared to a net non-operating loss of US$124.5 million in the fourth quarter of 2020. Our non-operating loss in the fourth quarter of 2021 was primarily due to interest expenses on our convertible notes.
Income Tax Expense
We had a net income tax expense of US$105.6 million and US$44.2 million in the fourth quarter of 2021 and 2020, respectively. The income tax expense in the fourth quarter of 2021 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$616.3 million and US$524.6 million in the fourth quarter of 2021 and 2020, respectively.
Net Loss Excluding Share-based Compensation
Net loss excluding share-based compensation, was US$483.5 million and US$430.7 million in the fourth quarter of 2021 and 2020, respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding Share-based Compensation Attributable to Sea Limiteds Ordinary Shareholders
Basic and diluted loss per share based on net loss excluding share-based compensation, was US$0.88 and US$0.87 in the fourth quarter of 2021 and 2020, respectively.
Full Year Ended December 31, 2021 Compared to Full Year Ended December 31, 2020
Revenue
Our total GAAP revenue increased by 127.5% to US$10.0 billion for the full year ended December 31, 2021 from US$4.4 billion for the full year ended December 31, 2020. The increase was mainly driven by the growth in each of the segments detailed as follows:
Contacts
For enquiries:
Investors / analysts: ir@sea.com
Media: Martin Reidy, media@sea.com
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