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, 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-digits year-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
Full Year 2023 Highlights
| 1 | For a discussion of the use of non-GAAP financial measures, see “Non-GAAP Financial Measures”. | |
| 2 | 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. | |
| 3 | Includes proceeds of approximately US$370 million from lower securities purchased under agreements to resell relating to our banking operations. | |
| 4 | Contribution margin refers to adjusted EBITDA before allocation of HQ costs. | |
| 5 | Off-book loans principal outstanding mainly refers to channeling arrangements, which is lending by other financial institutions on our platform. | |
| 6 | GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue. This operating metric is used as an approximation of cash spent by our users in the applicable period that is attributable to our digital entertainment segment. |
| Unaudited Summary of Financial Results | ||||||||||||||||||
| (Amounts are expressed in thousands of US dollars “$” 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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| 2022 | 2023 |
| 2022 | 2023 |
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| $ | $ | YOY% | $ | $ | YOY% | ||||||||||||
| Revenue |
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| Service revenue |
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| 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 | % | ||||||
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| 3,451,584 |
| 3,616,628 |
| 4.8 | % | 12,449,705 |
| 13,063,560 |
| 4.9 | % | ||||||
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| Cost of revenue |
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| Cost of service |
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| 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 | % | ||||||
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| (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 | )% | ||||||
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Earnings (Loss) per share attributable to 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 | )% | ||||||
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Change in deferred revenue of | (405,262 | ) | (54,459 | ) | (86.6 | )% | (1,125,294 | ) | (362,397 | ) | (67.8 | )% | ||||||
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| 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 | )% | ||||||
| (1) | For a discussion of the use of non-GAAP financial measures, see “Non-GAAP Financial Measures”. | |
| (2) | 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 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, 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.
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.
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.
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$473.6 million in the fourth quarter of 2022. The table below sets forth breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).
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For the Three Months |
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| 2022 |
| 2023 | YOY% | ||
| Sales and Marketing Expenses | $ |
| $ |
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| 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$43.5 million in the fourth quarter of 2022.
Net Loss or Income
As a result of the foregoing, we had net loss of US$(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.
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.
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.
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.
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$3.3 billion for the full year ended December 31, 2022. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).
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For the Full Year |
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| 2022 |
| 2023 | YOY% | ||
| Sales and Marketing Expenses | $ |
| $ |
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| 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.
Non-operating Income or Losses, Net
Non-operating income or losses mainly consist of interest income, interest expense, investment gain (loss), and foreign exchange gain (loss), and gain (loss) on debt extinguishment. We recorded a net non-operating income of US$207.6 million for the full year ended December 31, 2023, as compared to a net non-operating loss of US$(13.0) million for the full year ended December 31, 2022.
Income Tax Expense
We had a net income tax expense of US$262.7 million and US$168.4 million for the full year ended December 31, 2023 and 2022, respectively.
Net Income or Loss
As a result of the foregoing, we had net income of US$162.7 million for the full year ended December 31, 2023, as compared to net loss of US$(1.7) billion for the full year ended December 31, 2022.
Basic and Diluted Earnings or Loss Per Share Attributable to Sea Limited’s Ordinary Shareholders
Basic earnings per share attributable to Sea Limited’s ordinary shareholders was US$0.27 for the full year ended December 31, 2023, as compared to basic loss per share attributable to Sea Limited’s ordinary shareholders of US$(2.96) for the full year ended December 31, 2022.
Diluted earnings per share attributable to Sea Limited’s ordinary shareholders was US$0.25 for the full year ended December 31, 2023, as compared to diluted loss per share attributable to Sea Limited’s ordinary shareholders of US$(2.96) for the full year ended December 31, 2022.
Webcast and Conference Call Information
The Company’s management will host a conference call today to review Sea’s business and financial performance.
Details of the conference call and webcast are as follows:
| Date and time: |
7:30 AM U.S. Eastern Time on March 4, 2024 | |
| Webcast link: |
A replay of the conference call will be available at the Company’s investor relations website (www.sea.com/investor/home). An archived webcast will be available at the same link above.
About Sea Limited
Sea Limited (NYSE: SE) is a leading global consumer internet company founded in Singapore in 2009. Its mission is to better the lives of consumers and small businesses with technology. Sea operates three core businesses across digital entertainment, e-commerce, as well as digital financial services, known as Garena, Shopee and SeaMoney, respectively. Garena is a leading global online games developer and publisher. Shopee is the largest pan-regional e-commerce platform in Southeast Asia and Taiwan and has a significant presence in South America. SeaMoney is a leading digital financial services provider in Southeast Asia and is growing its presence in Brazil.
Forward-Looking Statements
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “could,” “will,” “expect,” “anticipate,” “aim,” “future,” “intend,” “plan,” “believe,” “estimate,” “likely to,” “potential,” “confident,” “guidance,” and similar statements. Among other things, statements that are not historical facts, including statements about Sea’s beliefs and expectations, the business, financial and market outlook, and projections from its management in this announcement, as well as Sea’s strategic and operational plans, contain forward-looking statements. Sea may also make written or oral forward-looking statements in its periodic reports to the U.
Contacts
For enquiries:
Investors / analysts: ir@sea.com
Media: media@sea.com
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