Sea Limited Q4 & FY2023 Earnings

Sea Limited Reports Fourth Quarter and Full Year 2023 Results

Sea Limited Reports - Merchant Navy Info - News

Sea Limited (NYSE: SE) reported its financial results for Q4 and 2023, achieving its first annual profit since its IPO. The company strengthened its market leadership in e-commerce, expanded digital financial services, and stabilized digital entertainment. Its cash position increased to $8.5 billion, with positive expectations for 2024. Shopee gained market share, SeaMoney saw its first year of profit, and Garena experienced improved user trends.

Positive

Sea Limited achieved annual profit for the first time since its IPO, showcasing a strong performance across its businesses.
The company’s e-commerce segment, Shopee, gained market share amidst intensified competition in Southeast Asia, with plans to maintain its position in 2024.
SeaMoney, the digital financial services arm, reported its first year of positive profit, primarily driven by consumer and SME credit business.
In 2023, Garena witnessed improved user acquisition and retention for Free Fire, the most downloaded mobile game globally.
Total GAAP revenue for Q4 2023 was $3.6 billion, with a net loss of $111.6 million and adjusted EBITDA of $126.7 million.
E-commerce GAAP revenue for Q4 2023 was $2.6 billion, up 23.2% year-on-year, with adjusted EBITDA of $(225.3) million.
Digital Financial Services GAAP revenue for Q4 2023 was $472.4 million, up 24.3% year-on-year, with adjusted EBITDA of $148.5 million.
Digital Entertainment GAAP revenue for Q4 2023 was $510.8 million, with bookings of $456.3 million and adjusted EBITDA of $217.4 million.

Negative

Adjusted EBITDA for the e-commerce segment showed a reduction in Q4 2023 compared to the previous year.
The Digital Entertainment segment saw declined revenue and bookings for Q4 2023.
The company reported a net loss of $111.6 million for Q4 2023, contrasting with a net income of $422.8 million in Q4 2022.

SINGAPORE–(BUSINESS WIRE)– Sea Limited Stock (NYSE: SE) (“Sea” or the “Company”) today declared its financial results for the fourth quarter and whole year ended December 31, 2023.

“I am happy to share that we have earned 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, maintained our market leadership for our e-commerce business, grew our digital financial services business, and stabilized our digital entertainment business performance. We have emerged with a much stronger balance sheet with our cash position rising to 8.5 billion dollars as of the end of 2023. Demonstrating the discipline and tactfulness we have applied in our investments over the past year. Looking ahead, we expect 2024 to be another profitable year.”

“Despite an environment of strengthened competition in Southeast Asia, we believe Shopee had a noteworthy gain in market share between the start and the end of 2023. We are pleased to have solidified Shopee’s market share in the region and intend to maintain it in 2024. We expect Shopee’s full-year GMV growth to be in the high teens range and its revised 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 finance user acquisition for our credit business. Both on and off the Shopee platform we see significant upside in our markets. As we scale, we will remain cautious 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 delighted 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 most extensive 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

Group

Total GAAP revenue was US$3.6 billion, up 4.8% year-on-year.
The total gross profit was US$1.5 billion, compared to US$1.7 billion for the fourth quarter of 2022.
Total net loss was US$(111.6) million, compared to total net income of US$422.8 million for the fourth quarter of 2022.
Total adjusted EBITDA1 was US$126.7 million, compared to US$495.7 million for the fourth quarter of 2022.
As of December 31, 2023, cash, cash equivalents, short-term, and other treasury investments2 were US$8.5 billion, representing a net increase3 of US$565.7 million from September 30, 2023.

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 and value-added services revenue, increasing by 23.2% year over year.
- Core marketplace revenue, mainly transaction-based fees and advertising revenues, was up 40.6% year-on-year to US$1.6 billion due to platform growth and improved monetization.
- Value-added services revenue, mainly related to logistics services, was down 5.3% year-on-year to US$657.9 million due to higher revenue net-off against shipping subsidies.
Adjusted EBITDA1 was US$(225.3) million, 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, 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, the principal outstanding amount of consumer and SME loans was US$3.1 billion, up 27.0% year-on-year. This comprises US$2.5 billion on-book and US$0.6 billion off-book loans principal outstanding5.
Non-performing loans exceeding due by more than 90 days. The percentage of consumer and SME loans on-book was 1.6%, which is stable quarter-on-quarter.
Digital Entertainment
Average bookings per user were US$0.86, up 4.8% quarter-on-quarter.
GAAP revenue was US$510.8 million 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, compared to US$234.0 million for the previous quarter.
Adjusted EBITDA represented 47.6% of bookings for the fourth quarter of 2023, compared to 52.2% for the previous quarter.
Quarterly active users were 528.7 million, compared to 544.1 million for the previous quarter.
Quarterly paying users were 39.7 million, compared to 40.5 million for the previous quarter. The paying-user ratio was 7.5%, remaining stable 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$162.7 million, compared to a total net loss of US$(1.7) billion for the full year of 2022.
Total adjusted EBITDA1 was US$1.2 billion, compared to US$(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, 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$550.1 million, compared to US$(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. This is 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, compared to 47.7% for the full year of 2022.