Singapore unicorn Sea’s 2020 gross profit doubles on e-commerce, gaming boom

Photo: Sea website

NYSE-listed consumer internet company Sea Ltd more than doubled its revenue and gross profits in 2020, compared with the previous year, propelled by a surge in demand for its gaming and e-commerce services amid COVID-19.

The group’s GAAP revenue for 2020 stood at $4.4 billion, up 101% year-on-year (yoy), while gross profit stood at $1.3 billion, compared with $604 million in 2019, up 123%, it said in a statement on Tuesday.

Total adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) stood at $107 million, compared with a loss of $178.6 million in 2019.

Net losses, though, widened from $1.46 billion in 2019 to $1.62 billion in 2020.

E-commerce proved to be the major growth propeller, with GAAP revenue for the unit at $2.2 billion, up 159.8% year-on-year. This encompassed $1.6 billion of marketplace revenue (up 155.2% yoy), and $575.4 million of product revenue (up 173.1% yoy). Marketplace revenue mostly comprises transaction-based fees and advertising income and revenue generated from other value-added services, while product revenue is generated from direct sales.

For 2021, Sea expects bookings for digital entertainment to be $4.3-$4.5 billion, just over a third higher than 2020’s rate. The company expects GAAP revenue for e-commerce to be $4.5-$4.7 billion, or more than double that of 2020.

In Q4, adoption of the group’s digital payments service SeaMoney continued to grow, with mobile wallet total payment volume exceeding $2.9 billion for Q4 and $7.8 billion in 2020.

In Q4, quarterly paying users for its mobile wallet services surpassed 23.2 million, with monthly paying users in Indonesia alone surpassing 10 million. Sea expanded its partnership with Google to offer its mobile wallet as a payment option for the Google Play Store in Indonesia, following a similar move in Thailand in March 2020.

Shopee shines

For e-commerce, gross orders totalled 1 billion, an increase of 134.6% yoy. Gross merchandise value was $11.9 billion, up 112.5% yoy.

In Indonesia, Shopee registered over 430 million orders in Q4, an increase of over 128% year-on-year.

Shopee also ranked first in Indonesia by average monthly active users (MAU), and total time spent on the app on Android, and downloads, in the shopping category for the fourth quarter and for the full year 2020, according to App Annie statistics.

Both in Southeast Asia and in Taiwan, Shopee ranked first in the Shopping category by average MAU, total time spent on the app on Android, and downloads, for both Q4 and 2020. Shopee was also the third most downloaded app globally in the shopping category in 2020. It launched a small presence in Brazil in late 2019 as a pilot initiative of its cross-border team. It has another small pilot project in Mexico.

“Shopee ranked first in YouGov’s ‘Best APAC Buzz Rankings 2020’ and ranked eighth in YouGov’s ‘Best Global Brands 2020’. Shopee represents one of the only two e-commerce brands in YouGov’s top 10 global brand rankings,” noted Shopee in its release.

Garena

Sea’s gaming unit Garena also exceeded guidance, with bookings at $1 billion, up 111.1% yoy. Sea said Free Fire was the highest-grossing game in Southeast Asia, Latin America, and India in Q4. It also noted that “Free Fire was the most downloaded mobile game globally in 2020, according to App Annie, for the second consecutive year.”

Acquisitions

In 2020, Sea Group built capabilities in the financial services space, going beyond its strong gaming and e-commerce cores.

It announced on Tuesday that it has acquired a 100% stake in Composite Capital Management (“Composite”), a Hong Kong-licensed global investment management firm. Composite was founded and is led by David Ma.

Concurrent with the acquisition, Sea announced it was establishing Sea Capital, a platform to manage Sea’s overall investment efforts.

David Ma will serve as the chief investment officer of Sea Capital and will report directly to Sea’s chairman and group CEO Forrest Li. Sea Capital will focus on partnering with entrepreneurs using technology to better serve consumers and small businesses. Sea is allocating an initial $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 Sea’s long-term growth strategies,” noted Sea in its earnings release.

Earlier this year, Sea acquired Indonesia’s Bank Kesejahteraan Ekonomi (Bank BKE), with the objective of ultimately transforming the local lender into a digital bank, DealStreetAsia had reported.

And in Sea’s home of Singapore, after fierce bidding, the group won one of two digital full-banking licences awarded by the Monetary Authority of Singapore (MAS). The licences will allow Sea to provide retail customers with fully online services such as account openings, deposits, and debit and credit cards, as well as serve corporate customers.

Group Chief Scientist

Sea has also announced Dr. Yan Shuicheng as its new Group Chief Scientist to build and lead Sea AI Labs.

Dr. Yan has expertise in artificial intelligence, focusing on computer vision, machine learning, and multimedia analysis.

As an indicator of future plans, Sea said that 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”.

Shares of Sea Ltd. were trading at $248.5, up by more than 5% in early trade on Tuesday on NYSE.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.