NYSE-listed Sea Ltd has reported its first full-year profit in 2023.
The Southeast Asian tech giant, which runs the popular e-commerce platform Shopee and gaming platform Garena, clocked a net income of $162.7 million for the year ended Dec. 31, 2023. This marks a significant improvement from a net loss of $1.7 billion in 2022, according to the company’s fourth quarter (Q4 2023) financial report released on Monday.
Gross profit in 2023 increased 12.5% to $5.8 billion.
Sea’s GAAP revenue stood at $13.1 billion for 2023, representing a 4.9% year-on-year (YoY) increase.
Additionally, its total adjusted EBITDA reached $1.2 billion, showing improvement from the negative $878.1 million reported for the full year of 2022.
In Q4 2023, the group reported GAAP revenue of $3.6 billion, up 5% year-on-year. Gross profit, meanwhile, dipped to $1.5 billion in the three months from $1.7 billion a year ago.
However, the quarter saw losses of $111.6 million, in contrast to the postive net income of $422.8 million recorded in the fourth quarter of 2022, marking the second loss-making quarter after three consecutive profitable quarters.
Its adjusted EBITDA for the October-December period stood at $126.7 million.
As of December 31, 2023, Sea Ltd held $8.5 billion in cash, cash equivalents, short-term, and other treasury investments.
“I am happy to share that we have achieved our first full year of annual profit since our IPO,” said Sea’s chairman and CEO Forrest Li in a statement.
He highlighted the milestones reached in 2023, including profitability, strengthened market leadership in e-commerce, growth in digital financial services, and stabilised performance in digital entertainment. The company’s cash position increased to $8.5 billion, reflecting disciplined investment strategies. Looking ahead, Li anticipates another profitable year in 2024.
Rising revenues for Shopee
Sea’s marketplace arm Shopee recorded GAAP revenue of $2.6 billion for Q4 2023, marking a 23.2% YoY increase. This revenue included $2.3 billion from GAAP marketplace revenue, comprising core marketplace revenue and value-added services revenue.
However, it recorded negative adjusted EBITDA of $225.3 million, in contrast to positive $196.1 million in the fourth quarter of 2022.
Even so, the company noted that there was a notable improvement in adjusted EBITDA quarter-on-quarter [QoQ] for both Asia and other markets.
In Asia, adjusted EBITDA totalled negative $192.9 million for the quarter, compared to $306.2 million in the Q3 of 2023. Nonetheless, it showed a YoY decline in Q4 2023, compared with $320 million in the fourth quarter of the previous year.
Shopee’s gross orders for the quarter amounted to 2.5 billion, marking a 46% YoY increase while GMV reached $23.1 billion for the quarter, rising by 28.6% YoY.
For the full year of 2023, Shopee’s GAAP revenue reached $9 billion, representing 23.5% YoY rise. Meanwhile, it recorded negative adjusted EBITDA of $213.8 million, as compared to negative $1.7 billion for the full year of 2022.
Gross orders totalled 8.2 billion, up 8.8% YoY while GMV was US$78.5 billion, up 6.8% YoY.
Despite heightened competition in Southeast Asia, Li emphasised Shopee’s significant market share gain throughout 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,” he continued.
Garena holds hope
In Q4 2023, Sea’s digital entertainment arm Garena, reported GAAP revenue of $510.8 million, a decrease of approximately 13% from the previous quarter’s $592.2 million.
Bookings amounted to $456.3 million, marking a 1.9% increase QoQ. Its adjusted EBITDA stood at $217.4 million, compared to $234 million in the previous quarter.
Garena boasted 528.7 million active users and 39.7 million quarterly paying users for the quarter, with a stable paying user ratio of 7.5% QoQ. The average bookings per user increased by 4.8% QoQ to $0.86.
For the full year of 2023, GAAP revenue totalled $2.2 billion, down from $3.9 billion in 2022. Bookings amounted to $1.8 billion, compared to $2.8 billion in 2022. Adjusted EBITDA for the full year was $920.9 million, down from $1.3 billion in 2022.
Last year, Garena’s flagship gaming title, Free Fire, was the most downloaded mobile game globally according to Sensor Tower. The company expects the trend to continue this year.
“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,” said Li.
Digital financial services recorded profit
SeaMoney achieved its first year of positive profit last year, mainly driven by consumer and SME credit business, said the CEO
“This year forward, we plan to further invest in user acquisition for credit business, both on and off the Shopee platform, as we anticipate substantial growth in our markets. While scaling up, we will maintain a cautious approach to risk management,” he said.
For the full year of 2023, GAAP revenue for digital financial services surged to $1.8 billion, a remarkable 44% year-on-year increase. Adjusted EBITDA reached $550.1 million, compared to a negative $228.6 million in the full year of 2022.
Meanwhile, in Q4 2023, GAAP revenue for digital financial services surged to $472.4 million, marking a 24.3% year-on-year increase, while adjusted EBITDA soared to $148.5 million, up 96.4% year-on-year.
The growth in digital financial services revenue and operating income is mainly attributed to the consumer and SME credit business. As of December 31, 2023, the principal outstanding for consumer and SME loans reached $3.1 billion, reflecting a 27% year-on-year increase.
This comprises $2.5 billion on-book and $0.6 billion off-book loans. The percentage of non-performing loans past due by more than 90 days remained stable quarter-on-quarter at 1.6% of consumer and SME loans on-book.
