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, Sea’s
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 Shopee’s 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 Garena’s 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
- Group
- Total GAAP revenue was US$3.2 billion, up 105.7%
year-on-year.
- Total gross profit was US$1.3 billion, up 145.6%
year-on-year.
- Total adjusted EBITDA1 was US$(492.1) million compared to
US$48.7 million for the fourth quarter of 2020.
- Digital Entertainment
- GAAP revenue was US$1.4 billion, up 104.1% year-on-year.
- Bookings2 were US$1.1 billion, up 6.8% year-on-year.
- Adjusted EBITDA1 was US$602.6 million, compared to US$663.5
million for the fourth quarter of 2020.
- Adjusted EBITDA represented 55.7% of bookings for the fourth
quarter of 2021, compared to 65.5% for the fourth quarter of
2020.
- Quarterly active users (“QAUs”) reached 654.0 million, an
increase of 7.1% year-on-year.
- Quarterly paying users grew by 5.6% year-on-year to 77.2
million and represented 11.8% of QAUs for the fourth quarter
compared to 12.0% for the same period in 2020.
- Average bookings per user were US$1.7, in line with that for
the fourth quarter of 2020.
- Our self-developed global hit game, Free Fire, continued to
maintain top global rankings in user and grossing metrics. It
remained the most downloaded mobile game globally for the fourth
quarter and the full year of 2021, according to data.ai3,
previously known as App Annie, maintaining this leading position
for a third consecutive year.
- Free Fire also ranked second globally by average monthly active
users for all mobile games on Google Play in the fourth quarter and
the full year of 2021, according to data.ai3.
- Free Fire continued to be the highest grossing mobile game in
Southeast Asia and Latin America for the fourth quarter and the
full year of 2021, according to data.ai3. Free Fire has maintained
this leading position for the past ten consecutive quarters in
Southeast Asia and in Latin America.
- In the United States, Free Fire was the highest grossing mobile
battle royale game for four consecutive quarters for the fourth
quarter and full year of 2021, according to data.ai3.
- Craftland, our recently introduced Free Fire map editor
feature, gained strong traction since launch with the most popular
maps being subscribed by close to 40 million users so far. We
believe that the strong user reception to Craftland is a positive
indicator of the result of our continued efforts to encourage user
participation in content creation as we build Free Fire into an
increasingly open platform and is well aligned with major emerging
industry trends such as the metaverse.
- We are working on multiple prototype games across different
stages through both self-development and publishing pipelines. In
2022 and beyond, we expect to expand our portfolio with more games
across diverse genres such as multiplayer action, role-playing,
sandbox and casual games.
- E-commerce
- GAAP revenue was US$1.6 billion, up 89.4% year-on-year.
- GAAP revenue included US$1.3 billion of GAAP marketplace
revenue4, up 103.5% year-on-year, and US$0.3 billion of GAAP
product revenue5, up 48.1% year-on-year.
- Gross orders totaled 2.0 billion, an increase of 90.1%
year-on-year.
- Gross merchandise value (“GMV”) was US$18.2 billion, an
increase of 52.7% year-on-year.
- Adjusted EBITDA1 was US$(877.7) million compared to US$(427.5)
million for the fourth quarter of 2020.
- In Southeast Asia and Taiwan, adjusted EBITDA loss per order
before allocation of the headquarters’ common expenses was 15
cents, an improvement from 21 cents in the fourth quarter of
2020.
- We believe that, in line with the continued scaling of the
platform and sustained improvement in unit economics, Shopee is
currently on track to achieve positive adjusted EBITDA before
allocation of the headquarters’ common expenses in Southeast Asia
and Taiwan by this year.
- In Shopee’s other markets, unit economics also showed
consistent improvement year-on-year.
- In Brazil, where Shopee was launched in late 2019, we have
already achieved strong traction with meaningful commercialization
and improving efficiency.
- In the fourth quarter, Shopee Brazil recorded more than 140
million gross orders, growing at close to 400% year-on-year, and
more than US$70 million of GAAP revenue, up by around 326%
year-on-year.
- Meanwhile, its adjusted EBITDA loss per order before allocation
of the headquarters’ common expenses improved by more than 40%
year-on-year to below US$2.
- For Shopee overall, adjusted EBITDA loss per order was US$0.45,
compared to US$0.41 for the fourth quarter of 2020. This increase
was attributable to the increasing contribution from the other
markets which are at a much earlier stage of development, and
therefore are both growing faster and incurring higher adjusted
EBITDA loss per order than Southeast Asia and Taiwan.
- In Southeast Asia and in Taiwan respectively, Shopee continued
to rank first in the Shopping category by average monthly active
users and total time spent in app for the fourth quarter and for
the full year of 2021, according to data.ai3.
- In Indonesia, where Shopee is the largest e-commerce platform,
gross orders grew by around 88% year-on-year. Shopee also continued
to rank first in the Shopping category by average monthly active
users and total time spent in app for the fourth quarter and for
the full year of 2021, according to data.ai3.
- Shopee Brazil continued to rank first in the Shopping category
by downloads and total time spent in app and second by average
monthly active users for the fourth quarter and for the full year
of 2021, according to data.ai3.
- Globally, Shopee was the top ranked app in the Shopping
category by downloads in the fourth quarter and for the full year
of 2021, according to data.ai3. In the same category, for Google
Play, Shopee also ranked first globally by total time spent in app
and second by average monthly active users in the fourth quarter
and for the full year of 2021, according to data.ai3.
- Shopee is also building strong brand recognition across our
communities. It was the top e-commerce brand in YouGov’s “Best
Global Brands 2021” and ranked sixth overall.
- Digital Financial Services
- GAAP revenue was US$197.5 million, up 711.1% year-on-year.
- Adjusted EBITDA1 was US$(149.8) million, compared to US$(171.3)
million for the fourth quarter of 2020.
- While our SeaMoney business continues to enjoy very strong
growth, we are also focused on continuing to improve growth
efficiency and expect the segment to achieve positive cashflow by
next year.
- Quarterly active users6 across our SeaMoney products and
services reached 45.8 million, up 89.7% year-on-year.
- In Indonesia, which has the most comprehensive set of products
and services among our markets, over 20% of the quarterly active
users6 have used multiple SeaMoney products or services in the
fourth quarter. We view this as a highly positive indicator of the
strong efficiencies we can leverage in bringing new offerings to
our large and fast-growing user base on the Shopee and SeaMoney
platforms, which are both highly synergistic with one another and
enjoy a strong flywheel effect in the scaling of each
platform.
- Total payment volume (“TPV”) for the mobile wallet was US$5.0
billion, up 70.1% year-on-year.
- We also expanded various products offerings including credit
services to consumers and merchants across more markets, started
offering services in digital banking and insurtech in Indonesia and
obtained a bank license in the Philippines.
Full Year 2021 Highlights
- Group
- Total GAAP revenue was US$10.0 billion, up 127.5%
year-on-year.
- Total gross profit was US$3.9 billion, up 188.8%
year-on-year.
- Total adjusted EBITDA1 was US$(593.6) million compared to
US$107.0 million for the full year of 2020.
- Digital Entertainment
- GAAP revenue was US$4.3 billion, up 114.3% year-on-year.
- Bookings2 were US$4.6 billion, up 44.3% year-on-year.
- Adjusted EBITDA1 was US$2.8 billion, up 40.0%
year-on-year.
- Adjusted EBITDA represented 60.4% of bookings for the full year
of 2021, compared to 62.2% for the full year of 2020.
- E-commerce
- GAAP revenue was US$5.1 billion, up 136.4% year-on-year.
- GAAP revenue included US$4.1 billion of GAAP marketplace
revenue4, up 155.8% year-on-year, and US$1.1 billion of GAAP
product revenue5, up 82.7% year-on-year.
- Gross orders totaled 6.1 billion, an increase of 116.5%
year-on-year.
- GMV was US$62.5 billion, an increase of 76.8%
year-on-year.
- Adjusted EBITDA1 was US$(2.6) billion compared to US$(1.3)
billion for the full year of 2020.
- Adjusted EBITDA loss per order improved by 8.7% year-on-year to
US$0.42, compared to US$0.46 for the full year of 2020.
- Digital Financial Services
- GAAP revenue was US$469.8 million, up 672.8% year-on-year.
- Adjusted EBITDA1 was US$(616.9) million, compared to US$(511.1)
million for the full year of 2020.
- TPV for the mobile wallet was US$17.2 billion, up 119.6%
year-on-year.
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)
For the Three Months ended
December 31,
For the Full Year ended
December 31,
2020
2021
2020
2021
$
$
YOY%
$
$
YOY%
Revenue
Service revenue
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
%
1,566,550
3,222,114
105.7
%
4,375,664
9,955,190
127.5
%
Cost of revenue
Cost of service
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
%
(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
%
Net loss excluding share-based
compensation (1)
(430,722
)
(483,492
)
12.3
%
(1,333,911
)
(1,572,706
)
17.9
%
Basic and diluted loss per share based on
net loss excluding share-based
compensation attributable to Sea
Limited’s ordinary shareholders (1)
(0.87
)
(0.88
)
1.1
%
(2.78
)
(2.96
)
6.5
%
Change in deferred revenue of Digital
Entertainment
319,720
(333,300
)
(204.2
)%
1,170,399
276,352
(76.4
)%
Adjusted EBITDA for Digital
Entertainment (1)
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
%
Adjusted EBITDA for Digital
Financial Services (1)
(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:
- Digital Entertainment: GAAP revenue increased by 104.1% to
US$1.4 billion in the fourth quarter of 2021 from US$693.4 million
in the fourth quarter of 2020. This increase was primarily due to
recognition of accumulated deferred revenue from previous
quarters.
- E-commerce and other services: GAAP revenue increased by 125.8%
to US$1.5 billion in the fourth quarter of 2021 from US$656.6
million in the fourth quarter of 2020. This increase was primarily
driven by the growing adoption of products and services across our
e-commerce and digital financial services businesses.
- Sales of goods: GAAP revenue increased by 49.8% to US$324.4
million in the fourth quarter of 2021 from US$216.6 million in the
fourth quarter of 2020, primarily due to the increase in our
product offerings.
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.
- Digital Entertainment: Cost of revenue increased by 79.9% to
US$374.8 million in the fourth quarter of 2020 from US$208.4
million in the fourth quarter of 2020. The increase was largely in
line with the increase in our digital entertainment revenue.
- E-commerce and other services: Cost of revenue for our
e-commerce and other services segment combined increased by 102.0%
to US$1.2 billion in the fourth quarter of 2021 from US$611.6
million in the fourth quarter of 2020. The increase was primarily
due to higher costs of logistics from order growth, and other costs
driven by the growth of our e-commerce marketplace.
- Cost of goods sold: Cost of goods sold increased by 41.5% to
US$301.3 million in the fourth quarter of 2021 from US$212.8
million in the fourth quarter of 2020. The increase was largely in
line with the increase in our revenue from sales of goods.
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$665.2 million
in the fourth quarter of 2020. The table below sets forth the
breakdown of the sales and marketing expenses of our major
reporting segments. Amounts are expressed in thousands of US
dollars (“$”).
For the Three Months ended
December 31,
2020
2021
YOY%
Sales and Marketing Expenses
$
$
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
%
- Digital Entertainment: Sales and marketing expenses increased
by 79.2% to US$109.6 million in the fourth quarter of 2021 from
US$61.2 million in the fourth quarter of 2020. The increase was
primarily due to higher online marketing and content costs as we
continue to deepen the engagement with our gamers’ community and
deepen investment in long-term brand building.
- E-commerce: Sales and marketing expenses increased by 91.7% to
US$840.7 million in the fourth quarter of 2021 from US$438.5
million in the fourth quarter of 2020. The increase was primarily
attributable to the ramping up of marketing incentives and online
marketing efforts, as we continue investing in capturing market
opportunities and expanding across markets.
- Digital Financial Services: Sales and marketing expenses
increased by 50.1% to US$228.7 million in the fourth quarter of
2021 from US$152.4 million in the fourth quarter of 2020. The
increase was mainly due to our efforts to promote adoption of our
mobile wallet services.
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 Limited’s 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:
- Digital Entertainment: GAAP revenue increased by 114.3% to
US$4.3 billion for the full year ended December 31, 2021 from
US$2.0 billion for the full year ended December 31, 2020. This
increase was primarily due to the increase in our active user base
as well as the deepened paying user penetration.
- E-commerce and other services: GAAP revenue increased by 156.8%
to US$4.6 billion for the full year ended December 31, 2021 from
US$1.8 billion for the full year ended December 31, 2020. This
increase was primarily driven by the growing adoption of products
and services across our e-commerce and digital financial services
businesses.
- Sales of goods: GAAP revenue increased by 83.8% to US$1.1
billion for the full year ended December 31, 2021 from US$582.4
million for the full year ended December 31, 2020, primarily due to
the increase in our product offerings.
Cost of Revenue
Our total cost of revenue increased by 100.2% to US$6.1 billion
for the full year ended December 31, 2021 from US$3.0 billion for
the full year ended December 31, 2020.
- Digital Entertainment: Cost of revenue increased by 75.1% to
US$1.2 billion for the full year ended December 31, 2021 from
US$702.3 million for the full year ended December 31, 2020. The
increase was largely in line with the increase in our digital
entertainment revenue.
- E-commerce and other services: Cost of revenue for our
e-commerce and other services segment combined increased by 119.4%
to US$3.8 billion for the full year ended December 31, 2021 from
US$1.7 billion for the full year ended December 31, 2020. The
increase was primarily due to higher costs of logistics from order
growth, and other costs driven by the growth of our e-commerce
marketplace.
- Cost of goods sold: Cost of goods sold increased by 72.8% to
US$1.0 billion for the full year ended December 31, 2021 from
US$580.7 million for the full year ended December 31, 2020. The
increase was largely in line with the increase in our revenue from
sales of goods.
Other Operating Income
Our other operating income increased by 51.8% to US$287.9
million for the full year ended December 31, 2021 from US$189.6
million for the full year ended December 31, 2020. The increase in
our other operating income was mainly due to the rebates from
e-commerce related logistics services providers.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 109.2% to
US$3.8 billion for the full year ended December 31, 2021 from
US$1.8 billion for the full year ended December 31, 2020. The table
below sets forth the breakdown of the sales and marketing expenses
of our major reporting segments. Amounts are expressed in thousands
of US dollars (“$”).
For the Full Year ended
December 31,
2020
2021
YOY%
Sales and Marketing Expenses
$
$
Digital Entertainment
165,319
357,106
116.0
%
E-commerce
1,219,607
2,630,401
115.7
%
Digital Financial Services
415,418
742,702
78.8
%
- Digital Entertainment: Sales and marketing expenses increased
by 116.0% to US$357.1 million for the full year ended December 31,
2021 from US$165.3 million for the full year ended December 31,
2020. The increase was primarily due to higher online marketing and
content costs as we continue to deepen the engagement with our
gamers’ community and deepen investment in long-term brand
building.
- E-commerce: Sales and marketing expenses increased by 115.7% to
US$2.6 billion for the full year ended December 31, 2021 from
US$1.2 billion for the full year ended December 31, 2020. The
increase was primarily attributable to the ramping up of marketing
incentives and online marketing efforts, as we continue investing
in capturing market opportunities and expanding across
markets.
- Digital Financial Services: Sales and marketing expenses
increased by 78.8% to US$742.7 million for the full year ended
December 31, 2021 from US$415.4 million for the full year ended
December 31, 2020. The increase was mainly due to our efforts to
promote adoption of our mobile wallet services.
General and Administrative Expenses
Our general and administrative expenses increased by 68.2% to
US$1.1 billion for the full year ended December 31, 2021 from
US$657.2 million for the full year ended December 31, 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 135.1% to
US$831.7 million for the full year ended December 31, 2021 from
US$353.8 million for the full year ended December 31, 2020,
primarily due to the increase in research and development staff
force.
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). We recorded a net non-operating loss of
US$132.1 million for the full year ended December 31, 2021,
compared to a net non-operating loss of US$179.9 million for the
full year ended December 31, 2020. Our non-operating loss for the
full year ended December 31, 2021 was primarily due to interest
expense on our convertible notes.
Income Tax Expense
We had a net income tax expense of US$332.9 million and US$141.6
million for the full year ended December 31, 2021 and 2020,
respectively. The income tax expense for the full year ended
December 31, 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$2.0
billion and US$1.6 billion for the full year ended December 31,
2021 and 2020, respectively.
Net Loss Excluding Share-based Compensation
Net loss excluding share-based compensation, was US$1.6 billion
and US$1.3 billion for the full year ended December 31, 2021 and
2020, respectively.
Basic and Diluted Loss Per Share Based on Net Loss Excluding
Share-based Compensation Attributable to Sea Limited’s Ordinary
Shareholders
Basic and diluted loss per share based on net loss excluding
share-based compensation, was US$2.96 and US$2.78 for the full year
ended December 31, 2021 and 2020, respectively.
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 1,
2022
8:30 PM Singapore / Hong Kong Time on
March 1, 2022
Webcast link:
https://services.choruscall.com/links/se220301.html
Dial in numbers:
US Toll Free: 1-888-317-6003
Hong Kong: 800-963-976
International: 1-412-317-6061
Singapore: 800-120-5863
United Kingdom: 08-082-389-063
Passcode for Participants:
8129636
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 payments and 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. SeaMoney is a leading digital payments and financial
services provider in Southeast Asia.
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.S. Securities and Exchange Commission (the “SEC”), in its
annual report to shareholders, in press releases, and other written
materials, and in oral statements made by its officers, directors,
or employees to third parties. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: Sea’s goals and strategies; its future business
development, financial condition, financial results, and results of
operations; the growth in, and market size of, the digital
entertainment, e-commerce and digital financial services industries
in the markets where it operates, including segments within those
industries; expected changes in its revenue, costs or expenditures;
its ability to continue to source, develop and offer new and
attractive online games and to offer other engaging digital
entertainment content; the growth of its digital entertainment,
e-commerce and digital financial services businesses; its
expectations regarding growth in its user base, level of
engagement, and monetization; its ability to continue to develop
new technologies and/or upgrade its existing technologies; its
expectations regarding the use of proceeds from its financing
activities, including its follow-on offerings and convertible notes
offerings; growth and trends of its markets and competition in its
industries; government policies and regulations relating to its
industries, including the effects of any government orders or
actions on its businesses; general economic and business conditions
in its markets; and the impact of widespread health developments,
including the COVID-19 pandemic, and the responses thereto (such as
voluntary and in some cases, mandatory quarantines as well as shut
downs and other restrictions on travel and commercial, social and
other activities, and the availability of effective vaccines and
treatments) which could, among other things, impact the business
and manufacturing activities of its ecosystem participants, disrupt
the global supply chain including those of its sellers on its
platforms and merchant partners, and negatively affect consumer
discretionary spending. Further information regarding these and
other risks is included in Sea’s filings with the SEC. All
information provided in this press release and in the attachments
is as of the date of this press release, and Sea undertakes no
obligation to update any forward-looking statement, except as
required under applicable law.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with U.S. GAAP, we use the
following non-GAAP financial measures to help evaluate our
operating performance:
- “Net loss excluding share-based compensation” represents net
loss before share-based compensation. This financial measure helps
to identify underlying trends in our business that could otherwise
be distorted by the effect of certain expenses that are included in
net loss. The use of this measure has its limitations in that it
does not include all items that impact the net loss or income for
the period, and share-based compensation is a significant
expense.
- “Net loss excluding share-based compensation attributable to
Sea Limited’s ordinary shareholders” represents net loss
attributable to Sea Limited’s ordinary shareholders before
share-based compensation. This financial measure helps to identify
underlying trends in our business that could otherwise be distorted
by the effect of certain expenses that are included in net loss.
The use of this measure has its limitations in that it does not
include all items that impact the net loss or income for the
period, and share-based compensation is a significant expense.
- “Basic and diluted loss per share based on net loss excluding
share-based compensation attributable to Sea Limited’s ordinary
shareholders” represents net loss excluding share-based
compensation attributable to Sea Limited’s ordinary shareholders
divided by the weighted average number of shares outstanding during
the period.
- “Adjusted EBITDA” for our digital entertainment segment
represents operating income (loss) before share-based compensation
plus (a) depreciation and amortization expenses, and (b) the net
effect of changes in deferred revenue and its related cost for our
digital entertainment segment. We believe that the segment adjusted
EBITDA helps to identify underlying trends in our operating
results, enhancing their understanding of the past performance and
future prospects.
- “Adjusted EBITDA” for our e-commerce segment, digital financial
services segment and other services segment represents operating
income (loss) before share-based compensation plus depreciation and
amortization expenses. We believe that the segment adjusted EBITDA
helps to identify underlying trends in our operating results,
enhancing their understanding of the past performance and future
prospects.
- “Total adjusted EBITDA” represents the sum of adjusted EBITDA
of all our segments combined, plus unallocated expenses. We believe
that the total adjusted EBITDA helps to identify underlying trends
in our operating results, enhancing their understanding of the past
performance and future prospects.
These non-GAAP financial measures have limitations as analytical
tools. None of the above financial measures should be considered in
isolation or construed as an alternative to revenue, net
loss/income, or any other measure of performance or as an indicator
of our operating performance. These non-GAAP financial measures
presented here may not be comparable to similarly titled measures
presented by other companies. Other companies may calculate
similarly titled measures differently, limiting their usefulness as
comparative measures to Sea’s data. We compensate for these
limitations by reconciling the non-GAAP financial measures to their
nearest U.S. GAAP financial measures, all of which should be
considered when evaluating our performance. We encourage you to
review our financial information in its entirety and not rely on
any single financial measure.
The tables below present selected financial information of our
reporting segments, the non-GAAP financial measures that are most
directly comparable to GAAP financial measures, and the related
reconciliations between the financial measures. Amounts are
expressed in thousands of US dollars (“$”) except for number of
shares & per share data.
For the Three Months ended
December 31, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
858,831
(941,028
)
(157,647
)
(59,138
)
(143,093
)
(442,075
)
Net effect of changes in deferred
revenue and its related cost
(266,399
)
-
-
-
-
(266,399
)
Depreciation and Amortization
10,133
63,291
7,834
2,279
-
83,537
Share-based compensation
-
-
-
-
132,797
132,797
Adjusted EBITDA
602,565
(877,737
)
(149,813
)
(56,859
)
(10,296
)
(492,140
)
For the Three Months ended
December 31, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
397,115
(467,955
)
(174,896
)
(14,335
)
(97,254
)
(357,325
)
Net effect of changes in deferred
revenue and its related cost
259,107
-
-
-
-
259,107
Depreciation and Amortization
7,317
40,481
3,633
1,667
-
53,098
Share-based compensation
-
-
-
-
93,847
93,847
Adjusted EBITDA
663,539
(427,474
)
(171,263
)
(12,668
)
(3,407
)
48,727
(1) A combination of multiple business activities that does not
meet the quantitative thresholds to qualify as reportable segments
are grouped together as “Other Services”. (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 CODM as part of segment performance.
For the Full Year ended
December 31, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
2,500,081
(2,766,566
)
(640,422
)
(177,633
)
(498,520
)
(1,583,060
)
Net effect of changes in deferred
revenue and its related cost
240,109
-
-
-
-
240,109
Depreciation and Amortization
35,767
212,345
23,498
7,422
-
279,032
Share-based compensation
-
-
-
-
470,324
470,324
Adjusted EBITDA
2,775,957
(2,554,221
)
(616,924
)
(170,211
)
(28,196
)
(593,595
)
For the Full Year ended
December 31, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Operating income (loss)
1,016,793
(1,442,593
)
(520,075
)
(49,006
)
(308,444
)
(1,303,325
)
Net effect of changes in deferred
revenue and its related cost
939,816
-
-
-
-
939,816
Depreciation and Amortization
26,125
135,685
8,983
9,455
-
180,248
Share-based compensation
-
-
-
-
290,246
290,246
Adjusted EBITDA
1,982,734
(1,306,908
)
(511,092
)
(39,551
)
(18,198
)
106,985
(1) A combination of multiple business activities that does not
meet the quantitative thresholds to qualify as reportable segments
are grouped together as “Other Services”. (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 CODM as part of segment performance.
For the Three Months ended
December 31,
For the Year ended December
31,
2020
2021
2020
2021
$
$
$
$
Net loss
(524,569)
(616,289)
(1,624,157)
(2,043,030)
Share-based compensation
93,847
132,797
290,246
470,324
Net loss excluding share-based
compensation
(430,722)
(483,492)
(1,333,911)
(1,572,706)
Net loss (profit) attributable to non-
controlling interests
977
(1,319)
6,101
(3,729)
Net loss excluding share-based
compensation attributable to Sea
Limited’s ordinary shareholders
(429,745)
(484,811)
(1,327,810)
(1,576,435)
Weighted average shares used in loss per
share computation:
Basic and diluted
494,805,090
553,635,479
477,264,888
532,705,796
Basic and diluted loss per share based on
net loss excluding share-based compensation
attributable to Sea Limited’s ordinary
shareholders
(0.87)
(0.88)
(2.78)
(2.96)
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
Amounts expressed in thousands of US
dollars (“$”) except for number of shares & per share
data
For the Three Months ended
December 31,
For the Year ended December
31,
2020
2021
2020
2021
$
$
$
$
Revenue
Service revenue
Digital Entertainment
693,362
1,415,044
2,015,972
4,320,013
E-commerce and other services
656,566
1,482,665
1,777,330
4,564,617
Sales of goods
216,622
324,405
582,362
1,070,560
Total revenue
1,566,550
3,222,114
4,375,664
9,955,190
Cost of revenue
Cost of service
Digital Entertainment
(208,360
)
(374,783
)
(702,329
)
(1,230,082
)
E-commerce and other services
(611,637
)
(1,235,351
)
(1,743,773
)
(3,825,826
)
Cost of goods sold
(212,841
)
(301,252
)
(580,657
)
(1,003,547
)
Total cost of revenue
(1,032,838
)
(1,911,386
)
(3,026,759
)
(6,059,455
)
Gross profit
533,712
1,310,728
1,348,905
3,895,735
Operating income (expenses):
Other operating income
72,697
72,294
189,645
287,946
Sales and marketing expenses
(665,222
)
(1,219,858
)
(1,830,875
)
(3,829,743
)
General and administrative expenses
(189,005
)
(318,597
)
(657,215
)
(1,105,295
)
Research and development expenses
(109,507
)
(286,642
)
(353,785
)
(831,703
)
Total operating expenses
(891,037
)
(1,752,803
)
(2,652,230
)
(5,478,795
)
Operating loss
(357,325
)
(442,075
)
(1,303,325
)
(1,583,060
)
Interest income
4,275
10,924
24,804
36,082
Interest expense
(34,889
)
(52,292
)
(148,243
)
(138,945
)
Net investment loss
(63,073
)
(18,917
)
(17,820
)
(43,502
)
Changes in fair value of convertible
notes
–
–
(87
)
–
Foreign exchange (loss) gain
(30,772
)
(10,710
)
(38,567
)
14,241
Loss before income tax and share of
results of equity investees
(481,784
)
(513,070
)
(1,483,238
)
(1,715,184
)
Income tax expense
(44,166
)
(105,609
)
(141,640
)
(332,865
)
Share of results of equity investees
1,381
2,390
721
5,019
Net loss
(524,569
)
(616,289
)
(1,624,157
)
(2,043,030
)
Net loss (profit) attributable to non-
controlling interests
977
(1,319
)
6,101
(3,729
)
Net loss attributable to Sea Limited’s
ordinary shareholders
(523,592
)
(617,608
)
(1,618,056
)
(2,046,759
)
Loss per share:
Basic and diluted
(1.06
)
(1.12
)
(3.39
)
(3.84
)
Weighted average shares used in loss per
share computation:
Basic and diluted
494,805,090
553,635,479
477,264,888
532,705,796
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of December 31,
2020
2021
$
$
ASSETS
Current assets
Cash and cash equivalents
6,166,880
9,247,762
Restricted cash
859,192
1,551,635
Accounts receivable, net of allowance for
credit losses of $7,978 and $5,772, as of
December 31, 2020 and 2021 respectively
362,999
388,308
Prepaid expenses and other assets
1,054,229
1,401,863
Loans receivable, net of allowance for
credit losses of $20,872 and $91,504, as of
December 31, 2020 and 2021 respectively
285,937
1,500,954
Inventories, net
64,219
117,499
Short-term investments
126,099
911,281
Amounts due from related parties
19,449
16,095
Total current assets
8,939,004
15,135,397
Non-current assets
Property and equipment, net
386,401
1,029,963
Operating lease right-of-use assets,
net
234,555
649,680
Intangible assets, net
39,773
52,517
Long-term investments
190,482
1,052,861
Prepaid expenses and other assets
204,804
124,521
Loans receivable, net of allowance for
credit losses of $19,612 and $6,172, as of
December 31, 2020 and 2021 respectively
117,149
28,964
Restricted cash
27,321
38,743
Deferred tax assets
99,904
103,755
Goodwill
216,278
539,624
Total non-current assets
1,516,667
3,620,628
Total assets
10,455,671
18,756,025
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of December 31,
2020
2021
$
$
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Accounts payable
121,637
213,580
Accrued expenses and other payables
2,033,461
3,531,187
Advances from customers
161,379
244,574
Amounts due to related parties
42,613
74,738
Bank borrowings
–
100,000
Operating lease liabilities
74,506
186,494
Deferred revenue
2,150,165
2,644,463
Income tax payable
52,306
181,400
Total current liabilities
4,636,067
7,176,436
Non-current liabilities
Accrued expenses and other payables
36,159
76,234
Operating lease liabilities
177,870
491,313
Deferred revenue
343,297
104,826
Convertible notes
1,840,406
3,475,708
Deferred tax liabilities
1,526
6,992
Unrecognized tax benefits
107
107
Total non-current liabilities
2,399,365
4,155,180
Total liabilities
7,035,432
11,331,616
UNAUDITED INTERIM CONDENSED
CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US
dollars (“$”)
As of December 31,
As of December 31,
2020
2021
$
$
Shareholders’ equity
Class A Ordinary shares
179
204
Class B Ordinary shares
76
74
Additional paid-in capital
8,526,571
14,622,292
Accumulated other comprehensive income
(loss)
4,681
(28,519
)
Statutory reserves
2,363
6,144
Accumulated deficit
(5,150,958
)
(7,201,498
)
Total Sea Limited shareholders’
equity
3,382,912
7,398,697
Non-controlling interests
37,327
25,712
Total shareholders’ equity
3,420,239
7,424,409
Total liabilities and shareholders’
equity
10,455,671
18,756,025
UNAUDITED INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts expressed in thousands of US
dollars (“$”)
For the Three months ended
December 31,
For the Year ended December
31,
2020
2021
2020
2021
$
$
$
$
Net cash generated from (used in)
operating activities
185,444
(304,824
)
555,868
208,649
Net cash used in investing activities
(366,936
)
(1,775,510
)
(886,912
)
(3,767,273
)
Net cash generated from financing
activities
2,949,101
385,993
3,733,132
7,401,589
Effect of foreign exchange rate changes on
cash, cash equivalents and restricted cash
59,032
6,509
80,727
(58,218
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
2,826,641
(1,687,832
)
3,482,815
3,784,747
Cash, cash equivalents and restricted cash
at beginning of the period/year
4,226,752
12,525,972
3,570,578
7,053,393
Cash, cash equivalents and restricted cash
at end of the period/year
7,053,393
10,838,140
7,053,393
10,838,140
UNAUDITED SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operating Decision Maker (“CODM”) reviews the performance of each
segment based on revenue and certain key operating metrics of the
operations and uses these results for the purposes of allocating
resources to and evaluating the financial performance of each
segment. Amounts are expressed in thousands of US dollars
(“$”).
For the Three Months ended
December 31, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
1,415,044
1,595,075
197,531
14,464
-
3,222,114
Operating income (loss)
858,831
(941,028
)
(157,647
)
(59,138
)
(143,093
)
(442,075
)
Non-operating loss, net
(70,995
)
Income tax expense
(105,609
)
Share of results of equity investees
2,390
Net loss
(616,289
)
For the Three Months ended
December 31, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
693,362
842,215
24,353
6,620
-
1,566,550
Operating income (loss)
397,115
(467,955
)
(174,896
)
(14,335
)
(97,254
)
(357,325
)
Non-operating loss, net
(124,459
)
Income tax expense
(44,166
)
Share of results of equity investees
1,381
Net loss
(524,569
)
(1) A combination of multiple business activities that does not
meet the quantitative thresholds to qualify as reportable segments
are grouped together as “Other Services”. (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 CODM as part of segment performance.
For the Year ended December
31, 2021
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
4,320,013
5,122,959
469,774
42,444
-
9,955,190
Operating income (loss)
2,500,081
(2,766,566
)
(640,422
)
(177,633
)
(498,520
)
(1,583,060
)
Non-operating loss, net
(132,124
)
Income tax expense
(332,865
)
Share of results of equity investees
5,019
Net loss
(2,043,030
)
For the Year ended December
31, 2020
Digital Entertainment
E- commerce
Digital Financial Services
Other Services(1)
Unallocated expenses(2)
Consolidated
$
$
$
$
$
$
Revenue
2,015,972
2,167,149
60,785
131,758
-
4,375,664
Operating income (loss)
1,016,793
(1,442,593
)
(520,075
)
(49,006
)
(308,444
)
(1,303,325
)
Non-operating loss, net
(179,913
)
Income tax expense
(141,640
)
Share of results of equity investees
721
Net loss
(1,624,157
)
(1) A combination of multiple business activities that does not
meet the quantitative thresholds to qualify as reportable segments
are grouped together as “Other Services”. (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 CODM as part of segment performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220228006251/en/
For enquiries: Investors / analysts: ir@sea.com Media:
Martin Reidy, media@sea.com
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