Sea Limited Reports Fourth Quarter and Full Year 2023 Results

Rhea-AI Summary

Sea Limited (NYSE: SE) reported its financial results for Q4 and full year 2023, achieving annual profit since IPO. The company strengthened its market leadership in e-commerce, grew digital financial services, and stabilized digital entertainment. Cash position increased to $8.5 billion, with positive expectations for 2024. Shopee gained market share, SeaMoney saw 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.
• Garena witnessed improved user acquisition and retention for Free Fire, the most downloaded mobile game globally in 2023.
• 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 decline in Q4 2023 compared to the previous year.
• Digital Entertainment segment saw a decrease in 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 (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

• Group
  • Total GAAP revenue was US$3.6 billion, up 4.8% year-on-year.
  • Total gross profit was US$1.5 billion, as compared to total gross profit of US$1.7 billion for the fourth quarter of 2022.
  • Total net loss was US$(111.6) million, as compared to total net income of US$422.8 million for the fourth quarter of 2022.
  • Total adjusted EBITDA¹ was US$126.7 million, as 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 revenue and value-added services revenue and increased by 23.2% year-on-year.
    • Core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was up 40.6% year-on-year to US$1.6 billion as a result of platform growth and improved monetization.
    • Value-added services revenue, mainly consisting of revenues related to logistics services, was down 5.3% year-on-year to US$657.9 million as a result of higher revenue net-off against shipping subsidies.
  • Adjusted EBITDA¹ was US$(225.3) million, as 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, as 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, consumer and SME loans principal outstanding was US$3.1 billion, up 27.0% year-on-year. This consists of US$2.5 billion on-book and US$0.6 billion off-book loans principal outstanding⁵.
  • Non-performing loans past due by more than 90 days as a percentage of consumer and SME loans on-book was 1.6%, stable quarter-on-quarter.
    
    
• Digital Entertainment
  • GAAP revenue was US$510.8 million, as 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, as compared to US$234.0 million for the previous quarter.
  • Adjusted EBITDA represented 47.6% of bookings for the fourth quarter of 2023, as compared to 52.2% for the previous quarter.
  • Quarterly active users were 528.7 million, as compared to 544.1 million for the previous quarter.
  • Quarterly paying users were 39.7 million, as compared to 40.5 million for the previous quarter. Paying user ratio was 7.5%, remaining stable quarter-on-quarter.
  • Average bookings per user were US$0.86, up 4.8% 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$162.7 million, as compared to total net loss of US$(1.7) billion for the full year of 2022.
  • Total adjusted EBITDA¹ was US$1.2 billion, as compared to US$(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, as 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$550.1 million, as compared to US$(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, as 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, as compared to 47.7% for the full year of 2022.
    
    

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)
		For the Three Months ended December 31,									For the Full Year ended December 31,
		2022			2023						2022			2023
		$			$			YOY%			$			$			YOY%
Revenue
Service revenue
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	%
		3,451,584			3,616,628			4.8	%		12,449,705			13,063,560			4.9	%
Cost of revenue
Cost of service
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	%
		(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	)%
Earnings (Loss) per share attributable to    Sea Limited’s ordinary shareholders:    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	)%
Change in deferred revenue of    Digital Entertainment		(405,262	)		(54,459	)		(86.6	)%		(1,125,294	)		(362,397	)		(67.8	)%
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.

• Digital Entertainment: GAAP revenue was US$510.8 million compared to US$948.9 million in the fourth quarter of 2022, primarily attributable to moderation in user monetization year-on-year.
• E-commerce and other services: GAAP revenue increased by 24.2% to US$2.8 billion in the fourth quarter of 2023 from US$2.2 billion in the fourth quarter of 2022, primarily driven by the GMV growth of our e-commerce business and the growth of our credit business year-on-year.
• Sales of goods: GAAP revenue increased by 23.2% to US$334.6 million in the fourth quarter of 2023 from US$271.6 million 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.

• Digital Entertainment: Cost of revenue decreased by 33.5% to US$161.4 million in the fourth quarter of 2023 from US$242.5 million in the fourth quarter of 2022.
• E-commerce and other services: Cost of revenue for e-commerce and other services segment combined was US$1.6 billion in the fourth quarter of 2023, as compared to US$1.3 billion in the fourth quarter of 2022, primarily driven by higher costs of logistics from order growth.
• Cost of goods sold: Cost of goods sold increased by 34.7% to US$309.3 million in the fourth quarter of 2023 from US$229.6 million 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$473.6 million in the fourth quarter of 2022. The table below sets forth breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).

	For the Three Months ended December 31,
	2022		2023		YOY%
Sales and Marketing Expenses	$		$
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.

• Digital Entertainment: GAAP revenue was US$2.2 billion for the full year ended December 31, 2023 from US$3.9 billion for the full year ended December 31, 2022, primarily attributable to the moderation in user engagement and monetization.
• E-commerce and other services: GAAP revenue increased by 30.9% to US$9.8 billion for the full year ended December 31, 2023 from US$7.5 billion for the full year ended December 31, 2022, primarily driven by the improved monetization in our e-commerce business and the growth of our credit business.
• Sales of goods: GAAP revenue was US$1.1 billion for the full year ended December 31, 2023, relatively stable year-on-year.

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.

• Digital Entertainment: Cost of revenue decreased by 37.6% to US$672.5 million for the full year ended December 31, 2023 from US$1.1 billion for the full year ended December 31, 2022.
• E-commerce and other services: Cost of revenue for our e-commerce and other services segment combined increased by 6.5% to US$5.5 billion for the full year ended December 31, 2023 from US$5.2 billion for the full year ended December 31, 2022, primarily driven by higher costs of logistics from order growth.
• Cost of goods sold: Cost of goods sold was US$1.0 billion for the full year ended December 31, 2023.

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$3.3 billion for the full year ended December 31, 2022. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (“$”).

	For the Full Year ended December 31,
	2022		2023		YOY%
Sales and Marketing Expenses	$		$
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 8:30 PM Singapore / Hong Kong Time on March 4, 2024
Webcast link:		https://events.q4inc.com/attendee/352581999

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.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 expected 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 or guidance 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 expected 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 equity 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, political, social and business conditions in its markets; and the impact of widespread health developments. 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:

• “Adjusted EBITDA” for our digital entertainment segment represents operating income (loss) before impairment of goodwill 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) 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, 2023
		Digital Entertainment			E- commerce			Digital Financial Services		Other Services(1)			Unallocated expenses(2)			Consolidated
		$			$			$		$			$			$
Operating income (loss)		261,060			(303,681	)		134,205		(9,558	)		(138,545	)		(56,519	)
Net effect of changes in deferred    revenue and its related cost		(49,925	)		-			-		-			-			(49,925	)
Depreciation and Amortization		6,276			78,349			14,277		2,579			-			101,481
Share-based compensation		-			-			-		-			131,668			131,668
Adjusted EBITDA		217,411			(225,332	)		148,482		(6,979	)		(6,877	)		126,705
		For the Three Months ended December 31, 2022
		Digital Entertainment			E- commerce			Digital Financial Services		Other Services(1)			Unallocated expenses(2)			Consolidated
		$			$			$		$			$			$
Operating income (loss)		400,165			109,486			61,841		(28,714	)		(199,914	)		342,864
Net effect of changes in deferred    revenue and its related cost		(331,321	)		-			-		-			-			(331,321	)
Depreciation and Amortization		11,726			86,660			13,760		3,277			-			115,423
Share-based compensation		-			-			-		-			191,027			191,027
Impairment of goodwill		177,663			-			-		-			-			177,663
Adjusted EBITDA		258,233			196,146			75,601		(25,437	)		(8,887	)		495,656

(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, impairment of goodwill of prior acquisitions that are not under our reportable segments, 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, 2023
		Digital Entertainment			E- commerce			Digital Financial Services			Other Services(1)			Unallocated expenses(2)			Consolidated
		$			$			$			$			$			$
Operating income (loss)		1,177,871			(550,470	)		490,209			(56,728	)		(836,104	)		224,778
Net effect of changes in deferred    revenue and its related cost		(289,346	)		-			-			-			-			(289,346	)
Depreciation and Amortization		32,398			336,696			59,903			11,848			-			440,845
Share-based compensation		-			-			-			-			685,030			685,030
Impairment of goodwill		-			-			-			-			117,875			117,875
Adjusted EBITDA		920,923			(213,774	)		550,112			(44,880	)		(33,199	)		1,179,182
		For the Full Year ended December 31, 2022
		Digital Entertainment			E- commerce			Digital Financial Services			Other Services(1)			Unallocated expenses(2)			Consolidated
		$			$			$			$			$			$
Operating income (loss)		1,971,416			(2,013,360	)		(277,264	)		(252,162	)		(916,138	)		(1,487,508	)
Net effect of changes in deferred    revenue and its related cost		(879,809	)		-			-			-			-			(879,809	)
Depreciation and Amortization		43,821			322,806			48,704			13,013			-			428,344
Share-based compensation		-			-			-			-			705,896			705,896
Impairment of goodwill		177,663			-			-			-			177,280			354,943
Adjusted EBITDA		1,313,091			(1,690,554	)		(228,560	)		(239,149	)		(32,962	)		(878,134	)

(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, impairment of goodwill of prior acquisitions that are not under our reportable segments, 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.

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,
		2022			2023			2022			2023
		$			$			$			$
Revenue
Service revenue
Digital Entertainment		948,857			510,773			3,877,163			2,172,009
E-commerce and other services		2,231,133			2,771,267			7,463,173			9,770,376
Sales of goods		271,594			334,588			1,109,369			1,121,175
Total revenue		3,451,584			3,616,628			12,449,705			13,063,560
Cost of revenue
Cost of service
Digital Entertainment		(242,470	)		(161,360	)		(1,077,017	)		(672,481	)
E-commerce and other services		(1,282,174	)		(1,621,218	)		(5,194,065	)		(5,530,043	)
Cost of goods sold		(229,627	)		(309,263	)		(993,346	)		(1,027,389	)
Total cost of revenue		(1,754,271	)		(2,091,841	)		(7,264,428	)		(7,229,913	)
Gross profit		1,697,313			1,524,787			5,185,277			5,833,647
Operating income (expenses):
Other operating income		68,453			58,524			279,184			221,021
Sales and marketing expenses		(473,620	)		(967,433	)		(3,269,223	)		(2,779,223	)
General and administrative expenses		(352,321	)		(232,603	)		(1,437,612	)		(1,134,724	)
Provision for credit losses		(175,103	)		(159,988	)		(513,690	)		(633,942	)
Research and development expenses		(244,195	)		(279,806	)		(1,376,501	)		(1,164,126	)
Impairment of goodwill		(177,663	)		–			(354,943	)		(117,875	)
Total operating expenses		(1,354,449	)		(1,581,306	)		(6,672,785	)		(5,608,869	)
Operating income (loss)		342,864			(56,519	)		(1,487,508	)		224,778
Interest income		54,336			90,949			115,515			331,310
Interest expense		(10,809	)		(10,129	)		(45,396	)		(41,075	)
Investment loss, net		(123,004	)		(80,279	)		(207,331	)		(125,656	)
Net gain on debt extinguishment		199,697			38,550			199,697			38,550
Foreign exchange (loss) gain		(85,247	)		(7,437	)		(75,510	)		4,487
Income (Loss) before income tax and    share of results of equity investees		377,837			(24,865	)		(1,500,533	)		432,394
Income tax credit (expense)		43,461			(76,894	)		(168,395	)		(262,680	)
Share of results of equity investees		1,540			(9,856	)		11,156			(7,032	)
Net income (loss)		422,838			(111,615	)		(1,657,772	)		162,682
Net loss (income) attributable to non-    controlling interests		3,960			1,875			6,351			(11,956	)
Net income (loss) attributable to Sea    Limited’s ordinary shareholders		426,798			(109,740	)		(1,651,421	)		150,726
Earnings (Loss) per share:
Basic		0.76			(0.19	)		(2.96	)		0.27
Diluted		0.72			(0.19	)		(2.96	)		0.25
Weighted average shares used in earnings    (loss) per share computation:
Basic		560,326,301			569,527,667			558,119,948			566,612,815
Diluted		611,938,691			569,527,667			558,119,948			594,405,604

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars (“$”)
		As of December 31,
		2022		2023
		$		$
ASSETS
Current assets
Cash and cash equivalents		6,029,859		2,811,056
Restricted cash		1,549,574		1,410,365
Accounts receivable, net of allowance for credit losses of    $12,818 and $9,351, as of December 31, 2022 and 2023    respectively		268,814		262,716
Prepaid expenses and other assets		1,798,651		1,861,842
Loans receivable, net of allowance for credit losses of    $236,797 and $319,463, as of December 31, 2022 and    2023 respectively		2,053,767		2,464,662
Inventories, net		109,668		125,395
Short-term investments		864,258		2,547,644
Amounts due from related parties		13,421		290,254
Total current assets		12,688,012		11,773,934
Non-current assets
Property and equipment, net		1,387,895		1,207,698
Operating lease right-of-use assets, net		957,840		1,015,982
Intangible assets, net		65,019		50,821
Long-term investments		1,253,593		4,262,562
Prepaid expenses and other assets		135,616		87,705
Loans receivable, net of allowance for credit losses of    $2,022 and $2,105, as of December 31, 2022 and 2023    respectively		21,663		20,551
Restricted cash		17,724		22,236
Deferred tax assets		245,226		328,961
Goodwill		230,208		112,782
Total non-current assets		4,314,784		7,109,298
Total assets		17,002,796		18,883,232

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars (“$”)
		As of December 31,
		2022		2023
		$		$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		258,648		342,547
Accrued expenses and other payables		1,396,613		1,834,807
Deposits payable		1,316,395		1,706,299
Escrow payables and advances from customers		1,862,325		2,199,464
Amounts due to related parties		415		64,081
Borrowings		88,410		146,661
Operating lease liabilities		269,968		290,788
Convertible notes		31,237		151,764
Deferred revenue		1,535,083		1,208,892
Income tax payable		176,598		223,638
Total current liabilities		6,935,692		8,168,941
Non-current liabilities
Accrued expenses and other payables		87,072		79,257
Borrowings		–		119,323
Operating lease liabilities		756,818		789,514
Deferred revenue		63,566		72,587
Convertible notes		3,338,750		2,949,785
Deferred tax liabilities		9,967		133
Unrecognized tax benefits		107		6,107
Total non-current liabilities		4,256,280		4,016,706
Total liabilities		11,191,972		12,185,647

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts expressed in thousands of US dollars (“$”)
		As of December 31,
		2022			2023
		$			$
Shareholders’ equity
Class A Ordinary shares		258			262
Class B Ordinary shares		23			23
Additional paid-in capital		14,559,690			15,283,870
Accumulated other comprehensive loss		(111,215	)		(108,000	)
Statutory reserves		12,490			16,981
Accumulated deficit		(8,745,541	)		(8,599,306	)
Total Sea Limited shareholders’ equity		5,715,705			6,593,830
Non-controlling interests		95,119			103,755
Total shareholders’ equity		5,810,824			6,697,585
Total liabilities and shareholders’ equity		17,002,796			18,883,232

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,
		2022			2023			2022			2023
		$			$			$			$
Net cash generated from (used in)    operating activities		319,691			278,833			(1,055,692	)		2,079,688
Net cash generated from (used in)    investing activities		51,522			(1,048,554	)		(2,428,809	)		(5,804,462	)
Net cash (used in) generated from    financing activities		(513,711	)		183,385			400,256			366,011
Effect of foreign exchange rate changes    on cash, cash equivalents and    restricted cash		109,112			68,317			(143,511	)		(7,964	)
Net decrease in cash, cash equivalents    and restricted cash		(33,386	)		(518,019	)		(3,227,756	)		(3,366,727	)
Cash, cash equivalents and restricted    cash at beginning of the period(1)		7,643,770			4,761,676			10,838,140			7,610,384
Cash, cash equivalents and restricted    cash at end of the period		7,610,384			4,243,657			7,610,384			4,243,657

(1)

As of December 31, 2022, cash and cash equivalents of US$13,227 was included in assets held for sale within prepaid expenses and other assets.

Net cash used in investing activities amounted to US$1,049 million for the three months ended December 31, 2023. This was primarily attributable to net placement of US$528 million in securities purchased under agreements to resell, time deposits and liquid investment products, for better cash yield management, increase in loans receivable of US$452 million and purchase of property and equipment of US$65 million to support the existing operations. Net cash generated from financing activities amounted to US$183 million for the three months ended December 31, 2023. This was primarily attributable to an increase in customer deposits of US$317 million, as well as an increase in net proceeds from borrowings of US$71 million, offset by the cash used in repurchase of convertible notes of US$205 million.

Net cash used in investing activities amounted to US$5,804 million for the year ended December 31, 2023. This was primarily attributable to net placement of US$4,507 million in securities purchased under agreements to resell, time deposits and liquid investment products, for better cash yield management, increase in loans receivable of US$1,000 million and purchase of property and equipment of US$242 million to support the existing operations. Net cash generated from financing activities amounted to US$366 million for the year ended December 31, 2023. This was primarily attributable to an increase in customer deposits of US$389 million as well an increase in net proceeds from borrowings of US$173 million, offset by the cash used in repurchase of convertible notes of US$205 million.

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, 2023
		Digital Entertainment		E- commerce			Digital Financial Services		Other Services(1)			Unallocated expenses(2)			Consolidated
		$		$			$		$			$			$
Revenue		510,773		2,591,272			472,389		42,194			-			3,616,628
Operating income (loss)		261,060		(303,681	)		134,205		(9,558	)		(138,545	)		(56,519	)
Non-operating income, net															31,654
Income tax expense															(76,894	)
Share of results of equity investees															(9,856	)
Net loss															(111,615	)

		For the Three Months ended December 31, 2022
		Digital Entertainment		E- commerce		Digital Financial Services		Other Services(1)			Unallocated expenses(2)			Consolidated
		$		$		$		$			$			$
Revenue		948,857		2,102,740		380,172		19,815			-			3,451,584
Operating income (loss)		400,165		109,486		61,841		(28,714	)		(199,914	)		342,864
Non-operating income, net														34,973
Income tax credit														43,461
Share of results of equity investees														1,540
Net income														422,838

(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, impairment of goodwill of prior acquisitions that are not under our reportable segments, 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, 2023
		Digital Entertainment		E- commerce			Digital Financial Services		Other Services(1)			Unallocated expenses(2)			Consolidated
		$		$			$		$			$			$
Revenue		2,172,009		9,000,848			1,759,422		131,281			-			13,063,560
Operating income (loss)		1,177,871		(550,470	)		490,209		(56,728	)		(836,104	)		224,778
Non-operating income, net															207,616
Income tax expense															(262,680	)
Share of results of equity investees															(7,032	)
Net income															162,682

		For the Year ended December 31, 2022
		Digital Entertainment		E- commerce			Digital Financial Services			Other Services(1)			Unallocated expenses(2)			Consolidated
		$		$			$			$			$			$
Revenue		3,877,163		7,288,677			1,221,996			61,869			-			12,449,705
Operating income (loss)		1,971,416		(2,013,360	)		(277,264	)		(252,162	)		(916,138	)		(1,487,508	)
Non-operating loss, net																(13,025	)
Income tax expense																(168,395	)
Share of results of equity investees																11,156
Net loss																(1,657,772	)

(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, impairment of goodwill of prior acquisitions that are not under our reportable segments, 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.

 

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Source: Sea Limited

FAQ

What were Sea Limited's total GAAP revenue and net loss for Q4 2023?

Sea Limited reported total GAAP revenue of $3.6 billion and a net loss of $111.6 million for Q4 2023.

How did Shopee perform in terms of market share in 2023?

Shopee gained market share in Southeast Asia between the start and end of 2023, solidifying its position in the region.

What was SeaMoney's financial performance in 2023?

SeaMoney reported its first year of positive profit in 2023, attributed to the consumer and SME credit business.

Which game performed well for Garena in 2023?

Free Fire, a mobile game by Garena, was the most downloaded globally in 2023, with over 100 million peak daily active users in February.

What was the adjusted EBITDA for the e-commerce segment in Q4 2023?

The adjusted EBITDA for the e-commerce segment in Q4 2023 was $(225.3) million.

How did the Digital Entertainment segment fare in terms of revenue and bookings in Q4 2023?

The Digital Entertainment segment reported revenue of $510.8 million and bookings of $456.3 million in Q4 2023.

What was Sea Limited's net loss in Q4 2023 compared to the same period in 2022?

Sea Limited reported a net loss of $111.6 million in Q4 2023, contrasting with a net income of $422.8 million in Q4 2022.