Sea Limited Q4 FY22 Earnings Highlights
[Rewards] Sea Limited's Q4 profit turned positive riding on e-commerce's solid growth
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KEY Figures:
● Sea Group Q4 total revenue was $3.5 billion, representing an increase of 7.1% YoY (year-over-year).
● Q4 net income turned positive to $422.8 million, as compared to minus $616.3 million for the fourth quarter last year.
● Total adjusted EBITDA turned positive as well to $495.7 million, as compared to minus $492.1 million for the fourth quarter last year.
● The E-commerce sector's revenue in Q4 was $2.1 billion, up 31.8% year-on-year. Specifically, its core marketplace revenue, which consists of transaction-based fees and advertising revenues, was up 53.9% YoY to $1.1 billion. The value-added services revenue, mainly consisting of logistics services, was up 29.2% YoY to $0.7 billion.
● As of December 31, 2022, the Cash & cash equivalents and short-term investments were $6.9 billion, representing a net change of minus $401.6 million from the last reported quarter.
● For the 2023 Outlook, Sea will still maintain a strong R&D team. Meanwhile, there has not been any change in the relationship with Tencent.
● For the 2023 Outlook, in terms of R&D and G&A costs, Sea will continue to focus on efficiency improvements, tightening and also enabling the costs to be efficient relative to the size of current businesses.
More statistics:
*A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as “Other Services”
KEY Points:
● For the E-commerce sector, gross merchandise value (GMV) was $18.0 billion in Q4, as compared to $18.2 billion YoY. Based on constant currency assumptions, GMV was up 7.7% YoY.
● In Brazil, E-commerce's unit economics continued to improve, with contribution margin loss per order improving 53.9% QoQ (quarter-on-quarter) to reach $0.47.
● For the Digital Entertainment sector, quarterly active users were 485.5 million, down 14% YoY, as compared to 568.2 million in the previous quarter. Quarterly paying users were 43.6 million, representing a paying ratio of 9.0%.
● The Digital Entertainment sector continues to face a challenging time since its main game title Garena Free Fire was banned in India.
● For the Digital Financial Services sector, total loans receivable was $2.1 billion, net of allowance for credit losses of $238.8 million. Non-performing loans past due more than 90 days declined to less than 2% as a percentage of total gross loans.
● Sea continues to see macro uncertainties and will closely monitor the market environment and adjust operations accordingly.
The KEY in your hands:
By March 7, 2022, SE shares had bounced up more than 50% since the beginning of 2023, beyond the S&P 500 (.SPX), which was up about 4% during the same period (Source: moomoo APP).
How do you see SE currently? Which segments of the company's business are you more optimistic about? E.g. e-commerce, gaming, and digital finance. Speak out with mooers and get inspired by sharing!
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Comments above are made available for informational purposes only. Before investing, please consult a licensed professional. *Source of data: sec.gov/Archives/edgar/data/1703399/000110465923029545/tm238717d1_6k.htm# This presentation is for information and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Before investing, please consult a licensed professional. See this link for more information.
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Milk The Cow : Not bad
, turned back profitable for the quarter 
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I think I give it a hold/reduce
Demascus : Quite surprised that it turned profitable this quarter. Had thought it would do so later. I think its e-commerce and gaming segments will continue to do well. Not sure about digital finance.
Kaka Tan : Less promo code for user, more profit for Shopee!
GodSpeed289 : It's rare to see a company like Sea Limited (Sea) pivot from steep losses to strong profitability in such a short time. This huge achievement does not come easy. Sea has been very proactive in optimising its cost structure, taking concrete, difficult steps to streamline its business operations, relentlessly focusing on its core markets to turn profitability, and improve cash flow profile. In Q4, Sea slashed its sales and marketing expenses significantly. Sea's top management are making great efforts to improve operating efficiency by looking for ways to reduce headcount worldwide and even sacrificing themselves for this cause. The cost-cutting measures are working effectively and led to real net profits.
I think that e-commerce business is a rather competitive industry with multiple global market players like Amazon and Alibaba's Lazada. These are e-commerce players that are established and have strong financials that can compete meaningfully with Shopee if they decide to go on a price war to compete in Shopee's core markets. The risk of competitive pressures from any of these players may threaten Shopee's current leadership position.
Online businesses are facing economic headwinds. Sea's gaming business, Garena, is on a mission to find the next blockbuster game. Expect slowing growth as Garena may take a while to release new games that could help it diversify its games segment.
And on its growing third arm — digital finance. As an emerging fintech business of Sea, SeaMoney looks set to be the next growth driver as digital payments continue to have strong tailwinds and Sea can benefit from the synergies between SeaMoney and Shopee to compete with peers.
All in all, I believe that Sea has the upside potential. Sea will continue its upward momentum by progressing on its efficiency gains and on track to meet profitability target.