Sea Limited has reported a net loss of US$616.3 million ($836.6 million) for the 4QFY2021 ended December, 17.5% higher than the net loss of US$524.6 million posted in the 4QFY2020.
For the FY2021, the NYSE-listed company posted a net loss of US$2.04 billion, 25.8% higher than the net loss of US$1.62 billion in the FY2020.
“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,” says Forrest Li, Sea’s chairman and group CEO.
During the 4QFY2021, total generally accepted accounting principles (GAAP) revenue increased 105.7% y-o-y to US$3.22 billion amid broad-based y-o-y growth across all segments, led by the spike in revenue growth for the digital financial services segment.
Segmentally, digital entertainment saw revenue improve by 104.1% y-o-y to US$1.4 billion during the 4QFY2021 due to recognition of accumulated deferred revenue from previous quarters. The segment’s adjusted EBITDA for the 4QFY2021 fell 9.17% y-o-y to US$602.6 million. Quarterly active users (QAUs) grew by 7.1% y-o-y to 654.0 million, while quarterly paying users grew 5.6% y-o-y to 77.2 million.
Sea’s hit game, Free Fire, continued to maintain its top global rankings in user and grossing metrics.
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“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,” says Sea in its results statement on March 1.
In the 4QFY2021, Sea’s e-commerce segment saw revenue grow 89.4% y-o-y to US$1.6 billion primarily driven by the growing adoption of products and services across its ecommerce and digital financial services businesses. The segment’s adjusted EBITDA for the quarter stood at a deeper loss of US$877.7 million compared to the 4QFY2020’s EBITDA loss of US$427.5 million.
“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,” writes Sea.
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For Shopee overall, adjusted EBITDA loss per order was 45 US cents, compared to 41 US cents 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.
Sea’s digital financial services for the 4QFY2021 saw revenue surge 711.1% y-o-y to US$197.5 million.
Adjusted EBITDA was US$(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,” says the tech company.
Quarterly active users across Sea’s SeaMoney products and services reached 45.8 million, up 89.7% year-on-year.
4QFY2021 cost of revenue increased 85.1% y-o-y to US$1.91 billion due to higher cost of revenue across all segments, including the higher costs of logistics from order growth in Sea’s e-commerce segment.
Total gross profit for the 4QFY2021 increased 145.6% y-o-y to US$1.31 billion.
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During the quarter, total operating expenses increased by 96.7% y-o-y to US$1.75 billion.
4QFY2021 total adjusted EBITDA plunged 1,110% y-o-y to a loss of US$492.1 million from the EBITDA of US$48.7 billion.
In the FY2021, total GAAP revenue surged 127.5% y-o-y to US$10.0 billion, thanks to revenue growth across all segments.
Cost of revenue in the FY2021 increased 100.2% y-o-y to US$6.06 billion.
Total gross profit was up 188.8% y-o-y to US$3.9 billion.
Total operating expenses were up 106.6% y-o-y to US$5.48 billion.
Total adjusted EBITDA stood at a loss of US$593.6 million from the US$107.0 million in the year before.
Looking ahead, Li says the company currently expects Shopee to post a positive adjusted EBITDA before HQ costs allocation in Southeast Asia and Taiwan by end-2022.
He also expects SeaMoney to achieve positive cashflow by 2023.
“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,” he says.
With SeaMoney, Li says the segment 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,” he adds.
“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,” he continues.
Shares in Sea last trading at US$145.60, up US$8.14 or 5.92% before its close on Feb 28 (US time).
