Sea Ltd.’s billionaire founder declared a 5% pay increase for most employees starting July, sending a strong signal to investors he thinks the e-commerce and gaming business has turned the corner after years of bleeding losses.
Workers who joined on or before March 31 will get the salary bump, Forrest Li said in a memo to staff on Monday seen by Bloomberg News. He said Sea has reached “self-sufficiency” as its cash balance is now increasing rather than shrinking every quarter, a goal it achieved months ahead of a target set last year.
The across-the-board hike marks a reversal from just a couple of quarters ago, when Li surprised investors with a companywide salary freeze and deep layoffs. The Southeast Asian internet leader’s about-face may presage a broader recovery for the region’s tech sector, which like elsewhere has endured deep job losses and downward-spiralling valuations after a Covid-era online spending boom sputtered out in 2022. Sea’s US-listed shares closed 7.6% higher at US$84.33 ($111.90) in New York, the biggest gain in six weeks.
Sea reported its first-ever quarterly net profit in March, about 14 years after its founding. The company took brutal measures last year to convince investors of its profit-making ability, including cutting thousands of jobs, retreating from major markets and slashing more than US$700 million from its quarterly sales and marketing expenses.
In his 1,300-word missive, sent out about a week before the company is set to report its next earnings, Chief Executive Officer Li addressed head-on the painful struggles Sea went through during its turnaround effort. Sea was at one point in 2020 the world’s best-performing stock, buoyed by hopes the company would embody Southeast Asia’s nascent e-commerce and entertainment boom. But the company then lost about US$160 billion of market value since a peak in October 2021 on questions about its moneymaking prospects and a global decline in tech stocks.
“This past year was probably the most difficult period in the history of our company,” Li said, describing “painful” decisions including layoffs the management had to take to navigate a worsening business environment.
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Last year, Sea cut about 3,500 people from its workforce, according to its annual report. In September, the leadership team said they would forgo their salaries and tighten company expense policies until the company reaches self-sufficiency. Its largest shareholders include Tencent Holdings Ltd., Capital Group and Li.
“The external environment is still a challenging one,” Li said. “With self-sufficiency, we have a foundation for strong growth once again.”
