Sea Ltd. has made the changes it needs to deliver profits over the long haul, billionaire founder Forrest Li said in a memo to staff, assuring workers who had survived months of steep job cuts that the worst is over.
The Asian internet giant’s first-ever quarterly net profit marks a turning point for the company, the chief executive officer said in a recent internal memo seen by Bloomberg News. The company made painful decisions to adapt quickly and has a stabler footing with fewer inefficiencies, Li said in his 700-word missive.
“I want to assure you that, assuming no major shift in our external environment, our large-scale changes are complete, and we do not foresee further major changes,” Li said.
But he warned the company still needs to prove that it can sustain a profit. “The world will be watching to see whether this quarter’s result is just a momentary blip or the start of a long-term trend,” he said. “Our job is not yet done.”
Sea, the largest of Southeast Asia’s internet firms and briefly the world’s best-performing stock, is emerging from a painful 2022 in a changed world of rising interest rates, accelerating inflation and geopolitical tensions. The company has lost about US$160 billion ($214.84 billion) of market value since a peak in October 2021 on questions about its money-making prospects.
In recent months, the company cut thousands of jobs, froze salaries and slashed more than US$700 million from quarterly sales and marketing expenses to convince investors of its profit-making ability. It cut about 500 jobs at e-commerce unit Shopee in Indonesia this month, just days after the company reported a surprise first-ever quarterly profit helped by last year’s extensive cost cuts.
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In a stark about-face from years of prioritizing global expansion, the company has also shuttered operations in India and some European and Latin American markets to trim costs and reach positive cash flows.
“As a company, it is our first time going through a crisis of this magnitude,” Li said. “Taking major action early in this crisis — much earlier than most in our industry — was painful, but has put us in a stronger position today.”
