Singapore tech giant Sea reported Q4 earnings: bullish on e-commerce growth in Brazil

March 2, 2022 0 Comments

Singapore-based tech giant Sea Limited reported fourth-quarter results earlier on Tuesday, with earnings falling short estimates but revenue exceeding expectations.

The NYSE-listed company reported an adjusted loss of $484.81 million, or $0.88 per share, for the period, well below the average analyst estimate of a loss of $0.59 per share, while revenue for the quarter rose 105.1% to $3.22 billion from $1.57 billion a year earlier.

The revenue of the firm mainly comes from three business segments: e-commerce unit Shopee, digital entertainment unit Gerana, and financial services unit SeaMoney. According to the latest earnings report, e-commerce sales climbed 89% to $1.6 billion, digital entertainment doubled to $1.4 billion, and financial services soared 711% to $197.5 million.

During the quarter, Shopee’s GAAP revenue rose 89% year over year to $1.6 billion, and its GMV rose 53% year over year to $18.2 billion. The strong quarterly performance led to a strong full-year 2021 result: Shopee delivered $5.1 billion in GAAP revenue, up 136% year over year, and GMV hit $52.5 billion, representing a 77% growth over 2020.

The company said it will continue to invest in Shopee Latam, with a focus on Brazil. In the fourth quarter, Shopee Brazil’s total orders volume exceeded 140 million, an increase of nearly 400% year-over-year, and GAAP revenue exceeded $70 million, an increase of approximately 626% year-over-year. 

Speaking of the Latin American market, Forrest Li, founder and CEO of Sea Limited, told in the earnings call that Shopee is able to first manage strong user and order growth with improving efficiency and then achieve market leadership and profitability with scale. 

Shopee made its debut in Latin America with the launch of Shopee Brazil in October 2019, now the e-commerce services are available in Brazil, Mexico, Chile, and Colombia. Within two years, it overtook Mercado Libre to become the most downloaded shopping app in the region

For full-year 2022, Sea expects e-commerce to be between $8.9 billion and $9.1 billion, up 75% at the midpoint, while digital entertainment revenue is expected to be between $2.9 billion and $3.1 billion, down from $3.2 billion the previous year. The downward adjustment in gaming sector is due to the fluctuation in user engagement brought by further economies reopening, as well as India’s plan to ban Sea’s flagship video game Free Fire.

“Over the long-term, our priority remains sustaining and growing our existing major franchises, while diversifying our games portfolio,” the CEO said. In 2022 and beyond, the company expects to expand its product portfolio with more diverse games, including multiplayer, sandbox and casual games.

According to the earnings report, mobile wallet payments totaled approximately $5 billion in the fourth quarter, up 70% year over year, and totaled $17.2 billion for the full year, up 120% year over year. The company said it sees a high level of synergy between fintech unit SeaMoney and Shopee.

“We currently expect that by 2025 cash generated by Shopee and SeaMoney proactively will enable these two businesses to substantially self-fund their own long-term growth,” the CEO said.

With about $10 billion in cash, cash equivalents and short-term investments on its balance sheet, including nearly $7 million it raised last year, the company said it intends to continue investing in the growth of Shopee and SeaMoney over the next few years.

On Tuesday, Sea plunged 13.12% to close at $126.50 per share, with a market value of $70.554 billion.

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