Sea hit first profitable year in 2023, eyes positive EBITDA for Shopee in H2 2024

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Sea Group posted its first positive annual net income of US$163 million for 2023, while clocking in US$13 billion in revenue for the year, up 5% from 2022.

However, the New York Stock Exchange-listed company remained in the red in the fourth quarter of 2023, although its net loss of US$112 million narrowed from Q3’s US$144 million.

Revenue for Q4 2023 was US$3.6 billion, 5% higher than a year ago – growth it mostly owed to Shopee.

Sales at the group’s ecommerce arm rose 23% for the year to US$9 billion, partly thanks to a 7% uptick in its gross merchandise value – which hit US$79 billion.

Shopee’s Q4 2023 revenue was US$2.6 billion, 23% higher than Q4 of the previous year. Adjusted losses were reported at US$225 million, which was an improvement from the previous quarter’s negative US$347 million.

The ecommerce unit’s adjusted EBITDA for the full year was negative US$214 million – improving significantly from negative US$1.7 billion in 2022.

These results came amid fierce competition in Southeast Asia, especially from TikTok Shop in Indonesia. However, Sea Group CEO and founder Forrest Li said that he expects Shopee to maintain its market share in the region this year, while returning to the black (in terms of adjusted earnings) in the second half of 2024.

Meanwhile, gaming division Garena continued to show a decline in revenue and adjusted earnings. The segment’s full-year revenue was US$2.2 billion, down 44% from a year ago. Adjusted earnings dropped 30% to US$921 million as well.

Additionally, Garena’s quarterly revenue of US$511 million and adjusted earnings of US$217 million were the lowest of the four quarters in 2023.

Li, however, said its self-developed Free Fire was the most downloaded mobile game in 2023, according to data from market research firm Sensor Tower. He also said Garena was looking to grow the game’s user base and bookings by “double digits” in 2024.

Top line at SeaMoney, the group’s financial services business, continued to grow strongly. Revenue for 2023 as a whole was US$1.8 billion, 44% higher than a year ago, with its Q4 revenue of US$472 million up by 24% year on year.

SeaMoney posted its first-ever year of positive adjusted earnings, at US$550 million for 2023. Adjusted earnings of US$149 million for the quarter also marked a 96% surge compared to the same year-ago period. However, it was lower than the US$166 million it had posted for Q3, as sales and marketing spend doubled during Q4.

Li maintains that Sea Group sees a “significant upside” in its markets in the financial services space, and intends to continue investing in user acquisition “both on and off the Shopee platform” while remaining “prudent on risk management.”