SINGAPORE--(BUSINESS WIRE)--Sea Limited (NYSE: SE) (�Sea� or the �Company�) today announced its financial results for the fourth quarter and full year ended December 31, 2021.

�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,� said Forrest Li, Sea�s Chairman and Group Chief Executive Officer.

�We currently expect Shopee to achieve positive adjusted EBITDA before HQ costs allocation in Southeast Asia and Taiwan by this year and SeaMoney to achieve positive cashflow by next year. 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.�

�In addition to Shopee�s strong and growing market leadership in Southeast Asia and Taiwan, we are very excited to see Shopee fast gaining traction in Brazil, the sixth largest country by population in the world and our new growth market. Just two years after entering the market, Shopee Brazil recorded more than 140 million gross orders in the fourth quarter, growing at close to 400% year-on-year. At the same time, unit economics for Brazil substantially improved with adjusted EBITDA loss per order before HQ costs allocation lowered by more than 40% year-on-year.�

�We are also very pleased to see SeaMoney continuing to scale rapidly with fast growing user base, expanding product offerings, and further enhanced commercialization. It 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.�

�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.�

Fourth Quarter 2021 Highlights

• Group
  • Total GAAP revenue was US$3.2 billion, up 105.7% year-on-year.
  • Total gross profit was US$1.3 billion, up 145.6% year-on-year.
  • Total adjusted EBITDA¹ was US$(492.1) million compared to US$48.7 million for the fourth quarter of 2020.

• Digital Entertainment
  • GAAP revenue was US$1.4 billion, up 104.1% year-on-year.
  • Bookings² were US$1.1 billion, up 6.8% year-on-year.
  • Adjusted EBITDA¹ was US$602.6 million, compared to US$663.5 million for the fourth quarter of 2020.
  • Adjusted EBITDA represented 55.7% of bookings for the fourth quarter of 2021, compared to 65.5% for the fourth quarter of 2020.
  • Quarterly active users (�QAUs�) reached 654.0 million, an increase of 7.1% year-on-year.
  • Quarterly paying users grew by 5.6% year-on-year to 77.2 million and represented 11.8% of QAUs for the fourth quarter compared to 12.0% for the same period in 2020.
  • Average bookings per user were US$1.7, in line with that for the fourth quarter of 2020.
  • Our self-developed global hit game, Free Fire, continued to maintain top global rankings in user and grossing metrics. It remained the most downloaded mobile game globally for the fourth quarter and the full year of 2021, according to data.ai³, previously known as App Annie, maintaining this leading position for a third consecutive year.
  • Free Fire also ranked second globally by average monthly active users for all mobile games on Google Play in the fourth quarter and the full year of 2021, according to data.ai³.
  • Free Fire continued to be the highest grossing mobile game in Southeast Asia and Latin America for the fourth quarter and the full year of 2021, according to data.ai³. Free Fire has maintained this leading position for the past ten consecutive quarters in Southeast Asia and in Latin America.
  • In the United States, Free Fire was the highest grossing mobile battle royale game for four consecutive quarters for the fourth quarter and full year of 2021, according to data.ai³.
  • Craftland, our recently introduced Free Fire map editor feature, gained strong traction since launch with the most popular maps being subscribed by close to 40 million users so far. We believe that the strong user reception to Craftland is a positive indicator of the result of our continued efforts to encourage user participation in content creation as we build Free Fire into an increasingly open platform and is well aligned with major emerging industry trends such as the metaverse.
  • 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.

• E-commerce
  • GAAP revenue was US$1.6 billion, up 89.4% year-on-year.
  • GAAP revenue included US$1.3 billion of GAAP marketplace revenue⁴, up 103.5% year-on-year, and US$0.3 billion of GAAP product revenue⁵, up 48.1% year-on-year.
  • Gross orders totaled 2.0 billion, an increase of 90.1% year-on-year.
  • Gross merchandise value (�GMV�) was US$18.2 billion, an increase of 52.7% year-on-year.
  • Adjusted EBITDA¹ was US$(877.7) million compared to US$(427.5) million for the fourth quarter of 2020.
  • In Southeast Asia and Taiwan, adjusted EBITDA loss per order before allocation of the headquarters� common expenses was 15 cents, an improvement from 21 cents in the fourth quarter of 2020.
  • 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.
  • In Shopee�s other markets, unit economics also showed consistent improvement year-on-year.
  • In Brazil, where Shopee was launched in late 2019, we have already achieved strong traction with meaningful commercialization and improving efficiency.
    • In the fourth quarter, Shopee Brazil recorded more than 140 million gross orders, growing at close to 400% year-on-year, and more than US$70 million of GAAP revenue, up by around 326% year-on-year.
    • Meanwhile, its adjusted EBITDA loss per order before allocation of the headquarters� common expenses improved by more than 40% year-on-year to below US$2.
  • For Shopee overall, adjusted EBITDA loss per order was US$0.45, compared to US$0.41 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.
  • In Southeast Asia and in Taiwan respectively, Shopee continued to rank first in the Shopping category by average monthly active users and total time spent in app for the fourth quarter and for the full year of 2021, according to data.ai³.
  • In Indonesia, where Shopee is the largest e-commerce platform, gross orders grew by around 88% year-on-year. Shopee also continued to rank first in the Shopping category by average monthly active users and total time spent in app for the fourth quarter and for the full year of 2021, according to data.ai³.
  • Shopee Brazil continued to rank first in the Shopping category by downloads and total time spent in app and second by average monthly active users for the fourth quarter and for the full year of 2021, according to data.ai³.
  • Globally, Shopee was the top ranked app in the Shopping category by downloads in the fourth quarter and for the full year of 2021, according to data.ai³. In the same category, for Google Play, Shopee also ranked first globally by total time spent in app and second by average monthly active users in the fourth quarter and for the full year of 2021, according to data.ai³.
  • Shopee is also building strong brand recognition across our communities. It was the top e-commerce brand in YouGov�s �Best Global Brands 2021� and ranked sixth overall.

• Digital Financial Services
  • GAAP revenue was US$197.5 million, up 711.1% year-on-year.
  • Adjusted EBITDA¹ was US$(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.
  • Quarterly active users⁶ across our SeaMoney products and services reached 45.8 million, up 89.7% year-on-year.
  • In Indonesia, which has the most comprehensive set of products and services among our markets, over 20% of the quarterly active users⁶ have used multiple SeaMoney products or services in the fourth quarter. We view this as a highly positive indicator of the strong efficiencies we can leverage in bringing new offerings to our large and fast-growing user base on the Shopee and SeaMoney platforms, which are both highly synergistic with one another and enjoy a strong flywheel effect in the scaling of each platform.
  • Total payment volume (�TPV�) for the mobile wallet was US$5.0 billion, up 70.1% year-on-year.
  • We also expanded various products offerings including credit services to consumers and merchants across more markets, started offering services in digital banking and insurtech in Indonesia and obtained a bank license in the Philippines.

Full Year 2021 Highlights

• Group
  • Total GAAP revenue was US$10.0 billion, up 127.5% year-on-year.
  • Total gross profit was US$3.9 billion, up 188.8% year-on-year.
  • Total adjusted EBITDA¹ was US$(593.6) million compared to US$107.0 million for the full year of 2020.

• Digital Entertainment
  • GAAP revenue was US$4.3 billion, up 114.3% year-on-year.
  • Bookings² were US$4.6 billion, up 44.3% year-on-year.
  • Adjusted EBITDA¹ was US$2.8 billion, up 40.0% year-on-year.
  • Adjusted EBITDA represented 60.4% of bookings for the full year of 2021, compared to 62.2% for the full year of 2020.

• E-commerce
  • GAAP revenue was US$5.1 billion, up 136.4% year-on-year.
  • GAAP revenue included US$4.1 billion of GAAP marketplace revenue⁴, up 155.8% year-on-year, and US$1.1 billion of GAAP product revenue⁵, up 82.7% year-on-year.
  • Gross orders totaled 6.1 billion, an increase of 116.5% year-on-year.
  • GMV was US$62.5 billion, an increase of 76.8% year-on-year.
  • Adjusted EBITDA¹ was US$(2.6) billion compared to US$(1.3) billion for the full year of 2020.
  • Adjusted EBITDA loss per order improved by 8.7% year-on-year to US$0.42, compared to US$0.46 for the full year of 2020.

• Digital Financial Services
  • GAAP revenue was US$469.8 million, up 672.8% year-on-year.
  • Adjusted EBITDA¹ was US$(616.9) million, compared to US$(511.1) million for the full year of 2020.
  • TPV for the mobile wallet was US$17.2 billion, up 119.6% year-on-year.

2022 Guidance

For the full year of 2022, we currently expect bookings for digital entertainment to be between US$2.9 billion and US$3.1 billion. With many economies reopening further in the fourth quarter and into this year, we have observed some moderation in online activities and fluctuations in user engagement. Moreover, due to unanticipated government actions, Free Fire is currently unavailable in the Google Play and iOS app stores in India. The guidance takes into consideration these headwind factors. The midpoint of the guidance of US$3.0 billion reflects our current expectations that our bookings for 2022 will be close to the level in 2020 while also considering the uncertainty in India.

We expect GAAP revenue for e-commerce to be between US$8.9 billion and US$9.1 billion. The midpoint of the guidance represents an increase of 75.7% from 2021.

We expect GAAP revenue for digital financial services to be between US$1.1 billion and US$1.3 billion. The midpoint of the guidance represents an increase of 155.4% from 2021.

⁽¹⁾ For a discussion of the use of non-GAAP financial measures, see �Non-GAAP Financial Measures�.

⁽²⁾ Unallocated expenses are mainly related to share-based compensation and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed by the Chief Operating Decision Maker (�CODM�) as part of segment performance.

Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020

Revenue

Our total GAAP revenue increased by 105.7% to US$3.2 billion in the fourth quarter of 2021 from US$1.6 billion in the fourth quarter of 2020. The increase was mainly driven by the growth in each of the segments detailed as follows:

• Digital Entertainment: GAAP revenue increased by 104.1% to US$1.4 billion in the fourth quarter of 2021 from US$693.4 million in the fourth quarter of 2020. This increase was primarily due to recognition of accumulated deferred revenue from previous quarters.
• E-commerce and other services: GAAP revenue increased by 125.8% to US$1.5 billion in the fourth quarter of 2021 from US$656.6 million in the fourth quarter of 2020. This increase was primarily driven by the growing adoption of products and services across our e-commerce and digital financial services businesses.
• Sales of goods: GAAP revenue increased by 49.8% to US$324.4 million in the fourth quarter of 2021 from US$216.6 million in the fourth quarter of 2020, primarily due to the increase in our product offerings.

Cost of Revenue

Our total cost of revenue increased by 85.1% to US$1.9 billion in the fourth quarter of 2021 from US$1.0 billion in the fourth quarter of 2020.

• Digital Entertainment: Cost of revenue increased by 79.9% to US$374.8 million in the fourth quarter of 2020 from US$208.4 million in the fourth quarter of 2020. The increase was largely in line with the increase in our digital entertainment revenue.
• E-commerce and other services: Cost of revenue for our e-commerce and other services segment combined increased by 102.0% to US$1.2 billion in the fourth quarter of 2021 from US$611.6 million in the fourth quarter of 2020. The increase was primarily due to higher costs of logistics from order growth, and other costs driven by the growth of our e-commerce marketplace.
• Cost of goods sold: Cost of goods sold increased by 41.5% to US$301.3 million in the fourth quarter of 2021 from US$212.8 million in the fourth quarter of 2020. The increase was largely in line with the increase in our revenue from sales of goods.

Other Operating Income

Our other operating income was US$72.3 million and US$72.7 million in the fourth quarter of 2021 and 2020, respectively. Other operating income mainly consists of rebates from e-commerce related logistics services providers.

Sales and Marketing Expenses

Our total sales and marketing expenses increased by 83.4% to US$1.2 billion in the fourth quarter of 2021 from US$665.2 million in the fourth quarter of 2020. The table below sets forth the breakdown of the sales and marketing expenses of our major reporting segments. Amounts are expressed in thousands of US dollars (�$�).

• Digital Entertainment: Sales and marketing expenses increased by 79.2% to US$109.6 million in the fourth quarter of 2021 from US$61.2 million in the fourth quarter of 2020. The increase was primarily due to higher online marketing and content costs as we continue to deepen the engagement with our gamers� community and deepen investment in long-term brand building.
• E-commerce: Sales and marketing expenses increased by 91.7% to US$840.7 million in the fourth quarter of 2021 from US$438.5 million in the fourth quarter of 2020. The increase was primarily attributable to the ramping up of marketing incentives and online marketing efforts, as we continue investing in capturing market opportunities and expanding across markets.
• Digital Financial Services: Sales and marketing expenses increased by 50.1% to US$228.7 million in the fourth quarter of 2021 from US$152.4 million in the fourth quarter of 2020. The increase was mainly due to our efforts to promote adoption of our mobile wallet services.

General and Administrative Expenses

Our general and administrative expenses increased by 68.6% to US$318.6 million in the fourth quarter of 2021 from US$189.0 million in the fourth quarter of 2020. This increase was primarily due to higher staff compensation and benefit costs from increased staff to support the business growth, office facilities and related expenses, as well as credit losses for our digital financial services business.

Research and Development Expenses

Our research and development expenses increased by 161.8% to US$286.6 million in the fourth quarter of 2021 from US$109.5 million in the fourth quarter of 2020, primarily due to the increase in research and development staff force.

Non-operating Income or Losses, Net

Non-operating income or losses consist of interest income, interest expense, investment gain (loss), and foreign exchange gain (loss). We recorded a net non-operating loss of US$71.0 million in the fourth quarter of 2021, compared to a net non-operating loss of US$124.5 million in the fourth quarter of 2020. Our non-operating loss in the fourth quarter of 2021 was primarily due to interest expenses on our convertible notes.

Income Tax Expense

We had a net income tax expense of US$105.6 million and US$44.2 million in the fourth quarter of 2021 and 2020, respectively. The income tax expense in the fourth quarter of 2021 was primarily due to corporate income tax and withholding tax expenses incurred by our digital entertainment segment.

Net Loss

As a result of the foregoing, we had net losses of US$616.3 million and US$524.6 million in the fourth quarter of 2021 and 2020, respectively.

Net Loss Excluding Share-based Compensation

Net loss excluding share-based compensation, was US$483.5 million and US$430.7 million in the fourth quarter of 2021 and 2020, respectively.

Basic and Diluted Loss Per Share Based on Net Loss Excluding Share-based Compensation Attributable to Sea Limited�s Ordinary Shareholders

Basic and diluted loss per share based on net loss excluding share-based compensation, was US$0.88 and US$0.87 in the fourth quarter of 2021 and 2020, respectively.

Full Year Ended December 31, 2021 Compared to Full Year Ended December 31, 2020

Revenue

Our total GAAP revenue increased by 127.5% to US$10.0 billion for the full year ended December 31, 2021 from US$4.4 billion for the full year ended December 31, 2020. The increase was mainly driven by the growth in each of the segments detailed as follows:

• Digital Entertainment: GAAP revenue increased by 114.3% to US$4.3 billion for the full year ended December 31, 2021 from US$2.0 billion for the full year ended December 31, 2020. This increase was primarily due to the increase in our active user base as well as the deepened paying user penetration.

Contacts

For enquiries:

Investors / analysts: [email protected]
Media: Martin Reidy, [email protected]

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