Sea Limited $SE Reports 105% Revenue Growth

SE stock has started to consolidate on March 2, 2022, after the company reported eye-popping revenue growth of 105% and gross profit growth of 145%.

Sea Limited Reports Fourth Quarter and Full Year 2021 Results

On March 1, 2022, Sea Limited (NYSE: SE) announced its financial results for the fourth quarter and full year ended December 31, 2021. Sea Limited reported Q4 EPS of ($1.12) versus the consensus estimate of (59c). The company reported Q4 revenue of $3.22B versus the consensus estimate of $2.91B.

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.

“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.”

📺 SEA LIMITED STOCK ANALYSIS (SE): A Value Trap or Undervalued?

SEA LIMITED STOCK ANALYSIS (SE): A Value Trap or Undervalued?

📉 SE Stock Technical Analysis

The short-term trend is negative, as is the long-term trend. SE is part of the Entertainment industry. There are 82 other stocks in this industry, SE did better than 41% of them. SE is currently trading near the lower end of its 52-week range, which is not a good sign. SE is lagging the S&P500 Index which is trading in the middle of its 52-week range.

There is a resistance zone ranging from 126.49 to 126.51. This zone is formed by a combination of multiple trend lines in multiple time frames. There is resistance at 147.03 from a trend line in the daily time frame. There is also resistance at 155.72 from a trend line in the daily time frame.

The technical rating of SE is bad and it also does not present a quality setup at the moment. SE stock has a Setup Rating of 3 out of 10. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when SE stock consolidates and has a Setup Rating of 8 or higher.

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