Singapore's Sea reports first profit on cost cuts; shares soar
A person stands in front of a signage of Southeast Asian e-commerce and gaming group Sea Ltd's, at their office in Singapore, on March 5, 2021.
PHOTO: Reuters
PUBLISHED ONMarch 08, 2023 1:37 AM
Singapore-based Sea Ltd on Tuesday (March 7) posted its first quarterly profit, as the gaming and e-commerce company benefited from major cost cuts it undertook to offset a post-pandemic slowdown in demand.
Shares of the company soared over 15 per cent in morning trading.
The Southeast Asian firm had shuttered operations in some countries, cut jobs, and slashed its spending on marketing, as part of its turnaround plan.
For the fourth quarter ended Dec 31, Sea's marketing and sales expenses declined by 61 per cent, helping it pull down total operating expenses by nearly a quarter to US$1.35 billion (S$1.83 billion).
"We exited or downsized operations in non-core markets, streamlined our pipeline with investments and project closures and deprioritised non-core initiatives," Chief Executive Officer Forrest Li said.
"Our decisive pivot to focus on efficiency and profitability since late last year is already driving meaningful bottom line improvements."
The company's net income attributable to shareholders was US$426.8 million, or 72 cents per share, compared with a loss of US$617.6 million, or US$1.12 per share, a year earlier.
While Sea had a meteoric run in 2020 and part of 2021, when the pandemic-led demand lifted revenues and helped it expand into Mexico and Spain, its growth has tapered in line with a broader slowdown in e-commerce and digital entertainment demand.
The company's market capitalisation too dropped to US$37 billion after its shares plunged over 75 per cent last year. Sea was valued at more than US$200 billion at its peak in late-2021.
Reuters had reported in September that the firm's e-commerce unit Shopee would exit Argentina and shut local operations in Chile, Colombia and Mexico, while its gaming arm Garena will lay off hundreds of staff in Shanghai.
Sea also cut 10 per cent of its workforce in six months, according to reports in November.
The ban of Sea's Free Fire in India, the top market for the popular mobile game, was an another blow last year.