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    SE
    Earnings call· Dec 2024(Q4 FY24)

    Sea Ltd SE

    Mar 4, 2025 Source

    Executive summary

    Sea Limited Q4 FY24 — Strong Double-Digit Growth Across All Businesses & Profitability Milestones

    Sea Limited delivered a strong Q4 FY24, with all three core businesses—Shopee, Digital Financial Services, and Garena—returning to robust double-digit growth and achieving significant profitability milestones. The company emphasized its strengthened financial position and operational excellence, driven by strategic execution and AI adoption across its platforms. Management expressed confidence in sustaining profitable growth in 2025 by focusing on high-quality expansion and deepening market leadership.

    Highlights

    5

    • All three businesses (e-commerce, digital financial services, digital entertainment) returned to strong double-digit growth, exceeding original guidance.

    • Achieved second consecutive year of annual positive profit with all three businesses recording positive adjusted EBITDA.

    • Shopee's GMV surpassed $100 billion and 10 billion orders in 2024, achieving positive adjusted EBITDA in both Asia and Brazil.

    • Digital Financial Services loan book grew over 60% year-on-year to $5.1 billion, with a stable 90-day NPL ratio of 1.2%.

    • Garena's Free Fire bookings grew 34% year-on-year in 2024, with average daily active users (DAU) growing 28% year-on-year to over 100 million.

    Guidance & targets

    5
    CategoryTargetConfidence
    Shopee GMV growth
    around 20%
    high materiality
    High
    Shopee profitability
    improving profitability
    high materiality
    High
    SeaMoney loan book size growth
    grow meaningfully faster than Shopee's GMV annual growth rate
    high materiality
    High
    Garena user base growth
    grow double digit year-on-year
    medium materiality
    High
    Garena bookings growth
    grow double digit year-on-year
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    E-commerce (Shopee)
    Strong growth and profitability in both Asia and Brazil. Significant improvements in monetization through higher commission and advertising take rates. Logistics efficiencies and AI adoption contributed to service quality and cost reduction.
    GMV: $28.6 billionGMV growth: 23% YoYOrders: $3 billionOrders growth: 20% YoYGAAP marketplace revenue: $3.2 billionCore marketplace revenue: $2.4 billion, up 50% YoYValue-added services revenue: $0.8 billion, up 21% YoYGAAP product revenue: $0.5 billionAd revenue growth: >50% YoYAd take rate improvement: >50 bpsAsia adjusted EBITDA: PositiveOther markets adjusted EBITDA: Positive
    		$3.7 billion41% (GAAP marketplace revenue)—$152 million (Adjusted EBITDA)
    E-commerce (Shopee) - Full Year
    First full year of being adjusted EBITDA positive. GMV surpassed $100 billion for the first time. Reinforced market leadership and returned to high growth.
    GMV: $100 billionGMV growth: 28% YoYOrders: 10 billionGAAP marketplace revenue: $9 billionGAAP product revenue: $1.6 billion
    		$12.4 billion38% (GAAP marketplace revenue)—$156 million (Adjusted EBITDA)
    Digital Financial Services
    Sizable and profitable business, meaningful contributor to overall growth. Strong loan book growth with stable risk exposure. Off-Shopee loans account for about half of the loan book in Asian markets.
    Adjusted EBITDA growth: 42% YoYLoans principal outstanding: $5.1 billion (as of end of Dec)Loans principal outstanding growth: 64% YoYOn-book loans: $4.2 billionOff-book loans: $0.9 billion90-day NPL ratio: 1.2%Active borrowers: >26 millionActive borrowers growth: 50% YoYFirst-time borrowers added: ~5 million
    		$733 million55%—$211 million (Adjusted EBITDA)
    Digital Financial Services - Full Year
    Achieved over 30% year-on-year growth in both top line and bottom line for the full year.
    Adjusted EBITDA growth: 29% YoY
    		$2.4 billion35%—$712 million (Adjusted EBITDA)
    Digital Entertainment (Garena)
    Free Fire's remarkable comeback. Strong engagement and retention, securing its place as an evergreen franchise. Accessibility and local relevance drive user base expansion.
    Bookings: $543 millionBookings growth: 19% YoY
    		$519 million (GAAP)——$290 million (Adjusted EBITDA)
    Digital Entertainment (Garena) - Full Year
    Free Fire was the world's largest mobile game by average DAU and most downloaded title. Africa became one of Free Fire's fastest-growing regions.
    Bookings: $2.1 billionBookings growth: 19% YoYFree Fire bookings growth: 34% YoYFree Fire average DAU: >100 millionFree Fire average DAU growth: 28% YoY
    		$1.9 billion (GAAP)——$1.2 billion (Adjusted EBITDA)

    Operational metrics

    22
    Total GAAP Revenue growth
    37%year-on-year
    Q4 FY24

    Overall company GAAP revenue growth.

    Total GAAP Revenue growth
    29%year-on-year
    FY24

    Overall company GAAP revenue growth.

    E-commerce GAAP Marketplace Revenue growth
    38%year-on-year
    FY24

    Growth of GAAP marketplace revenue for the full year.

    E-commerce Adjusted EBITDA loss
    $225 million
    Q4 FY23

    Prior period adjusted EBITDA for e-commerce.

    E-commerce Adjusted EBITDA loss
    $214 million
    FY23

    Prior period adjusted EBITDA for e-commerce.

    Digital Financial Services Adjusted EBITDA growth
    42%year-on-year
    Q4 FY24

    Growth of adjusted EBITDA for Digital Financial Services.

    Shopee Core Marketplace Take Rate
    8.5%
    Q4 FY24

    Core marketplace take rate, including transaction-based fees and advertising revenues.

    Shopee Logistics Cost per Order Reduction
    $0.05year-on-year
    Q4 FY24

    Reduction in Shopee's overall logistics cost per order.

    Shopee Customer Service Cost per Contact Reduction
    nearly 30%year-on-year
    past year

    Cost reduction achieved by upgrading chatbots with AI.

    Shopee Live Streaming Contribution to Orders
    15%
    Q4 FY24

    Contribution of live streaming to Shopee's overall order volume.

    Shopee Live Streaming Daily Unique Streamers growth
    >40%year-on-year
    Q4 FY24

    Growth in average daily unique streamers.

    Shopee Live Streaming Daily Unique Viewers growth
    >30%year-on-year
    Q4 FY24

    Growth in average daily unique viewers.

    Shopee Asia SPX Express Orders Delivered within 2 Days
    almost halfimprovement from same period last year
    Q1

    Efficiency of SPX Express delivery service.

    Shopee Asia Buyer Return/Refund Resolution Time Improvement
    >40%year-on-year
    Q4 FY24

    Improved resolution times for buyer return/refund process.

    Shopee Asia Buyer Return/Refund Cases Resolved within 1 Day
    nearly 6 in 10
    Q4 FY24

    Percentage of cases resolved quickly.

    SeaMoney First-Time Borrowers Added
    ~5 million
    Q4 FY24

    Number of new borrowers added to the digital financial services platform.

    SeaMoney Active Borrowers
    >26 million
    Q4 FY24

    Total active borrowers for digital financial services.

    SeaMoney Off-Shopee Loans as % of Loan Book
    about half
    Q4 FY24

    Proportion of the loan book from off-Shopee scenarios.

    Free Fire Average DAU
    >100 million
    FY24

    Average daily active users for Free Fire.

    Free Fire Average DAU growth
    28%year-on-year
    FY24

    Growth in average daily active users for Free Fire.

    Free Fire Nigeria Active Users growth
    90%year-on-year
    December

    Surge in active users after improving connection speeds.

    Free Fire World Series Viewership Hours growth
    43%compared to the previous year
    November

    Increase in viewership for the flagship annual eSports event.

    Industry KPIs

    4
    MetricValueDetails
    Segment revenue mix$3.7 billionUSD
    Regional market performanceincreased by more than 40%%
    Advertising revenue take rateimproved by more than 50 basis pointsbps
    Operating income EBIT and adjusted EBITDA$591 millionUSD

    Deals & partnerships

    1
    YouTubeCollaboration enabling seamless purchases from Shopee for video viewers and attracting YouTube creators to Shopee's content ecosystem.

    The collaboration leverages YouTube's video content to drive e-commerce sales on Shopee, enhancing user engagement and content creator participation.

    What to watch in Q1 FY25

    5

    Shopee GMV Growth

    next quarter
    Current23% YoY (Q4 FY24)
    Targetaround 20% YoY (FY25 guidance)

    Why it matters

    Verifying if Shopee maintains its strong GMV growth trajectory, especially in Brazil, is crucial for its market leadership and overall revenue expansion.

    We expect Shopee's full year 2025 GMV growth to be around 20% with improving profitability.

    Q&A highlights

    7

    What are the underlying assumptions for 20% GMV growth, including competitive landscape, marketing, service quality, and FX impact? How will profitability trend?

    GMV growth is driven by user growth and purchase frequency, with Brazil growing faster than Asia. FX is assumed at current rates. Profitability is expected to improve in 2025, with some seasonality.

    “On the profitability side, we do expect the profitability for 2025 to be better than 2024 as a trend. However, as you might know, e-commerce does have some seasonality from time to time. So there might be some fluctuation due to seasonality.”

    asked by Pang Vitt with Goldman Sachs · answered by Tony Hou

    2 min read5 chapters

    Detailed Narrative

    01

    AI Adoption & Efficiency

    Sea Limited is leveraging AI across its e-commerce operations to enhance service quality and drive efficiency. This includes using large language models for more accurate search and discovery, providing AI tools to sellers for improved product listings, and upgrading chatbots for customer service, leading to a nearly 30% reduction in customer service cost per contact. AI also aids in faster resolution of buyer return/refund cases, with a 40% improvement in resolution times in Asia.

    02

    Logistics Integration & Cost Savings

    Shopee's end-to-end integration with logistics partners, particularly SPX Express, has led to significant efficiencies. Almost half of SPX Express orders in Asia were delivered within two days in Q1, and overall logistics cost per order was reduced by $0.05 year-on-year in Q4. These efficiencies allow for savings to be passed to buyers and sellers, reinforcing Shopee's competitive advantage and improving service standards.

    03

    Content Ecosystem & Partnerships

    The content ecosystem, including live streaming and collaborations, is integral to e-commerce. Live streaming contributes around 15% of Shopee's overall order volume for physical goods in Southeast Asia, with daily unique streamers and viewers growing over 40% and 30% respectively in Q4. The collaboration with YouTube has seen significant success, with daily orders attributed to YouTube content in Indonesia growing more than sixfold since September, and plans for expansion to more markets.

    04

    Brazil Market Performance

    Shopee demonstrated strong performance in Brazil, achieving market share gains and improving profitability. Average monthly active buyers increased by over 40% year-on-year in Q4, outpacing the industry. Efforts to onboard brands, diversify product categories, and improve delivery speeds have attracted more users and resulted in larger basket sizes, leading to positive adjusted EBITDA for the second consecutive quarter.

    05

    Digital Financial Services Strategy

    The DFS segment focuses on sustainable, healthy growth driven by risk management. Operating primarily in markets with a strong Shopee presence allows for deep risk assessment. The strategy involves starting with on-Shopee SPayLater loans to build credit track records, then expanding to off-Shopee products with longer tenures and larger quantum. Off-Shopee loans now account for about half of the loan book in Asian markets, tapping into underserved demand for credit.

    AI-generated summary of the company’s earnings call. Not investment advice.