SINGAPORE, Feb. 27, 2018 /PRNewswire/ -- Sea Limited (NYSE:
SE) ("Sea" or the "Company") today announced its financial results
for the fourth quarter and full year ended December 31, 2017.
"We made excellent progress in all of our businesses in the
fourth quarter," stated Forrest Li,
Chairman and Group Chief Executive Officer of Sea. "Garena, our
digital entertainment business, launched its first self-developed
mobile game, Free Fire. Shopee, our e-commerce platform, continued
to grow robustly across all of our markets, as we forged ahead in
our mission to support millions of sellers across the region, and
empower consumers. AirPay, our digital financial services platform,
further strengthened its payment infrastructure. We remain deeply
committed to serving as a key enabler to our region's rapid digital
evolution."
Fourth Quarter 2017 Key Metrics
- Group
-
- Total adjusted revenue was US$164.5
million, up 72.8% year-on-year from US$95.2 million for the fourth quarter of 2016
and up 8.3% quarter-on-quarter from US$151.9
million for the third quarter of 2017.
- Total adjusted EBITDA was US$(140.2)
million, compared to US$(56.0)
million for the fourth quarter of 2016 and US$(99.7) million for the third quarter of
2017.
- Digital Entertainment
-
- Adjusted revenue was US$141.9
million, up 59.2% year-on-year from US$89.1 million for the fourth quarter of 2016
and up 5.3% quarter-on-quarter from US$134.7
million for the third quarter of 2017.
- Adjusted EBITDA was US$52.6
million, an increase of 216.4% year-on-year from
US$16.6 million for the fourth
quarter of 2016 and up 16.7% quarter-on-quarter from $45.1 million for the third quarter of 2017.
- Quarterly active users ("QAU") was 87.8 million, an increase of
74.2% year-on-year from 50.4 million for the fourth quarter of 2016
and up 27.2% quarter-on-quarter from 69.0 million for the third
quarter of 2017.
- Average revenue per user ("ARPU") was US$1.6 compared to US$1.8 for the fourth quarter of 2016 and
US$2.0 for the third quarter of
2017.
- E-Commerce
-
- Gross merchandise value ("GMV") was US$1.6 billion, an increase of 206.1%
year-on-year from US$515.8 million
for the fourth quarter of 2016 and up 48.3% quarter-on-quarter
from US$1.1 billion for the third
quarter of 2017.
- Gross orders for the quarter was 98.3 million, an increase of
243.7% year-on-year from 28.6 million for the fourth quarter of
2016 and up 49.2% quarter-on-quarter from 65.9 million for the
third quarter of 2017.
- Adjusted revenue for the quarter was US$9.3 million, up 61.6% quarter-on-quarter from
US$5.8 million. There was no
e-commerce adjusted revenue for the fourth quarter of 2016.
- Adjusted EBITDA was US$(175.4)
million, compared to US$(59.2)
million for the fourth quarter of 2016 and US$(130.0) million for the third quarter of
2017.
- Sales and marketing as a percentage of GMV stood at 8.5%, for
both the fourth quarters of 2016 and 2017, and improved from 9.7%
for the third quarter of 2017.
- Digital Financial Services
-
- Gross transaction value of our digital financial services as a
whole ("GTV") grew 310.7% year-on-year from US$250.2 million and 129.3% quarter-on-quarter
from US$448.2 million to reach
US$1.0 billion.
Full Year 2017 Key Metrics
- Group
-
- Total adjusted revenue was US$553.6
million, up 58.6% year-on-year from US$348.9 million for the full year of 2016.
- Total adjusted EBITDA was US$(332.1)
million, compared to US$(130.1)
million for the full year of 2016.
- Digital Entertainment
-
- Adjusted revenue was US$495.9
million, up 49.7% year-on-year from US$331.3 million for the full year of 2016.
- Adjusted EBITDA was US$174.9
million, an increase of 104.6% year-on-year from
US$85.5 million for the full year of
2016.
- E-Commerce
-
- GMV was US$4.1 billion, an
increase of 257.5% year-on-year from US$1.2
billion for the full year of 2016.
- Gross orders was 244.8 million, an increase of 231.7%
year-on-year from 73.8 million for the full year of 2016.
- Adjusted revenue was US$17.7
million.
- Adjusted EBITDA was US$(444.3)
million, compared to US$(169.7)
million for the full year of 2016.
- Sales and marketing as a percentage of GMV was 8.3% compared to
11.0% for the full year of 2016.
- Digital Financial Services
-
- GTV grew 249.2% year-on-year from US$614.4 million to reach US$2.1 billion.
Strategic Business Updates
Digital Entertainment
Garena enjoyed healthy growth this quarter, buoyed by factors
including the continued growth of one of the leading mobile games
in the region, Arena of Valor. Our mobile game business has been a
key beneficiary of the increasing smartphone penetration in the
region. For instance, Arena of Valor has achieved 10 million daily
active users ("DAU"). Moreover, we continue to complement this
franchise through a growing e-sports league, video streaming
options and other ancillary services.
Another important milestone this quarter was the launch of our
fully self-developed game, Free Fire, on December 4, 2017. Free Fire is a "battle royale"
type of mobile game developed in-house by Garena. The game was
launched on both the iOS App Store
and Google Play Store in many markets around the world and has
achieved 6 million DAUs. We are committed to expanding our game
development capabilities further, while continuing to build our
position as the partner of choice in our markets for the world's
leading game development studios.
E-Commerce
Shopee achieved robust growth in both GMV and gross orders in
each of our markets in the fourth quarter of 2017. This growth was
driven primarily by our on-the-ground efforts to attract new buyers
and sellers in our focus categories.
Shopee has focused much of its innovation on launching
value-added services to our ever-expanding seller base,
particularly for brands that use our Shopee Mall platform. We
continue to expand our support for sellers by offering them
integrated logistics and payments solutions as well as fulfilment
and other services.
We have begun monetization by rolling out performance-based
advertising tools in all of our markets. In Taiwan and in our cross-border transactions,
we have also started to charge transaction-based commissions to
sellers.
Digital Financial Services
We continue to focus our efforts on building up the
infrastructure to support our existing platforms and to improve
user experience. One of our recent initiatives in this area is the
deeper integration of AirPay with Shopee.
Other Developments
Retirement of Director and Group President and Election of
New Director
The Company's Group President and Director, Nicholas A. Nash, plans to retire from his
position as the Group President at the end of 2018. During
the period before his retirement, Mr. Nash will continue to advise
the Company's Group Chief Executive Officer on the Company's
long-term strategic priorities. Concurrent with announcing his
retirement, Mr. Nash has also retired from the Company's board as
of February 23, 2018. On February 24, 2018, the Company's board elected
Tony Tianyu Hou to serve as a
director. Mr. Hou is also the Group Chief Financial Officer of the
Company.
Amendment of Equity Incentive Plan
The Company has amended its Amended and Restated Incentive Plan
(the "Plan"), effective on February 24,
2018, to increase the maximum number of its Class A ordinary
shares ("Ordinary Shares") that may be delivered under the Plan
from 53,000,000 shares to 83,000,000 shares (the "ESOP Pool Size"),
and to increase the ESOP Pool Size on the first day of year 2019,
2020, 2021 and 2022 by 5% of the total number of Ordinary Shares
outstanding on that day immediately before such annual increase.
Sea intends to use such increases in the ESOP Pool Size to make
equity grants to its management team and other employees, so as to
better attract global talents and more closely align the interest
of its employees with the Company and its shareholders.
Summary of Financial Results
(Amounts are expressed in thousands of US dollars "$")
|
For Three
Month
ended December
31,
|
|
For Full
Year
ended December
31,
|
|
|
2016
|
2017
|
|
2016
|
2017
|
|
|
$
|
$
|
YOY%
|
$
|
$
|
YOY%
|
|
(unaudited)
|
(unaudited)
|
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Digital
Entertainment
|
82,407
|
106,323
|
29.0%
|
327,985
|
365,167
|
11.3%
|
Others
|
6,054
|
18,281
|
202.0%
|
17,685
|
49,023
|
177.2%
|
|
88,461
|
124,604
|
40.9%
|
345,670
|
414,190
|
19.8%
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
|
|
|
Digital
Entertainment
|
(47,298)
|
(60,240)
|
27.4%
|
(185,314)
|
(217,986)
|
17.6%
|
Others
|
(15,879)
|
(40,819)
|
157.1%
|
(47,284)
|
(108,892)
|
130.3%
|
|
(63,177)
|
(101,059)
|
60.0%
|
(232,598)
|
(326,878)
|
40.5%
|
Gross
profit
|
25,284
|
23,545
|
(6.9)%
|
113,072
|
87,312
|
(22.8)%
|
Other operating
income
|
415
|
2,157
|
419.8%
|
2,103
|
3,497
|
66.3%
|
Sales and marketing
expenses
|
(61,763)
|
(156,418)
|
153.3%
|
(187,372)
|
(425,974)
|
127.3%
|
General and
administrative expenses
|
(41,304)
|
(51,754)
|
25.3%
|
(112,383)
|
(137,868)
|
22.7%
|
Research and
development expenses
|
(5,786)
|
(8,671)
|
49.9%
|
(20,809)
|
(29,323)
|
40.9%
|
Total operating
expenses
|
(108,438)
|
(214,686)
|
98.0%
|
(318,461)
|
(589,668)
|
85.2%
|
Operating
loss
|
(83,154)
|
(191,141)
|
129.9%
|
(205,389)
|
(502,356)
|
144.6%
|
Non-operating income
(loss), net
|
15,150
|
(62,283)
|
(511.1)%
|
8,503
|
(46,153)
|
(642.8)%
|
Income tax
expense
|
1,047
|
(8,730)
|
(933.8)%
|
(8,546)
|
(10,745)
|
25.7%
|
Share of results of
equity
investees
|
(5,279)
|
(986)
|
(81.3)%
|
(19,523)
|
(1,912)
|
(90.2)%
|
Net
loss
|
(72,236)
|
(263,140)
|
264.3%
|
(224,955)
|
(561,166)
|
149.5%
|
Adjusted net
loss (1)
|
(61,981)
|
(251,563)
|
305.9%
|
(196,114)
|
(532,530)
|
171.5%
|
|
|
|
|
|
|
|
Adjusted revenue of
Digital
Entertainment
(1)
|
89,132
|
141,883
|
59.2%
|
331,252
|
495,878
|
49.7%
|
Adjusted revenue of
E-Commerce (1)
|
-
|
9,319
|
-
|
-
|
17,717
|
-
|
Revenue of Digital
Financial Services
|
1,709
|
4,102
|
140.0%
|
5,892
|
16,270
|
176.1%
|
Revenue of Other
Services
|
4,345
|
9,213
|
112.0%
|
11,793
|
23,719
|
101.1%
|
Total adjusted
revenue (1)
|
95,186
|
164,517
|
72.8%
|
348,937
|
553,584
|
58.6%
|
|
|
|
|
|
|
|
Adjusted EBITDA for
Digital
Entertainment
(1)
|
16,626
|
52,607
|
216.4%
|
85,492
|
174,939
|
104.6%
|
Adjusted EBITDA for
E-Commerce (1)
|
(59,188)
|
(175,414)
|
(196.4)%
|
(169,716)
|
(444,280)
|
(161.8)%
|
Adjusted EBITDA for
Digital
Financial
Services (1)
|
(9,240)
|
(7,551)
|
18.3%
|
(33,682)
|
(36,697)
|
(9.0)%
|
Adjusted EBITDA for
Other Services (1)
|
(2,495)
|
(7,276)
|
(191.6)%
|
(9,276)
|
(18,190)
|
(96.1)%
|
Unallocated expenses
(2)
|
(1,708)
|
(2,579)
|
(51.0)%
|
(2,937)
|
(7,887)
|
(168.5)%
|
Total adjusted
EBITDA (1)
|
(56,005)
|
(140,213)
|
(150.4)%
|
(130,119)
|
(332,115)
|
(155.2)%
|
|
|
|
|
|
|
|
(1) For a discussion of the use of non-GAAP financial
measures, see "Non-GAAP Financial Measures."
(2) Unallocated expenses are mainly relating 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 Operation
Decision Maker ("CODM") as part of segment performance.
Three Months Ended December 31,
2017 Compared to Three Months Ended December 31, 2016
Revenue
The table below sets forth revenue generated from our reported
segments. Amounts are expressed in thousands of US dollars
("$").
|
For the Three
Months
ended December 31,
|
|
|
2016
|
|
2017
|
|
|
$
|
% of
revenue
|
|
$
|
% of
revenue
|
YOY%
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenue
|
|
|
|
|
|
|
Digital
Entertainment
|
82,407
|
93.2
|
|
106,323
|
85.3
|
29.0%
|
E-Commerce
|
-
|
-
|
|
4,966
|
4.0
|
-
|
Digital Financial
Services
|
1,709
|
1.9
|
|
4,102
|
3.3
|
140.0%
|
Other
Services
|
4,345
|
4.9
|
|
9,213
|
7.4
|
112.0%
|
|
88,461
|
100.0
|
|
124,604
|
100.0
|
40.9%
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
|
$
|
% of total
adjusted
revenue
|
|
$
|
% of total
adjusted
revenue
|
YOY%
|
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Adjusted revenue of
Digital Entertainment
|
89,132
|
93.6
|
|
141,883
|
86.2
|
59.2%
|
Adjusted revenue of
E-Commerce
|
-
|
-
|
|
9,319
|
5.7
|
-
|
Revenue of Digital
Financial Services
|
1,709
|
1.8
|
|
4,102
|
2.5
|
140.0%
|
Revenue of Other
Services
|
4,345
|
4.6
|
|
9,213
|
5.6
|
112.0%
|
Total
adjusted revenue
|
95,186
|
100.0
|
|
164,517
|
100.0
|
72.8%
|
Our total revenue increased by 40.9% to US$124.6 million in the fourth quarter of 2017
from US$88.5 million in the fourth
quarter of 2016. Our total adjusted revenue increased by 72.8% to
US$164.5 million in the fourth
quarter of 2017 from US$95.2 million
in the fourth quarter of 2016. These increases were mainly driven
by the growth in each of the segments detailed as follows:
- Digital Entertainment: Revenue increased by 29.0% to
US$106.3 million in the fourth
quarter of 2017 from US$82.4 million
in the fourth quarter of 2016. Adjusted revenue increased by 59.2%
to US$141.9 million in the fourth
quarter of 2017 from US$89.1 million
in the fourth quarter of 2016. This increase was primarily due to
the growth of our QAUs to 87.8 million in the fourth quarter of
2017 from 50.4 million in the fourth quarter of 2016, as we
launched new games and expanded our existing games into new
markets, which in turn increased the number of our paying users. In
the fourth quarter of 2017, we have revised our estimation on
certain games' revenue recognition period (including Arena of
Valor's), using average paying user lives instead of game licensing
periods of the respective games. The change in estimation was based
on management's best understanding of the user behaviours reflected
in the data that management collected over time. The impact of such
changes was accounted for prospectively and was not significant to
our digital entertainment revenue had we not made such changes. We
believe changing the estimation reflects the economic essence of
the respective games better and provides better quality financial
reporting.
- E-Commerce: We began monetizing our e-commerce business
in 2017. In the fourth quarter of 2017, our e-commerce revenue was
US$5.0 million. Our e-commerce
adjusted revenue was US$9.3 million
in the same period.
- Digital Financial Services: Revenue increased by 140.0%
to US$4.1 million in the fourth
quarter of 2017 from US$1.7 million
in the fourth quarter of 2016. This increase was primarily
attributable to the addition of use cases to our AirPay platform
and a further deepening of our market penetration.
- Other Services: Revenue increased by 112.0% to
US$9.2 million in the fourth quarter
of 2017 from US$4.3 million in the
fourth quarter of 2016. This increase was primarily due to
ancillary services we provide to our e-commerce platform
users.
Cost of Revenue
Our total cost of revenue increased by 60.0% to US$101.1 million in the fourth quarter of 2017
from US$63.2 million in the fourth
quarter of 2016. This increase was in line with the overall growth
of our businesses:
- Digital Entertainment: Cost of revenue increased by
27.4% to US$60.2 million in the
fourth quarter of 2017 from US$47.3
million in the fourth quarter of 2016. This increase was
primarily due to an increase in royalty payments to game developers
as well as in other costs directly associated with our digital
entertainment segment which were largely in line with the revenue
growth of our business.
- Others: Cost of revenue for our other segments combined
increased by 157.1% to US$40.8
million in the fourth quarter of 2017 from US$15.9 million in the fourth quarter of 2016.
This increase was primarily due to bank transaction fees driven by
GMV growth from our e–commerce business, as well as higher staff
compensation and benefit costs.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 153.3% to
US$156.4 million in the fourth
quarter of 2017 from US$61.8 million
in the fourth quarter of 2016. This increase was in line with the
overall growth of our businesses. The table below sets forth the
breakdown of our sales and marketing expenses of our two major
reporting segments. Amounts are expressed in thousands of US
dollars ("$").
|
For the Three
Months
ended December 31,
|
|
|
2016
|
|
2017
|
YOY%
|
Sales and
Marketing Expenses
|
$
(unaudited)
|
|
$
(unaudited)
|
|
Digital
Entertainment
|
13,335
|
|
16,854
|
26.4%
|
E-Commerce
|
43,990
|
|
134,961
|
206.8%
|
- Digital Entertainment: Sales and marketing expenses
increased by 26.4% to US$16.9 million
in the fourth quarter of 2017 from US$13.3
million in the fourth quarter of 2016. This increase was
primarily due to the launch of new games and our continued efforts
to expand our existing games into new markets, which in turn
enlarged our user base and increased the number of our paying
users.
|
For the Three
Months
ended December
31,
|
|
2016
|
|
2017
|
Digital
Entertainment
|
$
(unaudited)
|
|
$
(unaudited)
|
Sales and marketing
expenses
|
13,335
|
|
16,854
|
Adjusted
revenue
|
89,132
|
|
141,883
|
Sales and marketing
expenses as a percentage of adjusted revenue
|
15.0%
|
|
11.9%
|
Sales and marketing expenses as a percentage of adjusted revenue
decreased to 11.9% in the fourth quarter of 2017 from 15.0% in the
fourth quarter of 2016 as we continue to improve the efficiency of
our marketing efforts.
- E-Commerce: Sales and marketing expenses increased by
206.8% to US$135.0 million in the
fourth quarter of 2017 from US$44.0
million in the fourth quarter of 2016. The increase in
marketing efforts was aligned with our strategy to fully capture
the market growth opportunity and was primarily driven by shipping
and other promotions on our platform in order to increase user base
and enhance user engagement.
|
For the Three
Months
ended December 31,
|
|
2016
|
|
2017
|
E-Commerce
|
$
(unaudited)
|
|
$
(unaudited)
|
Sales and marketing
expenses
|
43,990
|
|
134,961
|
GMV
|
515,791
|
|
1,578,599
|
Sales and marketing
expenses as a percentage of GMV
|
8.5%
|
|
8.5%
|
Sales and marketing expenses as a percentage of GMV was 8.5% in
the fourth quarter of 2016 and 2017. It improved from 9.7% in the
third quarter of 2017.
General and Administrative Expenses
Our general and administrative expenses increased by 25.3% to
US$51.8 million in the fourth quarter
of 2017 from US$41.3 million in the
fourth quarter of 2016. This increase was primarily due to an
expansion of our staff force, an increase in office facilities and
related expenses, as well as an increase in professional fees and
other expenses.
Research and Development Expenses
Our research and development expenses increased by 49.9% to
US$8.7 million in the fourth quarter
of 2017 from US$5.8 million in the
fourth quarter of 2016, primarily due to an increase in research
and development staff force as we expanded and enriched our product
offerings.
Non-operating Income or Losses, Net
Non-operating income or losses consists of interest income,
interest expense, investment gain (loss), fair value change for
convertible promissory notes and foreign exchange gain (loss). The
amount was a net non-operating loss of US$62.3 million in the fourth quarter of 2017,
compared to a net non-operating gain of US$15.2 million in the fourth quarter of 2016.
This was primarily due to a charge of fair value loss of
US$52.0 million from the fair value
accounting treatment for the convertible promissory notes and
interest expense on those convertible promissory notes recognized
in the fourth quarter of 2017; while an investment gain was
recognized in the fourth quarter of 2016 due to the disposal of an
associated company.
Income Tax Expense
We had an income tax expense of US$8.7
million in the fourth quarter of 2017 which was primarily
due to the corporate income taxes and withholding tax expenses
recognized for our digital entertainment segment. The income tax
benefit in the fourth quarter of 2016 was mainly driven by a
reduction in statutory withholding tax rate in one of our
markets.
Share of Results of Equity Investees
We had share of losses of equity investees of US$1.0 million in the fourth quarter of 2017,
compared with US$5.3 million in the
fourth quarter of 2016. This is primarily due to lower losses we
picked up following the disposal of an associated company in
2017.
Net Loss
As a result of the foregoing, we had net losses of US$263.1 million and US$72.2 million in the fourth quarter of 2017 and
2016, respectively.
Adjusted Net Loss
Adjusted net loss, which is net loss adjusted to remove
share-based compensation expenses, was US$251.6 million and US$62.0 million in the fourth quarter of 2017 and
2016, respectively.
Full Year Ended December 31,
2017 Compared to Full Year Ended December 31, 2016
Revenue
The table below sets forth revenue generated from our reported
segments. Amounts are expressed in thousands of US dollars
("$").
|
For the Full
Year
ended December 31,
|
|
|
2016
|
|
2017
|
|
|
$
|
% of
revenue
|
|
$
|
% of
revenue
|
YOY%
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenue
|
|
|
|
|
|
|
Digital
Entertainment
|
327,985
|
94.9
|
|
365,167
|
88.2
|
11.3%
|
E-Commerce
|
-
|
-
|
|
9,034
|
2.2
|
-
|
Digital Financial
Services
|
5,892
|
1.7
|
|
16,270
|
3.9
|
176.1%
|
Other
Services
|
11,793
|
3.4
|
|
23,719
|
5.7
|
101.1%
|
|
345,670
|
100.0
|
|
414,190
|
100.0
|
19.8%
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
|
$
|
% of total
adjusted
revenue
|
|
$
|
% of total
adjusted
revenue
|
YOY%
|
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Adjusted revenue of
Digital Entertainment
|
331,252
|
94.9
|
|
495,878
|
89.6
|
49.7%
|
Adjusted revenue of
E-Commerce
|
-
|
-
|
|
17,717
|
3.2
|
-
|
Revenue of Digital
Financial Services
|
5,892
|
1.7
|
|
16,270
|
2.9
|
176.1%
|
Revenue of Other
Services
|
11,793
|
3.4
|
|
23,719
|
4.3
|
101.1%
|
Total adjusted
revenue
|
348,937
|
100.0
|
|
553,584
|
100.0
|
58.6%
|
Our total revenue increased by 19.8% to US$414.2 million for the full year ended
December 31, 2017 from US$345.7 million for the full year ended
December 31, 2016. Our total adjusted
revenue increased by 58.6% to US$553.6
million for the full year ended December 31, 2017 from US$348.9 million for the full year ended
December 31, 2016. These increases
were mainly driven by the growth in each of the segments detailed
as follows:
- Digital Entertainment: Revenue increased by 11.3% to
US$365.2 million for the full year
ended December 31, 2017 from
US$328.0 million for the full year
ended December 31, 2016. Adjusted
revenue increased by 49.7% to US$495.9
million for the full year ended December 31, 2017 from US$331.3 million in the full year ended
December 31, 2016. This increase was
primarily due to the growth of our user base in 2017, as we
launched new games and expanded our existing games into new
markets, which in turn increased the number of paying users.
- E-Commerce: We began monetizing our e-commerce business
in 2017. For the full year ended December
31, 2017, our e-commerce revenue was US$9.0 million. Our e-commerce adjusted revenue
was US$17.7 million in the same
period.
- Digital Financial Services: Revenue increased by 176.1%
to US$16.3 million for the full year
ended December 31, 2017 from
US$5.9 million for the full year
ended December 31, 2016. This
increase was primarily attributable to the addition of use cases to
our AirPay platform and a further deepening of our market
penetration.
- Other Services: Revenue increased by 101.1% to
US$23.7 million for the full year
ended December 31, 2017 from
US$11.8 million for the full year
ended December 31, 2016. This
increase was primarily due to ancillary services we provide to our
e-commerce platform users.
Cost of Revenue
Our total cost of revenue increased by 40.5% to US$326.9 million for the full year ended
December 31, 2017 from US$232.6 million for the full year ended
December 31, 2016. This increase was
in line with the overall growth of our businesses:
- Digital Entertainment: Cost of revenue increased by
17.6% to US$218.0 million for the
full year ended December 31, 2017
from US$185.3 million for the full
year ended December 31, 2016. This
increase was primarily due to an increase in royalty payments to
game developers as well as in other costs directly associated with
our digital entertainment business which were in line with the
increased revenue in this segment.
- Others: Cost of revenue for our other segments combined
increased by 130.3% to US$108.9
million for the full year ended December 31, 2017 from US$47.3 million for the full year ended
December 31, 2016. This increase was
primarily due to bank transaction fees driven by GMV growth from
our e-commerce business, as well as higher staff compensation and
benefit costs.
Sales and Marketing Expenses
Our total sales and marketing expenses increased by 127.3% to
US$426.0 million for the full year
ended December 31, 2017 from
US$187.4 million for the full year
ended December 31, 2016. This
increase was in line with the overall growth of our businesses. The
table below sets forth the breakdown of our sales and marketing
expenses of our two major reporting segments. Amounts are expressed
in thousands of US dollars ("$").
|
For the Full
Year
ended December
31,
|
|
|
2016
|
|
2017
|
YOY%
|
Sales and
Marketing Expenses
|
$
(unaudited)
|
|
$
(unaudited)
|
|
Digital
Entertainment
|
44,030
|
|
61,472
|
39.6%
|
E-Commerce
|
126,220
|
|
339,768
|
169.2%
|
- Digital Entertainment: Sales and marketing expenses
increased by 39.6% to US$61.5 million
for the full year ended December 31,
2017 from US$44.0 million for
the full year ended December 31,
2016. This increase was primarily due to the launch of new
games and our continued efforts to expand our existing games into
new markets, which in turn enlarged our user base and increased the
number of our paying users.
|
For the Full
Year
ended
December 31,
|
|
2016
|
|
2017
|
Digital
Entertainment
|
$
(unaudited)
|
|
$
(unaudited)
|
Sales and marketing
expenses
|
44,030
|
|
61,472
|
Adjusted
revenue
|
331,252
|
|
495,878
|
Sales and marketing
expenses as a percentage of adjusted revenue
|
13.3%
|
|
12.4%
|
Sales and marketing expenses as a percentage of adjusted revenue
decreased to 12.4% for the full year ended December 31, 2017 from 13.3% for the full year
ended December 31, 2016 as we
continue to improve the efficiency of our marketing efforts.
- E-Commerce: Sales and marketing expenses increased by
169.2% to US$339.8 million for the
full year ended December 31, 2017
from US$126.2 million for the full
year ended December 31, 2016. The
increase in marketing efforts was aligned with our strategy to
fully capture the market growth opportunity and was primarily
driven by shipping and other promotions on our platform in order to
increase user base and enhance user engagement.
|
For the Full
Year
ended December
31,
|
|
2016
|
|
2017
|
E-Commerce
|
$
(unaudited)
|
|
$
(unaudited)
|
Sales and marketing
expenses
|
126,220
|
|
339,768
|
GMV
|
1,150,270
|
|
4,112,732
|
Sales and marketing
expenses as a percentage of GMV
|
11.0%
|
|
8.3%
|
Sales and marketing expenses as a percentage of GMV decreased to
8.3% for the full year ended December 31,
2017 from 11.0% for the full year ended December 31, 2016.
General and Administrative Expenses
Our general and administrative expenses increased by 22.7% to
US$137.9 million for the full year
ended December 31, 2017 from
US$112.4 million for the full year
ended December 31, 2016. This
increase was primarily due to an expansion of our staff force, an
increase in office facilities and related expenses, as well as an
increase in professional fees and other expenses.
Research and Development Expenses
Our research and development expenses increased by 40.9% to
US$29.3 million for the full year
ended December 31, 2017 from
US$20.8 million for the full year
ended December 31, 2016, primarily
due to an increase in research and development staff force as we
expanded and enriched our product offerings.
Non-operating Income or Losses, Net
Non-operating income or losses consists of interest income,
interest expense, investment gain (loss), fair value change for
convertible promissory notes and foreign exchange gain (loss). The
amount was a net non-operating loss of US$46.2 million for the full year ended
December 31, 2017, compared to a net
non-operating gain of US$8.5 million
for the full year ended December 31,
2016. This is primarily due to a charge of fair value loss
of US$52.0 million from the fair
value accounting treatment for the convertible promissory notes and
interest expenses on those convertible promissory notes, partially
offset by an investment gain arising from the disposal of and a net
gain arising from re-measurement of our investments in 2017; while
an investment gain was recognized in 2016 due to the disposal of an
associated company.
Income Tax Expense
We had an income tax expense of US$10.7
million for the full year ended December 31, 2017, compared with an income tax
expense of US$8.5 million for the
full year ended December 31, 2016.
This was primarily due to higher corporate income tax and
withholding tax expenses recognized for our digital entertainment
segment in 2017 which was in line with the growth of the
business.
Share of Results of Equity Investees
We had share of losses of equity investees of US$1.9 million for the full year ended
December 31, 2017, compared with
US$19.5 million for the full year
ended December 31, 2016. This is
primarily due to lower losses we picked up following the disposal
of an associated company in 2017.
Net Loss
As a result of the foregoing, we had net losses of US$561.2 million and US$225.0 million for the full year ended
December 31, 2017 and 2016,
respectively.
Adjusted Net Loss
Adjusted net loss, which is net loss adjusted to remove
share-based compensation expenses, was US$532.5 million and US$196.1 million for the full year ended
December 31, 2017 and 2016,
respectively.
Guidance
For the full year of 2018, we currently expect total adjusted
revenue to be US$730 million to
US$770 million, representing 31.9% to
39.1% growth from 2017.
We currently expect our e-commerce GMV to be between
US$7.5 billion to US$8.0 billion for the full year of 2018,
representing 82.4% to 94.5% growth from 2017.
Webcast and Conference Call Information
Mr. Forrest Li, Founder, Chairman
and Group Chief Executive Officer; Mr. Nick
Nash, Group President; Mr. Tony
Hou, Group Chief Financial Officer; and Mr. Alan Hellawell, Group Chief Strategy Officer,
will host a conference call today to review Sea's business and
financial performance.
Details of the conference call and webcast are as follows:
Date and
time:
|
7:00 PM U.S. Eastern
Time on 27 February
|
|
8:00 AM Singapore/
Hong Kong Time on 28 February 2018
|
|
|
Webcast
link:
|
http://mms.prnasia.com/SE/20180227/default.aspx
|
|
|
|
Dial in
numbers:
|
US Toll Free:
1-888-317-6003
|
Hong Kong:
800-963-976
|
|
International:
1-412-317-6061
|
Singapore:
800-120-5863
|
|
United Kingdom:
08-082-389-063
|
|
|
|
|
Passcode for
participants:
|
0677787
|
|
A replay of the conference call will be available at the
Company's investor relations website
(http://www.seagroup.com/investor/financials). An archived webcast
will be available at the same link above.
For enquiries, please contact:
Investors / analysts: ir@seagroup.com
Media: media@seagroup.com or sea@brunswickgroup.com
About Sea Limited
Sea's mission is to better the lives of the consumers and small
businesses of our region with technology. Our region includes the
key markets of Indonesia,
Taiwan, Vietnam, Thailand, the
Philippines, Malaysia and
Singapore. Sea operates three
platforms across digital entertainment, e-commerce, and digital
financial services, known as Garena, Shopee, and AirPay,
respectively.
Forward Looking Statements
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates," "confident," "guidance" and similar
statements. Among other things, statements that are not historical
facts, including statements about Sea's beliefs and expectations,
the business, financial and market outlook and projections from its
management in this announcement, as well as Sea's strategic and
operational plans, contain forward-looking statements. Sea may also
make written or oral forward-looking statements in its periodic
reports to the U.S. Securities and Exchange Commission (the "SEC"),
in its annual report to shareholders, in press releases and other
written materials and in oral statements made by its officers,
directors or employees to third parties. Forward-looking statements
involve inherent risks and uncertainties. A number of factors could
cause actual results to differ materially from those contained in
any forward-looking statement, including but not limited to the
following: Sea's goals and strategies; its future business
development, financial condition and results of operations; the
growth in, and market size of, the digital entertainment,
e-commerce and digital financial services industries in our region,
including segments within those industries; changes in its revenue,
costs or expenditures; its ability to continue to source, develop
and offer new and attractive online games and to offer other
engaging digital entertainment content; the growth of its digital
entertainment, e-commerce and digital financial services platforms;
the growth in its user base and their level of engagement; its
ability to continue to develop new technologies and/or upgrade its
existing technologies; growth of and trends of its markets and
competition in its industry; government policies and regulations
relating to its industry; and general economic and business
conditions in the markets it has businesses. Further information
regarding these and other risks is included in Sea's filings with
the SEC. All information provided in this press release and in the
attachments is as of the date of this press release, and Sea
undertakes no obligation to update any forward-looking statement,
except as required under applicable law.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with U.S. GAAP, we use the
following non-GAAP financial measures to help evaluate our
operating performance:
- "Adjusted revenue" of our digital entertainment segment
represents revenue of the digital entertainment segment plus change
in digital entertainment deferred revenue. This financial measure
is used as an approximation of cash spent by our users in the
applicable period that is attributable to our digital entertainment
segment. Although other companies may present such measures related
to gross billings differently or not at all, we believe that the
adjusted revenue of our digital entertainment segment provides
useful information to investors about the segment's core operating
results, enhancing their understanding of our past performance and
future prospects.
- "Adjusted revenue" of our e-commerce segment represents revenue
(currently consisting of advertising income) of the e-commerce
segment plus commission income (before deducting sales incentives
from commission income). This financial measure enables our
investors to follow trends in our e-commerce monetization
capability over time and is a useful performance measure.
- "Total adjusted revenue" represents the sum of adjusted revenue
of our digital entertainment segment, the adjusted revenue of our
e-commerce segment, the revenue of our digital financial services
segment, and the revenue of our other services. This financial
measure enables our investors to follow trends in our overall group
monetization capability over time and is a useful performance
measure.
- "Adjusted net loss" represents net loss excluding share-based
compensation expense. We believe that the adjusted net loss helps
to identify underlying trends in our business that could otherwise
be distorted by the effect of certain expenses that are included in
net loss. The use of adjusted net loss has its limitations in that
it does not include all items that impact the net loss or income
for the period, and share-based compensation is a recurring
significant expense.
- "Adjusted EBITDA" for our digital entertainment segment
represents operating income (loss) before share-based compensation
plus (a) depreciation and amortization expenses, and (b) net effect
of changes in deferred revenue and its related cost for our digital
entertainment segment. Although other companies may calculate
adjusted EBITDA differently or not present it at all, we believe
that the segment adjusted EBITDA helps to identify underlying
trends in our operating results, enhancing their understanding of
the past performance and future prospects.
- "Adjusted EBITDA" for our e-commerce segment represents
operating income (loss) before share-based compensation plus (a)
depreciation and amortization expenses, and (b) e-commerce
commission income before deducting sales incentives. Although other
companies may calculate adjusted EBITDA differently or not present
it at all, we believe that the segment adjusted EBITDA helps to
identify underlying trends in our operating results, enhancing
their understanding of the past performance and future
prospects.
- "Adjusted EBITDA" for our digital financial services segment
and other services segment represents operating income (loss)
before share-based compensation plus depreciation and amortization
expenses. Although other companies may calculate adjusted EBITDA
differently or not present it at all, we believe that the segment
adjusted EBITDA helps to identify underlying trends in our
operating results, enhancing their understanding of the past
performance and future prospects.
- "Total adjusted EBITDA" represents the sum of adjusted EBITDA
of all our segments combined, plus unallocated expenses. Although
other companies may calculate adjusted EBITDA differently or not
present it at all, we believe that the total adjusted EBITDA helps
to identify underlying trends in our operating results, enhancing
their understanding of the past performance and future
prospects.
These non-GAAP financial measures have limitations as analytical
tools. None of the above financial measures should be considered in
isolation or construed as an alternative to revenue, net
loss/income, or any other measure of performance or as an indicator
of our operating performance. These non-GAAP financial measures
presented here may not be comparable to similarly titled measures
presented by other companies. Other companies may calculate
similarly titled measures differently, limiting their usefulness as
comparative measures to Sea's data. We compensate for these
limitations by reconciling the non-GAAP financial measures to their
nearest U.S. GAAP financial measures, all of which should be
considered when evaluating our performance. We encourage you to
review our financial information in its entirety and not rely on
any single financial measure.
The tables below present selected financial information of our
reporting segments and its non-GAAP financial measures that are
most directly comparable to GAAP financial measures and the related
reconciliations between the financial measures. Amounts are
expressed in thousands of US dollars ("$").
|
For the Three
Months ended December 31, 2017
|
|
Digital
Entertainment
|
E-Commerce
|
Digital Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
106,323
|
4,966
|
4,102
|
9,213
|
-
|
124,604
|
Changes in
deferred
revenue
|
35,560
|
-
|
-
|
-
|
-
|
35,560
|
Commission
income
|
-
|
4,353
|
-
|
-
|
-
|
4,353
|
Adjusted
revenue
|
141,883
|
9,319
|
4,102
|
9,213
|
-
|
164,517
|
|
|
|
|
|
|
|
Operating
income
(loss)
|
18,102
|
(178,780)
|
(8,038)
|
(8,269)
|
(14,156)
|
(191,141)
|
Net effect of changes
in
deferred
revenue and
its related
cost
|
26,724
|
-
|
-
|
-
|
-
|
26,724
|
Depreciation
and
Amortization
|
7,781
|
3,366
|
487
|
993
|
-
|
12,627
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
11,577
|
11,577
|
Adjusted
EBITDA
|
52,607
|
(175,414)
|
(7,551)
|
(7,276)
|
(2,579)
|
(140,213)
|
|
For the Three
Months ended December 31, 2016
|
|
Digital
Entertainment
|
E-Commerce
|
Digital Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
82,407
|
-
|
1,709
|
4,345
|
-
|
88,461
|
Changes in
deferred
revenue
|
6,725
|
-
|
-
|
-
|
-
|
6,725
|
Commission
income
|
-
|
-
|
-
|
-
|
-
|
-
|
Adjusted
revenue
|
89,132
|
-
|
1,709
|
4,345
|
-
|
95,186
|
|
|
|
|
|
|
|
Operating
income
(loss)
|
1,780
|
(60,117)
|
(9,447)
|
(3,407)
|
(11,963)
|
(83,154)
|
Net effect of changes
in
deferred
revenue and
its related
cost
|
6,724
|
-
|
-
|
-
|
-
|
6,724
|
Depreciation
and
Amortization
|
8,122
|
929
|
207
|
912
|
-
|
10,170
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
10,255
|
10,255
|
Adjusted
EBITDA
|
16,626
|
(59,188)
|
(9,240)
|
(2,495)
|
(1,708)
|
(56,005)
|
|
For the Year ended
December 31, 2017
|
|
Digital
Entertainment
|
E-Commerce
|
Digital Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
365,167
|
9,034
|
16,270
|
23,719
|
-
|
414,190
|
Changes in
deferred
revenue
|
130,711
|
-
|
-
|
-
|
-
|
130,711
|
Commission
income
|
-
|
8,683
|
-
|
-
|
-
|
8,683
|
Adjusted
revenue
|
495,878
|
17,717
|
16,270
|
23,719
|
-
|
553,584
|
|
|
|
|
|
|
|
Operating
income
(loss)
|
45,637
|
(452,233)
|
(38,038)
|
(21,199)
|
(36,523)
|
(502,356)
|
Net effect of changes
in
deferred
revenue and
its related
cost
|
100,678
|
-
|
-
|
-
|
-
|
100,678
|
Depreciation
and
Amortization
|
28,624
|
7,953
|
1,341
|
3,009
|
-
|
40,927
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
28,636
|
28,636
|
Adjusted
EBITDA
|
174,939
|
(444,280)
|
(36,697)
|
(18,190)
|
(7,887)
|
(332,115)
|
|
For the Year ended
December 31, 2016
|
|
Digital
Entertainment
|
E-Commerce
|
Digital Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
327,985
|
-
|
5,892
|
11,793
|
-
|
345,670
|
Changes in
deferred
revenue
|
3,267
|
-
|
-
|
-
|
-
|
3,267
|
Commission
income
|
-
|
-
|
-
|
-
|
-
|
-
|
Adjusted
revenue
|
331,252
|
-
|
5,892
|
11,793
|
-
|
348,937
|
|
|
|
|
|
|
|
Operating
income
(loss)
|
45,525
|
(172,409)
|
(34,407)
|
(12,320)
|
(31,778)
|
(205,389)
|
Net effect of changes
in
deferred
revenue and
its related
cost
|
6,875
|
-
|
-
|
-
|
-
|
6,875
|
Depreciation
and
Amortization
|
33,092
|
2,693
|
725
|
3,044
|
-
|
39,554
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
28,841
|
28,841
|
Adjusted
EBITDA
|
85,492
|
(169,716)
|
(33,682)
|
(9,276)
|
(2,937)
|
(130,119)
|
(1) Unallocated expenses are mainly relating 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
segments results as they are not reviewed by the CODM as part of
segment performance.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
Amounts expressed in thousands of US dollars ("$") except for
number of shares & per share data
|
|
For the Three
Months
ended December
31,
|
For the
Year
ended December
31,
|
|
Note
|
2016
|
2017
|
2016
|
2017
|
|
|
$
|
$
|
$
|
$
|
|
|
(unaudited)
|
(unaudited)
|
|
(unaudited)
|
Revenue
|
|
|
|
|
|
Digital
Entertainment
|
|
82,407
|
106,323
|
327,985
|
365,167
|
Others
|
1
|
6,054
|
18,281
|
17,685
|
49,023
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
88,461
|
124,604
|
345,670
|
414,190
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
|
|
Digital
Entertainment
|
|
(47,298)
|
(60,240)
|
(185,314)
|
(217,986)
|
Others
|
|
(15,879)
|
(40,819)
|
(47,284)
|
(108,892)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of
revenue
|
|
(63,177)
|
(101,059)
|
(232,598)
|
(326,878)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
25,284
|
23,545
|
113,072
|
87,312
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(expenses):
|
|
|
|
|
|
Other operating
income
|
|
415
|
2,157
|
2,103
|
3,497
|
Sales and marketing
expenses
|
|
(61,763)
|
(156,418)
|
(187,372)
|
(425,974)
|
General and
administrative expenses
|
|
(41,304)
|
(51,754)
|
(112,383)
|
(137,868)
|
Research and
development expenses
|
|
(5,786)
|
(8,671)
|
(20,809)
|
(29,323)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
(108,438)
|
(214,686)
|
(318,461)
|
(589,668)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(83,154)
|
(191,141)
|
(205,389)
|
(502,356)
|
Interest
income
|
|
271
|
760
|
741
|
2,922
|
Interest
expense
|
|
(9)
|
(9,043)
|
(23)
|
(26,501)
|
Investment gain
(loss)
|
|
15,021
|
(352)
|
9,434
|
33,591
|
Changes in fair value
of convertible
promissory
notes
|
|
-
|
(51,950)
|
-
|
(51,950)
|
Foreign exchange
loss
|
|
(133)
|
(1,698)
|
(1,649)
|
(4,215)
|
|
|
|
|
|
|
Loss before income
tax and share
of results
of equity investees
|
|
(68,004)
|
(253,424)
|
(196,886)
|
(548,509)
|
Income tax
expense
|
|
1,047
|
(8,730)
|
(8,546)
|
(10,745)
|
Share of results of
equity investees
|
|
(5,279)
|
(986)
|
(19,523)
|
(1,912)
|
|
|
|
|
|
|
Net
loss
|
|
(72,236)
|
(263,140)
|
(224,955)
|
(561,166)
|
|
|
|
|
|
|
Net (gain) loss
attributable to
non-controlling interests
|
|
(4)
|
480
|
2,088
|
681
|
|
|
|
|
|
|
Net loss
attributable to Sea
Limited's ordinary shareholders
|
|
(72,240)
|
(262,660)
|
(222,867)
|
(560,485)
|
|
|
|
|
|
|
Adjusted net
loss (1)
|
|
(61,981)
|
(251,563)
|
(196,114)
|
(532,530)
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
Basic and
diluted
|
|
(0.42)
|
(0.90)
|
(1.30)
|
(2.72)
|
|
|
|
|
|
|
Shares used in loss
per share
computation:
|
|
|
|
|
|
Basic and
diluted
|
|
171,565,142
|
293,324,598
|
171,127,788
|
205,727,195
|
|
|
|
|
|
|
(1) For a discussion of the use of non-GAAP financial
measures, see "Non-GAAP Financial Measures."
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE
SHEETS
Amounts expressed in thousands of US dollars ("$")
|
As
of
December
31,
|
As
of
December
31,
|
|
2016
|
2017
|
|
$
|
$
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
170,078
|
1,347,361
|
Restricted
cash
|
18,607
|
95,300
|
Accounts receivable,
net
|
35,074
|
61,846
|
Prepaid expenses and
other assets
|
79,443
|
186,181
|
Inventories,
net
|
3,947
|
9,790
|
Short-term
investment
|
–
|
18,000
|
Amounts due from
related parties
|
2,735
|
2,235
|
|
|
|
|
|
|
Total current
assets
|
309,884
|
1,720,713
|
|
|
|
Non-current
assets
|
|
|
Property and
equipment, net
|
31,123
|
74,348
|
Intangible assets,
net
|
29,963
|
37,333
|
Long-term
investments
|
45,072
|
28,216
|
Prepaid expenses and
other assets
|
32,299
|
46,297
|
Restricted
cash
|
2,139
|
2,317
|
Deferred tax
assets
|
35,295
|
48,104
|
Goodwill
|
–
|
30,952
|
|
|
|
|
|
|
Total non-current
assets
|
175,891
|
267,567
|
|
|
|
|
|
|
Total
assets
|
485,775
|
1,988,280
|
|
|
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE
SHEETS
Amounts expressed in thousands of US dollars ("$")
|
As
of
December
31,
|
As
of
December
31,
|
|
2016
|
2017
|
|
$
|
$
|
|
|
(unaudited)
|
|
|
|
LIABILITIES,
MEZZANINE EQUITY AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
5,990
|
8,644
|
Accrued expenses and
other payables
|
102,086
|
285,248
|
Advances from
customers
|
15,459
|
27,155
|
Amount due to related
parties
|
9,696
|
36,790
|
Short-term bank
borrowings
|
1,858
|
2,013
|
Deferred
revenue
|
122,218
|
268,241
|
Income taxes
payable
|
6,449
|
9,614
|
|
|
|
|
|
|
Total current
liabilities
|
263,756
|
637,705
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Accrued expenses and
other payables
|
4,480
|
7,547
|
Deferred
revenue
|
137,259
|
133,481
|
Convertible
promissory notes
|
–
|
726,950
|
Deferred tax
liabilities
|
–
|
4,378
|
Unrecognized tax
benefits
|
855
|
3,088
|
|
|
|
|
|
|
Total non-current
liabilities
|
142,594
|
875,444
|
|
|
|
|
|
|
Total
liabilities
|
406,350
|
1,513,149
|
|
|
|
|
|
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE
SHEETS
Amounts expressed in thousands of US dollars ("$")
|
As
of
December
31,
|
As
of
December
31,
|
|
2016
|
2017
|
|
$
|
$
|
|
|
(unaudited)
|
|
|
|
Mezzanine
equity
|
|
|
Seed contingently
redeemable convertible preference shares
|
500
|
–
|
Series A contingently
redeemable convertible preference shares
|
10,000
|
–
|
Series B contingently
redeemable convertible preference shares
|
194,575
|
–
|
|
|
|
|
|
|
Total mezzanine
equity
|
205,075
|
–
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
Ordinary
shares
|
88
|
–
|
Class A Ordinary
shares
|
–
|
91
|
Class B Ordinary
shares
|
–
|
76
|
Additional paid-in
capital
|
370,615
|
1,564,656
|
Accumulated other
comprehensive income
|
8,587
|
10,701
|
Statutory
reserves
|
46
|
46
|
Accumulated
deficit
|
(505,006)
|
(1,106,545)
|
|
|
|
|
|
|
Total Sea Limited
shareholders' (deficit) equity
|
(125,670)
|
469,025
|
Non-controlling
interests
|
20
|
6,106
|
|
|
|
|
|
|
Total
shareholders' (deficit) equity
|
(125,650)
|
475,131
|
|
|
|
Total liabilities,
mezzanine equity and shareholders'
equity
|
485,775
|
1,988,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
Amounts expressed in thousands of US dollars ("$")
|
Three months
ended
December
31,
|
For the year
ended
December
31,
|
|
2016
|
2017
|
2016
|
2017
|
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
Net cash used in
operating activities
|
(42,118)
|
(113,244)
|
(114,726)
|
(334,230)
|
Net cash generated from
(used in)
investing activities
|
12,861
|
(51,140)
|
(29,931)
|
(118,614)
|
Net cash (used in)
generated from
financing activities
|
(2)
|
927,401
|
199,622
|
1,623,843
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(2,596)
|
2,870
|
(1,090)
|
6,284
|
Net (decrease) increase
in cash and cash
equivalents
|
(31,855)
|
765,887
|
53,875
|
1,177,283
|
Cash and cash
equivalents at beginning of the period
|
201,933
|
581,474
|
116,203
|
170,078
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of the period
|
170,078
|
1,347,361
|
170,078
|
1,347,361
|
|
|
|
|
|
1 REVENUE – OTHERS
Revenue – Others includes our e-commerce segment's advertising
income and commission income charged to the sellers on its
marketplace, net of promotional incentives. These promotional
incentives being net-off against the revenue amounted to
US$4.4 million and US$8.7 million for the quarter ended December 31, 2017 and for the year ended
December 31, 2017, respectively.
2 SEGMENT INFORMATION
The Company has three reportable segments, namely digital
entertainment, e-commerce and digital financial services. The Chief
Operation Decision Maker ("CODM") reviews the performance of each
segment based on revenue and certain key operating metrics of the
operations and uses these results for the purposes of allocating
resources to and evaluating the financial performance of each
segment. Amounts are expressed in thousands of US dollars
("$").
|
For the Three
Months ended December 31, 2017
|
|
Digital
Entertainment
|
E-Commerce
|
Digital
Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
106,323
|
4,966
|
4,102
|
9,213
|
-
|
124,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
18,102
|
(178,780)
|
(8,038)
|
(8,269)
|
(14,156)
|
(191,141)
|
Non-operating loss,
net
|
|
|
|
|
|
(62,283)
|
Income tax
expense
|
|
|
|
|
|
(8,730)
|
Share of results of
equity
investees
|
|
|
|
|
|
(986)
|
Net
loss
|
|
|
|
|
|
(263,140)
|
|
For the Three
Months ended December 31, 2016
|
|
Digital
Entertainment
|
E-Commerce
|
Digital
Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
82,407
|
-
|
1,709
|
4,345
|
-
|
88,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
1,780
|
(60,117)
|
(9,447)
|
(3,407)
|
(11,963)
|
(83,154)
|
Non-operating income,
net
|
|
|
|
|
|
15,150
|
Income tax
expense
|
|
|
|
|
|
1,047
|
Share of results of
equity
investees
|
|
|
|
|
|
(5,279)
|
Net
loss
|
|
|
|
|
|
(72,236)
|
|
For the Year ended
December 31, 2017
|
|
Digital
Entertainment
|
E-Commerce
|
Digital
Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
365,167
|
9,034
|
16,270
|
23,719
|
-
|
414,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
45,637
|
(452,233)
|
(38,038)
|
(21,199)
|
(36,523)
|
(502,356)
|
Non-operating loss,
net
|
|
|
|
|
|
(46,153)
|
Income tax
expense
|
|
|
|
|
|
(10,745)
|
Share of results of
equity
investees
|
|
|
|
|
|
(1,912)
|
Net
loss
|
|
|
|
|
|
(561,166)
|
|
For the Year ended
December 31, 2016
|
|
Digital
Entertainment
|
E-Commerce
|
Digital
Financial
Services
|
Other
Services
|
Unallocated
expenses(1)
|
Consolidated
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
|
|
|
|
|
|
Revenue
|
327,985
|
-
|
5,892
|
11,793
|
-
|
345,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
45,525
|
(172,409)
|
(34,407)
|
(12,320)
|
(31,778)
|
(205,389)
|
Non-operating income,
net
|
|
|
|
|
|
8,503
|
Income tax
expense
|
|
|
|
|
|
(8,546)
|
Share of results of
equity
investees
|
|
|
|
|
|
(19,523)
|
Net
loss
|
|
|
|
|
|
(224,955)
|
(1) Unallocated expenses are mainly relating 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 CODM as part of
segment performance.
SUPPLEMENTAL OPERATIONAL METRICS
|
|
For the three
months ended September 30, 2017
|
|
For the three
months ended December 31, 2017
|
|
|
|
|
|
Digital
Entertainment
|
Unit
|
|
|
|
|
|
|
|
|
Quarterly active
users
|
millions
|
69.0
|
|
87.8
|
Monthly active users
(last month)
|
millions
|
42.7
|
|
59.5
|
Quarterly paying
users
|
millions
|
6.5
|
|
7.2
|
Average revenue per
user
|
US$
|
2.0
|
|
1.6
|
Average revenue per
paying user
|
US$
|
20.7
|
|
19.7
|
|
|
|
|
|
E-Commerce
|
|
|
|
|
|
|
|
|
|
Gross GMV
|
US$
millions
|
1,064.8
|
|
1,578.6
|
Gross
orders
|
millions
|
65.9
|
|
98.3
|
|
|
|
|
|
Market breakdown (by
% orders)
|
|
|
|
|
Indonesia
|
%
|
36% - 38%
|
|
40% - 42%
|
Taiwan
|
%
|
33% - 35%
|
|
25% - 27%
|
Vietnam
|
%
|
9% - 11%
|
|
11% - 13%
|
Thailand
|
%
|
7% - 9%
|
|
7% - 9%
|
Philippines
|
%
|
4% - 6%
|
|
6% - 8%
|
Singapore and
Malaysia
|
%
|
5% - 7%
|
|
6% - 8%
|
|
|
|
|
|
Digital Financial
Services
|
|
|
|
|
|
|
|
|
|
GTV
|
US$
millions
|
448.2
|
|
1,027.5
|
View original
content:http://www.prnewswire.com/news-releases/sea-limited-reports-fourth-quarter-and-full-year-2017-results-300605107.html
SOURCE Sea Limited