SE rallies 12% after posting first annual profit ever

Sea Limited, a leading global consumer internet company, released its Q4 earnings report on Wednesday morning, showcasing a mixed bag of results. The company achieved its first full year of annual profit since its IPO and expects to remain profitable in 2024. Shares extended recent gains and have rallied 12% in pre-market trade., hitting tis highest level since August 2023. 

The company reported revenue of $3.62 billion, which slightly beat estimates of $3.5 billion. However, the company reported a loss per share of $0.19, which fell short of the consensus of ($0.06). Despite the loss, the company achieved its first full year of annual profit since its IPO and expects to remain profitable in 2024.

The e-commerce segment, which includes Sea"s flagship Shopee marketplace, reported a 23.2% year-over-year increase in revenue to $2.6 billion. Core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, increased by 40.6% year-over-year to $1.6 billion. The adjusted EBITDA for the e-commerce segment improved quarter-on-quarter for both Asia and Other markets, with Asia markets recording an adjusted EBITDA of $192.9 million, as compared to $320.0 million in the previous quarter.

The digital financial services segment reported a 24.3% year-over-year increase in revenue, with adjusted EBITDA of $148.5 million, up 96.4% year-over-year. The segment"s revenue and operating income are primarily attributed to the consumer and SME credit business, with consumer and SME loans principal outstanding reaching $3.1 billion, up 27.0% year-over-year.

The digital entertainment segment, which includes Sea"s Garena and Shopee Game platforms, reported a 1.9% quarter-over-quarter increase in bookings to $456.3 million. However, adjusted EBITDA for the segment decreased to $217.4 million, as compared to $234.0 million in the previous quarter.

As of December 31, 2023, the consumer and SME loans principal outstanding reached $3.1 billion, showing a 27.0% year-on-year growth. The company remains cautious about risk management while focusing on user acquisition for the credit business.

In conclusion, Sea Limited's Q4 earnings report presents a mixed picture, with revenue growth and profitability in some segments but also decreased adjusted EBITDA in others. The company remains focused on expanding its market share and growing its user base, particularly in the e-commerce and digital financial services segments. As the company continues to invest in user acquisition and technology, it will be interesting to see how its financial performance evolves in the coming quarters.