The firm, listed on the New York Stock Exchange, said on Tuesday it is “working towards” having online retail business Shopee break even by the end of 2023 in terms of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
During an earnings call on Tuesday, Chairman and CEO Forrest Li said his company has “entirely shifted” its mindset and focus “from growth to achieving self-sufficiency and profitability as soon as possible, without relying on any external funding”.
“We are adapting quickly to the changing climate,” Li added.
Sea’s announcement came as the gaming and online retail giant posted a net loss of US$569 million for the quarter ended September, similar to the US$570 million loss in the year-ago period.
Group revenue totalled US$3.1 billion, up 17% on the year. While the top line for e-commerce rose 51% to US$1.97 billion, the digital entertainment business dipped 19% to US$892 million as the number of paying users shows little sign of bottoming out.
Paying users totalled 51.5 million for the September quarter, down 45% from a year ago. On a quarter-by-quarter basis, paying users have fallen for four consecutive quarters.
Sea’s share price jumped 30% to US$60 at one point in early trading in New York. The company’s market capitalisation has shed over 80% of its value from the peak in October 2021.
Sea’s layoffs this year follow a global tech sell-off stemming from rising interest rates, fears of a recession and softening demand for online services as economies reopen. Recent reports indicate the company laid off over 7,000 employees, or about 10% of its total workforce, over the past six months.
As the pandemic-induced growth wanes, Sea exited some of its newer markets in Latin America and Europe.
According to its annual report, Sea had a total of 67,300 employees as of the end of 2021, almost double the number from a year earlier.
During the earnings call on Tuesday, Sea’s chief corporate officer Yanjun Wang said the recent change in headcount is related to “market exits and deprioritisation of certain business initiatives” as part of an “ongoing exercise”.
The downsizing underscores the wave of tech layoffs reaching Asian markets. US e-commerce company Amazon reportedly plans to cut around 10,000 employees, while Facebook announced 11,000 job cuts this month and Twitter has cut 50% of its global workforce, including in Asian markets.
Even as Sea rushes to manage costs, challenges remain for the core gaming business, which could take time to monetise some of its new titles to follow the popular Free Fire.
For the digital entertainment business, Sea said it expects bookings for 2022 of between US$2.6 billion and US$2.8 billion, down from the previous guidance of US$2.9 billion to US$3.1 billion. The company continues to see “impact on user engagements and user base on the macro headwinds”, Wang said.
Due to market uncertainty, Sea said the company does “not intend to provide any guidance for 2023” on its businesses.
“Once we achieve self-sufficiency, we will be in a position to decide to reaccelerate growth again in a much more efficient and long-term sustainable manner,” Li said.