Singapore tech giant Sea Group reported its second-ever annual profit Tuesday, sending shares surging by around 6% in early trading in what was otherwise a tough morning on the U.S. markets.
Sea, which owns the e-commerce platform Shopee and the video game publisher Garena, reported an annual profit of $447.8 million.
“It was also our second consecutive year of annual positive profit, with all three of our businesses recording positive adjusted EBITDA,” said Forrest Li, Sea’s chairman and CEO, in prepared remarks. (In addition to video gaming and e-commerce, Sea also provides financial services).
Sea’s 2024 profit is almost three times larger than its first-ever annual profit in 2023, which came in at $162.7 million.
In particular, Sea credited investments in AI and logistics for driving growth in its e-commerce business. Gross orders totaled 10.9 billion, a 33% jump. Gross merchandise value also rose 28% to reach $100.5 billion.
Sea also reported adjusted earnings before income, tax, depreciation and amortization for its e-commerce segment at $155.8 million, compared to an adjusted loss of $213.8 million the year before.
On Sea’s earnings call, Li said investments in the company’s logistics network has allowed Shopee to reduce its overall cost per order. Sellers are also more willing to spend money on advertising thanks to generative AI tools. The new technology also allows Sea to spend less money on customer service without sacrificing customer satisfaction.
A surprising market
E-commerce profitability, even on an adjusted basis, suggests Sea’s Shopee is fending off competition in Asia’s crowded retail sector. Shopee is the “clear market leader” in the platform’s seven Asian markets, Li said.
But he also noted Shopee’s “sizable and growing presence in Brazil,” a market Sea entered in 2019. The platform now has at least 10 distribution centers in South America’s largest country.
“Our average monthly active buyers increased by more than 40% year on year in the fourth quarter, significantly outpacing the industry average,” Li said in prepared remarks about Sea’s Brazil business, crediting diversified product offerings and improved delivery speeds.
What is Sea?
Consumers in Southeast Asia and Taiwan may know Sea best as the operator of the e-commerce platform Shopee, but the tech firm actually started out as Garena, the developer and publisher behind Free Fire, one of the world’s most-played mobile games.
Garena now sits in Sea’s digital entertainment segment. The company reported bookings of $2.1 billion for 2024, a 19% increase. Sea said Garena’s growth was due to consumers finally moving past post-COVID “burnout” on gaming and returning to more typical behaviors.
The company is also building out its financial services arm, known as SeaMoney. What started out as a digital payments service has since evolved to include both credit and banking. Sea’s revenue for digital finance grew to $2.4 billion for 2024, up 34.6%. SeaMoney is available in eight markets in Southeast Asia, Taiwan, and Brazil.
Sea Group is a bit of an anomaly on Fortune’s Southeast Asia 500, which ranks the largest companies in the region by revenue. Sea, ranked No. 20, is the only dedicated tech company in the top 25, and one of a handful that isn’t a bank or commodity trader.
At around $131 as of 10:30 a.m. ET, Sea’s shares are up 145% over the past 12 months, though have yet to return to the $350 range reported at their November 2021 peak.
