While many companies were facing turbulent situations caused by the COVID-19 pandemic, others were blossoming. Singapore-based eCommerce and gaming unicorn Sea Ltd is one of the pandemic’s biggest beneficiaries. The tech unicorn’s shares increased by 395% during the pandemic, putting it among the top gainers worldwide.
The company’s rise is a direct result of the work and lifestyle changes caused by the global health crisis. The social distancing policies enforced in most countries worldwide brought about increased demand for ePayment systems, eCommerce, and home entertainment, including online gaming. This internet company took advantage of the new trends, helping it generate a total GAAP revenue of $4.4 billion USD, recording a 101.1% increase compared to its 2019 GAAP revenue of $2.2 billion USD.
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The growth recorded is uncommon, so the big question is: how did the company manage to achieve such an incredible feat amid a global pandemic?
Rise of eCommerce
The company’s online shopping platform Shopee was the major growth driver with a GAAP revenue of $2.2 billion USD. The company generated about 73% ($1.6 billion USD) of this revenue from adverts and transaction-based fees, while the remaining 27% ($575.4 million USD) came from product sales.
In Indonesia, Shopee received over 430 million orders in the fourth quarter of 2020 to achieve a year-on-year increase of 128%. It ranked first as the most actively used shopping platform in Southeast Asia. It was also the third most downloaded shopping application worldwide in 2020.
To establish a trans-border presence, the online shopping mall launched a pilot initiative in Mexico and Brazil in late 2019. Sea expects a 2021 GAAP revenue of $4.5 to $4.7 billion USD, which is more than double the amount they generated in 2020.
Increased demand for digital entertainment and gaming
Owing to the lockdown policies and increased unemployment rates caused by the pandemic, the digital entertainment industry continues to boom as many individuals currently spend a great deal of time live streaming videos and playing online games. According to a GroupM report, video gaming recorded its highest year-on-year increase after rising to 47% in 2020. The report also stated that online streaming also recorded a 19% year-on-year increase.
Again, Sea Ltd benefited greatly from this trend, helping it generate a GAAP revenue of $693.4 million USD in 2020, accounting for a 72.9% year-on-year increase. The company’s digital entertainment subsidiary, Garena, exceeded expectations in 2020 after the income generated from bookings rose to $1 billion USD, recording a 111.1 % year-on-year growth. Plus, Garena’s quarterly subscribers increased by over 100% to 65.3 million. Its average bookings per user also increased from $1.4 in 2019 to $1.7 in 2020.
According to analytics experts App Annie, Garena’s Free Fire was the number one downloaded mobile game in 2020, retaining its top position for two consecutive years. The growth in the digital entertainment subsidiary is slower than that of eCommerce, but it has consistently increased and continues to support the entire company.
However, investors and analysts suggest that Sea Ltd should not be overly dependent on one game. The fear stems from the fact that gamers get tired of a game after a while and switch to others that appear more interesting. The company is currently working hard to develop other products, which it believes will receive a high acceptance rate amongst consumers.
Accelerated adoption of digital financial services
In Q4 of 2020, Sea Ltd witnessed strong growth in the adoption of its digital payment platform, SeaMoney. The platform processed payments amounting to over $2.9 billion USD in the fourth quarter of 2020, adding up to a total of $7.8 billion USD for the entire year.
The eWallet’s quarterly subscribers exceeded 23.2 million in Q4, with Indonesia accounting for about 43% of that figure.
SeaMoney plans to expand and create more offerings for its consumers by securing partnerships with top companies. It recently expanded its link with the Indonesian arm of Google, enabling it to offer the SeaMoney eWallet as a payment option to Google Play Store users in the country.
A growing portfolio
Sea Ltd has made continuous efforts to explore new industries and diversify its portfolio. The company took a significant step towards actualising this ambition by acquiring 100% shares in Composite Capital Management, a Hong Kong-licensed global investment management company.
Following the acquisition, the company announced the establishment of Sea Capital. This subsidiary will oversee Sea Ltd’s entire investment efforts. Sea Capital will also partner with tech companies to provide better services for customers and small businesses.
The eCommerce and gaming unicorn Sea Ltd successfully took advantage of the pandemic opportunities presented to them. These moves put the company’s shares among 2020’s top gainers, coming in second behind Tesla Inc. Sea Ltd’s plans show that the tech unicorn seeks to dominate the entire ecosystem in the future.