Last week, it was reported that Singapore-based Sea Limited’s e-commerce arm Shopee will reportedly exit Argentina and shut local operations in Chile, Colombia and Mexico, while its Garena gaming unit will lay off hundreds of staff in Shanghai.
Shopee CEO Chris Feng explained in an internal email that they are focusing their resources on core operations, in light of the “elevated macro uncertainty”.
Separately, Shopee had also pulled out of France, Spain and India within months after launching operations in those markets.
Today (September 15), Bloomberg reported that Sea Limited’s top management will now forego their salaries and tighten company’s expenses as it navigates the certain economic conditions.
This was announced by CEO Forrest Li in a 1,000-word internal memo to staff, in which he said that the leadership team will not take any cash compensation “until the company reaches self-sufficiency”.
The company will also cap business travel to economy class flight fares, with travel meal expenses limited to US$30 a day. It will also curb spending on hotel stays for business trips to US$150 a night, and cull reimbursement for meals and entertainment bills.
It aims to be cashflow positive as soon as possible
He noted that Sea has been struggling in an era of rising interest rates, accelerating inflation, and a volatile market. He sees this as not a “passing storm”, adding that these will likely persist into the medium term.
“With investors fleeing for ‘safe haven’ investments, we do not anticipate being able to raise funds in the market,” said Li, stressing that the company’s primary objective for the next 12 to 18 months is to achieve positive cashflow as soon as possible.
“The only way for us to free ourselves from relying on external capital is to become self-sufficient, generating enough cash for all our own needs and projects.”
Sea saw its market value soar to more than US$200 billion last October as its gaming and e-commerce units surged in popularity during the pandemic, but its shares have tumbled since then and are now worth just US$27 billion.
Free Fire, a survival shooting game, has long been Sea’s most lucrative game, raking in more than US$4 billion by 2021 since its release in 2017, according to research firm Sensor Tower.
However, gaming revenue has declined as Free Fire struggled after the game was banned by the Indian government in February. Sea also withdrew its e-commerce forecast for the year.