Sea Ltd. has announced that it has completed major changes to its business structure in order to deliver long-term profitability, according to a memo by its billionaire founder Forrest Li.
The announcement comes as the company recently reported its first-ever quarterly net profit, marking a turning point for the firm.
In a 700-word internal memo seen by Bloomberg News, Li assured employees that the worst is over, and that the company has a stabler footing with fewer inefficiencies. He also warned that the company needs to prove that it can sustain a profit and that it has more work to do to achieve long-term success.
“I want to assure you that, assuming no major shift in our external environment, our large-scale changes are complete, and we do not foresee further major changes,” he said.
“The world will be watching to see whether this quarter’s result is just a momentary blip or the start of a long-term trend. Our job is not yet done.”
Sea is now in a much “stronger position”
Sea Ltd. has faced a difficult year, with rising interest rates, accelerating inflation, and geopolitical tensions impacting its business. The company has lost approximately US$160 billion (S$214.7 billion) of market value since its peak in October 2021, which has led to thousands of job cuts and the freezing of salaries to convince investors of its profit-making ability.
The company has also made major changes to its operations, shuttering its operations in India and some European and Latin American markets to trim costs and reach positive cash flows. This is a stark contrast to years of prioritising global expansion.
Regardless, Li praised the company for taking “major action early in the crisis”, which he says has put Sea Ltd. in a “stronger position today”.
Sea Ltd. has been in the news recently for its e-commerce unit, Shopee, which cut about 500 jobs in Indonesia this month, just days after the company reported its surprise first-ever quarterly profit. The company has also slashed more than US$700 million from quarterly sales and marketing expenses to improve profitability.
Despite the challenges Sea Ltd. has faced, it remains the largest internet company in Southeast Asia, and its recent quarterly profit suggests that the company’s major changes are starting to pay off.
Sea Ltd. was briefly the world’s best-performing stock and has a market capitalisation of around US$121.9 billion. The company operates three main businesses: digital entertainment, e-commerce, and digital financial services. Its e-commerce platform, Shopee, is one of the largest online shopping platforms in Southeast Asia.
Featured Image Credit: Guru Gamer / Sea
