Singapore-based Sea Ltd on Tuesday posted its first quarterly profit, as the gaming and e-commerce company benefited from major cost cuts it undertook to offset a post-pandemic slowdown in demand.
Shares of the company soared over 15% in morning trading.
The Southeast Asian firm had shuttered operations in some countries, cut jobs, and slashed its spending on marketing, as part of its turnaround plan.
For the fourth quarter ended Dec.31, Sea’s marketing and sales expenses declined by 61%, helping it pull down total operating expenses by nearly a quarter to $1.35 billion.
“We exited or downsized operations in non-core markets, streamlined our pipeline with investments and project closures and deprioritized non-core initiatives,” Chief Executive Officer Forrest Li said.
“Our decisive pivot to focus on efficiency and profitability since late last year is already driving meaningful bottom line improvements.”
The company’s net income attributable to shareholders was $426.8 million, or 72 cents per share, compared with a loss of $617.6 million, or $1.12 per share, a year earlier.
While Sea had a meteoric run in 2020 and part of 2021, when the pandemic-led demand lifted revenues and helped it expand into Mexico and Spain, its growth has tapered in line with a broader slowdown in e-commerce and digital entertainment demand.
The company’s market capitalization too dropped to $37 billion after its shares plunged over 75% last year. Sea was valued at more than $200 billion at its peak in late-2021.
Reuters had reported in September that the firm’s ecommerce unit Shopee would exit Argentina and shut local operations in Chile, Colombia, and Mexico, while its gaming arm Garena will lay off hundreds of staff in Shanghai. Sea also cut 10% of its workforce in six months, according to reports in November.
The ban of Sea’s “Free Fire” in India, the top market for the popular mobile game, was an another blow last year.