Q4 2020 Sea Ltd Earnings Call
Good morning, and good evening welcome to the Sea Ltd fourth quarter and full year 2020 results conference call. All participants will be in a listen only mode did you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to Mr. Song. Please go ahead.
Hello, everyone and welcome to <unk>, 'twenty 'twenty fourth quarter and for your earnings Conference call I am in your song from Pes Group Chief Corporate officers office people.
For we continue I would like to remind you that we may make forward looking statements, which are inherently subject to risks and uncertainties and may not be a real life from the future for various reasons as stated in our press release.
Also this call includes debt discussion of certain non-GAAP financial measures such as adjusted EBITDA and net loss, excluding share based compensation and changes in fair value of the 2017 convertible notes.
We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures.
For a discussion of the use of non-GAAP financial measures a reconciliation with the closest GAAP measures. Please refer to the section on non-GAAP financial measures in our press release.
I have here with me, He's chairman and group Chief Executive Officer, Forrest Li Group, Chief Financial Officer, Tony Hull and group Chief Corporate Officer, Andrew Wang.
Our management will share strategy and business updates operating highlights and financial performance for the fourth quarter and for the full year of 'twenty 'twenty.
This will be followed by a Q&A session in which we welcome any questions you have.
With that let me turn the call over to you for it.
Thank you me too.
Hello, everyone and thank you as always for joining today's call two.
2020, what does non mark year for T. Our key user community Oh faced unprecedented challenges as a result of the pandemic.
These further reinforced the importance of our mission to empower the consumer kind of small businesses in our communities with technology.
We've adapted rapidly to enable our user community to meet the unique challenges of the last year.
<unk> also successfully addressing the fastest growing and evolving demands from our user for these products and services.
For example, we quickly build up and leaving in the Gulf, where we operate on the shopping platform.
Logos that are for both programs to help local merchants to get back from the deep water.
But it's not a repeat our digital payment service offering.
And the shifting major esports event online.
Each with highly successful result.
The lockdown and social distancing measures to curb the pandemic.
Too early at better rates.
Digitalization of our economy.
And we expect the effect to be long lasting.
During this time, our team has demonstrated resilience adaptability and strong execution.
We believe these capabilities position us very well to capture and to drive the significant growth opportunities ahead.
Strong market leader.
Our results for the fourth quarter and for the full year of 2020 speak for the success of our approach.
On the group level in the fourth quarter, we reported a total weighted year on year growth in GAAP revenue compared to the previous quarter.
It reached one 6 billion dollar.
102% year on year.
We also reported 100 under 2% year on year growth in our fourth quarter gross profit for reached $533 $7 million.
Our fourth quarter, adjusted EBITDA was $48 7 million compared.
Compared to our adjusted EBITDA loss of 100 and for $9 million a year ago.
The strong fourth quarter results contributed to an outstanding set of results for the full year of 2020.
GAAP revenue for the full year more than doubled compared to that of 2019 to reach for $4 billion.
Gross profit grew 123% year on year to reach one 3 billion.
We also achieved a positive for adjusted EBITDA of $107 million for the full year compared to a loss of $178 $6 million for 2019.
This was supported by the strong performance across our digital entertainment and E Commerce businesses.
For the for Weir Guarino achieved bookings of.
$3 2 billion and the choppy achieved GAAP revenue plus 29, all of two 5 billion.
Both businesses exceeded our recently raised full year guidance for 2020.
Let me now discuss each business individually.
Starting with digital entertainment.
The arena outstanding performance in the previous quarter continued in the fourth quarter as we reported bookings of $1 billion.
111% year on year.
Adjusted EBITDA in the fourth quarter was 663 5 million.
149% year on year, representing 56 per ton of booking.
For the for year, we generated bookings of $3 2 billion.
The increasing by 80% year on year.
Adjusted EBITDA increased by 94% year on year to reach $2 billion, representing 52% of booking.
The strong financial performance in the fourth quarter and the full year was a result of for ability to continually expand our user and paying user base.
Every quarter more gamers globally engaged we are in game content and esports activities.
In the fourth quarter quarterly active users reached 600, and the $10 6 million.
The price of 72% year on year.
Quarterly paying user he seven tier $3 1 million dollar 70, $73 1 million.
120% year on year.
Our paying user ratio measured at quarterly paying users as a percentage of quarterly active users continued to grow in the fourth quarter for reach trough for that.
Free fire was once again, a key driver of the arenas outperformance.
According to App Annie it continued to be the highest grossing mobile game in Latin America, and southeast Asia in the fourth quarter as well as the full year of 2020.
It has maintained its top ranking for six consecutive quarters.
This strong performance was also evident in India, where free fire was the highest grossing mobile game for the fourth quarter and for the full year of 2020 based on App Annie.
We are also pleased to share that <unk> was once again, the most downloaded mobile game in the war in 2020, according to App Annie.
This is the second year in a row. The Revpar was ranked first globally.
As we continue to grow the free prior user base worldwide and the build even tighter bong with global Gamer.
We believe that free fire formally establishing itself as a strong global gaming franchise and platform.
One of the key factors in free price has been the success is our commitment to keeping our games fresh and engaging game.
Gamers around the world increasingly recognized arenas reputation for constantly fighting the free fire spirit with innovative content partnerships and the esports activity.
In the fourth quarter for example, we announced the partnership between free fire football legend download on our goal.
One of the most significant tie up between the esport industry under the physical sports industry in recent times.
In addition to new in game items and the playable characters. We also introduced two new game mode as part of the partnership with Cristiano Ronaldo our.
Our limited time vital role, you're raising game modes and the team based on <unk> dual mode.
Our users love this new game mode as they provide a richer and more battery gaming spirit by morphing different types of gameplay into the backbone of oil Jenner.
Great for huge and growing esports streaming community is another key pillar of our user engagement strategy.
We made significant progress in deepening engagement with our community in 2020, despite the challenge of holding life events.
Three of the five top esports tournament by peak concurrent viewers in 2020 will free fire tournament. According to esports charts.
In 2020 free fire was once again the top ranked mobile only video game and the top ranked backward we all video game on Youtube in terms of yield.
Also the third rapid game overall on Youtube by <unk> Com.
Free fire related content reported over 72 billion Bill com across Youtube globally over the course of the year.
The game was also named the esports mobile game of the year added the Esports Award 2020.
The esports activities and online video content helped to drive up gamers engagement.
Around the free for our franchise, while extending its reach to a wider group of communities as a spectator sport.
While we continue to grow free fire into a long lasting global franchise.
Also focused on building solid foundations for garena long term growth.
For example for fourth quarter Phoenix Lab, our Triple eight gaming studios faced England for announced the further expansion.
Adding new offices in Marseille, and the Los Angeles, alongside existing existing basis, England, who work on the Seattle.
It also well plan to build out the team in each of those cities to walk us on new game development.
We are confident that the expanded finished last key will deliver great content in the year for com.
As we move through 2021 very nice the building on the strong momentum of 2020 and strengthening our position as the global leader in the digital entertainment industry.
We believe that our uniquely nuanced understanding of the taste and preferences of global gaming community and.
Our proven ability ability to build lapping bonds of affinity with gamers in diverse market. The wrong Awards will continue to drive growth and success for garena in 2021 and beyond.
Moving on to e-commerce.
2020, what that extraordinary year for shockey.
In a challenging environment, we have adapted quickly to serve our communities and adjusted the fast evolving needs of our buyer and seller.
As a result, we have demanded sharply position as the <unk>.
E Commerce platform for both buyer and seller across southeast Asia and Taiwan.
We continued to report excellent results for the fourth quarter.
Year on year growth for Ito grow.
<unk> order DMV and the GAAP revenue for the accelerated compared to the third quarter.
In the fourth quarter shop, you reported 1 billion cross border.
100, and its 35% year on year.
And the <unk> of 11 9 billion.
An increase of 100, and a 13% year on year.
GAAP revenue grew 178 per ton year on year to $842 $2 million.
Adjusted EBITDA loss per order decreased by 41% year on year to 41 zone during the quarter, reflecting the efficiencies we have reaped across 2020, even as we continued to invest in growth, especially during the peak shopping season.
For the full year of 2020 shop is cross border total $2 8 billion up 100, and a 33% year on year GM.
<unk> 30.
<unk> five $4 billion.
<unk> of 100, and a 1% year on year.
GAAP revenue grew by 150% year on year to achieve for $2 billion.
Indonesia shop at largest market we.
We continue to grow our leadership position will.
We reported more than 413 million of orders from the fourth quarter.
These translate into a daily average of a wrong for 7 million orders up 100, and the 28% year on year.
According to App, Annie Sharpie continued to Rev birth, Indonesia by average monthly active user total time spending app on Android and the download in the shopping category in the fourth quarter and for the full year of 2017.
We are also encouraged to see more sellers and brands around the region doing business on sharpie.
For example shopping mall, our dedicated space for leading brands now features over 23000 international and the local brand.
As our communities increasingly embrace e-commerce as their top retail toy, we believe choppy relentless focus on serving our users yes sure that we continue to capture the largest share of the reduction grow.
In both the fourth quarter and for the full year Xiaomi was ranked the number one from the shopping category across Southeast Asia, and Taiwan by average monthly active user total time spending app on Android and the download based on have any.
In fact shopping was ranked the third most downloaded app in the shopping category globally for the full year. According to App Annie.
The success of choppy has also translated into stronger brand recognition across our communities.
We see this in your golf recently published first the APAC box ranking 2020, where Xiaomi was ranked first in Asia.
<unk> was also the number eight ranked brand yoga fastest global brands 2020, representing one of the two e-commerce breadth in the world's top 10 ranking.
Our strong focus on serving our users we will continue to drive lasting ramp affinity across our region.
Each of our market E Commerce adoption continues to grow at a better rate paid and we believe that as the go to online shopping platform Shockey will successfully capture and further drive this growth opportunity.
Turning now to digital financial services.
The money's had a transformational year in 2020.
At each successfully captured opportunities presented by both the acceleration of digitalization in our economy as a whole and a particularly strong growth of our E Commerce platform.
As a result, EBIT joined rapid and efficient growth in the fourth quarter ended the full year of 2020.
For the fourth quarter demand is mobile wallets reported total payment volume of $2 9 billion.
With quarterly paying users, surpassing $23 2 million.
This was partly driven by monthly paying user, Indonesia, which exceeded $10 million during the fourth quarter.
For the full year 2020, our mobile wallet total payment volume was seven 8 billion.
You were at our mobile wallet Shockey pay benefited from the strong growth of choppy. It also meaningfully reduce the payment friction and improve the user experience are shocking.
These synergistic growth of both sharpie and sharpie paid showcased the strength of our platform in terms of adding value for our consumer.
Our platform online and offline use cases and the partnerships also grew in 2020 as we continued our initiative to expand the use cases and as we sold more natural adoption by users who appreciate the accessibility and convenience of our mobile wallets Thursday.
For example, we recently expanded our partnership with Google to offer our mobile wallet as a payment option for the Google play store in Indonesia. In addition to already existing partnership in Thailand.
As we onboard more online and offline use cases, we.
We are seeing that our users increasingly appreciate the ease and convenience of using our mobile wallet services.
We also see that sea monies merchant partners increasingly recognize the value of tapping into the bath and the rapidly growing use of user bases of shockey and his day money.
We are excited about opportunities ahead of us too.
To serve a wider set of needs for both new and existing consumers and businesses across our ecosystems.
The rapid adoption of digital financial services in our region is expected to have a long term growth for us back and we will continue to focus on delivering strong efficient and sustainable growth.
Turning now to our guidance for 2021.
We believe that we are well positioned for continued delivering value cost across our community.
For the full year of 2021, we currently expect bookings for digital entertainment to be between $4 3 billion and for $5 billion.
Representing 38% year on year growth at the midpoint of the guidance.
We also expect GAAP revenue for e-commerce to be between $4 5 billion and $4 7 billion.
Representing 100, and a 12% year on year growth at the midpoint of the guidance.
Okay.
I'm also pleased to share that sea had completed the acquisition of composite capital.
A leading investment management for founded and led by Debbie Ma.
I have non Debbie for several year in.
In the past he has been a long term shareholder of sea and to share our vision for the business and our passion to serve our communities through technology.
David and his team have put them.
Credit track record of thoughtful long term investing with a deep understanding of industry trend and the business globally.
I am very excited to welcome Debbie and the team at composite tactful for the sea family.
Along with this acquisition I am proud to announce the formation of sea capital a new platform to manage these investment effort.
That we will serve as the chief investment officer of <unk> capital.
<unk> directly to me.
The capital will focus on identifying partnering with and investing in technology companies that share a revision upward bettering the lives of consumers and small businesses through technology.
By investing into the growth of our border ecosystem, we believe the capital kind of help us better rate of growth of the oral digital economy, and create real and lasting value for our user business partners and our communities.
In line with this commitment we are allocating our initial $1 billion for capital to deploy in the coming year.
We believe the addition of the composite team ended the establishment of capital will further enhance our investments and our capital allocation capability in support of these long term growth strategy.
I would also like to take this opportunity for welcome Doctor you actually total who have joined the sea family to build and to lead the AI lab as our group Chief scientist.
South Korea is a leading expert in the field of artificial intelligence.
With the particular for Costar computer vision machine learning and the multimedia analyses.
He is the ACM fellow and a fellow of the Academy of Engineering, Singapore.
The AI lab in.
<unk> to attract and collaborate with top talent in artificial intelligence with the goal of exploring and developing long term inside and the technology related to our existing businesses and the new opportunities beyond.
I believe that doctor, yet and the TALF will strengthen our capabilities innovation and research in line with our commitment to advancing technology.
Try to drive the development of the digital economy across our region.
I'm very proud of the outstanding results our team achieved in 2020 and believe we are moving into 2021 prime for an exciting growth opportunity ahead of us.
Across the business, we are focused on driving system and efficient growth.
As we scale towards becoming a top global Internet company, we believe our single minded goal of delivering value to our user will continue to drive our success.
With that.
Mike <unk> to discuss our financials.
Thank you for it and thanks to everyone for joining the call. We have included detailed financial schedules together with the corresponding management analysis in today's press release and for it.
Some of our financial highlights so I will focus my comments on the other relevant metrics.
For our sea overall total GAAP revenue increased 102% year on year to $1 $6 billion in the fourth quarter and 101% year on year to four by $4 billion for the full year of 2020.
This was mainly driven by take rate growth in our E Commerce business as we continue to roll out tools to better serve our users needs as well as growth of our digital entertainment business, especially our self developed game free fire.
Digital entertainment bookings grew 111% year on year to $1 billion in the fourth quarter and 80% year on year to $3 $2 billion for the full year of 2020.
GAAP revenue was up 72% year on year to $693 4 million in the fourth quarter and 78% year on year to $2 billion for the.
For year of 2020.
The growth was primarily driven by the increase of our active user base and deepened paying user penetration as we continue to engage the community through new content rollout and esports events.
Digital entertainment adjusted EBITDA was $663 $5 million in the fourth quarter and $2 billion.
For the full year of 2020.
This represents year on year growth of 149% and 94 per cent for the border and a full year's effectively.
This was mainly due to the strong top line growth and an increased share of our self developed game and all of our total bookings.
On E Commerce, our fourth quarter GAAP revenue of $842 2 million.
Included GAAP marketplace revenue of $627 $6 million.
175% year on year, and GAAP product revenue of $214 $6 million.
187% year on year.
For the full year of 2020 GAAP revenue of $2 2 billion included GAAP marketplace revenue $1 6 billion up 155% year on year, and GAAP product revenue, all Europe and $6 billion.
173% year on year.
The strong results demonstrated the deepening penetration of e-commerce, and our ability to capture this accelerated growth opportunities created by the rapid expansion of the digital economy.
E Commerce, adjusted EBITDA loss was $427 $5 million in the fourth quarter and $1 $3 billion for the full year of 2020, as we continued our investment to fully capture the opportunities in our markets.
We remain committed to efficiently investing in and growing the ecosystem to serve our users better.
Digital financial services GAAP revenue was plenty for $4 million in the fourth quarter and $68 million for.
For the full year of 2020.
Digital financial services adjusted EBITDA loss was 171 for terminate in the fourth quarter.
$511 $1 million for the full year of 2017, as we continue our efforts to drive mobile wallet adoption.
Returning to our consolidated numbers, we recognized a net non operating loss of $124 $5 million from the fourth quarter of 2020 compared to a net non operation operating loss of $15 $2 million in the fourth quarter of 2019.
Our non operating losses in the fourth quarter also that in 'twenty was primarily due to the investment loss in interest expense from vertical notes.
For the full year net net.
Net non operating loss was $179 $9 million from.
Tax loss of 177 $4 million for the full year of 2019.
Our net operating loss for the full year of 2020 was primarily due to interest expense on convertible notes, while especially in 2019 was primarily due to a fair value loss of $472 9 million.
Our 2017 from vertical wells.
We had a net income tax expense of $44 2 million in the fourth quarter of 2020, and $141 6 million for the full year with all the uncertainty this.
This was primarily due to corporate income tax and withholding tax recognized digital and entertainment business.
As a result net loss excluding share based compensation and changes in fair value of the 2017 convertible loans was $437 million in the fourth quarter of 2020 and $1 $3 billion for the full year to the other items.
2000.
With that let me turn their policy angry.
Thank you for Boston, Tony We're now ready to open the call for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on you touched on <unk>.
Speaker phone please pick up your handset before pressing the keys.
Your question. Please press Star then two.
The interest of time, we will take a maximum of two questions at a time from each caller, if you wish to ask any more questions.
This request to join the question queue again after your first questions have been addressed at this time, we will pause momentarily to assemble our roster.
The first question today comes from pious with.
With Goldman Sachs. Please go ahead.
Thank you for taking my question and congratulations on the numbers.
We all just talked about the guidance you could provide them for gaming five and looking back at the.
The growth that you've seen in the US a number in 2020 could you extrapolate from that and give us a feel for what sort of user growth. We can foresee in 2021, that's underpinning the growth in gaming revenues for 2021.
Related to that if you could expand on the driver of the improvement in margin quickly absorbing on the gaming side that would be great I'll go back to the queue. Thank you.
Thank you for years.
In terms of the use of close.
Perfect forecast that for 10-K, one, but if you look at past performance so far on revenue for bookings growth for debt.
Just your entertainment.
That's being driven by both user base quote.
On.
Hey.
Penetration steepening.
With a relatively stable average revenue per paying user and that speaks to the strength of our games, especially all sounds about the same police fire.
Testing for a top grossing game in southeast Asia in Manhattan for them.
Multiple quarters.
Also become a top grossing game.
Yeah.
For FY 'twenty as well as a force quota.
Okay.
I think that is a very positive defense offsetting will continue to grow our user base globally for this game and we are also seeing glyphosate diversification.
Avenue with Mark in America.
Hum.
Contributing the largest share of Avenue.
We see other parts of the world, including India.
Increase any country for a significant portion of it.
So entertainment.
Shipments for this.
This indication where sea arena to become increasingly a global player.
With revenue coming from all over the world and user base expanding to the right.
Rest of the world gasoline, although we reached.
Last quarter for us.
That quota release, you would've had cash.
70 million plenty active users.
Now with a very good number.
And then you see for class action.
<unk> increased to 601 and 600 million.
We're still continuing to see very positive use across across for the region and that's for us is it.
It's a very positive sign for the longevity and non per ton commercialization of this game as well.
Efforts to felt mosquito long lasting Anthony that's felt platform.
And increasingly the ecosystem.
In terms of the improvement.
For entertainment.
Adjusted EBITDA margin.
As we mentioned this is that many actually beautiful.
Free fire.
<unk> talked about net gain which doesn't require any revenue share with.
And you actually own it or develop there and therefore with interest.
The margin improvement.
Question, even longer than that.
We will also see more densification.
Revenues for both from.
From self developed as well as.
Publishing site and we are also focusing on investing into our ecosystem.
In recruiting top talent and building, our technology capability and introducing more equally IP collaboration with our partners.
Kosten at defense side.
Whether it's on the gaming side as well as on the social Entertainment box.
To further improve our content offering to our user base.
But in the London around would you expect to maintain a very healthy adjusted EBITDA margin for the business I will continue to run it for sure.
<unk>.
The next question comes from Thomas Chong with Jefferies. Please go ahead.
Hi, Good evening, Thanks management for taking my questions and congratulations on the solid start talk about guidance.
On sharpie.
I'd like to ask about our triple digit about the new flow measurement.
Management comments about the piece of this trend across our different regions, Indonesia, Singapore, Taiwan, Malaysia et cetera, just wanted to get a sense about which countries are we seeing.
Faster growth for this year and Ah and my second question is.
On the <unk> did you pull a finance syn 10 minutes from and comments about our strategies for <unk>.
In particular all right.
Oh people step up our efforts.
Could be definitely or other <unk>. Thank you.
Thank you.
Thanks for the business trends and our revenue growth for sharpie.
First of all we are seeing Nash on clubs for cost of Aegean.
And.
In particular, our largest market, Indonesia, which we disclosed continue accelerate zone.
The GMB order as well as takeaway side.
See even accelerated yeah close rates.
Which speaks to volume again.
For the strength.
Our market leadership and our platform.
Even as most of the countries have opened up.
Yes, it does.
You know more of that.
Great.
From Covid situations.
Thank you.
Management.
And I think that in.
In terms of the deal close rates.
Different markets, we don't specifically it is a breakdown, but usually we see very strong growth in.
Not in market.
Already established Dan strong.
Nita position as well as the honey at salary as well.
In some of that market debt.
Well, we see very strong adoption during the Covid period.
For example, in the Philippines, and Malaysia, Singapore.
We see very strong growth as people face online solution during the Covid period and shopping coming equally from the go to platform for peoples consumption.
Cost variance there is settlement.
And that trend, we're seeing going into 2021 and show you our guidance for it.
E Commerce.
Yes.
So we're continuing to focus on driving efficient growth across our region and.
Especially for cross selling our new users as well.
Our board is doing and catering to that shift in lifestyle choices not accelerated by the Covid and the law.
Measures taken so far which could be at least at this point, we believe it's going to have a non lasting effects on digitalization of our economy.
Jim.
In terms from digital financial services.
Again very strong growth.
Even though we started integrating outlet shopping per.
So much from one platform with a sharpie, Jeff said at the beginning of last.
Last year.
<unk> saw very strong adoption.
Demonstrated by our.
Pay user ratio almost paying user number.
And for our CPE for.
And we will continue to drive efficient for us for.
Shockey user base and also continue to expand it too much.
As we mentioned we are expanding our partnership with Google to Indonesia.
Awesome.
For the offline.
And F&B chain to continue to make payments I know wallets offerings available to a broader user base again. This is for the accelerated by the fact that and now people are increasingly look for looking for alternative contactless payment method.
And shifting gears consumption online.
Quiet convenience infrastructure for all non payment.
For the region, where credit card penetration for me there.
And in terms of food and other and you've shaded Cds.
Cds.
Category on Sharpie and that can offer additional value added to our consumers. We will continue to observe what is based on debt natural consumption behavior in terms of stuff for expansion into new categories over time.
For sure.
Okay.
The next question comes from Alicia Yap with Citigroup. Please go ahead.
Hi, Good evening management, Thanks for taking my questions. Congratulations on the strong results.
The first question phase III related to shop that has been a lot of Nielsen report mentioned about choppy, making good progress in Brazil. So just wondering if you could share with us your overall e-commerce thoughts all the strategies for the Latin America.
That's what they can for per sale.
And then if you if we can compare between Latam and southeast Asia. What are some of the similar average piece and also the biggest difference between the two regions and if your vision is for these Brazil E Commerce in Asia, Keith what are the things that Oh aspect.
Debt you would need to step up in order to achieve your target in Brazil, and then very quickly on the gaming.
For your studio that you are setting up in Montreal, and Los Angeles and all day.
Small coming for them.
Potentially we are planning to license more U S IP or is it they will come out from our own IP income southeast new games.
Thank you.
Thank you Alicia.
On the E Commerce front as we mentioned are for.
Brazil is a.
Any statements by our cross border at sea to offer more.
Markets to our cross border sellers.
Given that we already have established operations on the gaming side are in.
In the market.
Generally efficient for us to.
Oh for additional value, adding to our sellers.
That sounds for we also start to see local sellers from parking all platform that has been well received and we think that's a.
Question for Mr. Stein.
However, it's still very preliminary for us Alan will continue to upset the market and let the team are wrong with it and see how that progresses over time and our interest for our.
Comparison to change a lot 10, and South East Asia, I think he's a very defense market Oh, we wouldn't pursue that we know those markets are doing well at this point again, given the early stage of its development there.
He will lead the team.
Is it more at sea.
And it turns out the sea lat expansion.
So these are a few recall, we acquired our finished flat and.
At the higher efforts, you're breaking top talent.
And our debt.
No.
And who has that should they share in lung.
Tissue have experienced that for triple a titles and also on PC and console based games.
And the team testing expanding into other locations.
Locations.
U S to continue to.
Crude more any talents for our long term.
Self development capabilities.
And at same time off course.
For partners.
In the U S.
Cause that market.
<unk> has been a keener always seem close communications with them to see if that could be good IP took me brought to our region.
No.
Has been expanded to not just southeast Asia, but also to include Latam India.
Nina.
In order for the walls.
We have demonstrated our strong track record.
Energy deepening user base as well as commercial line nation.
And pretty much unprecedented that massive weight.
In those regions are for.
Our sustained long period of time with our own IP as well as.
The Pontiac incorporated.
Talked about scheme.
With that strong track records for me, but very good position to both attract.
Top talent from all of the vault tell US do you use those based in the U S, Canada or Asia, as well as to attract top IP globally, and our partnership with other developers.
The next question comes from highest foundry with HSBC. Please go ahead.
Yeah, Hi, good evening, congratulations and thanks for taking my questions two questions.
Firstly on Sharpie take rate has been improving can you provide us some color on the ranking of the countries in terms of the take rate and which country has the highest potential improvement indicate in 'twenty 'twenty. One secondly on the logistics side.
What are the average delivery times and can you tell us highly win planned for choppy Express.
And then kind of targets for managing and we had a button data orders are through choppy expressed in one year.
Any color there would be any day.
Okay.
Thank you Walt we don't eat.
But the take rate breakdown, but suffice to say that's the.
Let's take rate increase has been a giant across different countries over time, we'd do it at the pace and Fi communique.
Communication welcome indication with the market and also making sure we understand the performance with a need of our sellers and buyers as well.
Most importantly, the increase in net take rate.
Hi, advertisement as well as transaction based to see across different market.
So I think that there could be fluctuations also sometimes a from period to period. It is a dynamic process, we always look at.
The competition.
The time period.
As well as the performances of our ecosystem to decide how best to manage that take rate over time.
Suffice to say that the only thing for longer that on a blended number one for me.
Can still move to even higher rates.
I didn't even high single low double digit range and I think we're putting a target of getting there all the time.
And in terms of logistics.
Delivery time.
It's around probably a couple of days depending of course.
You know what part of the region, you're talking about are in the city. It can be less than a day and of course being some false places a day.
And it can be for longer period of time for.
But so far we don't see that as a bottleneck for our e-commerce sits.
Net cost of cost during the Covid period.
Uh huh.
Travel constraints as well as Oh.
Men are increased demand for from all over the different parts of the region.
We are quickly ramping up our logistics capabilities in partnership with our third party logistics those items.
As well as bi income.
Using our own.
Pasty in last mile asbestos they vary.
To supplement the CPA CPL keeps our capacity during the peak time I said, we will continue to monitor.
The logistics demand as well as debt. So that's novels of our free P L and help them.
But as well in their efficiency and capability in serving our users and at the same time ramping up our own capabilities.
As needed, but in a very efficient manner.
The next question comes from Ranjan Sharma with Jpmorgan, Singapore. Please go ahead.
Hi.
Thank you for the presentation and congratulations on the results.
Two questions from my side Firstly.
The given guidance.
Do do games me from that.
Part of this guidance and if you can share.
Could you give back that might be for this year.
Secondly, we have seen a sea expanding into new geographies.
And within non selling new services.
How should we think about your sales and marketing budget and how are you allocating it.
For the different services. Thank you.
Thank you.
In terms of the.
The game a guidance we are budgeting in the states.
Whatever it is currently difficult to us.
Total weight.
Specifically discussed pipelines that are and so as we all know you always be testing for.
The types of ideas and even more debt.
James at any time at any point in time.
And so we continue to diversify our pipeline shiners that capability across different types of games.
So the revenue guidance or bookings guidance is based on reasonable estimates.
For 2021.
Based on what others are calling vehicles for us and Uh huh.
Oh Acacia for sales marketing are you referring to this show entertainment segments fossil.
These non Jackie.
For the US Hi can you hear me.
Yes, yes I can.
So for e-commerce, our sales marketing expense.
You can see we continue to explore our efficiency.
And Hello allocation sales marketing.
Again, a dynamic dynamics losses based on the time of day here.
And what we think is a department.
It's aman <unk> and take them, both well for the market.
And efficiency of investment in that market as well as any opportunistic a media event for example.
It's a combination of factors we look at it.
Allocating sales and marketing.
The gist of it is this country to focus on in addition to.
To make sure that every dollar we spent there.
It's driving.
Effective use of close and there's some news with strong user retention and also increasing use of frequency.
For example during.
During Q for.
The peak.
Sales target.
This is a very strong shopping for anthem. He has a lot of shopping activity as well as media activity across different markets and these have shown very strong itself as you can see and why for me we are driving.
Not just for use in some sense, but also for use of frequency.
We now see a more than five seven times.
Such as frequency or the frequency per month.
And that's another step up from the last quarter's Q3.
Number so that is very good.
Testament to the strength of our platform and efficiency.
Our investment into sales and marketing.
The next question comes from John Blackledge with Cowen. Please go ahead.
Great. Thank you.
Choppy as EBITDA any thoughts on EBITDA trends in 2021 would you expect losses to be higher than in 2020 and more broadly is there a certain kind of overall take rate range. We should think about that would lead to flat or positive EBITDA choppy and then also on choppy.
For Q 'twenty overall marketplace take rate was five 3% in <unk> versus five 9% in <unk>. So any color on the modest Q over Q decline in the take rate. Thank you.
Yes.
The EBITDA trends, we don't provide guidance or forecast from EBITDA.
I think that maybe the previous.
Question also my also for the previous question touch upon that it's a we look at efficiency of investments N D. We look at each market and tiny.
Based on the what's the natural taste for schools and all weekend.
That goes with efficiency.
And free there could be optimistic events that could try.
That fluctuation over time, but most importantly, I think.
So if I have to say is that for me.
Can't breakeven if we choose to.
At this point even at this take rates.
And our Taiwan take Li is not for example, that's it for the market well, we broke even and we have achieved a very healthy EBITDA margin there as we previously disclosed before and the take rate in Taiwan is small.
Highest even among our existing market.
So it's mark.
To say that but you know we have to cash flow of very high take rate ought to be able to breakeven.
Oh, that's me equals is really by choice and according to the pace that we think is suitable for each market.
We're in a very good position right now where our destiny is in our own hands and if we can control the pace of investment and allocation of each market and the highly dynamic and elastic wait to try for efficient growth.
In terms of the take rate our take rate has actually increased quarter on quarter. It didn't decline.
Happy to elaborate further.
But.
If you look at our past disclosure it does increase from it takes me put them for that.
Okay.
The next question will come from Darren <unk> with Credit Suisse. Please go ahead.
Yeah, Hi, good evening and thanks for the opportunity.
Well I got two questions first can you elaborate a little bit doesn't speak out for them.
What are the objectives. So that business is it you're looking more like for Softbank are definitely investments they didn't do it turned up from.
Can you kind of a thing.
What kind of for the dawn starting what I, then any more color will be good bad or good for so many.
Investments that didn't begin doing the business. So that's one.
But number two.
I've been doing the last few months reported.
You acquiring a bank in the nation, if he can provide more color on that back from Japan.
Okay.
Mm three tenths of sea capital actually share at all here that Oh, we have net happy too.
Perhaps the composites team net that day that mark to join us to further strengthen our investment and capital allocation pieces of it.
Oh, we think it's a very important test for a global air net company to to have that capabilities.
In the longer run.
We will continue to build from.
Talent for as well as high flying to flow to strengthen that we don't have a specific key items of the return rate in particular.
For us it for it to eight eight.
I think all overall weight.
Do you towards that is still it is an integral part of peaceful story and whatever we do on the investment side is to further strengthen our close capability.
In the long run average to further strengthen our ecosystem.
Well as too.
Further all of them.
Mission ambition.
To quote to use technology to serve our users our communities as well as the ecosystem participants.
Our four regions. So I think this is a not a departure from our existing course of trying to grow the business in the long run and maximizing returns to our shareholders for them on that day.
In terms of the Indonesia Bank he has.
Content licensing and Asia as well.
And so we see this ex.
Integral parts of policy money.
Segment, where we continue to build out the infrastructure for digital payments as well as digital financial services.
We will continue to focus on the technology spots.
Our business.
But yes it is.
As part of our core DNA, but same time also for US is to use the technology.
We have Oh Internet DNA to see how best to further strengthen the digital economy infrastructure.
In our region, which were part of and.
Thank God, we believe there are significant opportunities in the long run.
That's for even exceed the size of our current opportunities for looking at are in that segment. So we're very we're going to adopt a very long one for you what's that and look at that that's a honey comprehensive settlement and each are an integral part of our long term.
Hum venture into the asset.
Yes.
This concludes our question and answer session I would now like to turn the clock Tonight conference back over to MS. Your song for any closing remarks.
Thank you everyone for joining today's call and we look forward to speaking to you all again next quarter. Thank you.
Yes.
This conference has now concluded. Thank you for attending today's presentation you may now.