Q4 2023 Sea Ltd Earnings Call

Operator: Good morning and good evening to all, and welcome to the Sea Limited 4th Quarter and Full Year 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise.

Good morning, and good evening to all and welcome to the Sea limited fourth quarter and full year 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press star 1. For operator assistance throughout the call, please press star 0.

Led by the number one on your telephone keypad, if you would like to withdraw your question again prestige star one for operator assistance throughout the call. Please press star Zero and finally, I would like to advise all participants that this call is being recorded. Thank you I'd now like to welcome Ms. Minju song to begin the conference. Please go ahead.

Operator: And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Ms. Minju Song.

Min Ju Song: To begin the conference, please go ahead. Thank you, and hello everyone, and welcome to SEAS's 2023 4th Quarter and 4-Year Earnings Conference Call. I'm Minju Song from SEAS' Chief Corporate Officer's Office.

Ed.

Min Ju Song: Thank you and Hello, everyone and welcome to <unk> 2023, fourth quarter and full year earnings conference call.

Min Ju Song: Your song from <unk>, Chief Corporate Officer his office.

Min Ju Song: Before we continue, I would like to remind you that we may make forward-looking statements which are intelligently subject to risks and uncertainties and may not be realized in the future for various reasons, as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures, such as adjusted. 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 gaps in capital. For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our program.

Min Ju Song: Before 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 realized in the future for various reasons as stated in our press release.

Min Ju Song: Also this call includes a discussion of certain non-GAAP financial measures such as adjusted EBITDA. 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.

Min Ju Song: For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures. Please refer to the section on non-GAAP financial measures in our press release.

Min Ju Song: I have with me Sea's, Chairman and Chief Executive Officer, Bruce Lee President Tesla.

Forrest Li: I have with me CE's Chairman and Chief Executive Officer, Forrest Li, President, Press Wong, Chief Financial Officer, Tony Ho, and Chief Corporate Officer, Yanjun Wang. Our management will share strategy and business updates, operating highlights, and financial performance for the fourth quarter and full year of 2020. This will be followed by a Q&A session in which we welcome any questions. With that, I will turn the call over to you.

Min Ju Song: Key financial Officer, Tony Hull, and Chief Corporate Officer, Andrew way.

Min Ju Song: Our management will share strategy and business updates operating highlights and financial performance for the fourth quarter and full year of 2023.

Min Ju Song: This will be followed by a Q&A session in which we welcome any questions you have.

Speaker Change: With that let me turn the call over to floor.

Forrest Li: Thank you. Hello everyone, and thank you for joining today's call. I am happy to share that we have achieved our 4th full year of annual profit since our IPO. In 2023, we achieved profitability, strengthening our market leadership for our e-commerce business, grew our digital financial services business, and stabilized the performance of our digital entertainment business. We have emerged with a much stronger balance sheet, with our cash position increasing to $8.5 billion as of the end of 2023, demonstrating the discipline and prudence we have applied in our investments over the past years. Looking ahead, we expect 2024 to be another profitable year. Let me recap our performance at the individual business level in 2023 and share the key strategic focus for each business in 2024. Starting with Xiaopi, First, Shopee's investments since July last year have paid off.

Speaker Change: Okay.

Tony Hull: Hello, everyone and thank you for joining today's call.

Floor: I'm happy to share that we have achieved our first full year of annual perfect. Thanks, Our IPO.

Speaker Change: In 2023, we achieved profitability strengthening our market leadership for our E Commerce business.

Floor: Grew our digital financial services business and the stabilized the performance of our digital entertainment business.

Floor: We have emerged with a much stronger balance sheet with our cash position increasing to eight 5 billion.

Floor: At the end of 2023.

Most treating the discipline and prudence, we have applied our investments over the past year.

Floor: Looking ahead, we expect 2024 to be another profitable year.

Floor: Let me recap our performance at the individual business level in 2023, and the shared a key strategic focus for each business in 2024.

Floor: Starting with choppy.

Floor: First shop is investments since July last year has paid off.

Forrest Li: I am pleased to report that, despite an environment of intensified competition in Southeast Asia, we believe we had a meaningful gain in market share between the start and the end of 2023. We are happy to have solidified Shopee's market share in the region, and we intend to maintain our market share in 2024. We expect Shopee's full-year GMV growth to be in the high-teens range and its adjusted EBITDA to turn positive in the second half of this year.

Floor: I'm pleased to report that despite an environment of intensified competition in southeast Asia. We believe we had a meaningful gain in market share between the start and at the end of 2023.

Floor: We're happy to have solidified shop is market share in the region and we intend to maintain our market share in 2024.

Floor: We expect shop is full year DMV growth to be in the high teens range and adjusted EBITDA to turn positive in the second half of this year.

Forrest Li: To return and strengthen our competitive advantage, Shopee's three operational priorities in 2024 are improving service quality for buyers, enhancing the price competitiveness of our product listings, and strengthening our content ecosystem. For service quality for buyers, we will do more to optimize key aspects of the buyer's experience, such as delivery speed and consistency, return and refund processes, and customer service. These are areas we already excel in and will continue to improve on. In keeping our product listings competitive, we will continue to work more with sellers who have more upstream supply chain access and provide more fulfillment, marketing, and shop management services to our sellers. On content, we will deepen and broaden engagement with creators, sellers, and partners across the content ecosystem and better integrate live-streaming and short-form video into the shopping experience. Now, let me now highlight some of the showpiece achievements in the fourth quarter.

Floor: To return and strengthen our competitive advantage sharpies three operational priorities in 2024, improving service quality for buyers in hunting the price competitiveness of our product listings and strengthening our content ecosystem.

Floor: Our service quality for buyers, we will do more to optimize key aspects of the buyers experience such as the delivery speed and consistency return on the refunds processes and customer service.

Floor: These are areas, we already excel in and will continue to improve.

Floor: I'm, keeping our product listings price competitive we will continue to work more with sellers, who will have more upstream supply chain access and.

Ill provide more fulfillment marketing and the shop management services to our sellers.

Floor: On content, we will deepen in the broader engagement with the creators sellers and partners across the content ecosystem and the better integrate live streaming and short form video into the shopping experience.

Floor: Let me now highlight some of the shop piece achievements in the fourth quarter.

Forrest Li: During the quarter, Shopee delivered strong results with both top-line growth acceleration and bottom-line improvement. Shopee's GMV and orders grew 29% and 46% year-on-year and 15% and 13% quarter-on-quarter, respectively, resulting in solid market share gains across our markets. Meanwhile, Shopee's adjusted EBITDA loss improved by 35% sequentially.

Floor: During the quarter Sharpie delivered strong results with both top line growth acceleration and the bottom line improvement.

Floor: Sharp is GMB and orders grew 29% and 46% year on year, and 15% and 13% quarter on quarter respectively.

Floor: The resulting in solid market share gains across our market.

Floor: Meanwhile, shall piece at adjusted EBITDA loss improved by 35% sequentially.

Forrest Li: Adjusted EBITDA loss per order improved by 43% quarter-on-quarter. On logistics, we opened 5 new sorting centers and 385 new first and last mile hubs across our Asia markets and extended our logistics network further to improve our coverage through more automation, tighter planning, better routing, and other operational improvements. Our platform logistics cost per order in Asia decreased by 12% year-on-year in the fourth quarter.

Floor: The adjusted EBITDA loss per order improved by 43% quarter on quarter.

Floor: On logistics, we opened five new sorting centers and a 385, new first and last mile hubs across our Asia markets and extended our logistics network further to improve our coverage.

Floor: Through more automation tighter.

Floor: Planning dietary routing and other operational improvements.

Floor: Our platform logistics cost per order in Asia decreased by 12% year on year in the fourth quarter.

Forrest Li: This was partly driven by our own logistics network cost per order decreasing by 20% from the same period last year. We are also seeing good progress made on delivery speed. In Indonesia, in December 2023, more than half of the orders from buyers in Java were delivered within two days.

Floor: This was partly driven by our own logistics network cost per order decreasing by 20% from the same tier rate last year.

Floor: We are also seeing good progress made on delivery speed.

Floor: Indonesia in December 2023, more than half of the orders from buyers in Java, what delivered within two days.

Forrest Li: We will continue to improve logistics service quality in terms of both speed and consistency. At the same time, we are also expanding premium services such as next day delivery and introducing new features. For example, we commenced return-on-spot services in Indonesia and Vietnam.

Floor: We will continue to improve logistics service quality in terms of both speed and consistency.

Floor: And at the same time, we are also expanding premium services, such as next day delivery and introducing new features.

Floor: Example, we commenced return on spot services, Indonesia and Vietnam.

Forrest Li: This initiative has resulted in higher trust and increased purchase frequency from our buyers, particularly those who are new to Shopee. Our e-commerce logistics network is now one of the most intensive and efficient in our market and a strong competitive mode for us. We have rapidly ramped up live streaming e-commerce, which accounted for around 15% of our physical order volume in Southeast Asia last December. With the skill and leadership achieved, the unique economics of the segment also improved meaningfully quarter-on-quarter. Shopee Brazil continued its strong performance in the fourth quarter.

Floor: This initiative has resulted in higher trust and increased product frequency purchase frequency from our buyers.

Clearly those who are new to sharpie.

Floor: Our E Commerce logistics network is now one of the most intensive and efficient in our markets and our strong competitive moat for us.

Floor: We have rapidly ramped up live streaming e-commerce.

Floor: <unk> accounted for around 15% of our physical order volume in Southeast Asia last December.

With the scale and the leadership achieved unique economics of the segment also improved meaningfully quarter on quarter.

Floor: Shop, Your Brazil continued its strong performance in the fourth quarter.

Forrest Li: Its contribution margin loss per order improved by nearly 90% year-on-year. This was driven by improvements in both user monetization and cost efficiency. We believe we have achieved cost leadership in logistics through scale and operational efficiencies, which have been and will be key to our success in the market. Now, turning to our digital financial services segment. Simani has delivered a strong year in 2023, primarily due to our consumer and SME credit business. Our journey to build a credit business dates back to 2019. We initially started by introducing pay later consumption loans in response to Shopee buyers' strong need for such services.

Floor: Contribution margin loss per order improved by nearly 19% year on year.

Floor: This was driven by improvements in both user monetization and cost efficiency.

Floor: We believe we have achieved cost leadership in logistics through scale and operational efficiencies.

Floor: Each has been and will be key to our success in the market.

Floor: Turning to our digital financial services segment.

Floor: <unk> has delivered a strong year in 2023, primarily attributed to our consumer and SME credit business.

Our journey to build a credit business dates back to 2019, we.

Floor: We initially started by introducing as pay later consumption loans in response to shop, he buyers strong need for such services.

Forrest Li: Subsequently, we extended our offerings to cash loan services to both buyers and sellers on Shopee. This underscores our user-centric approach and the unique advantage offered by the Shopee ecosystem for Seamoney to quickly achieve critical scale and profitability. 2023 was the first year of positive profit for Sea Money, with full-year adjusted EBITDA of $550 million. As of December 31, 2023, our consumer and SME loans principal outstanding was $3.1 billion, a 27% increase year-on-year. $2.5 billion of that was on the book. Consumer and SME loans active users for the fourth quarter, defined as credit users with loans outstanding by the end of the quarter, were over 16 million, a 28% increase year-on-year.

Floor: Subsequently, we extended our offerings to cash loan services to both buyers and sellers on sharpie.

Floor: This underscores our user centric approach and the unique advantage offered by the <unk> ecosystem for <unk> to quickly achieve critical scale and profitability.

Floor: 2023 was the first of the year of positive perfect foresee money with full year adjusted EBITA of $550 million.

Floor: As of December 31, 22 2023.

Floor: Our consumer and SME loans principal outstanding was $3 1 billion.

Floor: At 27% increase year on year.

Floor: Two $5 billion of that was on the book.

Floor: Consumer and SME loans active users for the fourth quarter defined as credit users with the loans outstanding by the end of the quarter was over $15 million.

Floor: A 28% increase year on year.

Forrest Li: In 2024, we will continue to invest in user acquisition for our credit business both on and off the Shopee platform as we see significant upsides in our market. As we scale, we will remain prudent on risk management, in addition to our credit business. C-Money is also growing its digital banking and insurance services to capture future business opportunities in the digital financial services segment. We expect Simanyi to continue its robust growth in Digital Entertainment in 2024. Garena has done well in enhancing and optimizing game experiences for its players. For instance, we have continuously introduced fresh and highly localized content to Free Fire. In the fourth quarter, we collaborated with Lamborghini to allow players to drive their cars in-game.

Floor: In 2024, we will continue to invest in user acquisition for our credit business, both on and off sharply platform as we see significant upside in our markets.

Floor: As we scale, we will remain prudent risk management.

In addition to our credit business. The money is also growing our digital banking and the insurance services to capture future business opportunities in the digital financial services segment.

Floor: We expect <unk> to continue its robust growth in 2024.

Floor: In digital entertainment.

Floor: Arena has done well enhancing and optimizing game experiences for our players.

Floor: For instance, we have continuously introduced a fresh and a highly localized content to free fire.

Floor: In the fourth quarter, we collaborated with Lamborghini to allow players to drive their cars in game.

Forrest Li: We also recently announced our collaboration with JKT48, an idol group from Jakarta, as our Indonesian brand ambassador. These partnerships excite and delight our players and enable us to nurture our local communities. I'm happy to share that we are seeing improved user acquisition and retention trends for Free Fire. In 2023, Free Fire was the most downloaded mobile game globally, according to Censor Tower.

Floor: We also recently announced our collaboration with J K T 48, and.

Floor: In Idaho group from Jakarta, as our Indonesia, Brent and Buster.

Floor: These partnerships excite and delight, our players and enable us to nurture our local communities.

Floor: Okay.

Floor: I am happy to share that we are seeing improved user acquisition and the retention trends for free fire.

In 2023 free fire was the most downloaded mobile game globally. According to sensor tower.

Forrest Li: We are pleased that these positive trends are continuing into 2024. In February, Free Fire achieved more than 100 million peak daily active users. It remains one of the largest mobile games in the world. With this positive momentum, we currently expect Free Fire to grow double digits year-on-year for both user base and bookings in 2024. To conclude, we are pleased to see positive trends in both growth and profitability for all three of our businesses. We will continue to invest for the future with discipline and focus. I would also like to take this opportunity to thank our employees, users, investors, and partners for your continued support throughout this journey. With that, I will invite Tony to discuss our financials. Thank you, Forrest, and thanks to everyone for joining the call.

Floor: We are pleased that these positive trends are continuing into 2024.

Floor: In fiber re <unk> achieved more than 100 million peak daily active users.

Floor: <unk> remains one of the largest mobile games in the world.

Floor: With this positive momentum, we currently expect <unk> to grow double digits year on year for both user base and bookings in 2024.

Floor: To conclude.

Floor: We are pleased to see positive trends in both growth and profitability for all three of our businesses.

Floor: We will continue to invest for the future with a discipline and focus.

Floor: I would also like to take this opportunity to thank our employees users investors and partners for your continued support throughout this journey.

Mike Tony: With that I'll, let you Mike Tony to discuss our financials.

Mike Tony: Thank you Forrest and thanks to everyone for joining the call.

Tony Ho: For CE overall, total GAP revenue increased 5% year-on-year to $3.6 billion in the fourth quarter and 5% year-on-year to $13.1 billion for the full year of 2023. This was primarily driven by improved monetization in our e-commerce and digital financial services industry. Our total adjusted EBITDA was $127 million in the fourth quarter of 2023 compared to an adjusted EBITDA of $496 million in the fourth quarter of 2022. For the full year of 2023, our total adjusted EBITDA was $1.2 billion compared to an adjusted EBITDA loss of $878 million for the full year of 2022. On e-commerce, our fourth-quarter GAP revenue of $2.6 billion included GAP marketplace revenue of $2.3 billion.

Mike Tony: We will see overall total GAAP revenue increased 5% year on year to $3 6 billion in the fourth quarter and 5% year on year to $13 1 billion for the full year of 2023.

Mike Tony: This was primarily driven by the improved monetization in our E Commerce and digital financial services businesses.

Mike Tony: Our total adjusted EBITDA was $127 million in the fourth quarter of 2023 compared to an adjusted EBITDA of $496 million in.

Mike Tony: In the fourth quarter of 2022.

Mike Tony: For the full year of 2023, our total adjusted EBITDA was $1 2 billion.

Mike Tony: Compared to our adjusted EBITDA loss of $878 million for the full year of 2022.

Mike Tony: On E Commerce, our fourth quarter GAAP revenue of $2 $6 billion.

Mike Tony: Included GAAP marketplace revenue of $2 3 billion.

Tony Ho: Up 23% year-on-year, and GAP product revenue of $0.3 billion. Within Gap Marketplace revenue, core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was $1.6 billion, up 41% year-on-year as a result of platform growth and improved monetization. Value-added services revenue, meaning consisting of revenues related to logistics services, was $0.7 billion, down 5% year-on-year as a result of higher revenue netting off against shipping subsidies, for the full year of 2023. GAP revenue of $9.0 billion included GAP marketplace revenue of $7.9 billion, up 27% year-on-year, and Gap product revenue of $1.1 billion. E-commerce's adjusted EBITDA loss was $225 million in the fourth quarter of 2023, compared to an adjusted EBITDA loss of $196 million in the fourth quarter of 2022.

Mike Tony: Up 23% year on year.

Mike Tony: And <unk> product revenue of <unk> 3 billion.

Mike Tony: Within that marketplace revenue core marketplace revenue, mainly consisting of transaction based fees and advertising revenues was $1 6 billion.

Mike Tony: Up 41% year on year as a result of platform growth and improved monetization.

Mike Tony: Value added services revenue, mainly consisting of revenues related to logistics services was <unk> 7 billion.

Mike Tony: Down 5% year on year as a.

Mike Tony: Out of higher revenue and netting off against shipping subsidies.

Mike Tony: For the full year of 2023.

Mike Tony: <unk> revenue of $9.0 billion included GAAP marketplace revenue of $10 9 billion.

Up 27% year on year.

Mike Tony: And GAAP product revenue of $1 1 billion.

Mike Tony: E Commerce adjusted EBITDA loss was $225 million in the fourth quarter of 2023.

Mike Tony: Peg to an adjusted EBITDA loss of $196 million in the fourth quarter of 2022.

Tony Ho: 2023 full-year adjusted EBITDA loss improved by 87% year-on-year to $240 million. For our Asia markets, we had an adjusted EBITDA loss of $193 million during the quarter compared to an adjusted EBITDA of $320 million in the fourth quarter of 2022. In our other markets, the adjusted EBITDA loss was $32 million, narrowing meaningfully from last year when losses were $124 million.

Mike Tony: 2023 full year, adjusted EBITDA loss improved by 87% year on year to $240 million.

Mike Tony: For our Asia markets, we had an adjusted EBITDA loss of $193 million during the quarter compared to an adjusted EBITDA of $320 million in the fourth quarter of 222.

Mike Tony: In our other markets.

Mike Tony: Adjusted EBITDA loss was $32 million.

Mike Tony: Narrowing meaningfully from last year, when losses were $124 million.

Tony Ho: Contribution margin loss per order in Brazil improved by nearly 90% year-on-year to reach negative $0.05. Digital financial services gap revenue was up by 24% year-on-year to $472 billion in the fourth quarter and up by 44% year-on-year to $1.8 billion for the full year of 2023. Adjusted EBITDA was up by 96% year-on-year to $148 million in the fourth quarter of 2023 and up by 341% year-on-year to $550 million for the full year of 2023. Digital entertainment bookings were $456 million in the fourth quarter and $1.8 billion for the full year of 2023.

Mike Tony: Contribution margin loss per order in Brazil improved by nearly 90% year on year to reach negative five.

Mike Tony: Digital financial services kept revenue was up by 24% year on year.

Mike Tony: Two $472 billion in the fourth quarter and up by 44% year on year to $1 8 billion for the full year of 2023.

Mike Tony: Adjusted EBITDA was up by 96% year on year to $148 million in the fourth quarter of 2023 and up by 341% year on year to $550 million.

Mike Tony: For the full year of 2023.

Mike Tony: Digital entertainment bookings were $456 million in the fourth quarter and $1 8 billion for the full year of 2023.

Mike Tony: GAAP revenue was $511 million.

Tony Ho: Gap revenue was $511 million in the fourth quarter and $2.2 billion for the full year of 2023. Adjusted EBITDA was $217 million in the fourth quarter and $921 million for the full year of 2023. Returning to our consolidated numbers, we recognize a net non-operating income of $32 million in the 4th quarter of 2023 compared to a net non-operating income of $35 million in the 4th quarter of 2022. For the full year, our non-operating income was $208 million compared to a loss of $13 million for the full year of 2022.

Mike Tony: In the fourth quarter and $2 2 billion for the full year of 2023.

Mike Tony: Adjusted EBITDA was $217 million in the fourth quarter and $921 million for the full year of soda in 'twenty three.

Mike Tony: Returning to our consolidated numbers, we recognized a net nonoperating income of $32 million in the fourth quarter of <unk>.

Mike Tony: 23.

Mike Tony: <unk> to our net operating income of $35 million in the fourth quarter also that in 'twenty two.

Mike Tony: For the full year, our non operating income was $208 million.

Mike Tony: Impaired to a loss of $13 million for the full year of 2022.

Tony Ho: The improvement was mainly due to higher interest income for the full year of 2023 as compared to the full year of 2022. We had a net income tax expense of $77 million in the fourth quarter of 2023 compared to a net income tax credit of $43 million in the fourth quarter of 2022. For the full year, our net income tax expense was $263 million compared to $168 million for the full year of 2022.

Mike Tony: The improvement was mainly due to higher interest income for the full year of 2023 as compared to the full year of two that in phase II.

Mike Tony: We had a net income tax expense of $77 million.

Mike Tony: In the fourth quarter of 2023 compared to a net income tax credit of $43 million in the fourth quarter of 2022 for the full year. Our net income tax expense was $263 million.

Mike Tony: <unk> to $168 million for the full year of 2022.

Tony Ho: As a result, its net loss was $112 million in the fourth quarter of 2023, as compared to net income of $423 million in the fourth quarter of 2020. For the full year, its net income was $163 million, as compared to a net loss of $1.7 billion for the full year of 2022. At the end of the 4th quarter of 2023, cash equivalents, short-term, and other treasury investments were $8.5 billion, representing a net increase of $566 million from the previous quarter. The increase includes proceeds of approximately $370 million from lower-grade securities purchased under agreements to resell relating to our banking operations. From the first quarter of 2024 onwards, we will include this as part of our other treasury investments as these are highly liquid marketable securities. With that... Let me turn the call to Mingzhu.

Mike Tony: As a result net loss was $112 million in the fourth quarter of 2008 2023 as compared to a net income of $423 million in the fourth quarter of 2012.

For the full year net income was $163 million as compared to a net loss of $1 $7 billion for the full year of 2022.

Mike Tony: At the end of fourth quarter of 2023 cash cash equivalents short term and other treasury investments were $8 5 billion.

Mike Tony: Representing a net increase of 500 and $686 million from the previous quarter.

Mike Tony: The increase includes proceeds of approximately $370 million from lower securities purchased under agreements to resell relating to our banking operations front.

Mike Tony: During the first quarter of 2024 onwards.

Mike Tony: We will include this as part of our other treasury investments as these are highly liquid marketable securities.

Speaker Change: With that let.

Speaker Change: Let me turn the call to <unk>.

Min Ju Song: Thank you, Forrest and Tony. We are now ready to open the call. We will now begin the question-and-answer session. If you would like to ask a question during this time, simply press star followed by number one on your telephone keypad.

Speaker Change: Thank you for thank Tony we are now ready to open the call for questions.

Speaker Change: Operator.

We will now begin the question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige star one in the interest of time, we will take a maximum of two questions at a time from each caller. If you wish to ask more questions. Please request.

Operator: If you would like to withdraw your question, again, press the star one. In the interest of time, we will take a maximum of two questions at a time from each caller. If you wish to ask more questions, please request to join the queue again after the first questions have been addressed. At this time, we will pause momentarily to assemble our roster. Your first question comes from a line of Pang Vitt from Goldman Sachs. Your line is open.

Speaker Change: To join the queue again after the first questions have been addressed at this time, we will pause momentarily to assemble our roster.

Speaker Change: Your first question comes from the line of Penguin from Goldman Sachs. Your line is open.

Pang Vittayaamnuaykoon: Hi, good morning, management team. Thank you very much for the opportunities and congratulations on the solid set of results. I have two questions from me.

Penguin: Hi, Good morning management team. Thank you very much for the opportunities and congratulation contest.

Penguin: Two questions from me Firstly on Sharpie can you. Please provide a little bit more color on the guidance you came out for 2024.

Pang Vittayaamnuaykoon: Firstly, on Shopee, can you please provide a little bit more color on the guidance you gave out for 2024? What is the assumption behind in terms of the competitive landscape and market share, especially in Indonesia? When it comes to high team growth, how do you plan to achieve this?

Penguin: And behind in terms of competitive landscape and market share, especially in Asia when it come to high teen growth how do you plan to achieve this.

Pang Vittayaamnuaykoon: And on the margin side, what gave you the confidence that we can go back to break even by the second half of this year? And what kind of EBITDA margin can we expect as well for Shopee to achieve in the near term? That's question number one. Question number two is related to Seamoney.

Penguin: And on the margin side, what gives you the confidence that we can go back to breakeven by second half of this year and what Kyle <unk>.

Penguin: And we can expect escuela choppy to achieve in the near term. That's question number one question number two related to <unk> can you provide some color on why EBITDA was weaker quarter on quarter.

Pang Vittayaamnuaykoon: Can you provide some color on why EBITDA was weaker quarter on quarter? We noticed that you spent more on marketing this quarter. Should we expect this to be the new run rate?

Penguin: We noticed that you spend more on marketing this quarter should we expect this to be the new run rate what type growth outlook can we expect for 2024 and can we still expect to see EBITDA growth here. Thank you.

Pang Vittayaamnuaykoon: What kind of growth outlook can we expect for 2024? And can we still expect to see EBITDA growth here? Thank you.

Speaker Change: I think let me address the first question first I think in terms of <unk>, we do believe that we have.

Yanjun Wang: I think, let me address the first question first. I think, in terms of the Shopee, we do believe that we are able to grow big things for the full year, as we shared in the opening. In particular, Indonesia, we do see Indonesia as a good market for us in Q4 and we will believe that the trend, the growth trend, likely will continue in Q1, and in line with the other markets in the following quarters. If you look at the overall competitive landscape, we're seeing a more stable competitive landscape in the past quarters. Again, we cannot sort of control, I guess, what our competitiveness is. But if you look at the past.

Speaker Change: We're able to grow high teens.

Speaker Change: For the full year 'twenty mindful as we said in the opening.

Speaker Change: For particular for Indonesia, we.

Speaker Change: We do see Indonesia is.

Speaker Change: A good market for us in the Q4, and we will believe that the trend likely the growth trend continued in Q1.

Speaker Change: And.

Speaker Change: In line with the other market in the following quarters.

Speaker Change: If you look at the overall comp.

Speaker Change: That landscape, we're seeing a more stable competitive landscape in the past quarters.

Speaker Change: Again.

Speaker Change: We cannot control.

Speaker Change: Control I guess.

Speaker Change: Our competitor does that if you look at the past.

Yanjun Wang: We have been competing with a similar set of competitors for quite a while, and even with the most intense competition during the past few quarters, we are able to gain market share while improving our union economy, thanks to a few factors. I think number one is that we are a clear market leader in the market. This translates to the economic scale, benefiting by both having a better monetization capability and also better cost efficiency. If you look at the scale, we are in a much better position now compared with a year ago.

Speaker Change: We have been competing with.

Speaker Change: Similar setup competitive for quite a while.

Speaker Change: And even with the most income intensive competition during the.

Speaker Change: Past few quarters, we're able to gain market share while improving our unique nymex.

Speaker Change: The contributing by a few factors I think number one is we are a clear market leader in the market.

Speaker Change: Translate to the economic scale benefiting by Bose.

Speaker Change: Having a better monetization completed and also a better cost efficiencies and if you look at the scale. We are in a much better position now compared with a year ago. We do believe that we have gained market share in Indonesia. If you compare the beginning of the year for last year and now.

Yanjun Wang: We do believe that we have gained market share in Indonesia if you compare the beginning of the year with the beginning of last year and now. The second one is, I do believe that we have a strong local leadership team and operating team to execute on what we set out to do and also make the right judgments based on what we've seen in the market. I probably spent most of my time, if you compare all countries, I spent most of my time in Indonesia.

Speaker Change: The second one is I do believe that we have a strong local leadership team and operating team to execute on what we set out to execute and also make the right judgment.

Speaker Change: Are we seeing the market.

Speaker Change: I spent probably most of my time, if you compare all countries I spent more time any louisa and many of our management team, including myself lenses sleeper, Indonesia over time as well to understand market better.

Speaker Change: Number three is we.

Yanjun Wang: And many of our management team, including myself, learned to speak Bahasa Indonesia over time as well to understand the market better. Number three is that we have built infrastructure for the market over time. For example, our logistic coverage in Indonesia has been a lot larger than before. Our cost has... The latest market results are that the retail prices of domestic products have been improving significantly over the past few quarters for shipping one order. Also, the quality has been improved.

Speaker Change: We have built infrastructure for the market Overtimes.

Speaker Change: For example, our luxury conference Indonesia has been a lot larger than before our cost has reduced significantly over the past few quarters for shipping one order.

Speaker Change: Also the quality has been improved.

Speaker Change: But most importantly by having our own logistics in the market are able to.

Speaker Change: Enabling us to offer differentiated services.

Speaker Change: If you follow the market closely we have recently.

Speaker Change: Starting with a return on the spot for the users, which has very little feedback not only for Indonesia, but also for Vietnam.

We also started a day.

Speaker Change: Essentially return services.

Yanjun Wang: But most importantly, having our own logistics in the market is enabling us to offer different services. If you follow the market closely, we have recently started the return on the spot for the users, which has received very good feedback, not only for Indonesia but also for Vietnam. We have also started a differentiated return service that allows the user to ask for a return at any time during the shipping process, and we can intercept the orders even if they are during shipping, which is not offered by any other one in the market so far. And also, on top of that, we have our strong integration with our digital financial services businesses. This not only enables us to reduce the cost for transactions, for example, on the payment side, but it also allows us to untap a cycle of potential by offering FPLATER to a broader segment that we have never seen in the market before.

Speaker Change: That.

Speaker Change: We're going to allow the user to actual return anytime during the shipping process and <unk>.

Speaker Change: We can intersect.

Speaker Change: <unk> EBIT during the shipping which is not offered by any other one in the market.

Speaker Change: Sofa.

Speaker Change: And also on top of that we have our strong integration with our digital financial services businesses.

Speaker Change: There is not only enable us to reduce the cost per transaction took some on the payment side, but also allow us to untap a sizable potential by offering.

Speaker Change: Later to a broader segment.

Speaker Change: We have never seen in the market before.

All of this helped us not only to reduce costs, but increase the conversions.

Speaker Change: In the market we've been doing all of this in the past few quarters and we do believe across all dimensions, we're able to do better over this year.

Speaker Change: So thats.

Speaker Change: Even.

Speaker Change: With.

Speaker Change: Whatever competitive landscape that we're facing we're able to outperform our competitors in the market be more efficient in the market.

Yanjun Wang: All of this helps us not only to reduce costs but increase conversions in the market. We've been doing all this in the past few quarters, and we do believe across all dimensions we are able to do better this year. So, you know, even with whatever competitive landscape that we are facing, we are able to outperform our competitors in the market, and be more efficient in the market. I think that's kind of how we see the market so far and how this will evolve in the future. In terms of the margins, as we shared in the openings, we believe that overall, since this was Shopee, we are able to break even in the second half of the year while with the intention to at least maintain our current market share in the market, and this applies to Indonesia as well. I think, as I shared earlier, compared to a year ago, we gained a sizable market share. And we are going to execute even better this year given the foundations we built during the last year.

Speaker Change: I think thats kind of like how we see.

Speaker Change: The market, so far and how this window evolve in the in the future.

Speaker Change: In terms of the margins as we shared in the openings.

Speaker Change: We believe that the overall businesses Lasalle fee, we're able to breakeven in the second half of the year.

Speaker Change: While.

Speaker Change: With intention.

Speaker Change: At least maintain our current market share in the market and this applied to.

Speaker Change: Indonesia, as well I think as I said earlier compared to a year ago, we gained sizable market shares.

Speaker Change: And we.

Speaker Change: We are going to execute.

Speaker Change: Even better over this year, giving the foundations we built.

Speaker Change: The last year.

Speaker Change: What I mentioned just now in terms of.

Speaker Change: The other thing we're doing there are a couple of other things we are doing further even over the year one is there.

Speaker Change: Price competitiveness.

Speaker Change: We do believe we have the most cost competitive platform in the market as you can do benchmark externally weapon to deep dive.

Yanjun Wang: On top of what I mentioned just now in terms of other things we are doing, there are a couple of other things we are doing further even over the year. One is price competitiveness. We do believe we are the most price competitive platform in the market, as you can benchmark externally. We are going to deep dive, we are going to deep dive on that even further over the year.

Speaker Change: Deep down that even further over the year.

Speaker Change: In particular for not only for individual vessel for the other market as well, but yes, Indonesia is.

Speaker Change: The key market for us.

Speaker Change:

Speaker Change: We're also going to two.

Speaker Change: To further drive the incentive policies.

Speaker Change: Not.

Speaker Change: Only on the logistics, but also on the offer fulfillment slightly alternative fund services.

Yanjun Wang: In particular, not only for Indonesia but for other markets as well, but yeah, Indonesia is the key market for us. They were also going to further drive the service quality I shared earlier, not only in the logistics but also in the after-fulfillment, like the return of funds services, the customer service quality, etc. And all this will essentially put us into an even better position in the future, not only maintaining our growth trajectory but also improving our EBITDA. Um, for the live stream that we talked about in the past earnings call, we have seen quite fast growth on the live stream in this quarter as well. As we shared in the opening, across the region, we have about 15% of our orders come from live streams. For Indonesia, it's an even bigger percentage. Indonesia is the first country we started in.

Speaker Change: On DM.

Speaker Change: Customer service quality et cetera.

Speaker Change: And.

Speaker Change: All of this will.

Speaker Change: We will.

<unk> put us into an even better position.

Speaker Change: And in the future.

Speaker Change: Not only.

Speaker Change: Maintaining our growth trajectory, but also improving our ebitdas.

Speaker Change: For the.

Speaker Change: Last name that we've talked about in the past.

Speaker Change: Earnings call.

Speaker Change: We are seeing.

Speaker Change: Quite.

Speaker Change: Cost growth on the Latam in this quarter as well.

Speaker Change: As we said in the opening we have.

Speaker Change: Across the region.

Speaker Change: We have about 15% of our orders come from lifestream.

Speaker Change: For Indonesia is even bigger.

Speaker Change: Centered in retail in the first country we started.

Speaker Change: In sulfur market, we believe that we are probably the largest latam platform.

Speaker Change: In the market.

Speaker Change: Only the scales.

Speaker Change: While we are growing it we have reduced the.

Speaker Change: The reducing the <unk> quite significantly.

Speaker Change: In the past few months and continued in Q1.

Yanjun Wang: In some markets, we believe that we are probably the largest live stream platform in the market. Not only the scale, but while we're growing it, we have been reducing the..., and we have been reducing the economics quite significantly in the past few months and will continue to do so in Q1. This also enables us to compete effectively with our competitors, which is quite different from a year ago. If you look at a year ago, we probably wouldn't have this ecosystem. We have to invest to build this ecosystem, and we are now in a very different status because of that.

Speaker Change: Actually.

Speaker Change: This also enable us to compete effectively with our competitors.

Seth Defense company, a year ago. If you look at it if you look at a year ago, we probably don't have this ecosystem, we have to invest to build this ecosystem.

Speaker Change: We are now in a very.

Speaker Change: At defense status for that.

Speaker Change: I think this is sort of probably conclude on on the first question for sharpie.

Speaker Change: Moving to the second question on the cement EBITDA for Q4, So I think we.

Speaker Change: Put into perspective on the overall cement businesses.

Speaker Change: The C money has seen.

Yanjun Wang: I think this sort of probably concludes on the first question for Shopee. Moving on to the second question on the C-money EBITDA for Q4. So I think we probably should put into perspective on the overall C-money businesses that C-money has seen the first positive profit in 2023, and the trajectory has been going well if you look at Q1, Q2, Q3 and extend to Q4. We have seen very healthy margins in our C-money business. And given the very healthy margin in the businesses, we in Q4, leveraging on the facilities we have spent, we invest more to acquire new users to the platform. And this essentially will bring us a better possibility in the long term. We measure our user acquisition cost very prudently. Every user acquired will bring positive profit over time. Thank you.

Speaker Change: <unk> the first positive.

Speaker Change: Profit in 2023 and to the trajectory has been doing well if you look at Q1 Q2 Q3.

Speaker Change: <unk> Q4.

Speaker Change: We are seeing very healthy margin in our.

Speaker Change: Many businesses.

Speaker Change: And giving the.

Speaker Change: Oh very healthy margin in the businesses.

Speaker Change: We are in Q4, leveraging on this and realities we spent.

Speaker Change: We invest more to acquire new users to the platform.

Speaker Change: And.

Speaker Change: This essentially will bring us a better profitability and long term, we measure our user acquisition cost very prudently ever user acquires will bring positive profit over that time.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Naveen Keeler from UBS. Your line is open.

Navin Killa: Alright, thank you for the opportunity.

Navin Killa: Actually we had a couple of questions.

Navin Killa: Firstly I just wanted to.

Navin Killa: I'm, a little bit about competition in the ecommerce space.

Navin Killa: Particularly in the Indonesia, I suppose Q.

Navin Killa: Your next question comes from the line of Navin Killa from UBS. Your line is open. Hi, thank you for the opportunity. I actually had a couple of questions.

Navin Killa: Four numbers might have benefited from the fact that tick tock was not in the market.

Navin Killa: But a large part of the quarter.

Navin Killa: Since the relaunch of Tic Toc and as we probably come close to the end of the trial period.

Navin Killa: First, I just wanted to understand a little bit about competition in the e-commerce space. Particularly in Indonesia, I suppose Q4 numbers might have benefited from the fact that TikTok was not in the market for a large part of the quarter. So since the relaunch of TikTok and, you know, as we probably come close to the end of the trial period, have you seen the intensity of the combined TikTak and Tokopedia entity evolve in a different direction over the course of the quarter? So that's my question number one. And second question, I guess, given the strong cash balance and your expectation of, I guess, positive profit for the full year for the group, how do we think about the use and allocation of this cash going forward, potentially for buybacks and other use cases? Thank you.

Navin Killa: Have you seen the intensity from the combined tick tock tocopilla entity.

Speaker Change: Well in a different direction.

Speaker Change: After the quarter. So that's my question number one.

Speaker Change: And second question I guess, given the strong cash balance.

Speaker Change: And your expectations I guess positive profit for the full year for the group.

Speaker Change: How do we think about use and allocation of this cash.

Speaker Change: Going forward potentially for buybacks and other uses.

Speaker Change: Thank you.

Speaker Change: For the first question that I think I shared quite quite a bit in the last.

Speaker Change: Well.

Speaker Change: Generally we compete with both competitive you mentioned for quite a long time.

Speaker Change: And Youre right that it does benefit us.

Speaker Change: In some extent in Q4 that <unk> wasn't.

Speaker Change: Operating ROE for the period of time for Facebook or a time during the quarter.

Speaker Change: But I don't think Thats, the only reason that we'll grow well in Q4.

Speaker Change: We're seeing similar growth trend continued in Q1 as well even.

Speaker Change: The landscape has changed.

Speaker Change: In a typical e-commerce.

Yanjun Wang: For the first question, I think I shared quite a bit in the last answer as well. Generally, we compete with both competitors you mentioned for quite a long period of time. And you are right that it did benefit us to some extent in Q4 that TikTok wasn't operating for the period of time, for five full periods of time during the quarter. But I don't think that's the only reason that it would grow well in Q4.

Speaker Change: Transactions.

Speaker Change: We can see across globally.

Speaker Change: It might not necessarily one plus one plus to greater than two situations.

Speaker Change: I think for US the most important thing is to focus on what we are great at.

Speaker Change: As I mentioned earlier.

Speaker Change: Our scale advantage our local.

Speaker Change: Leadership and operating teams our infrastructure build over time, our integration with DFS.

Speaker Change: And all of this and gave US the competitive advantage in the past few quarters as you can see.

Yanjun Wang: We have seen similar growth trends continued in Q1 as well; even the landscape has changed. In a typical e-commerce transaction, as we can see globally, it might not necessarily be 1 plus 1 plus 2 greater than 2 situations. I think for us, the most important thing is to focus on what we are great at, as I mentioned earlier. Our scale advantage, our local leadership and operation teams, our infrastructure built over time, our integration with DFS, and all of this has given us a competitive advantage in the past few quarters, as you can see, and will continue to give us an advantage in the coming quarters. And with that, I think, you know, we have shared that we're expecting good growth for Shopee over this coming year, in 2024, and in the coming quarter.

Speaker Change: And we will continue to give us the event in the.

Speaker Change: Coming quarters.

Speaker Change: That.

Speaker Change: Sure.

Speaker Change: And.

Speaker Change: With that I think the.

Speaker Change: We have.

Speaker Change: Sure that we have we're expecting a good growth for choppy over this.

Speaker Change: Coming in terms of any pull in in the coming quarters.

Speaker Change: And regarding our cash balance we think for a company of our size, it's prudent to maintain a strong cash balance and we are also very disciplined and focused in deploying our capital to capture future opportunities to maximize our long term shareholder return now we do not rule out any options for you.

Speaker Change: Our cash balance and Mr Guide.

Speaker Change: Yes.

Speaker Change: Your next question comes from the line of Alicia from Citigroup. Your line is open.

Yanjun Wang: And regarding our cash balance, we think for a company of our size, it's prudent to maintain a strong cash balance. And we're also very disciplined and focused in deploying our capital to capture future opportunities to maximize our long-term shareholder return. We do not rule out any options for using our cash balance in this regard. Your next question comes from a line from Alicia from Citigroup. Your line is open.

Alicia: Hi, Good evening management, Thanks for taking my questions. Congrats on the solid results I have two questions.

Alicia: First Scott.

Obviously, Mr. Ramadan coming do you anticipate your competitors in Indonesia to Florida step up.

Alicia: Spending.

Alicia: And in the event if your competitor in Indonesia.

Alicia Yap: Hi, good evening, management. Thanks for taking my questions. Congratulations on the solid results. I have two questions.

Alicia: Catching up on the market share would you step up your spending.

Alicia Yap: First is that, obviously, with Ramadan coming, do you anticipate your competitors in Indonesia will further step up the spending? And in the event, if your competitors in Indonesia are catching up on market share, would you step up your spending that might actually prevent your EBITDA from gaining profitability in the second half of this year? Second question is, what are the main reasons for your confidence in growing the free fire in double digits in booking and user this year? What have you done or plan to do to regain your user traction and monetization? Thank you. For the first question, so in a way, Ramadan has already started in Indonesia; we are comfortable with what we have seen so far, so in a way, we cannot see market share as a second number; market share is always changing, and the most important thing for us is to make sure that we always have a sizable leadership compared to our next competitors so that we can sustain our scale advantage. And that's number one.

Alicia: My actually prevent your EBITDA to regain profitability in the second half of Asia. Second question is what are the main reasons for your confidence in growing the sapphire in double digit in booking and user base.

Alicia: Sure.

Alicia: Have you done or plan to do to regain our user traction and monetization. Thank you.

Alicia: For PEO.

Alicia: First questions.

Alicia: So in a way Ramadan campaign has started already in Indonesia.

Alicia: We have.

Alicia: We are comfortable with Westin so far is put this way.

Alicia: So in a way we cannot see market share as affect a number market shares our dynamics and.

The most important for us is to make sure that we always have a sizeable leader leadership compared to our next competitors. So that we can.

Alicia: <unk> our scale advantage.

Alicia: And that's number one number two is we're able to good up our long term mode compared to competitors, who are more efficient when we compete.

Yanjun Wang: Number two is we're able to build up our long-term mode compared to competitors who are more efficient when we compete with them in the market. I think again, as I shared earlier, given all the things we have done, even with the most intensive competition in the past few quarters, we're able to reduce our costs while increasing our market shares. I think this reflects the mode we have been in over time, and we do believe that we'll be able to continue in the future. And regarding Free Fire, as we shared earlier, we're encouraged by the positive trends we have seen so far this year in terms of an active user base and monetization across our various markets. As a result, we share that our current expectation is for the game to achieve double-digit year-on-year growth for both user base and bookings. As a self-developed game, Free Fire also enjoys better margins for us. In terms of what we have done and will do in the future, I think our focus has been quite consistent.

Alicia: With the competitor in the market.

Alicia: I think again as I said earlier, given all the thing we have done.

Alicia: Even with the most intensive competition in the past few quarters, we're able to reduce our costs, while increasing our market shares I think this reflects of.

Alicia: The moat, we have been over times and we do believe that.

Alicia: We'll be able to continue in the in the future.

Alicia: And then regarding free fire as we shared early were encouraged by the positive trends we have seen so far this year in terms of active user base and monetization across our various markets.

Alicia: As a result, we shared that our current.

Alicia: Patient insulin again to achieve double digit <unk> growth for both user base and bookings.

Alicia: As a self developed game free fire also enjoys better market for us.

Alicia: In terms of what we have done and will do in the feature I think ill focus has been quite consistent.

Alicia: Building better user experience such as easy access to our users.

Alicia: File download size and data requirements.

Yanjun Wang: It's on building a better user experience such as easy access to users, file download size and data requirements, introducing more engaging content, and strengthening eSports communities to further develop the game into a strong evergreen franchise. Your next question comes from a line of Piyush Choudhary from HSBC. Your line is open. Hi.

Alicia: Introducing more engaging content.

And then strengthen exports communities to further develop the game into a strong evergreen franchise.

Abeer Chaudry: Your next question comes from the line of appear Chaudry from HSBC. Your line is open.

Abeer Chaudry: Okay.

Abeer Chaudry: Yes, hi.

Abeer Chaudry: Congratulations to the management team on.

Abeer Chaudry: Woods.

Abeer Chaudry: First question is on Sharpie, if I annualize your fourth quarter DMV and that itself is implying around 18% year on year growth in 2020 for Jamie.

Piyush Choudhary: Congratulations to the management team on a great set of results. First question is on Shopee. If I analyze your fourth quarter GMV, that itself is implying around 18% year-on-year growth in 2024. So why does the company expect to grow only in the high teens range and not more than that? What is driving the conservative guidance?

Abeer Chaudry: So why this company expect to grow only high teens range and not more than that what is driving.

Abeer Chaudry: Conservative guidance and also for Sharpie EBIDTA as you expect to turn profitable in second half would it mean that on a full year basis.

Abeer Chaudry: <unk> losses for choppy would narrow year on year and 24.

Piyush Choudhary: And also, for Shopee, as you expect to turn profitable in the second half, would it mean that on a full year basis, adjusted losses for Shopee would narrow year-on-year in 2024? Secondly, on gaming, what led to the fourth quarter quarterly pay users decline despite strong seasonality and your outlook for free fire is strong, would that mean console Garena will also grow double digits, and what's the margin outlook for Thank you.

Abeer Chaudry: Secondly on gaming.

Abeer Chaudry: What led to fourth quarter quarterly pay users decline, despite a strong seasonality and your outlook for free fire has strong would that mean consult arena will also grow double digit and what's the margin outlook for good reasons. Thank you.

Speaker Change: I think Paul in terms of the guidance, we gave out I think the high teens for the year.

Speaker Change: Believe that is the <unk>.

Speaker Change: Listenable.

Speaker Change: The estimate of giving out.

Speaker Change: Based on both the.

Market growth rate.

Speaker Change: So.

Yanjun Wang: I think in terms of the guidance we give out, I think the high change for the year is a reasonable estimate of giving out based on both the market growth rate and also the EBITDA goal we set up to achieve. And on top of that, the most important thing is that with this, we are able to sustain our market leadership while building up all the competitive modes that we've been building over the past years. On top of that, we even started a few other new initiatives during the year. So we are comfortable with what it is.

Speaker Change: The EBITDA goal, we set up to achieve and on top of that the most important thing is.

Speaker Change: With this we're able to sustain our market leadership.

While building up all of the competitive.

Speaker Change: Note that we've been building over the past years.

Speaker Change: On top of that even started do you other new initiatives during the year. So we are comfortable with what it is.

Speaker Change: In a way.

Speaker Change: We are not chasing for growth for the growth we have tried to growth.

Speaker Change: Efficient.

Yanjun Wang: In a way, we are not chasing growth for growth. We are trying to grow in an efficient and prudent fashion with the long-term possibility in mind. In terms of the second question, whether the full year will narrow over time, I think this is something we haven't given guidance on. We probably wouldn't comment in too much detail on that, but generally, I think what we set to achieve is to have Shopee as an overall business breakeven over the second half of the year. Regarding Free Fire, I think the quote-on-quote user fluctuation can be many reasons, including seasonality and game launch for Garena as a whole or esports events.

Speaker Change: And prudent.

Speaker Change: Fashions.

With the long term.

Speaker Change: Profitability in mind.

Speaker Change: The.

In terms of the SEC.

Speaker Change: Question, what the full year.

Speaker Change: Will narrow over time.

Speaker Change: I think this is something we haven't.

Speaker Change: Given our guidance on we probably wouldn't comment to detail on that but generally I think what we set to achieve again is to have.

Speaker Change: <unk> choppy as the overall business at breakeven.

Speaker Change: Over the second half of the year.

Speaker Change: Now regarding free fire.

Speaker Change: Quarter on quarter I use a fluctuation can be many reasons, including seasonality and game launch for garena as a whole or esports events.

Speaker Change: So overall I think we are.

Thomas Chong: But for Free Fire overall, I think we have, as shared earlier, we are very positive based on the trends we have seen so far, and therefore, we want to give the market some indication of what we have also seen. Regarding the rest of our portfolio, which are third-party games published by us, we will continue also to work closely with our partners to bring more content to our game communities as well. Your next question comes from a line of Thomas Chong from Jefferies. Your line is open. Hi, good evening.

Speaker Change: We have shared earlier, we are very positive based on the trends we have seen so far and therefore, we want to give the market some indication.

Speaker Change: We also have seen regarding the rest of our portfolio.

Speaker Change: Which third.

Speaker Change: Third party games published by US. We will continue also to work closely with our partners to bring more content to our game communities as well.

Speaker Change: Your next question comes from the line of Thomas Chong from Jefferies. Your line is open.

Thomas Chong: Hi, Good evening, Thanks management for taking my questions.

Thomas Chong: Thanks, management, for taking my questions and congratulations on a strong set of results. My question is first on Shopee. Given we are looking for just Iboga to break even in the second half and we have built up our competitive mode, I just want to ask, in terms of the pick rate trend for Shopee in 2024, how should we think about the advertising and the commission trend? That's number one.

Thomas Chong: Explanations on a strong set of results. My question is first on sharpie.

Thomas Chong: We are looking for adjusted EBITDA breakeven in the second half.

Thomas Chong: B, how steel up our competitive moat.

Speaker Change: Wanted to ask about.

Speaker Change: In terms of the take rate trends.

Speaker Change: So sharpie in touch on the floor or how should we think about the <unk> and the commission.

B: That's number one and then number two on.

On the Fintech side.

B: It's been a strong growth momentum that we are seeing.

Yanjun Wang: And then, number two, on the FinTech side, given the strong growth momentum that we are seeing, I just want to get some color with respect to our user acquisition strategies. What kind of channel are we getting new users through other than the organic one? And on that front, how are we thinking about the non-performing loans expectations as a percentage of our loan book? How is our technology or our data insights can help us achieve a low level? Thank you.

B: Just wanted to get some color with respect to our user acquisition.

B: Strategies, what kind of.

B: Channel.

Speaker Change: Thank you.

Speaker Change: Other than the old one.

<unk>.

Speaker Change: And on that one.

Speaker Change: Are we thinking about.

Speaker Change: Non performing loans expectations as percentage of our loan book.

Speaker Change: Our technology or our data insights, which can make it at a low level. Thank you.

Yanjun Wang: On the first question regarding the tick rate trend, as we have seen, we have adjusted our commission site continuously over the past few quarters. We are actually reviewing every month in terms of what makes sense for our user base in terms of commission. I think overall, the most important thing is that we want to make sure there is a healthy ecosystem, that our sellers have a reasonable margin to operate, but also are able to support the overall marketplace to grow healthcare. So, we will probably see some adjustments on commissions over the year. Some of them can be for specific categories; some of them are for specific countries.

Speaker Change: On the first question regarding the take rate trends.

Speaker Change: As you have seen that we have adjusted our commission side.

Speaker Change: Continuously over the past few quarters.

Speaker Change: We are actually reviewing term.

Speaker Change: Every month in terms of what makes sense for our user base in terms of commissions.

Speaker Change: I think overall the most important thing is we wanted to make sure there is a healthy ecosystem.

Speaker Change: That our seller has a reasonable margin to operate.

Speaker Change: Also are able to support the overall marketplace to grow healthily.

Speaker Change: So we will probably see some adjustment on the commissions over the year.

Speaker Change: Some of them can be for specific categories some of them for specific countries.

Speaker Change: <unk>.

Speaker Change: Sure.

Yanjun Wang: Yeah, I think it's probably going to be a fine-tuning process, I guess, over the year. On the second part, on the ad tick rate, we do believe that there is a sizeable potential on the ad side for the tick rate. Compared to many global peers, we still have a sizeable room to grow there. And we have done quite a few technical revamps in the past few months, and this will be deployed and fine-tuned in the coming quarter, which will enable us to further grow our edtech grid. The second question regarding C-money growth: if you look at C-money, the majority of businesses are in the credit business at this point in time. Of course, we also have digital banks and insurance, but they are still in a relatively growing stage. There are a few passes we're looking at here.

Speaker Change: Yes, I think it's probably going to be a fine tuning I.

Speaker Change: I guess.

Speaker Change: Over the year on the second part on the at take rate. We do believe that is a sizable.

Speaker Change: Sizable potential on the App side for.

Speaker Change: For the take rate compared to many global peers, we still have a sizable room to grow with that.

Speaker Change: We have done quite a few.

Speaker Change: Technical events in the past.

Speaker Change: Few months says and.

Speaker Change: This will be deployed and fine tuned in the coming quarter, which will enable us to.

Speaker Change: Further grow at take rate.

Speaker Change: The second question regarding <unk>.

Speaker Change: The money grows.

Speaker Change: If you look at the key money the majority of our business in the credit business. At this point of time of course, we also have regional banks and insurance by scaling the <unk>.

Speaker Change: A growing stage.

Speaker Change: The few.

Speaker Change: A few process well look at one is to further penetrate our sharpie ecosystem through our self pay later.

Yanjun Wang: One is to further penetrate our Shopee ecosystem through our Shopee Pay Later. The penetration of our e-commerce platform still has a slight room to grow. We started in Indonesia first and other countries later. Even for our earliest market, we still see a potential to further penetrate the user base. I think that's the first one.

Speaker Change: The penetration.

Speaker Change: Our E Commerce platform.

Speaker Change: Has the size of the room to grow.

Speaker Change: We started in Indonesia and other countries later.

Speaker Change: The even four.

Speaker Change: Our earliest market, we still see a potential to further penetrate that user base I think.

Speaker Change: That's the first one second one is we also believe that outside of the shelf the ecosystem.

Yanjun Wang: The second one is that we also believe that outside of the Shopee ecosystem, there are many users that we can onboard to our digital finance platforms. This is still at a very early stage as we started much later than penetrating the Shopee ecosystem. But essentially, I think you can imagine that in a big country like Indonesia where credit card penetration is relatively small, at the single-digit stage, we are probably the first one that is able to offer a credit service to the broader mass market. And, of course, this is helped by the Shopify penetration in the mass market, but there are still many other users outside of the Shopify ecosystem in the mass market that we believe that we can target. And, of course, there are many ways to do that.

Speaker Change: The our many users that we can onboard to our.

Speaker Change: Finance platforms.

Speaker Change: This is doing a very early stage as we started much later than penetrating the choppy ecosystem, but.

Essentially I think you can imagine that.

Speaker Change: A big country, like Indonesia, where our credit card penetration relatively small single digit stage.

Speaker Change: We are probably the first one.

That.

Speaker Change: Our April to offer credit service to the broader mass market.

Speaker Change: And of course.

Speaker Change: This helped by the shopping penetration in the mass market, but.

Speaker Change: There are still many other users also off the shelf the ecosystem in the mass market that we believe that we can target on.

Speaker Change: Of course, there are many channel to do that.

Yanjun Wang: We have offline QIS payment. We have product-based, theme-based consumption loans that we are working on, which is not uncommon in many other markets. So that's another part of it. The third equation in the credit business is to cross-sell other financial products to our Share with Pay Later user base. I think you asked about NPL as well.

Speaker Change: Well, we have offline.

Speaker Change: Joe asked payment.

Speaker Change: Very proud of base the same date.

Speaker Change: Sure.

Speaker Change: Consumption loans that we are working on which is.

Speaker Change: Not uncommon and many other market. So that's another part of this.

Speaker Change: A question in the year credit businesses. The third question in the credit businesses is to cross sell.

Speaker Change: Financial products.

Speaker Change: The two hour show until later user base I think.

Speaker Change: Sure.

Speaker Change: I think you asked about NPL as well the great thing for our business is here is that given the data we have.

Yanjun Wang: The great thing for our business here is that given the data we have from the e-commerce transactions and also, over the years, we've built up the external data besides our Shopify ecosystem, we are able to credit rate users a lot more efficiently and effectively. And if the users are onboarded to our Share with Pay Later platform, we have even better credit data based on their Share with Pay Later performance. This will enable us to sell them many other credit products over time. For example, we mentioned earlier the cash loans that we offer to the users, which unlock more use cases. Basically, the user can use them as credits for many other use cases besides the Shopee scenarios and other products we are rolling out over time.

Speaker Change: From the ecommerce transactions and also over years, we built up the external data. Besides our SAP ecosystem that we are able to credit rate user a lot more efficiently and effectively.

Speaker Change: And if they use their onboarding.

Speaker Change: Operator platform, we have even better credit data based on that so its related performers this will enable us to sell them.

Speaker Change: Any other credit products over time for example, we mentioned earlier on the year.

Speaker Change: The cash.

Speaker Change: <unk> alone that we offer to the users.

Speaker Change: Unlock more use cases, basically a user can use them.

Speaker Change: Credit for many other use cases, besides the choppy.

Speaker Change: Our scenarios.

Speaker Change: And other products were getting out over time.

Yanjun Wang: And I think the... As we grow, the scale will also enable us to lower down the cost of service as well, so the economics can be even better as time goes by. This will go into a positive cycle of having a better cost of service, and better risk management, so that we are able to target even broader segments in the market, so we can grow even further in the market. I think that's probably how we look at the growth side of the story. On the NPL side, we're seeing a relatively stable NPL, as Tony has shared in the opening, over time. Of course, that's based, number one, on the data we have, as I mentioned in the previous descriptions, but also because I do believe that we have probably the best, if not one of the best, credit modeling teams in South Asia to utilize the data to be able to credit rate our users.

Speaker Change: And I think.

Speaker Change: As we grow this will the scale will also enable us to lower down the cost of service low so the economics can be even better as time goes as this will.

I'll go to.

Speaker Change: A positive cycle that we have a cost of better customer service.

Speaker Change: Better risk management, so that we can.

Speaker Change: Able to target even broader segment in the market. So we can grow even further.

Speaker Change: In the market I think thats, probably how we look at the growth side of the story on.

Speaker Change: On the NPL side, we're seeing a relatively stable <unk>.

Speaker Change: PL.

Speaker Change: Tony has shared in the opening.

Speaker Change: Over the time.

Speaker Change: Of course, there's a.

Speaker Change: Uh huh.

Speaker Change: That's based on.

Speaker Change: Number one the data we have as I mentioned in the first.

Speaker Change: In the previous.

Speaker Change: Descriptions.

Speaker Change: But also because I do believe that we have probably the.

Speaker Change: The best if not the best.

Speaker Change: Credit.

Speaker Change: <unk> team in South Asia.

Speaker Change: Two to utilize that data.

Speaker Change: <unk>.

Speaker Change: To be able to raise our users on top of that it's also about how we manage the business overall and we mentioned this in a very prudent way, we're not rushing for growth further growth.

Yanjun Wang: On top of that, it's also about how we manage the business overall. We manage the business in a very prudent way. We're not rushing for growth. We want to make sure that our financial services not only have a proper business now but have a proper business in the very long term, even in credit cycle situations. So putting all these things together, we will probably see a pretty good upside for our financial services businesses. In 2024, we would like to further grow our user base and maintain our credit risk in the market. Your next question comes from a line of Sachin Sanghankar from Bank of America. Your line is open.

Speaker Change: We want to make sure that our financial service businesses.

Speaker Change: Not only have a public does now that have a public businesses the very long term EBIT in there.

Speaker Change: In the credit cycle situations.

Speaker Change: So putting all this together.

Speaker Change: We will probably see.

Speaker Change: Pretty high pretty good upside.

Speaker Change: Our.

Speaker Change: Financial services.

Speaker Change: And 2024, we will like to further grow our user base.

Speaker Change: And maintain our.

Speaker Change: <unk> credit risk in the market. Thank you.

Speaker Change: Your next question comes from the line of <unk> <unk> from Bank of America. Your line is open.

Sachin Sanghankar: Hi, thank you for the opportunity. I have two questions. First question, if you could help get a bit more clarity on improving unit economics at live streaming. Can you give some color in terms of the difference between normal e-commerce and live streaming in terms of AOV, the margin perspective, and also any thoughts on steady state EBITDA margin at live streaming? Second question, I also wanted to understand a bit more on Free Fire, i.e., is the expected launch of India baked in the expectation of double-digit growth, and are there any specific markets which are driving your optimism in terms of overall growth? In terms of eunuch noming for Livestream... Thank you.

Speaker Change: Hi, Thank you for pushing 80 I have two questions first question. If you could help us get a bit more clarity on improving unit economics that live streaming.

Speaker Change: Can you give some color in terms of the difference between normal ecommerce and live streaming in terms of <unk>.

Speaker Change: The margin perspective, and also any thoughts on steady state.

Speaker Change: EBITA margin at live streaming.

Speaker Change: Second question or I, just wanted to understand a bit more on <unk>.

Speaker Change: He is the expected launch of India, and the expectation for double digit growth and are there any specific markets, which is driving your optimism in terms of forward Hardie growth. Thank you.

Speaker Change: In terms of unit economics of livestream.

Yanjun Wang: It has improved cyclically in the past few months. Of course, at this point in time, compared to the non-livestream part, it has lower economics simply because we just started and it takes some effort to invest in growth. But we do believe in the long term, the livestream probability wouldn't be too different, would be quite similar to what we see in the other parts of the marketplace platform. In terms of the AOV that you asked earlier, we started livestream with a low AOV compared to the marketplace.

Speaker Change: It has improved significantly in the past few months.

Speaker Change: Of course at this point in time complaining to the non nitrogen part.

Speaker Change: It has.

Speaker Change: Lower economics simply because we just started and it takes some effort to invest for the growth.

Speaker Change: But we do believe in the long term.

The lifetime profitability wouldn't be two different will be quite similar to what we see in the other part of the marketplace platform.

Speaker Change: In terms of the Lv.

Speaker Change: That you asked earlier we started.

Speaker Change: Light chain with a lower <unk> compared to the marketplace a ton goes it will.

Yanjun Wang: As time went on, it started to converge, and now, in some markets, it's very similar, some markets even a little bit higher, some markets a bit lower, so it's a bit mixed at this stage, but eventually, in the big market, it will converge as time goes on. In the smaller market, it might have different variations, but I don't think it's significant for the purpose of discussion here. Regarding Free Fire, so far, the positive trends we have seen across various different markets for our global operations and currently, no material development in India; we are still making changes to Free Fire in India to best accommodate our users' preferences locally, and we'll update the market when there's more material. Your next question comes from a line Jiong Shao from Barclays. Your line is open.

Speaker Change: Start to converge and now is some market is very similar market, even a little bit higher some market lower so a bit mixed at this stage, but.

Speaker Change: Eventually in the big market it will converge as time goes.

Speaker Change: In the smaller market <unk> has a different variations, but I don't think it's a significant for the purpose of discussion here.

Speaker Change: And regarding free fire.

The so far the positive trends, we have seen a class.

Speaker Change: Various different markets for our global.

Speaker Change: <unk> operations.

Speaker Change: No material development in India.

Speaker Change: We're still making changes to the sapphire in yet to best accommodate I'll preface, our users' preference and locally and we will update the market when there's a more mature development.

Speaker Change: Our next question comes from the line of Jiang Zhang from Barclays. Your line is open.

Jiong Shao: Thank you very much for taking my questions. My first question is about your growth trend in the near term. You have returned to growth over 20% for the first time in the last year and a half. You changed your strategy a couple times during that period; usually, this kind of momentum doesn't sort of change. Thank you, for Indonesia.

Jiang Zhang: Thank you very much for taking my questions.

Jiang Zhang: My first question is about your.

Jiang Zhang: Gross trend in the near term.

Jiang Zhang: Hugh has returned back to growth over 20%.

For the first time in the last year and a half you changed your strategy a couple of times during that period, usually is kind of momentum doesn't sort of.

Jiang Zhang: Sure.

Speaker Change: Very quickly.

Speaker Change: Based on what you're seeing and also given what you have said so far.

Jiong Shao: Could you talk about your near-term growth momentum right now in the first quarter? Should we expect it to be sort of similar to what you saw in Q4. My second question is about your sort of mix between the core marketplace and the VAS. I know you talked about the VAS, which is a logistics, um, uh, sort of decline. Your view was at least partially, you know, mostly due to the subsidies for shipping, but over the last few quarters, it looks like your core marketplace growth has been very, very good, right, it's 30-40%, and your VAS growth has been relatively Other than the subsidies, are there other reasons behind, or strategic reasons behind these pretty meaningful differences? And if you add subsidies back, would the V.S.

Speaker Change: How about Indonesia.

Speaker Change: Could you talk about your near term growth of momentum right now in the first quarter should we expect sort of.

Speaker Change: Similar to what you saw.

Speaker Change: In Q4, My second question is about your.

Speaker Change: Sort of the mix between core marketplace, and yes I do.

Speaker Change: You talked about the Vms, which is the logistics.

Speaker Change: Sort of decline year over year was.

Speaker Change: Partially or mostly due to the subsidies for shipping but over the last few quarters. It looks like your core marketplace growth has been very very good right.

Speaker Change: 40%.

And your <unk> growth has been.

Speaker Change: Relatively low very low and negative in Q4 other than the subsidies.

Speaker Change: The other reasons behind our strategic reasons behind this pretty meaningful differences.

Speaker Change: And if you add subsidies back what is the <unk> growth being somewhat similar to your core market plus growth in Q.

Yanjun Wang: Will growth be somewhat similar to your core marketplace growth? I think for the growth trend for the near term, I think we have seen pretty good growth in Q1. I mean, you probably can see from the external data as well, although it's not very accurate.

I assume for the growth trend for the near terms I think we are seeing pretty good growth.

Speaker Change: In Q1.

Speaker Change: You probably can see from the external data as well, although it's not very accurate.

Yanjun Wang: But bear in mind that Q1, that's the Ramadan season for Indonesia in particular, and we have Chinese New Year in some other markets. So we do have to stick to the conservation personalities, but all in all, we're pretty happy with what we see in Q1 so far. On the VAS versus core marketplace, I would encourage you to look at core marketplace more closely to measure our overall platform growth, as well as monetization. The reason for VAS top line growth to deviate from that is because of accounting treatment that has a contra revenue effect caused by shipping. So that actually does not only affect the bottom line but also affects the top line for that revenue segment, causing a departure in the overall trend. We cannot discuss the non-GAAP adjusted revenue, but if you add that back, I think the overall growth is consistent with the platform growth. Your next question comes from the line of Ranjan Sharma from J.P. Morgan, Singapore. Your line is open.

Speaker Change: <unk>.

Speaker Change: But bear in mind that Q1.

Speaker Change: <unk> season.

Speaker Change: For Indonesia in particular, and we have 10, new year and some other markets.

Speaker Change: So we do we.

Speaker Change: We have to take into the consideration personalities, but all in all we see we're pretty happy with what we see.

Speaker Change: In Q1, so far.

Speaker Change: On the Mi versus core marketplace I would encourage you to look at our core marketplace more closely to measure our overall platform growth as well.

Speaker Change: As monetization.

Speaker Change: The reason for me as Potline golf to deviate from that is because of the accounting treatment.

Speaker Change: Has the contract revenue effect caused by shipping subsidies so.

Speaker Change: So that actually it does not only affect the bottom line, but also affect the top line for that.

Speaker Change: Revenues segment, causing a departure in overall trend.

Speaker Change: We cannot discuss.

Speaker Change: non-GAAP.

Speaker Change: Revenue adjusted revenue.

Speaker Change: But if you add that back I think the overall growth is consistent with our with our platform growth.

Speaker Change: Your next question comes from the line of Ranjan Sharma from Jpmorgan, Singapore. Your line is open.

Speaker Change: Yes.

Ranjan Sharma: Good morning, and thank you for the presentation. Two questions from my side. Firstly, for Chris on live streaming. Is there any cohort analysis that the team has done on the impact of live streaming GMV as incentives are removed for buyers? And the second question is for Forrest, if he's there, on Garena.

Ranjan Sharma: Hi, good morning, and thank you for the presentation two questions on my side.

Ranjan Sharma: Firstly for Chris on Lifesaving.

Ranjan Sharma: Is there any cohort analysis for the team has done.

Ranjan Sharma: On the back of lifestyle and <unk> as <unk>.

Ranjan Sharma: Incentives other move for.

Ranjan Sharma: <unk>.

Speaker Change: Second question is for <unk>.

Speaker Change: Sure.

Speaker Change: Good evening.

Ranjan Sharma: Still, the discussion is on free fire, but... Are there any developments to move away from a single title franchise to a more... Broader Studio. For the live streams on the cohort, yes, we do look at the cohort for live stream, and we're seeing pretty good retention and repurchase rates for live stream. But on top of that, I think more importantly for us actually for live stream is that we're seeing a very good new user percentage coming to live stream, which means that it does help us to reach out to a segment that we might not completely reach out to before, which helps us to grow the marketplace further as time goes on. And we also observed that the new users coming to Livestream also cross-purchase from across the Livestream platform as well. I think these are the encouraging signs we see, and that's also how we have actually been improving our economy in the past few months.

Speaker Change: Often the discussion is on free fire, but.

Speaker Change: Are there any developments to move away from a single franchise to our board.

Speaker Change: Broader studio thank you.

Speaker Change: For the license.

Speaker Change: Cohort, yes, we do look at a cohort for lifetime and we're saying.

Speaker Change: Pretty good retention.

Speaker Change: And repurchase rates for full lifespan.

Speaker Change: On top of that I think more importantly for us actually for Latam is we are saying.

Speaker Change: Very good.

Speaker Change: <unk>.

Speaker Change: Our percentage of coming to a last June which means that.

Speaker Change: Help us to.

Speaker Change: Reach out to.

Speaker Change: Segment.

Speaker Change: We might not completely reach out to before which help us to grow.

Speaker Change: So the marketplace further as time goes.

Speaker Change: And.

Speaker Change: We also observed that the news are coming from are coming through last time also cross purchase from long lifetime platform as well I think this other encouraging signs we see and that's also how actually we have been reducing our unit improving our economics.

Speaker Change: In the past few months and.

Forrest Li: Regarding Garena, I think Garena is definitely not a single franchise platform. We have multiple titles, both self-developed and published, across different genres, including battle royale, MOBA, sports, casual, RPG, etc. It's just that the super successful Free Fire franchise seems to dwarf, in comparison, the other titles, which have also been highly successful and very long-lasting for Garena so far, thanks to our global team's very strong operations and ability to build a strong pipeline for content, in partnership with our partners, as well as self-development, and also in growing our global esports communities.

Speaker Change: Regarding garena.

Speaker Change: Thank you Rina is definitely not a single franchise platform.

Speaker Change: Has multiple titles, both self developed and published across different genres, including Battle Royale.

Speaker Change: <unk> sport casual RPG.

Speaker Change: RPG et cetera.

Speaker Change: It's just that the super successful.

Speaker Change: Franchise same store.

Speaker Change: So Dorothy in comparison, the other titles, which are also highly successful and very long lasting.

Speaker Change: Walgreens, so far thanks, Todd global teams very strong operations and ability to build a strong pipeline in content partnership with our partners as well as self development and also in our global esports communities I think that being said as always we very focused on <unk>.

Forrest Li: I think that being said, as always, we're very focused on building future pipelines in terms of expanding our portfolio of genres and types of content, including more user-generated content, deploying more AI tools in building and furthering new models of interaction with our users. All of these things are going on in the background that our teams have been very, very focused on. We are very excited about the long-term prospects of Garena again as a leading global game. Your final question comes from the line of Ellie Jiang from Macquarie. Your line is open.

Speaker Change: <unk> future pipeline.

Speaker Change: In terms also expanding our portfolio of Sean.

Speaker Change: And type of content, including my user generated content.

Speaker Change: More AI tools in building in furthering our new models of interaction with our users all of these things are going on.

Speaker Change: Background that our teams have been very much focused on.

Speaker Change: So we are very excited about the long term prospects of Gary again.

Speaker Change: Leading global game company.

Speaker Change: Yes.

Yanjun Wang: Your final question comes from the line of <unk> Yang from Macquarie. Your line is open.

Ellie Jiang: Great, thank you so much for taking my question. I just have kind of two questions on the e-commerce side. Just now, Manchelin, you talked about our price competitiveness. I was wondering how we maintain this level of supply chain sustainability, and how do we see our merchants' general overlap compared to the other e-commerce apps in Indonesia? Also, in the slightly longer term, what is the end game for, I guess, overall e-commerce dynamics, and how do we really evaluate the longer term profitability level on the e-commerce side? Thank you.

Yang: Great. Thank you so much for taking my question.

Yang: Kind of two questions on the ecommerce side.

Yang: No management, you talked about our price competitiveness just wondering how do we maintain this level of supply chain sustainability and how do we see our merchant general overlap.

Yang: To the other.

Speaker Change: E Commerce App.

Speaker Change: Indonesia also.

Speaker Change: EBIT slightly longer term what is the endgame for I guess overall ecommerce dynamic and how do we really evaluate longer term profitability level on EBITDA. Thank you.

Speaker Change: Yes, I think for the price competitiveness I think.

Yanjun Wang: I think for price competitiveness, I think as a platform, we are generally the most competitive in the market, as you can benchmark from external numbers. The key to sustainable price competitiveness comes from a few angles. Number one is that we have scale, so scale does bring an advantage, so assuming that the same seller sells 100 items on our platform and sells 10 on other platforms, clearly, we have a slightly better bargaining power in terms of how much a price that can be set. I think that's number one.

Speaker Change: Our platform we are.

Speaker Change: Generally most competitive in the market as you can benchmark.

Speaker Change: A.

Speaker Change: Tom Mcdonnell numbers.

Speaker Change: And the key to sustain private competitors.

Speaker Change: From a few angles are number one is we.

Speaker Change: We have the scale.

Speaker Change: <unk> does bring advantage.

Speaker Change: Assuming that the same seller.

Speaker Change: So.

Speaker Change: Items, our platform sell 10 and other platforms.

Speaker Change: <unk>.

We have a slightly better.

Speaker Change: Our bargaining power in term of how much price that can be set.

Speaker Change: I think that's number one number two is the cost to serve from a seller perspective.

Speaker Change: We will like to mix.

Yanjun Wang: Number two is the cost to serve from a seller perspective. We would like to make the process for a seller to transact, to make their businesses successful on our platform much simpler compared to the other platforms. That comes with the tools, policies, and the fundamental concepts of how the marketplace operates. I think that's number two.

Speaker Change: The the process.

Speaker Change: For sellers to transact to make.

Speaker Change: That business is successful on our platform.

Speaker Change: A much simpler compared to the other platforms that come with the tools policy and the fundamental concept of.

Speaker Change: Of how the marketplace operates.

Speaker Change: I think.

Yanjun Wang: The third one is to be able to identify the right skills, the right sellers through our traffic allocation algorithms and policies. It's about how can we make sure that sellers with good performance and with good price competitiveness will be presented, and will be rewarded with better traffic on our platform. So, they can sell more, so they can reduce the price further because of the scale they have achieved. And they can also reduce the operation cost to serve the customers, and then this will flow in a very positive direction and be a win-win for everybody from both the buyer and the seller perspective. I think that's probably on the price competitive side. Just to add to that, I think another part of product competitiveness is to be able to offer differentiated services to different types of sellers on the platform. There are sellers who operate the full value chain; there are sellers who are very specialized in part of the value chain, for example, on the production side or the importing side.

Speaker Change: The first one is to be able to identify the right skus right centers.

Speaker Change: Our capital allocation algorithms.

Speaker Change: And policies of Cogs.

Speaker Change: It's about how can we make sure that.

Speaker Change: With a good performance.

Speaker Change: With a good product competitiveness will be presented.

Speaker Change: We'll be rewarded with better traffic to our platform.

Speaker Change: So we.

Speaker Change: We can sell more so they can reduce the price further because the scale achieved.

Speaker Change: And.

Speaker Change: We can also reduce the operation too.

Speaker Change: Operating cost to serve the customers and then this will flow to a very positive directions, and they're willing to for everybody from the both buyer and seller perspective, I think thats, probably on the price competitive side.

Speaker Change: Yeah.

Speaker Change: Just to add to that I think another part of cost competitiveness is too.

Speaker Change: Be able to have different to offer <unk> services to different type of selling in the platform. The our sellers who operate a full value chain. There are sellers, who are very specialized.

Speaker Change: And part of it a chance for example on the production side or.

Speaker Change: Or the importing site.

Yanjun Wang: It's very important for us as a marketplace platform to serve them well, to enable them to sell well on our platform, so we can leverage on their strengths, rather than them needing to be better at everything, and it makes it harder for many of the sellers to excel on the platform. Again, there are a lot of detailed operating methods that we have to work on to make sure that this works out smoothly. I think in terms of the long-term probabilities, my feeling is that our market is not too different from the other major e-commerce platforms that you have seen before. I think a similar profit level that is reasonable, in some markets a little bit better because of our market position, because of the nature of the retail margin in the market. Some markets might be a bit more competitive, but in general, we don't see our market too different compared to

Speaker Change: It's very important.

Speaker Change: For us as a marketplace platform too.

Speaker Change: Served us well to serve them well to enable them to sell our platform. So we can leverage on there.

Speaker Change: Strength rather than.

Speaker Change: They need to be passed on everything and.

Speaker Change: It makes it harder for many of the seller to XL in the platform, but again these are.

Speaker Change: A detailed bridging matters that we have to work on to make sure that.

Speaker Change: This warehouse mostly.

Speaker Change: I think in terms of the long term.

Speaker Change: <unk>.

Speaker Change: My feeling is that.

Our market is not too different from the other major E Commerce platform.

Speaker Change: You have seen before I think similar profit level that is reasonable and some market, maybe a bit better because our market position because of the nature of the retail margin in the market some market might be a bit more competitive in general.

We don't see our market to defense compared to.

Speaker Change: Yes.

Speaker Change: The other market as a market leader.

Speaker Change: And the.

Yanjun Wang: As a market leader in the platform, we will be able to achieve similar possibilities as a market leader in the other markets. This concludes our question and answer session. I would like to turn the conference back over to Ms. Minju Song for any closing remarks. Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. The conference is now concluded. Thank you for attending.

Speaker Change: As a market leader in the platform.

Speaker Change: We will.

Speaker Change: Be able to achieve similar profitability as the market leader in the other.

Speaker Change: Market.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to MS. <unk> for any closing remarks.

Speaker Change: Thank you all for joining today's call and we look forward to speaking to all of you again next quarter. Thank you.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Speaker Change: The conference has now concluded thank you for attending.