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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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American Depositary Shares, each representing one Class A ordinary share |
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New York Stock Exchange |
Class A ordinary shares, par value US$0.0005 per share*
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*Not for trading, but only in connection with the listing of American Depositary Shares on the New York Stock Exchange.
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Emerging growth company ☐
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“2023 convertible notes” refers to our 2.25% convertible senior notes due 2023, which were issued in June 2018;
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“2024 convertible notes” refers to our 1.00% convertible senior notes due 2024, which were issued in November 2019;
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“2025 convertible notes” refers to our 2.375% convertible senior notes due 2025, which were issued in May 2020;
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“2026 convertible notes” refers to our 0.25% convertible senior notes due 2026, which were issued in September 2021;
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“active users” in the context of digital entertainment refers to the number of unique accounts that interacted with our mobile and PC online games in a particular period. A single account that plays more than one online game or in more
than one market is counted as more than one active user. “Game QAUs” refers to the aggregate number of active users during the quarterly period;
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“ADSs” refers to the American Depositary Shares, each of which represents one of our Class A ordinary shares, par value US$0.0005 per share;
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“China” or “PRC” refers to the People’s Republic of China excluding, for the purpose of this annual report only, Taiwan, Hong Kong and Macau;
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“gross merchandise value” or “GMV” refers to the value of orders of products and services on our Shopee marketplace. Our calculation of GMV for our e-commerce platform includes shipping and other charges;
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“orders” refers to each confirmed order from a transaction between a buyer and a seller for products and services on our e-commerce platform, even if such order includes multiple items, during the specified period, regardless of
whether the transaction is settled or if the item is returned;
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“paying users” refers to the number of unique accounts through which a payment is made in our online games in a particular period. A unique account through which payments are made in more than one online game or in more than one market
is counted as more than one paying user. “Game QPUs” refers to the aggregate number of paying users during the quarterly period;
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“shares” or “ordinary shares” refer to our Class A ordinary shares, par value US$0.0005 per share, and our Class B ordinary shares, par value US$0.0005 per share;
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“Southeast Asia” refers to Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam;
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“SME” refers to small medium sized enterprises; and
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“we,” “us,” “our company,” “our group,” “our” or “Sea” refers to Sea Limited, a Cayman Islands company, its consolidated subsidiaries and its consolidated affiliated entities, including its variable interest entities, or VIEs, and
their subsidiaries and consolidated affiliated entities.
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our goals and strategies;
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our future business development, financial condition, financial results, and results of operations;
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changes in, and market size of, the e-commerce, digital financial services, and digital entertainment industries in the markets where we operate, including segments within those industries;
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expected changes or guidance in our revenue, costs or expenditures;
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our ability to continue to source, develop and offer new and attractive online games and to offer other engaging digital entertainment content;
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the expected monetization of our e-commerce, digital financial services, and digital entertainment businesses;
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our expectations regarding growth in our user base, level of engagement and monetization;
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our ability to continue to develop new technologies and/or upgrade our existing technologies;
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growth and trends of our markets and competition in our industries;
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government policies and regulations relating to our industries, including the effects of any government orders or actions on our businesses;
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general economic, political, social and business conditions in our markets; and
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the impact of widespread health developments.
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ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
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ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE
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ITEM 3. |
KEY INFORMATION
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A.
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[Reserved]
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B.
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Capitalization and Indebtedness
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C.
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Reasons for the Offer and Use of Proceeds
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D.
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Risk Factors
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We may fail to maintain or grow the size of our user base or the level of engagement of our users.
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Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our markets could have a material adverse effect on our business and operations.
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We have a history of net losses and we may not remain profitable in the future.
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Our results of operations are subject to fluctuations.
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We may fail to monetize our businesses effectively.
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Any future occurrence of natural disasters, epidemics, pandemics or other outbreaks, or other catastrophic events could also adversely affect our business.
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We may not succeed in managing or expanding our business across the expansive and diverse markets in which we operate.
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We are subject to extensive and changing laws and government regulations across our business.
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We may fail to compete effectively.
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Existing or future investments or acquisitions may not be successful.
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We have a limited operating history for some of our businesses.
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Our businesses involve third parties over whose actions we have no control.
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Fluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we report in U.S. dollars.
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We may be subject to intellectual property-related risks.
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We may be liable for security breaches and attacks against our or our third-party partners’ platforms and network, particularly with regard to confidential user information and personal or other data or any other privacy or data
protection compliance issue, and our platforms and games may contain unforeseen “bugs”, vulnerabilities or errors.
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We collect, process, transmit, and store personal information in connection with the operation of our businesses and are subject to complex and evolving international laws and regulations regarding privacy and data protection.
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We may use artificial intelligence in our business, and challenges with properly managing its use could adversely affect our results of operations.
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We face uncertainties relating to the growth and profitability of the e-commerce industry in our markets and we may face challenges and uncertainties in implementing our e-commerce strategy.
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We face risks related to logistics and fulfillment.
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We may be held liable for actions by our marketplace participants.
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We may suffer losses relating to the products we sell on Shopee.
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We face uncertainties and risks relating to our digital financial services business.
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We face risks related to our credit and banking businesses.
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Our banking business may subject us to additional material business, operational, financial, legal and compliance requirements and risks.
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We face risks related to our insurance business.
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We could be held liable if our digital financial services and products are used for fraudulent, illegal or improper purposes.
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We derive a significant portion of digital entertainment revenue and gross profit from a limited number of online games.
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We have a limited track record in game development and global game distribution.
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We rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and interact with user generated content.
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Our games are subject to scrutiny regarding the appropriateness of their content.
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We rely on technology and internet infrastructure, data center and cloud service providers and telecommunications networks in the markets where we operate.
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We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees.
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We face manpower-related risks.
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We may be subject to risks related to litigation and regulatory proceedings.
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We rely on structural arrangements to establish control over certain entities and government authorities may determine that these arrangements do not comply with existing laws and regulations. We are also subject to other risks
relating to such structural arrangements.
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we fail to maintain the popularity of our platforms among users;
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we are unable to maintain the quality of our existing content and services;
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we are unsuccessful in innovating or introducing new, best-in-class content and services;
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we fail to adapt to changes in user preferences, market trends or advancements in technology;
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technical, regulatory, governmental or other reasons prevent us from delivering our content or services in a timely and reliable manner, or at all, or otherwise affect the user experience;
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there are user concerns related to privacy, data protection, safety, fund security or other factors;
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monetization and cost reduction measures by us cause users to reduce their activity on our platforms or shift to other platforms;
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new games cause players to shift from our existing games without growing the overall size of our user base or online games platform;
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there are adverse changes to our platforms or offerings that are mandated by, or that we elect to make, to address legislation, regulation, government orders, or litigation, including settlements or consent decrees;
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our users fail to accept or comply with our terms of service or the privacy policies that we have implemented or may implement, or we adopt terms, policies, or procedures that are perceived negatively by our users;
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our marketing campaigns or promotional strategies fail to achieve the intended effect among users – for example, users may develop negative perceptions towards our marketing campaigns or promotional strategies;
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we are unable to achieve the expected synergies among our businesses, we are unable to achieve synergies in a cost-effective manner, or we fail to balance the interests of all participants in our ecosystem;
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we fail to maintain the brand image of our platforms or our reputation is damaged or changes negatively; or
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changes to demographic trends or economic development affect our markets.
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user acceptance of a digital economy, especially in the new markets to which we may expand in the future;
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lack of experience operating in these new markets, including our ability to understand different user behaviors and/or culture in new markets and roll-out relevant products and services localized to each market’s needs or preferences;
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challenges in adapting our approach and strategies in existing markets to new markets;
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recruiting and retaining talented and capable management and employees in various markets;
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our ability to appropriately deploy resources and management attention that otherwise would be focused on the development of our existing markets and businesses;
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limited technology infrastructure and low levels of use of the internet;
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challenges caused by distance, language and cultural differences, and local and regional competitive landscapes;
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providing content and services that appeal to the tastes and preferences of users in a larger number of markets;
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implementing our businesses in a manner that complies with local laws and practices, which may differ significantly from market to market, including laws regarding data protection, privacy, network security, cybersecurity, encryption
and payments;
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maintaining adequate internal and accounting control across various markets, each with its own accounting principles that must be reconciled to U.S. GAAP upon consolidation;
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compliance with privacy laws and data security laws and compliance costs across different legal systems;
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currency exchange rate fluctuations;
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protectionist laws and business practices that could, among other things, hinder our ability to execute our business strategies and put us at a competitive disadvantage relative to domestic
companies, including restrictions on foreign ownership;
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actions by governments or others to restrict access to our products and services, whether these actions are taken for political, security or other reasons, or that may cause us to discontinue our operations in a particular market;
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complex local tax regimes;
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differing, complex and potentially adverse customs, import/export laws, tax rules and regulations or other trade barriers or restrictions which may be applicable to transactions conducted through
cross-border e-commerce business, related compliance obligations and consequences of non-compliance, and any new developments in these areas;
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establishing strategic partnerships, as well as maintaining our relationships with any of our existing or future strategic partners;
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potential political, economic and social instability, including future major geopolitical events, and related actions taken by other countries in response, or perceived, threatened or actual security concerns; and
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higher costs associated with doing business in a larger number of markets.
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we may fail to successfully achieve the intended objectives;
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our investments or acquisitions may be viewed negatively by customers, financial markets or investors;
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the costs of identifying and consummating these transactions may be significant;
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acquisitions and the subsequent integration of new assets and businesses into our own could require significant management attention and could divert resources from our existing businesses;
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we may have difficulty in transitioning and integrating the business, technologies, products, personnel or operations of the acquired businesses;
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we may face unforeseen operating challenges;
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our relationships with existing employees, customers and business partners of our group, or those of the target, may be impaired;
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we may assume pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination or modification of which may be costly or disruptive to our business;
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an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;
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we may face challenges associated with managing additional and/or geographically remote businesses;
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investments and acquisitions could result in the use of substantial amounts of cash or significant capital contributions, which could limit other potential uses for our cash;
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investments and acquisitions could result in increased leverage, dilutive issuances of equity securities, adverse tax consequences, goodwill impairment charges, investment impairment charges or write-offs, and amortization expenses for
other intangible assets;
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if we incur debt to fund any investments or acquisitions, such debt may subject us to material restrictions on our ability to conduct our business, including financial maintenance covenants;
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we may need to issue new shares as acquisition consideration or to raise additional capital to fund the acquisition consideration, which may dilute our existing investors’ interest in us;
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we may assume unknown material liabilities of acquired companies, or may be exposed to claims and disputes by shareholders and third parties, including intellectual property claims and disputes;
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we may be unsuccessful in accurately projecting revenue, cost or other metrics of the invested or acquired entity in the due diligence process;
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the invested or acquired assets or businesses may not generate the financial results we expect; and
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the market value of our investments or acquisitions may fluctuate, particularly in volatile markets, or they may become obsolete.
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risks relating to third-party sellers on our platforms and merchant partners, including deficiencies in the quality of products, misrepresentations of or about products, listing or sale of restricted or prohibited products, failure to
comply with applicable laws and regulations, and potential intellectual property issues (see “—We may be subject to intellectual property-related risks”);
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risks relating to third-party publishing or distribution channels we use to make our applications available for download, such as the iOS App Store and the Google Play Store;
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risks relating to content generated by third parties and any user generated content in our games (see “—We rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and
interact with user generated content”), e-commerce platform, or other platforms, including content posted in real-time, which may be illegal, obscene, defamatory, infringing or otherwise inappropriate or unlawful;
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risks relating to third-party payment service providers we depend on to provide users with various payment options or mobile wallet top-up options, such as the iOS App Store and the Google Play Store, payment on delivery, bank
transfers, direct carrier billing, credit cards, debit cards, telecommunication card and over-the-counter top-up and payment through other third-party payment services;
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risks relating to services by third-party logistics service providers (see “—We face risks related to logistics and fulfillment”);
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risks relating to third party developers and independent software vendors;
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risks relating to third party collection agents in relation to our credit products and loans receivable;
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risks relating to manpower agencies and independent contractors (see “—We face manpower-related risks”);
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risks relating to business process outsourcing vendors, including customer service agents;
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risks relating to users’ personal data that is received or used by third parties in connection with our services, such as when sellers or third-party payments or logistics providers receive user information in connection with payment
services or order fulfillment;
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risks relating to third party banks, insurance, lending and wealth management service providers providing services on our platforms. If such third party service providers engage in activities that are negligent, fraudulent, or
otherwise harm the interest of users subscribing to such services or products through our platforms, we may be subject to legal and financial harm, including potential contractual or non-contractual liability, reputational damage,
litigation risk and/or user loss even if due to actions or activities not related to, attributable to or caused by us, or within our control;
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risks relating to users of our services or platforms who engage in fraud or other conduct that violates our terms of service, other policies, or the law;
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risks relating to our business and/or banking partners or counterparties being sanctioned and/or otherwise being found to have violated our agreements, other policies, or the law;
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risks relating to third-party data center providers and cloud services for the storing of data from our users and operations, including any risks relating to users’ personal data hosted by such service providers. In addition, we do not
control the operation of these facilities and rely on contracts to employ their use. The owners of the data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are
unable to renew these agreements on commercially reasonable terms, we may be required to transfer our servers and other infrastructure to new data center facilities, or change to other service providers, and we may incur significant costs
and possible lengthy service interruptions in connection with doing so; and
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damage to our reputation if third parties on our platforms or our other business partners do not properly perform their functions and negatively affect our users’ experience with our platforms.
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the growth rate of internet, broadband, personal computer and smartphone penetration and usage in our markets, including any changes or fluctuations in growth rates and/or usage;
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the trust and confidence level of e-commerce consumers, as well as changes in customer demographics and consumer tastes and preferences;
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the selection, pricing and popularity of products that online sellers offer;
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attracting and retaining a wide range of merchants, brands and retailers;
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providing effective technologies, infrastructure and services that meet the evolving needs of consumers and merchants;
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economic landscape, macro-economics, and consumer discretionary spending;
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competition from online and offline players, such as alternative retail channels or business models that better address the needs or preferences of consumers, including social commerce or
multi-category service e-commerce platforms;
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the differing and quickly changing laws and regulations applicable to e-commerce businesses in our markets, including any required licenses or permits, exposure to additional liability, including for conduct by or content originating
from third parties, and new labor legislation or changes to any employment or independent contractor classification frameworks; and
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the development of logistics (especially last-mile delivery and warehousing infrastructure), payment and other ancillary services associated with e-commerce.
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revoking the business licenses and/or operating licenses of such entities;
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discontinuing or placing restrictions or onerous conditions on the operations of our VIEs or Thai subsidiaries, or on our operations through any transactions between our company or our Cayman Islands or Singapore subsidiaries on the
one hand and our VIEs, subsidiaries of such VIEs or our Thai subsidiaries on the other hand;
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imposing fines, prohibiting payments by our VIEs or their shareholders to us as contemplated in the contractual arrangements with our VIEs, confiscating income from us, our Cayman Islands or Singapore subsidiaries, VIEs or Thai
subsidiaries, or imposing other requirements with which such entities may not be able to comply;
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imposing criminal penalties, including fines and imprisonment on our VIEs or Thai subsidiaries, their shareholders or directors;
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requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and their shareholders, which in turn would affect our ability to consolidate, derive economic
interests from, or exert effective control over our VIEs or Thai subsidiaries; or
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restricting or prohibiting us from providing funding to our business and operations in Vietnam and Thailand.
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imposing fines between NT$120,000 (US$3,919) to NT$25,000,000 (US$816,460) and further fines if the non-compliance is not rectified as ordered;
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ordering us to reduce any direct or indirect ownership or control by PRC investors in our company;
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requesting us to divest some or all of our ownership or control in our operating entities in Taiwan;
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suspending the rights of shareholders of our Taiwan operating entities; and
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discontinuing the operations and revoking the business licenses of our Taiwan operating entities.
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variations in our quarterly or annual revenue, earnings and cash flow;
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guidance or other projections we may provide to the public, including any changes or failure to meet any guidance or other projections;
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announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
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announcements of new content and services or plans of expansion or exits by us or our competitors;
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changes in financial estimates by securities analysts and data providers, or our failure to meet these estimates or the expectations of investors;
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downgrades by industry or securities analysts that publish research or reports on us;
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detrimental adverse publicity about us, our businesses or our industries or investor sentiment with respect to our competitors, our shareholders and investors, and our industry in general;
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additions or departures of key personnel;
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release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities, including the perception that these sales could occur;
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dilution of the ownership interests of our ADS holders due to conversions of our 2024, 2025 and 2026 convertible notes, which we may choose to settle by issuing ADSs, or from the unwinding of capped call transactions in connection with
our 2024 and 2025 convertible notes;
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current or potential litigation, government actions or regulatory investigations, including class actions;
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volatility in the stock market, including price and volume fluctuations in the overall stock market, changing trends in the economy, interest rate hikes or other interest rate-related decisions; and
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general political, economic, or market conditions, or other events or factors, including those resulting from war, incidents of terrorism, pandemics, and other disruptive external events, or responses to these events.
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we have failed to timely provide the depositary with our notice of meeting and related voting materials;
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we have instructed the depositary that we do not wish a discretionary proxy to be given;
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we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or
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a matter to be voted on at the meeting would have a material adverse impact on shareholders.
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ITEM 4. |
INFORMATION ON THE COMPANY
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A.
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History and Development of the Company
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B.
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Business Overview
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Our people define us. Sea shall be a place where talented people thrive at scale, enjoy freedom of ideas and achieve the unimaginable. It shall be a magnet for the smartest, the most creative
and the most driven.
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Our products and services differentiate us. We aspire to better every life we touch and make the world an ever more connected community through innovative products and services.
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Our institution will outlast us. We strive to build an institution that will last for generations and evolve with time, and that is founded upon our core values.
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We serve. Our customers are the sole arbiter of the value of our products and services. We strive to meet unmet needs and serve the underserved.
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We adapt. Rapid change is the only constant in the digital age of ours. We embrace change, celebrate it and always strive to be a thought leader that influences it.
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We run. We are in a constant race to success while grappling with rapidly shifting forces. We move faster, better and with more urgency every day.
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We commit. Our work is our commitment. We commit to our values, institution, customers and partners. We commit to each other. Above all, we commit to doing the best we can and being the best
we are.
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We stay humble. We have traveled a long way from our humble beginning and yet, we never lose our humility in our continual quest for greater heights.
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Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. It also has a significant presence in Latin America. Since its inception, Shopee has adopted a mobile-first approach and is a highly scalable marketplace platform
that connects buyers and sellers. Shopee provides users with a convenient, safe and trusted shopping environment that is supported by integrated payment, logistics, fulfillment, and other value-added services. Our users enjoy the social
nature of Shopee’s platform, where users can follow, rate and easily browse for discovery to enhance their retail experience. We also empower sellers with various tools and support and other value-added services for them to better engage
with their buyers. We monetize Shopee mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services, including logistics. We also purchase products from manufacturers
and third parties and sell them directly to buyers on our Shopee platform.
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SeaMoney is a leading digital financial services provider in Southeast Asia with a growing presence in Brazil. SeaMoney currently offers consumer and SME credit, mobile wallet, banking and insurtech services.
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Garena is a global game developer and publisher. Garena provides users with access to popular and engaging mobile and PC online games that we develop, curate, license and localize for each
market. We also promote esports in our markets to strengthen our game ecosystem and increase user engagement.
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Seller Verification. Sellers on the Shopee platform are subject to verification process and must agree to our standard terms of service before opening a seller account.
|
|
• |
Listing Screening. Shopee has adopted a set of policies and procedures to prevent and remove listings of inappropriate or illegal goods and to screen out repeat offenders. All listings on the
Shopee platform first undergo automated screenings against a list of illegal product names, categories and descriptions. We have developed this list based on local regulations and it is frequently updated by our local teams to reflect the
latest regulatory requirements. Listings posted by sellers which are deemed to be of high risk based on our screening will not be visible on our platform until they are manually cleared by our operations and compliance teams. Listings
that are not cleared due to regulatory violations or other violations of our terms of use will be permanently removed, and the seller will not be able to edit or re-submit the same product listing. We may suspend or remove accounts that
repeatedly submit illegal or inappropriate listings. Moreover, users and other third parties may report listings that they believe to be illegal, inappropriate or offensive for our further review.
|
|
• |
Shopee Guarantee. We provide “Shopee Guarantee,” a free service to facilitate transactions on the Shopee platform. Under Shopee Guarantee, we hold payments made by buyers in certain
designated Shopee Guarantee account held by us until the ordered products are received or deemed to have been received by the buyer. After this, we release the payment to the seller. If the purchased products are never delivered to or
received by the buyer, we will return the funds to them. Shopee Guarantee is available for all transactions executed through the Shopee platform. We believe that Shopee Guarantee reduces settlement risks and improves transaction
efficiency and security.
|
|
• |
Dispute Resolution. We have on-the-ground teams to help resolve disputes between buyers and sellers. In the case of a dispute, a buyer may submit supporting evidence through our dispute
resolution system and seek compensation from the seller.
|
For the Three Months Ended
|
||||||||||||||||
March 31, 2023
|
June 30, 2023
|
September 30, 2023
|
December 31, 2023
|
|||||||||||||
Bookings
(US$ in billions)(1)
|
0.5
|
0.4
|
0.4
|
0.5
|
||||||||||||
Game QAUs (in millions)
|
491.6
|
544.5
|
544.1
|
528.7
|
||||||||||||
Game QPUs (in millions)
|
37.6
|
43.1
|
40.5
|
39.7
|
|
(1) |
GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue. This operating metric is used as an approximation of cash spent by our users in the applicable period that is attributable to our
digital entertainment segment.
|
|
• |
imposing fines between NT$120,000 (US$3,919) to NT$25,000,000 (US$816,460) and further fines if the non-compliance is not rectified as ordered;
|
|
• |
ordering the violator to reduce any direct or indirect ownership or control by PRC investors;
|
|
• |
requesting the violator to divest some or all of its investment or control in its invested entities in Taiwan;
|
|
• |
suspending the rights of shareholders; and
|
|
• |
discontinuing the operations and revoking the business licenses of its invested entities in Taiwan.
|
|
(i) |
a natural person who is not a citizen of Thailand;
|
|
(ii) |
a juristic person not established in Thailand;
|
|
(iii) |
a juristic person established in Thailand with half or more of the shares constituting its capital held by (i) or (ii) or half or more of the total capital of such juristic person invested by (i) or (ii); and
|
|
(iv) |
a juristic person established in Thailand with half or more of the shares constituting its capital held by (i), (ii) or (iii), or half or more of the total capital of such juristic person invested by (i), (ii) or (iii).
|
C.
|
Organizational Structure
|
|
• |
Garena Online Private Limited, our wholly-owned subsidiary established in Singapore operating our digital entertainment business;
|
|
• |
Shopee Limited, our wholly-owned subsidiary established in the Cayman Islands holding certain of our e-commerce subsidiaries;
|
|
• |
Shopee Singapore Private Limited, our wholly-owned subsidiary established in Singapore operating our e-commerce business in Singapore;
|
|
• |
PT Shopee International Indonesia, our wholly-owned subsidiary established in Indonesia operating our e-commerce business in Indonesia;
|
|
• |
Sea Services Limited, our wholly-owned subsidiary established in the Cayman Islands which is an investment holding company for certain of our subsidiaries used mainly for
holding treasury investments such as available-for-sale sovereign bonds and corporate bonds; and
|
|
• |
Sea Services Holdings Limited, our wholly-owned subsidiary established in the Cayman Islands which is an investment holding company primarily holding treasury investments such
as available-for-sale sovereign bonds and corporate bonds.
|
|
• |
exercise effective control over our VIEs, including the ability to direct the VIE shareholders to vote at our direction and have the ability to replace each of them as a VIE shareholder;
|
|
• |
receive substantially all of the economic benefits and absorb losses of our VIEs; and
|
|
• |
have an exclusive call option to purchase all or part of the equity interests in and/or assets of our VIEs when and to the extent permitted by the relevant laws.
|
D.
|
Property, Plants and Equipment
|
ITEM 4A. |
UNRESOLVED STAFF COMMENTS
|
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|
A.
|
Operating Results
|
|
• |
In our e-commerce business, we closely monitor the number of transactions per active buyer. We optimize the assortment of our product categories on our marketplace and build convenient tools to attract sellers. We monetize our
e-commerce business mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services, including logistics. We may consider other monetization methods in order to capture
additional revenue streams. We also purchase products from manufacturers and third parties and sell them directly to buyers on our Shopee platform.
|
|
• |
In our digital financial services business, we mainly monetize by earning interest and fees from our credit and banking businesses, charging fees from our mobile wallet services and by earning premium or commission from our insurance
business.
|
|
• |
In our digital entertainment business, our primary source of revenue is the sale of in-game items. We focus on developing and curating the best content and localizing that content to cater to the tastes and preferences of each of our
unique markets. We maximize the in-game user experience to keep our users highly engaged and increase the likelihood of in-game spending so as to maximize revenue. To do so, we provide a high-quality entertainment experience, adopt
effective pricing strategies for each market and game, and leverage our platform’s cross-selling tools to support long-term user engagement with our games.
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2021
|
2022
|
2023
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Service revenue
|
||||||||||||||||||||||||
E-commerce
|
4,071,856
|
40.9
|
6,187,620
|
49.7
|
7,885,185
|
60.3
|
||||||||||||||||||
Digital Financial Services
|
469,747
|
4.7
|
1,221,996
|
9.8
|
1,759,422
|
13.5
|
||||||||||||||||||
Digital Entertainment
|
4,320,013
|
43.4
|
3,877,163
|
31.1
|
2,172,009
|
16.6
|
||||||||||||||||||
Other Services(1)
|
23,014
|
0.2
|
53,557
|
0.5
|
125,769
|
1.0
|
||||||||||||||||||
Sales of goods(2)
|
1,070,560
|
10.8
|
1,109,369
|
8.9
|
1,121,175
|
8.6
|
||||||||||||||||||
Total revenue
|
9,955,190
|
100.0
|
12,449,705
|
100.0
|
13,063,560
|
100.0
|
(1) |
Other services are a combination of multiple business activities that do not meet the quantitative threshold to qualify as reportable segments.
|
(2) |
Sales of goods revenue mainly comes from our e-commerce business.
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2021
|
2022
|
2023
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Southeast Asia
|
6,316,782
|
63.5
|
8,321,249
|
66.8
|
9,179,527
|
70.3
|
||||||||||||||||||
Latin America
|
1,850,861
|
18.6
|
2,043,918
|
16.4
|
2,193,758
|
16.8
|
||||||||||||||||||
Rest of Asia
|
1,394,342
|
14.0
|
1,727,187
|
13.9
|
1,496,433
|
11.4
|
||||||||||||||||||
Rest of the world
|
393,205
|
3.9
|
357,351
|
2.9
|
193,842
|
1.5
|
||||||||||||||||||
Total revenue
|
9,955,190
|
100.0
|
12,449,705
|
100.0
|
13,063,560
|
100.0
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2021
|
2022
|
2023
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Cost of service
|
||||||||||||||||||||||||
E-commerce
|
3,690,026
|
37.1
|
4,885,586
|
39.3
|
5,171,361
|
39.6
|
||||||||||||||||||
Digital Financial Services
|
105,274
|
1.0
|
254,138
|
2.0
|
279,745
|
2.1
|
||||||||||||||||||
Digital Entertainment
|
1,230,082
|
12.4
|
1,077,017
|
8.7
|
672,481
|
5.1
|
||||||||||||||||||
Other Services(1)
|
30,526
|
0.3
|
54,341
|
0.4
|
78,937
|
0.6
|
||||||||||||||||||
Cost of goods sold
|
1,003,547
|
10.1
|
993,346
|
8.0
|
1,027,389
|
7.9
|
||||||||||||||||||
Total cost of revenue
|
6,059,455
|
60.9
|
7,264,428
|
58.4
|
7,229,913
|
55.3
|
(1) |
Other services are a combination of multiple business activities that do not meet the quantitative threshold to qualify as reportable segments.
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2021
|
2022
|
2023
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue |
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Other operating income
|
(287,946
|
)
|
(2.9
|
)
|
(279,184
|
)
|
(2.2
|
)
|
(221,021
|
)
|
(1.7
|
)
|
||||||||||||
Sales and marketing expenses
|
3,829,743
|
38.5
|
3,269,223
|
26.3
|
2,779,223
|
21.3
|
||||||||||||||||||
General and administrative expenses
|
987,868
|
9.9
|
1,437,612
|
11.5
|
1,134,724
|
8.7
|
||||||||||||||||||
Provision for credit losses
|
117,427
|
1.2
|
513,690
|
4.1
|
633,942
|
4.8
|
||||||||||||||||||
Research and development expenses
|
831,703
|
8.4
|
1,376,501
|
11.0
|
1,164,126
|
8.9
|
||||||||||||||||||
Impairment of goodwill
|
–
|
–
|
354,943
|
2.9
|
117,875
|
0.9
|
||||||||||||||||||
Total operating expenses
|
5,478,795
|
55.1
|
6,672,785
|
53.6
|
5,608,869
|
42.9
|
For the Year Ended December 31,
|
||||||||||||||||||||||||
2021
|
2022
|
2023
|
||||||||||||||||||||||
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
US$
|
Percentage
of Total
Revenue
|
|||||||||||||||||||
(thousands, except for percentages)
|
||||||||||||||||||||||||
Selected Consolidated Statements of Operations Data:
|
||||||||||||||||||||||||
Revenue:
|
||||||||||||||||||||||||
Service revenue
|
||||||||||||||||||||||||
Digital Entertainment
|
4,320,013
|
43.4
|
3,877,163
|
31.1
|
2,172,009
|
16.6
|
||||||||||||||||||
E-commerce and other services
|
4,564,617
|
45.8
|
7,463,173
|
60.0
|
9,770,376
|
74.8
|
||||||||||||||||||
Sales of goods
|
1,070,560
|
10.8
|
1,109,369
|
8.9
|
1,121,175
|
8.6
|
||||||||||||||||||
Total revenue
|
9,955,190
|
100.0
|
12,449,705
|
100.0
|
13,063,560
|
100.0
|
||||||||||||||||||
Cost of revenue:
|
||||||||||||||||||||||||
Cost of service
|
||||||||||||||||||||||||
Digital Entertainment
|
(1,230,082
|
)
|
(12.4
|
)
|
(1,077,017
|
)
|
(8.7
|
)
|
(672,481
|
)
|
(5.1
|
)
|
||||||||||||
E-commerce and other services
|
(3,825,826
|
)
|
(38.4
|
)
|
(5,194,065
|
)
|
(41.7
|
)
|
(5,530,043
|
)
|
(42.3
|
)
|
||||||||||||
Cost of goods sold
|
(1,003,547
|
)
|
(10.1
|
)
|
(993,346
|
)
|
(8.0
|
)
|
(1,027,389
|
)
|
(7.9
|
)
|
||||||||||||
Total cost of revenue
|
(6,059,455
|
)
|
(60.9
|
)
|
(7,264,428
|
)
|
(58.4
|
)
|
(7,229,913
|
)
|
(55.3
|
)
|
||||||||||||
Gross profit
|
3,895,735
|
39.1
|
5,185,277
|
41.6
|
5,833,647
|
44.7
|
||||||||||||||||||
Operating income (expenses):
|
||||||||||||||||||||||||
Other operating income
|
287,946
|
2.9
|
279,184
|
2.2
|
221,021
|
1.7
|
||||||||||||||||||
Sales and marketing expenses
|
(3,829,743
|
)
|
(38.5
|
)
|
(3,269,223
|
)
|
(26.3
|
)
|
(2,779,223
|
)
|
(21.3
|
)
|
||||||||||||
General and administrative expenses
|
(987,868
|
)
|
(9.9
|
)
|
(1,437,612
|
)
|
(11.5
|
)
|
(1,134,724
|
)
|
(8.7
|
)
|
||||||||||||
Provision for credit losses
|
(117,427
|
)
|
(1.2
|
)
|
(513,690
|
)
|
(4.1
|
)
|
(633,942
|
)
|
(4.8
|
)
|
||||||||||||
Research and development expenses
|
(831,703
|
)
|
(8.4
|
)
|
(1,376,501
|
)
|
(11.0
|
)
|
(1,164,126
|
)
|
(8.9
|
)
|
||||||||||||
Impairment of goodwill
|
–
|
–
|
(354,943
|
)
|
(2.9
|
)
|
(117,875
|
)
|
(0.9
|
)
|
||||||||||||||
Total operating expenses
|
(5,478,795
|
)
|
(55.1
|
)
|
(6,672,785
|
)
|
(53.6
|
)
|
(5,608,869
|
)
|
(42.9
|
)
|
||||||||||||
Operating (loss) income
|
(1,583,060
|
)
|
(15.9
|
)
|
(1,487,508
|
)
|
(11.9
|
)
|
224,778
|
1.7
|
||||||||||||||
Interest income
|
36,082
|
0.4
|
115,515
|
0.9
|
331,310
|
2.6
|
||||||||||||||||||
Interest expense
|
(136,876
|
)
|
(1.4
|
)
|
(45,396
|
)
|
(0.4
|
)
|
(41,075
|
)
|
(0.3
|
)
|
||||||||||||
Net investment loss
|
(43,502
|
)
|
(0.4
|
)
|
(207,331
|
)
|
(1.7
|
)
|
(125,656
|
)
|
(1.0
|
)
|
||||||||||||
Net (loss) gain on debt extinguishment
|
(2,069
|
)
|
(0.0
|
)
|
199,697
|
1.6
|
38,550
|
0.3
|
||||||||||||||||
Foreign exchange gain (loss)
|
14,241
|
0.1
|
(75,510
|
)
|
(0.6
|
)
|
4,487
|
0.0
|
||||||||||||||||
(Loss) Income before income tax and share of results of equity investees
|
(1,715,184
|
)
|
(17.2
|
)
|
(1,500,533
|
)
|
(12.1
|
)
|
432,394
|
3.3
|
||||||||||||||
Income tax expense
|
(332,865
|
)
|
(3.3
|
)
|
(168,395
|
)
|
(1.4
|
)
|
(262,680
|
)
|
(2.0
|
)
|
||||||||||||
Share of results of equity investees
|
5,019
|
0.1
|
11,156
|
0.1
|
(7,032
|
)
|
(0.1
|
)
|
||||||||||||||||
Net (loss) income
|
(2,043,030
|
)
|
(20.5
|
)
|
(1,657,772
|
)
|
(13.3
|
)
|
162,682
|
1.2
|
For the Year Ended December 31,
|
||||||||||||
2021
|
2022
|
2023
|
||||||||||
(US$ thousands)
|
||||||||||||
Gross profit/(loss):
|
||||||||||||
Services
|
||||||||||||
E-commerce
|
381,830
|
1,302,034
|
2,713,824
|
|||||||||
Digital Financial Services
|
364,473
|
967,858
|
1,479,677
|
|||||||||
Digital Entertainment
|
3,089,931
|
2,800,146
|
1,499,528
|
|||||||||
Other Services
|
(7,512
|
)
|
(784
|
)
|
46,832
|
|||||||
Sales of goods
|
67,013
|
116,023
|
93,786
|
|||||||||
Total gross profit
|
3,895,735
|
5,185,277
|
5,833,647
|
For the Year Ended December 31,
|
||||||||||||
2021
|
2022
|
2023
|
||||||||||
(Percentage)
|
||||||||||||
Gross margin:
|
||||||||||||
Services
|
||||||||||||
E-commerce
|
9.4
|
21.0
|
34.4
|
|||||||||
Digital Financial Services
|
77.6
|
79.2
|
84.1
|
|||||||||
Digital Entertainment
|
71.5
|
72.2
|
69.0
|
|||||||||
Other Services
|
(32.6
|
)
|
(1.5
|
)
|
37.2
|
|||||||
Sales of goods
|
6.3
|
10.5
|
8.4
|
|||||||||
Total gross margin
|
39.1
|
41.6
|
44.7
|
|
• |
E-commerce: Our e-commerce service revenue increased by 27.4% from US$6.2 billion in 2022 to US$7.9 billion in 2023. This is mainly due to improved monetization, as e-commerce service revenue
over GMV improved from 8.4% in 2022 to 10.0% in 2023, as set forth in the table below. Average order value on Shopee remained stable year-on-year, at approximately US$10.
|
For the Year Ended December 31,
|
||||||||
2022
|
2023
|
|||||||
(US$ billions, except for percentages)
|
||||||||
E-commerce service revenue
|
6.2
|
7.9
|
||||||
GMV
|
73.5
|
78.5
|
||||||
E-commerce service revenue / GMV
|
8.4
|
%
|
10.0
|
%
|
|
• |
Digital Financial Services: Our digital financial services revenue increased by 44.0% from US$1.2 billion in 2022 to US$1.8 billion in 2023. This is mainly due to growth of our credit business
as our lending activities increased and our loans receivable grew from US$2.1 billion for the year ended December 31, 2022 to US$2.5 billion for the year ended December 31, 2023.
|
|
• |
Digital Entertainment: Our digital entertainment revenue decreased by 44.0% from US$3.9 billion in 2022 to US$2.2 billion in 2023. This decrease was primarily attributable to the moderation in
active and paying user base. Average Game QAUs decreased by 7.9% from 572.2 million in 2022 to 527.2 million in 2023, while average Game QPUs decreased by 24.3% from 53.1 million in 2022 to 40.2 million in 2023.
|
|
• |
Sales of goods: Revenue was relatively stable at US$1.1 billion for 2022 and 2023.
|
|
• |
E-commerce: Cost of revenue increased by 5.8% from US$4.9 billion in 2022 to US$5.2 billion in 2023. The increase was primarily driven by the increase in logistics costs as orders volume grew
8.8% from 7.6 billion in 2022 to 8.2 billion in 2023.
|
|
• |
Digital Financial Services: Cost of revenue increased by 10.1% from US$254.1 million in 2022 to US$279.7 million in 2023, primarily driven by interest expenses in line with the growth of our
loan book and increases in customer deposits under our banking business, amortization costs of internally developed software, and server and hosting expenses.
|
|
• |
Digital Entertainment: Cost of revenue dropped by 37.6% from US$1.1 billion in 2022 to US$672.5 million in 2023, primarily from payment channel costs, which was largely in line with the
decrease in digital entertainment revenue.
|
|
• |
Cost of goods sold: Cost of goods sold was relatively stable at US$1.0 billion for 2022 and 2023.
|
|
• |
E-commerce and other services: Our e-commerce and other services revenue increased by 63.5% from US$4.6 billion in 2021 to US$7.5 billion in 2022. This increase was primarily driven by the
improved monetization in our e-commerce business and the growth of our credit business.
|
|
• |
Digital Entertainment: Our digital entertainment revenue decreased by 10.3% from US$4.3 billion in 2021 to US$3.9 billion in 2022. This decrease was primarily attributable to the ongoing
moderation in user engagement and monetization.
|
|
• |
Sales of goods: Revenue was relatively stable at US$1.1 billion for 2021 and 2022.
|
|
• |
E-commerce and other services: Cost of revenue for our e-commerce and other services combined increased by 35.8% from US$3.8 billion in 2021 to US$5.2 billion in 2022. The increase was
primarily driven by higher costs of logistics from order growth and other costs related to the growth of e-commerce marketplace. The improvement in gross profit margins was mainly due to the growth of core marketplace revenue with
higher gross profit margin.
|
|
• |
Digital Entertainment: Cost of revenue decreased by 12.4% from US$1.2 billion in 2021 to US$1.1 billion in 2022, which was largely in line with the decrease in digital entertainment revenue.
|
|
• |
Cost of goods sold: Cost of goods sold was relatively stable at US$1.0 billion for 2021 and 2022.
|
For the Year ended December 31, 2023
|
||||||||||||||||||||||||
E-commerce
|
Digital
Financial
Services
|
Digital
Entertainment
|
Other
Services(1)
|
Unallocated
expenses(2)
|
Consolidated
|
|||||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||||||
Revenue
|
9,000,848
|
1,759,422
|
2,172,009
|
131,281
|
–
|
13,063,560
|
||||||||||||||||||
Operating (loss) income
|
(550,470
|
)
|
490,209
|
1,177,871
|
(56,728
|
)
|
(836,104
|
)
|
224,778
|
|||||||||||||||
Non-operating income, net
|
207,616
|
|||||||||||||||||||||||
Income tax expense
|
(262,680
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(7,032
|
)
|
||||||||||||||||||||||
Net income
|
162,682
|
For the Year ended December 31, 2022
|
||||||||||||||||||||||||
E-commerce
|
Digital
Financial
Services
|
Digital
Entertainment
|
Other
Services(1)
|
Unallocated
expenses(2)
|
Consolidated
|
|||||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||||||
Revenue
|
7,288,677
|
1,221,996
|
3,877,163
|
61,869
|
–
|
12,449,705
|
||||||||||||||||||
Operating (loss) income
|
(2,013,360
|
)
|
(277,264
|
)
|
1,971,416
|
(252,162
|
)
|
(916,138
|
)
|
(1,487,508
|
)
|
|||||||||||||
Non-operating loss, net
|
(13,025
|
)
|
||||||||||||||||||||||
Income tax expense
|
(168,395
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
11,156
|
|||||||||||||||||||||||
Net loss
|
(1,657,772
|
)
|
For the Year ended December 31, 2021
|
||||||||||||||||||||||||
E-commerce
|
Digital
Financial
Services |
Digital
Entertainment
|
Other
Services(1)
|
Unallocated
expenses(2)
|
Consolidated
|
|||||||||||||||||||
(US$ thousands)
|
||||||||||||||||||||||||
Revenue
|
5,122,959
|
469,774
|
4,320,013
|
42,444
|
–
|
9,955,190
|
||||||||||||||||||
Operating (loss) income
|
(2,766,566
|
)
|
(640,422
|
)
|
2,500,081
|
(177,633
|
)
|
(498,520
|
)
|
(1,583,060
|
)
|
|||||||||||||
Non-operating loss, net
|
(132,124
|
)
|
||||||||||||||||||||||
Income tax expense
|
(332,865
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
5,019
|
|||||||||||||||||||||||
Net loss
|
(2,043,030
|
)
|
(1) |
A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as “Other Services.”
|
(2) |
Unallocated expenses are mainly related to share-based compensation, impairment of goodwill of prior acquisitions that are not under our reportable segments, and general and corporate administrative costs such as professional fees
and other miscellaneous items that are not allocated to segments. These expenses are excluded from segment results as they are not reviewed by the chief operating decision maker as part of segment performance.
|
B.
|
Liquidity and Capital Resources
|
For the Year Ended December 31,
|
||||||||||||
2021
|
2022
|
2023
|
||||||||||
(US$ thousands)
|
||||||||||||
Net cash generated from (used in) operating activities
|
208,649
|
(1,055,692
|
)
|
2,079,688
|
||||||||
Net cash used in investing activities
|
(3,767,273
|
)
|
(2,428,809
|
)
|
(5,804,462
|
)
|
||||||
Net cash generated from financing activities
|
7,401,589
|
400,256
|
366,011
|
|||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
(58,218
|
)
|
(143,511
|
)
|
(7,964
|
)
|
||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
3,784,747
|
(3,227,756
|
)
|
(3,366,727
|
)
|
|||||||
Cash, cash equivalents and restricted cash at beginning of year
|
7,053,393
|
10,838,140
|
7,610,384
|
|||||||||
Cash, cash equivalents and restricted cash at end of year(1)
|
10,838,140
|
7,610,384
|
4,243,657
|
(1) |
As of December 31, 2022, cash and cash equivalents of US$13.2 million was included in assets held for sale within prepaid expenses and other assets.
|
|
• |
higher e-commerce and digital financial services gross profits in 2023 due to improved monetization of our e-commerce business and growth of the credit business;
|
|
• |
lower sales and marketing expenses in 2023 due to our efforts to optimize operating costs and achieve higher cost efficiencies in our digital financial services and digital entertainment businesses; and
|
|
• |
lower general and administrative expenses in 2023 due to a decrease in staff compensation and welfare expenses from lower staff headcount, and lower cost of office facilities and related expenses driven by
cost saving initiatives in our business operations and certain one-time impairment costs incurred in 2022 due to the exits from non-core markets and certain divestments;
|
|
• |
partially offset by the decline in bookings in 2023 for our digital entertainment business due to the moderation in active and paying user base. Bookings refer to GAAP revenue for the digital entertainment
segment plus change in digital entertainment deferred revenue and are used as an approximation of cash spent by our users.
|
|
• |
a general increase in 2023 in payables to our logistics providers in our e-commerce business in line with orders volume growth; and
|
|
• |
a general increase in sales and marketing expenses payable by our e-commerce business in the second half of 2023, as compared to that of the second half in 2022, which is in line with the increase in
investments in growing the e-commerce business in 2023 as opposed to the focus on cost saving initiatives in our business operations in 2022.
|
C.
|
Research and Development, Patents and Licenses, etc.
|
D.
|
Trend Information
|
E.
|
Critical Accounting Estimates
|
|
• |
Item-based revenue model. Virtual items have different lifespan patterns: time-based, consumable and durable.
|
|
• |
Time-based virtual items are items with a stated expiration time. Revenue attributable to a time-based virtual item is recognized ratably over the period based on the time unit of the item.
|
|
• |
Consumable virtual items are items that can be consumed by a specific user action and have limitations on repeated use. Revenue attributable to a consumable virtual item is recognized upon consumption.
|
|
• |
Durable virtual items are items that provide the user with continuing benefits over an extended period of time. Revenue attributable to a durable virtual item is recognized ratably over its average lifespan.
|
|
• |
User-based revenue model. We track paying users’ activeness within each game where the user-based revenue model is used to estimate paying users’ average lifespan. Paying users are defined as
inactive when they have reached a period of inactivity such that it is reasonable to believe that these users will not return to a specific game.
|
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
A. |
Directors and Senior Management
|
Directors and Executive Officers
|
Age
|
Position/Title
|
||
Forrest Xiaodong Li
|
46
|
Chairman and Chief Executive Officer
|
||
Gang Ye
|
43
|
Director and Chief Operating Officer
|
||
Tony Tianyu Hou
|
45
|
Director and Chief Financial Officer
|
||
David Heng Chen Seng
|
57
|
Director
|
||
Khoon Hua Kuok
|
45
|
Director
|
||
David Y Ma
|
43
|
Director
|
||
Chris Zhimin Feng
|
41
|
President
|
||
Terry Feng Zhao
|
40
|
President of Garena
|
||
Yanjun Wang
|
43
|
Chief Corporate Officer, General Counsel and Company Secretary
|
||
David Jingye Chen
|
43
|
Chief Product Officer of Shopee
|
B.
|
Compensation
|
Name
|
Class A
Ordinary
Shares
Underlying
Outstanding
Awards
Granted
|
Price
(US$/Share)
|
Date of Grant
|
Date of Expiration
|
||||
Forrest Xiaodong Li
|
10,000,000(1)(3)
|
15.0
|
April 30, 2019
|
April 30, 2029
|
||||
5,000,000(1)(3)
|
15.0
|
April 30, 2020
|
April 30, 2030
|
|||||
5,000,000(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
Gang Ye
|
4,650,000(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
||||
5,000,000(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
Tony Tianyu Hou
|
*(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
||||
*(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
*(2)
|
—
|
July 31, 2023
|
—
|
|||||
David Heng Chen Seng
|
*(2)
|
—
|
October 19, 2021
|
—
|
||||
Khoon Hua Kuok
|
5,000(2)
|
—
|
October 19, 2021
|
—
|
||||
David Y Ma
|
*(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
||||
*(2)
|
—
|
May 15, 2023
|
—
|
|||||
Chris Zhimin Feng
|
100,000(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
||||
4,500,000(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
4,000,000(1)
|
15.0
|
February 28, 2019
|
February 28, 2029
|
|||||
6,000,000(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
Terry Feng Zhao
|
*(1)
|
15.0
|
January 31, 2019
|
January 31, 2029
|
||||
*(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
Yanjun Wang
|
*(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
||||
*(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
*(2)
|
—
|
July 31, 2023
|
—
|
|||||
David Jingye Chen
|
220,000(1)
|
4.5
|
January 26, 2015
|
January 26, 2025
|
||||
2,000,000(1)
|
15.0
|
February 28, 2018
|
February 28, 2028
|
|||||
2,000,000(1)
|
120.0
|
April 17, 2022
|
April 17, 2032
|
|||||
All directors and executive officers as a group
|
59,906,667
|
* |
Each of these directors and executive officers beneficially owns less than 1% of our total outstanding shares as of December 31, 2023.
|
(1) |
Represents options to purchase Class A ordinary shares.
|
(2) |
Represents unvested restricted shares units for Class A ordinary shares.
|
(3) |
Granted pursuant to the previously disclosed authorization by our board of directors on April 8, 2018 of options to purchase a total of 20 million Class A ordinary shares. The relevant options disclosed here were granted to Mr. Li
between April 2019 and April 2020 and to vest between April 2020 and April 2022.
|
C.
|
Board Practice
|
|
• |
selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm;
|
|
• |
reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response;
|
|
• |
reviewing and approving related party transactions;
|
|
• |
discussing the annual audited financial statements with management and our independent registered public accounting firm;
|
|
• |
meeting periodically with the management and our internal auditor and our independent registered public accounting firm; and
|
|
• |
reviewing and discussing our accounting and control policies and procedures and any steps taken to monitor and control major financial risk exposure.
|
|
• |
reviewing and approving the compensation package for our chief executive officer;
|
|
• |
reviewing the annual bonus, long-term incentive compensation, stock option, employee pension and welfare benefit plans of our company;
|
|
• |
reviewing annually and administering all long-term incentive compensation or equity plans; and
|
|
• |
selecting and receiving advice from compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management.
|
|
• |
identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy;
|
|
• |
reviewing annually with our board of directors its current composition in light of the characteristics of independence, qualification, experience and availability of service to us;
|
|
• |
review the performance of our board of directors and management and will make appropriate recommendations for improving performance; and
|
|
• |
monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
|
|
• |
convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;
|
|
• |
declaring dividends and distributions;
|
|
• |
appointing officers and determining the term of office of officers;
|
|
• |
exercising the borrowing powers of our company and mortgaging the property of our company; and
|
|
• |
approving the transfer of shares of our company, including the registering of such shares in our share register.
|
D.
|
Employees
|
Function
|
Number of Employees
|
|||
General operation
|
36,900
|
|||
Sales and marketing
|
10,600
|
|||
General and administrative
|
5,600
|
|||
Research and development
|
9,600
|
|||
Total
|
62,700
|
E.
|
Share Ownership
|
|
• |
each of our directors and executive officers; and
|
|
• |
each person known to us to beneficially own more than 5% of our ordinary shares.
|
Class A
Ordinary
Shares
|
Class B
Ordinary
Shares
|
Percentage of
Total Class A
and Class B
Ordinary
Shares†
|
Percentage of
Total Voting
Power Held
††
|
|||||||||||||
Directors and Executive Officers:(1)
|
||||||||||||||||
Forrest Xiaodong Li(2)
|
69,416,146
|
45,527,793
|
18.5
|
59.8
|
||||||||||||
Gang Ye(3)
|
34,087,398
|
—
|
5.9
|
1.7
|
||||||||||||
Tony Tianyu Hou
|
*
|
—
|
*
|
*
|
||||||||||||
David Heng Chen Seng
|
*
|
—
|
*
|
*
|
||||||||||||
Khoon Hua Kuok(4)
|
8,207,907
|
—
|
1.4
|
0.7
|
||||||||||||
David Y Ma
|
*
|
—
|
*
|
*
|
||||||||||||
Chris Zhimin Feng(5)
|
9,357,650
|
—
|
1.6
|
0.0
|
||||||||||||
Terry Feng Zhao
|
*
|
—
|
*
|
*
|
||||||||||||
Yanjun Wang
|
*
|
—
|
*
|
*
|
||||||||||||
David Jingye Chen(6)
|
11,864,075
|
—
|
2.1
|
0.7
|
||||||||||||
All directors and executive officers as a group(7)
|
213,444,147
|
45,527,793
|
41.7
|
71.3
|
||||||||||||
Principal Shareholders:
|
||||||||||||||||
Tencent entities(8)
|
104,264,743
|
—
|
18.2
|
0.0
|
||||||||||||
Blue Dolphins Venture Inc(9)
|
—
|
45,527,793
|
7.9
|
56.4
|
||||||||||||
Baillie Gifford & Co(10)
|
34,183,394
|
—
|
6.0
|
2.8
|
* |
Less than 1% of our total outstanding shares on an as converted basis.
|
† |
For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group, including shares that such person or group has the right to acquire
within 60 days after March 31, 2024, by the sum of Class A and Class B ordinary shares, and the number of shares that such person or group has the right to acquire beneficial ownership within 60 days after March 31, 2024.
|
†† |
For each person and group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares beneficially owned by such person or group with respect to all outstanding
Class A and Class B ordinary shares as one single class. Holders of Class A ordinary shares are entitled to one vote per share and holders of Class B ordinary shares are entitled to 15 votes per share on all matters subject to a
shareholders vote.
|
(1) |
Unless otherwise indicated, the business address of our directors and executive officers is c/o 1 Fusionopolis Place, #17-10, Galaxis, Singapore 138522.
|
(2) |
Represents (i) 45,527,793 Class B ordinary shares held by Blue Dolphins Venture Inc, a British Virgin Islands company wholly owned by Mr. Li, (ii) 2,695,579 Class A ordinary shares beneficially owned by Mr. Li (including through an
entity solely owned and controlled by Mr. Li), (iii) 17,000,000 Class A ordinary shares issuable upon exercise of options held by Mr. Li within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares
issuable upon vesting of restricted share units within 60 days from March 31, 2024, and (iv) an aggregate of 49,717,733 Class A ordinary shares over which Mr. Li has received irrevocable voting proxies from the respective
owners of such shares (including certain directors and employees, certain affiliates of our employees, Garena ESOP Program (PTC) Limited and a family member of Mr. Li), including 27,997,705 Class A ordinary shares issuable upon exercise
of options within 60 days of March 31, 2024 and 1,224,424 Class A ordinary shares issuable upon vesting of restricted share units within 60 days of March 31, 2024.
|
(3) |
Represents (i) 27,434,564 Class A ordinary shares held or beneficially owned by Mr. Ye, and (ii) 6,650,000 Class A ordinary shares issuable upon exercise of options held by Mr. Ye within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting of restricted share units within 60 days from March 31, 2024. With respect to 13,111,553 Class A ordinary shares, Forrest Xiaodong Li has been given an
irrevocable proxy with regard to all matters that are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Ye.
|
(4) |
Includes (i) 200,000 Class A ordinary shares held or beneficially owned by Bright Magic Investments Limited, a British Virgin Islands company, (ii) 2,926,071 Class A ordinary shares held by Fexos Limited, a British Virgin Islands
company, (iii) 1,701,945 Class A ordinary shares beneficially owned by Macromind Investments Limited, a British Virgin Islands company (iv) 705,184 Class A ordinary shares held by City Jet Limited, a British Virgin Islands company, (v)
104,616 Class A ordinary shares beneficially owned by Joyce M. Kuok Foundation, a Hong Kong company, (vi) 104,616 Class A ordinary shares beneficially owned by Zheng Ge Ru Foundation, a Hong Kong company, and (vii) 322,000 shares held
by Always Best International Limited, a Hong Kong company. Bright Magic Investments Limited, Fexos Limited, and Macromind Investments Limited are all wholly-owned subsidiaries of Kerry Group Limited. Mr. Kuok is a director of Kerry
Group Limited and has indirect minority interests in these entities. Mr. Kuok may be deemed to have beneficial interests in the shares beneficially owned by these entities. City Jet Limited’s shareholders are Joyce M. Kuok Foundation
and Zheng Ge Ru Foundation. As Mr. Kuok is a governor of these two foundations, he may be deemed to have or share investment power which includes the power to dispose, or to direct the disposition of, the shares beneficially owned by
City Jet Limited and these two foundations. Always Best International Limited is an investment company of a discretionary trust in which Mr. Kuok is one of the discretionary beneficiaries. Mr. Kuok disclaims beneficial ownership of
ordinary shares held or beneficially owned by all of the aforesaid entities for all other purposes. The business address of Kerry Group Limited is 32/F, Kerry Centre, 683 King’s Road, Quarry Bay, Hong Kong. The business address or registered office of all the other aforesaid entities is 31/F, Kerry Centre, 683 King’s Road, Quarry Bay, Hong Kong, except for City Jet Limited whose registered office is at Vistra Corporate
Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. Shares beneficially owned by Mr. Kuok do not include the shares issuable upon conversion of the following convertible
notes which were not convertible accordingly to their respective terms and conditions within 60 days of March 31, 2024: (i) US$100 million principal amount of our 2024 convertible notes currently held by Macromind Investments
Limited, (ii) US$10 million principal amount of our 2025 convertible notes currently held by Velmar Company Limited, a Hong Kong company, wholly owned by Kerry Group
Limited, and (iii) US$35 million principal amount of our 2026 convertible notes currently held by Merrywood Investments Limited, a British Virgin Islands company, wholly owned by Kerry Group
Limited, subject to the terms and conditions of such notes.
|
(5) |
Represents (i) 354,816 Class A ordinary shares held or beneficially owned by Mr. Feng, and (ii) 9,000,000 Class A ordinary shares issuable upon exercise of options held by Mr. Feng within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting of restricted share units within 60 days from March 31, 2024. With respect to all these shares, Forrest Xiaodong Li has been given an irrevocable
proxy with regard to all matters that are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Feng.
|
(6) |
Represents (i) 8,841,241 Class A ordinary shares held or beneficially owned by Mr. Chen, and (ii) 3,020,000 Class A ordinary shares issuable upon exercise of options held by Mr. Chen within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting of restricted share units within 60 days from March 31, 2024. With respect to 3,706,703 Class A ordinary shares, Forrest Xiaodong Li has been given
an irrevocable proxy with regard to all matters that are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Chen.
|
(7) |
In September 2022, Tencent Holdings Limited and certain other Tencent entities granted an irrevocable voting proxy with respect to all their Class A ordinary shares to our board of directors to vote on matters that are subject to the
vote of shareholders of Sea. Such proxy gives our board of directors (duly constituted from time to time) approximately 8.6% of total voting power as of March 31, 2024. The total number of Class A ordinary shares beneficially owned by
all directors and executive officers as a group and the voting power of all directors and executive officers as a group have included the shares subject to such proxy.
|
(8) |
Based on a Schedule 13D/A filed with the SEC on September 8, 2022 by Tencent Holdings Limited and Tencent Limited, the number of shares beneficially owned by Tencent entities are as follows: (i) 1,816,833 Class A ordinary shares
beneficially owned by Tencent Holdings Limited through Huang River Investment Limited, (ii) 98,510,410 Class A ordinary shares held by Tencent Limited, and (iii) 3,937,500 Class A ordinary shares by Tencent Growthfund Limited, a
wholly-owned subsidiary of Tencent Holdings Limited. Tencent Holdings Limited is a limited liability company organized and existing under the laws of the Cayman Islands and is currently listed on Hong Kong Stock Exchange. The registered
office of Tencent Holdings Limited is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. In September 2022, Tencent granted an irrevocable voting proxy with respect to all its Class A ordinary shares
to our board of directors (duly constituted from time to time) to vote on matters that are subject to the vote of shareholders of Sea. Total voting power of Tencent excludes voting power subject to such proxy.
|
(9) |
Represents 45,527,793 Class B ordinary shares held by Blue Dolphins Venture Inc, a company wholly owned by Forrest Xiaodong Li. The registered address of Blue Dolphins Venture Inc is Kingston Chambers, P.O. Box 173, Road Town,
Tortola, British Virgin Islands.
|
(10) |
Based on a Schedule 13G filed with the SEC on January 26, 2024 by Baillie Gifford & Co (“Baillie Gifford”), Baillie Gifford reported sole voting power over 22,321,284 ADSs, each representing one Class A ordinary share, and sole
dispositive power over 34,183,394 ADSs. The address of Baillie Gifford is Calton Square 1 Greenside Row Edinburgh EH1 3AN, Scotland, United Kingdom.
|
F.
|
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
|
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
A.
|
Major Shareholders
|
B.
|
Related Party Transactions
|
C.
|
Interest of Experts and Counsel
|
ITEM 8. |
FINANCIAL INFORMATION
|
A.
|
Consolidated Statements and Other Financial Information
|
B.
|
Significant Changes
|
ITEM 9. |
THE OFFER AND LISTING
|
A.
|
Offer and Listing Details
|
B.
|
Plan of Distribution
|
C.
|
Markets
|
D.
|
Selling Shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the Issue
|
ITEM 10. |
ADDITIONAL INFORMATION
|
A.
|
Share Capital
|
B.
|
Memorandum and Articles of Association
|
|
• |
an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;
|
|
• |
an exempted company is not required to open its register of members for inspection;
|
|
• |
an exempted company does not have to hold an annual general meeting;
|
|
• |
an exempted company may issue no par value shares;
|
|
• |
an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are given for a period of up to 30 years);
|
|
• |
an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
|
|
• |
an exempted company may register as a limited duration company; and
|
|
• |
an exempted company may register as a segregated portfolio company.
|
|
• |
the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) of the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the
number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rights are
conditional;
|
|
• |
the date on which the name of any person was entered on the register as a member; and
|
|
• |
the date on which any person ceased to be a member.
|
|
• |
the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to
make the transfer;
|
|
• |
the instrument of transfer is in respect of only one class of shares;
|
|
• |
the instrument of transfer is properly stamped, if required;
|
|
• |
in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; or
|
|
• |
the ordinary shares transferred are free of any lien in favor of us; or
|
|
• |
a fee of such maximum sum as the designated stock exchange may determine to be payable, or such lesser sum as the board of directors may from time to time require, is paid to us in respect thereof.
|
|
• |
the designation of the series;
|
|
• |
the number of shares of the series;
|
|
• |
the dividend rights, dividend rates, conversion rights, voting rights; and
|
|
• |
the rights and terms of redemption and liquidation preferences.
|
|
• |
increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution prescribes;
|
|
• |
consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
|
|
• |
convert all or any of its paid-up shares into stock and reconvert the stock into paid-up shares of any denomination;
|
|
• |
sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our Ninth Amended and Restated Memorandum of Association; provided that in the subdivision the proportion between the amount paid and
the amount, if any, unpaid on each reduced share will be the same as it was in case of the share from which the reduced share is derived; and
|
|
• |
cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so canceled.
|
C.
|
Material Contracts
|
D.
|
Exchange Controls
|
E.
|
Taxation
|
|
• |
banks, insurance companies and other financial institutions;
|
|
• |
entities treated as partnerships for U.S. federal income tax purposes, S corporations or other pass-through entities;
|
|
• |
tax-exempt entities;
|
|
• |
real estate investment trusts;
|
|
• |
regulated investment companies;
|
|
• |
brokers, dealers, or traders in securities that elect to use a mark-to-market method of accounting;
|
|
• |
certain former citizens or residents of the United States;
|
|
• |
persons that elect to mark their securities to market;
|
|
• |
persons who hold ADSs or ordinary shares as part of a hedging, integrated, straddle, conversion or constructive sale transaction for U.S. federal income tax purposes;
|
|
• |
persons that have a functional currency other than the U.S. dollar; and
|
|
• |
persons that actually or constructively own 10% or more of our stock by vote or value.
|
|
• |
an individual who is a citizen or resident of the United States;
|
|
• |
a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of
Columbia;
|
|
• |
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
|
|
• |
a trust, (i) the administration of which is subject to the primary supervision of a court within the United States and for which one or more U.S. persons have the authority to control all substantial
decisions, or (ii) that has a valid election in effect under applicable Regulations to be treated as a U.S. person.
|
|
• |
the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;
|
|
• |
amounts allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (a “pre-PFIC year”) will be subject
to tax as ordinary income; and
|
|
• |
amounts allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year, and
such amounts will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to such years.
|
F.
|
Dividends and Paying Agents
|
G.
|
Statement by Experts
|
H.
|
Documents on Display
|
I.
|
Subsidiary Information
|
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
A.
|
Debt Securities
|
B.
|
Warrants and Rights
|
C.
|
Other Securities
|
D.
|
American Depositary Shares
|
Persons depositing or withdrawing shares
or holders of ADSs must pay:
|
For:
|
|
US$5.00 (or less) per 100 ADSs (or portion thereof)
|
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
Cancelation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
|
US$.05 (or less) per ADS (or portion thereof)
|
Any cash distribution to ADS holders
|
|
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs
|
Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
|
|
US$.05 (or less) per ADS (or portion thereof) per annum
|
Depositary services
|
|
Registration or transfer fees
|
Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
|
|
Expenses of the depositary
|
Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)
Converting foreign currency to U.S. dollars
|
|
Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes
|
As necessary
|
|
Any charges incurred by the depositary or its agents for servicing the deposited securities
|
As necessary
|
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
ITEM 15. |
CONTROLS AND PROCEDURES
|
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT
|
ITEM 16B. |
CODE OF ETHICS
|
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
For the Year Ended December 31,
|
||||||||
2022
|
2023
|
|||||||
(US$ thousands)
|
||||||||
Audit fees(1)
|
4,414
|
5,000
|
||||||
Tax fees(2)
|
79
|
90
|
||||||
Audit-related fees(3)
|
1,062
|
1,650
|
||||||
Other fees(4)
|
453
|
161
|
(1) |
“Audit fees” means the aggregate fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements. This category also included professional services
rendered by our independent registered public accounting firm for statutory audits required by non-U.S. jurisdictions. In 2023, the audit refers to financial audit and audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
|
(2) |
“Tax fees” means the aggregate fees billed for the tax services provided with respect to tax consulting and tax audit assistance.
|
(3) |
“Audit-related fees” means the aggregate fees billed in each fiscal year listed for professional services rendered by our principal auditors related to the audit of our financial statements that are not reported under “audit fees.”
|
(4) |
“Other fees” means the aggregate fees billed for transaction advisory services with respect to the review of our sustainability, regulatory compliance, cybersecurity, accounting standards training and transaction due diligence.
|
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
|
ITEM 16G. |
CORPORATE GOVERNANCE
|
ITEM 16H. |
MINE SAFETY DISCLOSURE
|
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
ITEM 16J. |
INSIDER TRADING POLICIES
|
ITEM 16K. |
CYBERSECURITY
|
|
● |
Risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology
environment;
|
|
● |
Regular testing of our systems to identify and address potential vulnerabilities;
|
|
● |
Integrated planning and preparedness activities supporting business continuity and operational resiliency;
|
|
● |
Security teams principally responsible for managing (1) our annual cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;
|
|
● |
A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents;
|
|
● |
The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls;
|
|
● |
An information training and awareness program for our employees, contractors, incident response personnel, and senior management; and
|
|
● |
a vendor assessment program designed to identify and mitigate cybersecurity risks associated with our use of third-party service providers.
|
ITEM 17. |
FINANCIAL STATEMENTS
|
ITEM 18. |
FINANCIAL STATEMENTS
|
ITEM 19. |
EXHIBITS
|
Exhibit
Number
|
Description of Document
|
1.1
|
|
2.1
|
|
2.2
|
|
2.3
|
|
2.4*
|
|
3.1
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4†
|
|
4.5
|
|
4.6†
|
|
4.7
|
|
4.8
|
4.9
|
|
4.10
|
|
8.1*
|
|
11.1
|
|
12.1*
|
|
12.2*
|
|
13.1**
|
|
13.2**
|
|
15.1*
|
|
15.2*
|
|
15.3*
|
|
15.4*
|
|
15.5*
|
|
97.1*
|
|
101.INS
|
Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
Cover Page Interactive Data File (embedded within the Exhibit 101 Inline XBRL document)
|
* |
Filed with this annual report on Form 20-F.
|
** |
Furnished with this annual report on Form 20-F.
|
† |
Confidential treatment has been granted by the U.S. Securities and Exchange Commission with respect to portions of the exhibit that have been redacted.
|
Sea Limited
|
||
By:
|
/s/ Forrest Xiaodong Li
|
|
Name:
|
Forrest Xiaodong Li
|
|
Title:
|
Chairman and Chief Executive Officer
|
|
Date: April 26, 2024
|
Page
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: 01247)
|
F-2
|
F-7
|
|
F-11
|
|
F-13
|
|
F-14
|
|
F-17
|
|
F-20
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
Description of the Matter
|
For the year ended December 31, 2023, the Company’s revenue arising from DE was $2,172 million.
As outlined in Note 2(o) of the consolidated financial statements, DE revenue is recognized over the performance obligation period. The
Company has determined that an implied obligation exists to the paying users to continue providing hosting services and access to the purchased in-game items within the online games over an estimated performance obligation period. Such
performance obligation period is largely determined in accordance with the estimated average lifespan of the paying users.
Auditing the DE revenue recognition process was complex and involved judgment to determine the historical paying users’ inactive rate
and playing behavior, in estimating the average lifespan of the paying users. In addition, the Company utilized various operating systems to process user data and transactions and relies on automated processes and controls over the
completeness and accuracy of the historical user and game data, which were key inputs to the above-mentioned estimates.
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s DE
revenue recognition process. For example, we tested the automated controls of the related operating systems. We also tested the effectiveness of management’s review controls over assessing the completeness and accuracy of the historical
user and game data and the appropriateness of the judgments regarding the most relevant historical user and game data to be applied in their estimates.
To test the recognition of DE revenue, our audit procedures included, among others, testing the completeness and accuracy of the
above-mentioned underlying historical user and game data and assessing the reasonableness of the historical data applied in estimating the average lifespan of the paying users. We also recalculated the amount of revenue to be deferred
based on management’s estimated performance obligation periods and compared those amounts with the amounts recorded by the Company.
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
Description of the Matter
|
As at December 31, 2023, the Company’s long-lived assets in EC segment amounted to approximately 84.6% of the Company’s long-lived
assets. The long-lived assets include property and equipment, operating lease right-of-use assets and intangible assets.
As outlined in Note 2(m) to the consolidated financial statements, the Company evaluates its long-lived assets for impairment when there
are events or changes in circumstances which indicate that the carrying amounts of the long-lived assets may not be recoverable. Due to the losses incurred by EC segment, the Company evaluated the related long-lived assets for impairment
at the asset group level by comparing the carrying amount of the asset group to the recoverable value determined by forecasted undiscounted cash flows expected to be generated by this asset group.
Auditing management’s long-lived assets impairment test was highly judgmental due to the magnitude of the carrying amount of long-lived
assets and management’s judgment in estimating the recoverable value (undiscounted cash flows) of the asset group, which were sensitive to key assumptions such as projected revenue and sales and marketing expenses.
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s long-lived
asset impairment process to determine the recoverable value of the asset group. For example, we tested controls over management’s review of the key assumptions used in estimating the recoverable value.
To test the impairment of long-lived assets, our audit procedures included, among others, obtaining an understanding from management
regarding the basis of which the undiscounted cash flows were prepared and assessing the reasonableness of the forecasted undiscounted cash flows by comparing them against the Company’s business strategies and underlying key assumptions
over the forecast periods, taking into consideration current industry and economic trends. We performed sensitivity analysis over the key assumptions described above to evaluate the changes to the estimated recoverable value for the asset
group that would result from reasonable changes in the assumptions.
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
As of December 31,
|
||||||||||||
Note
|
2022
$
|
2023
$
|
||||||||||
ASSETS
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
6,029,859
|
2,811,056
|
||||||||||
Restricted cash (including restricted cash of the Consolidated VIEs that can only be used to settle the obligations
of those Consolidated VIEs of nil and $14,773 as of December 31, 2022 and 2023, respectively)
|
1,549,574
|
1,410,365
|
||||||||||
Accounts receivable, net of allowance for credit
losses of $12,818 and $9,351,
as of December 31, 2022 and 2023,
respectively
|
|
268,814
|
262,716
|
|||||||||
Prepaid expenses and other assets (including prepaid expenses and other assets of the Consolidated VIEs that can
only be used to settle the obligations of those Consolidated VIEs of nil and $7 as of December 31, 2022 and 2023, respectively)
|
5
|
1,798,651
|
1,861,842
|
|||||||||
Loans receivable, net of allowance for credit losses of $236,797 and $319,463, as of December 31, 2022 and 2023,
respectively (including loans receivable, net of allowance for credit losses of the Consolidated VIEs that can only be used to settle the obligations of those Consolidated VIEs of nil and $153,820 as of December 31, 2022 and 2023,
respectively)
|
6
|
2,053,767
|
2,464,662
|
|||||||||
Inventories, net
|
109,668
|
125,395
|
||||||||||
Short-term investments
|
7 |
864,258
|
2,547,644
|
|||||||||
Amounts due from related parties
|
13,421
|
290,254
|
||||||||||
Total current assets
|
12,688,012
|
11,773,934
|
||||||||||
Non-current assets
|
||||||||||||
Property and equipment, net
|
8 |
1,387,895
|
1,207,698
|
|||||||||
Operating lease right-of-use assets, net
|
9
|
957,840
|
1,015,982
|
|||||||||
Intangible assets, net
|
10
|
65,019
|
50,821
|
|||||||||
Long-term investments
|
7
|
1,253,593
|
4,262,562
|
|||||||||
Prepaid expenses and other assets
|
5
|
135,616
|
87,705
|
|||||||||
Loans receivable, net of allowance for credit losses of $2,022 and $2,105, as of December 31, 2022 and 2023, respectively
|
6
|
21,663
|
20,551
|
|||||||||
Restricted cash
|
17,724
|
22,236
|
||||||||||
Deferred tax assets
|
18
|
245,226
|
328,961
|
|||||||||
Goodwill
|
4
|
230,208
|
112,782
|
|||||||||
Total non-current assets
|
4,314,784
|
7,109,298
|
||||||||||
Total assets
|
17,002,796
|
18,883,232
|
As of December 31,
|
||||||||||||
Note
|
2022
$
|
2023
$
|
||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||||||
Current liabilities
|
||||||||||||
Accounts payable (including accounts payable of the Consolidated VIEs without recourse to the primary beneficiaries of $18,699 and $7,612 as of December 31, 2022 and 2023,
respectively)
|
258,648
|
342,547
|
||||||||||
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without
recourse to the primary beneficiaries of $148,631 and $131,409 as of December 31, 2022 and 2023, respectively)
|
11
|
1,396,613
|
1,834,807
|
|||||||||
Deposits payable
|
1,316,395 | 1,706,299 | ||||||||||
Escrow payables and advances from customers (including escrow payables and advances from customers of the Consolidated VIEs
without recourse to the primary beneficiaries of $19,143 and $17,747 as of December 31, 2022 and 2023, respectively)
|
1,862,325
|
2,199,464
|
||||||||||
Amounts due to related parties (including amounts due to related parties of the Consolidated VIEs without recourse
to the primary beneficiaries of $9 and $15 as of December 31, 2022 and 2023, respectively)
|
415
|
64,081
|
||||||||||
Borrowings
|
12
|
88,410
|
146,661
|
|||||||||
Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourse to the primary
beneficiaries of $5,250 and $6,416
as of December 31, 2022 and 2023,
respectively)
|
9
|
269,968
|
290,788
|
|||||||||
Convertible notes
|
13 |
31,237 | 151,764 | |||||||||
Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primary beneficiaries of $192,243 and $169,059 as of December 31, 2022 and 2023,
respectively)
|
1,535,083
|
1,208,892
|
||||||||||
Income tax payable (including income tax payable of the Consolidated VIEs without recourse to the primary beneficiaries of
$664 and $1,748 as
of December 31, 2022 and 2023,
respectively)
|
176,598
|
223,638
|
||||||||||
Total current liabilities
|
6,935,692
|
8,168,941
|
As of December 31,
|
||||||||||||
Note
|
2022
$
|
2023
$
|
||||||||||
Non-current liabilities
|
||||||||||||
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without
recourse to the primary beneficiaries of $4,338 and $3,141 as of December 31, 2022 and 2023, respectively)
|
11
|
87,072
|
79,257
|
|||||||||
Borrowings (including borrowings of the Consolidated VIEs without recourse to the primary beneficiaries of nil and $119,323 as of December 31, 2022 and 2023, respectively)
|
12 |
– | 119,323 | |||||||||
Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourse to the primary
beneficiaries of $7,666 and $18,344
as of December 31, 2022 and 2023,
respectively)
|
9
|
756,818
|
789,514
|
|||||||||
Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primary beneficiaries of $23,886 and $16,658 as of December 31, 2022 and 2023,
respectively)
|
63,566
|
72,587
|
||||||||||
Convertible notes
|
13
|
3,338,750
|
2,949,785
|
|||||||||
Deferred tax liabilities
|
18
|
9,967
|
133
|
|||||||||
Unrecognized tax benefits (including unrecognized tax benefits of the Consolidated VIEs without recourse to the
primary beneficiaries of $107 and $107
as of December 31, 2022 and 2023,
respectively)
|
107
|
6,107
|
||||||||||
Total non-current liabilities
|
4,256,280
|
4,016,706
|
||||||||||
Total liabilities
|
11,191,972
|
12,185,647
|
||||||||||
Commitments and contingencies
|
23
|
|
|
As of December 31,
|
||||||||||||
Note
|
2022
$
|
2023
$
|
||||||||||
Shareholders’ equity
|
||||||||||||
Class A Ordinary shares (par value of US$0.0005 per share; authorized: 14,800,000,000 and 14,800,000,000 shares as of December 31, 2022
and 2023, respectively; issued and outstanding: 519,231,049 and 526,812,214 shares as of December 31, 2022 and 2023,
respectively)
|
15
|
258
|
262
|
|||||||||
Class B Ordinary shares (par value of US$0.0005 per share; authorized: 200,000,000 and 200,000,000 shares as of December 31, 2022
and 2023, respectively; issued and outstanding: 45,527,793 and 45,527,793 shares as of December 31, 2022 and 2023,
respectively)
|
15
|
23
|
23
|
|||||||||
Additional paid-in capital
|
14,559,690
|
15,283,870
|
||||||||||
Accumulated other comprehensive loss
|
16
|
(111,215
|
)
|
(108,000
|
)
|
|||||||
Statutory reserves
|
17
|
12,490
|
16,981
|
|||||||||
Accumulated deficit
|
(8,745,541
|
)
|
(8,599,306
|
)
|
||||||||
Total Sea Limited shareholders’ equity
|
5,715,705
|
6,593,830
|
||||||||||
Non-controlling interests
|
95,119
|
103,755
|
||||||||||
Total shareholders’ equity
|
5,810,824
|
6,697,585
|
||||||||||
Total liabilities and shareholders’ equity
|
17,002,796
|
18,883,232
|
Year ended December 31,
|
|||||||||||||
Note |
2021
$
|
2022
$
|
2023
$
|
||||||||||
Revenue
|
|||||||||||||
Service revenue
|
|||||||||||||
Digital entertainment
|
4,320,013
|
3,877,163
|
2,172,009
|
||||||||||
E-commerce and other services
|
4,564,617
|
7,463,173
|
9,770,376
|
||||||||||
Sales of goods
|
1,070,560
|
1,109,369
|
1,121,175
|
||||||||||
Total revenue
|
9,955,190
|
12,449,705
|
13,063,560
|
||||||||||
Cost of revenue
|
|||||||||||||
Cost of service
|
|||||||||||||
Digital entertainment
|
(1,230,082
|
)
|
(1,077,017
|
)
|
(672,481
|
)
|
|||||||
E-commerce and other services
|
(3,825,826
|
)
|
(5,194,065
|
)
|
(5,530,043
|
)
|
|||||||
Cost of goods sold
|
(1,003,547
|
)
|
(993,346
|
)
|
(1,027,389
|
)
|
|||||||
Total cost of revenue
|
(6,059,455
|
)
|
(7,264,428
|
)
|
(7,229,913
|
)
|
|||||||
Gross profit
|
3,895,735
|
5,185,277
|
5,833,647
|
||||||||||
Operating income (expenses)
|
|||||||||||||
Other operating income
|
287,946
|
279,184
|
221,021
|
||||||||||
Sales and marketing expenses
|
(3,829,743
|
)
|
(3,269,223
|
)
|
(2,779,223
|
)
|
|||||||
General and administrative expenses
|
(987,868
|
)
|
(1,437,612
|
)
|
(1,134,724
|
)
|
|||||||
Provision for credit losses | (117,427 | ) | (513,690 | ) | (633,942 | ) | |||||||
Research and development expenses
|
(831,703
|
)
|
(1,376,501
|
)
|
(1,164,126
|
)
|
|||||||
Impairment of goodwill | – | (354,943 | ) | (117,875 | ) | ||||||||
Total operating expenses
|
(5,478,795
|
)
|
(6,672,785
|
)
|
(5,608,869
|
)
|
|||||||
Operating (loss) income
|
(1,583,060
|
)
|
(1,487,508
|
)
|
224,778
|
||||||||
Interest income
|
36,082
|
115,515
|
331,310
|
||||||||||
Interest expense
|
(136,876
|
)
|
(45,396
|
)
|
(41,075
|
)
|
|||||||
Net investment loss |
(43,502
|
)
|
(207,331
|
)
|
(125,656
|
)
|
|||||||
Net (loss) gain on debt extinguishment | (2,069 | ) | 199,697 | 38,550 | |||||||||
Foreign exchange gain (loss)
|
14,241
|
(75,510
|
)
|
4,487
|
|||||||||
(Loss) Income before income tax and share of results of equity investees
|
(1,715,184
|
)
|
(1,500,533
|
)
|
432,394
|
||||||||
Income tax expense
|
18
|
(332,865
|
)
|
(168,395
|
)
|
(262,680
|
)
|
||||||
Share of results of equity investees
|
|
5,019
|
11,156
|
(7,032
|
)
|
||||||||
Net (loss) income |
(2,043,030
|
)
|
(1,657,772
|
)
|
162,682
|
||||||||
Net (income) loss attributable to non-controlling interests
|
(3,729
|
)
|
6,351
|
(11,956
|
)
|
||||||||
Net (loss) income attributable to Sea Limited’s ordinary shareholders
|
(2,046,759
|
)
|
(1,651,421
|
)
|
150,726
|
Year ended December 31,
|
||||||||||||||||
Note
|
2021
$
|
2022
$
|
2023
$
|
|||||||||||||
(Loss) Earnings per share:
|
||||||||||||||||
Basic
|
19
|
(3.84
|
)
|
(2.96
|
)
|
0.27
|
||||||||||
Diluted
|
19
|
(3.84 | ) | (2.96 | ) | 0.25 | ||||||||||
Weighted average shares used in (loss) earnings per share computation:
|
||||||||||||||||
Basic
|
532,705,796
|
558,119,948
|
566,612,815
|
|||||||||||||
Diluted
|
532,705,796 | 558,119,948 | 594,405,604 |
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Net (loss) income
|
(2,043,030
|
)
|
(1,657,772
|
)
|
162,682
|
|||||||
Other comprehensive (loss) income, net of tax
|
||||||||||||
Foreign currency translation adjustments:
|
||||||||||||
Translation loss
|
(32,972
|
)
|
(81,620
|
)
|
(695
|
)
|
||||||
Net change
|
(32,972
|
)
|
(81,620
|
)
|
(695
|
)
|
||||||
Available-for-sale investments:
|
||||||||||||
Change in unrealized (loss) gain
|
(1,386
|
)
|
(7,930
|
)
|
5,067
|
|||||||
Reclassification adjustment to net (loss) income
|
236 |
212 |
148 |
|||||||||
Net change
|
(1,150
|
)
|
(7,718
|
)
|
5,215
|
|||||||
Total other comprehensive (loss) income, net of tax
|
(34,122
|
)
|
(89,338
|
)
|
4,520
|
|||||||
Total comprehensive (income) loss attributable to non-controlling interests
|
(3,148
|
)
|
11,129
|
(13,261
|
)
|
|||||||
Total comprehensive (loss) income attributable to Sea Limited’s ordinary shareholders
|
(2,080,300
|
)
|
(1,735,981
|
)
|
153,941
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Net (loss) income
|
(2,043,030
|
)
|
(1,657,772
|
)
|
162,682
|
|||||||
Adjustments to reconcile net (loss) income to net cash generated from (used in) operating activities:
|
||||||||||||
Amortization of discount and debt issuance costs of convertible notes
|
100,141
|
7,536
|
6,034
|
|||||||||
Deferred income tax
|
(975
|
)
|
(140,553
|
)
|
(94,551
|
)
|
||||||
Depreciation and amortization
|
279,032
|
428,344
|
440,845
|
|||||||||
Impairment and write-off of long-lived assets
|
1,614
|
32,823
|
1,680
|
|||||||||
Impairment of goodwill
|
–
|
354,943
|
117,875
|
|||||||||
Net foreign exchange differences
|
(45,214
|
)
|
41,737
|
3,814
|
||||||||
Net investment loss
|
43,337 | 216,001 | 135,932 | |||||||||
Net loss (gain) on debt extinguishment
|
2,069 | (199,697 | ) | (38,550 | ) | |||||||
Provision
for credit losses
|
117,427 | 513,690 | 633,942 | |||||||||
Share-based compensation
|
470,324
|
705,896
|
685,030
|
|||||||||
Share of results of equity investees
|
(5,019
|
)
|
(11,156
|
)
|
7,032
|
|||||||
Others
|
12,723
|
22,144
|
(37,186
|
)
|
||||||||
Operating cash flows before changes in working capital:
|
(1,067,571
|
)
|
313,936
|
2,024,579
|
||||||||
Inventories
|
(62,735
|
)
|
1,441
|
(14,838
|
)
|
|||||||
Accounts receivable
|
(37,066
|
)
|
98,981
|
7,516
|
||||||||
Prepaid expenses and other assets
|
(395,803
|
)
|
(497,889
|
)
|
(344,845
|
)
|
||||||
Amounts due from related parties
|
2,185
|
1,360
|
(274,482
|
)
|
||||||||
Operating lease right-of-use assets
|
(418,846
|
)
|
(360,472
|
)
|
(47,543
|
)
|
||||||
Accounts payable
|
99,639
|
43,311
|
81,381
|
|||||||||
Accrued expenses and other payables
|
545,691
|
(39,069
|
)
|
455,088
|
||||||||
Escrow payables and advances from customers | 654,257 | 166,996 | 396,757 | |||||||||
Operating lease liabilities
|
429,366
|
385,911
|
42,473
|
|||||||||
Deferred revenue
|
314,048
|
(1,093,229
|
)
|
(325,160
|
)
|
|||||||
Income tax payable
|
105,927
|
(4,628
|
)
|
43,598
|
||||||||
Amounts due to related parties
|
39,557
|
(72,341
|
)
|
35,164
|
||||||||
Net cash generated from (used in) operating activities
|
208,649
|
(1,055,692
|
)
|
2,079,688
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Cash flows from investing activities
|
||||||||||||
Purchase of property and equipment
|
(772,177
|
)
|
(924,178
|
)
|
(241,605
|
)
|
||||||
Purchase of intangible assets and capitalized software costs
|
(34,999
|
)
|
(52,105
|
)
|
(16,656
|
)
|
||||||
Proceeds from disposal of long-lived assets
|
620
|
119,996
|
61,873
|
|||||||||
Purchase
of investments
|
(2,505,358
|
)
|
(2,630,842
|
)
|
(8,319,757
|
)
|
||||||
Proceeds from sale and maturity of investments
|
798,178
|
2,281,019
|
3,521,187
|
|||||||||
Distributions from investments
|
1,632
|
4,674
|
912
|
|||||||||
Acquisition of businesses, net of cash acquired
|
(22,763
|
)
|
(60,713
|
)
|
–
|
|||||||
Effect on cash from deconsolidation of subsidiaries
|
(11,775
|
)
|
(230
|
)
|
(43,785
|
)
|
||||||
Change in securities purchased under agreements to resell |
– | – | 233,219 | |||||||||
Change in loans receivable
|
(1,220,631
|
)
|
(1,166,430
|
)
|
(999,850
|
)
|
||||||
Net cash used in investing activities
|
(3,767,273
|
)
|
(2,428,809
|
)
|
(5,804,462
|
)
|
||||||
Cash flows from financing activities
|
||||||||||||
Repayment of bank borrowings and finance lease obligations
|
(1,247
|
)
|
(117,238
|
)
|
(54,407
|
)
|
||||||
Proceeds from bank borrowings
|
115,282
|
49,000
|
–
|
|||||||||
Proceeds from issuance of convertible notes, net
|
2,846,250
|
–
|
–
|
|||||||||
Capital contributed by non-controlling interest | 339 | 70,876 | 1,336 | |||||||||
Transactions with non-controlling interests
|
–
|
(22,889
|
)
|
–
|
||||||||
Payments for redemption, exchange, conversion and repurchase of convertible notes
|
(1,935
|
)
|
(611,315
|
)
|
(204,625
|
)
|
||||||
Proceeds from issuance of ordinary shares, net
|
4,050,055
|
50,211
|
10,643
|
|||||||||
Change in deposits payable
|
392,845
|
942,630
|
389,276
|
|||||||||
Proceeds from borrowings under securitization transactions |
– | – | 119,687 | |||||||||
Proceeds from secured borrowings, net | – | 38,981 | 104,101 | |||||||||
Net cash generated from financing activities
|
7,401,589
|
400,256
|
366,011
|
|||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
(58,218
|
)
|
(143,511
|
)
|
(7,964
|
)
|
||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
3,784,747
|
(3,227,756
|
)
|
(3,366,727
|
)
|
|||||||
Cash, cash equivalents and restricted cash at beginning of the year
|
7,053,393
|
10,838,140
|
7,610,384
|
|||||||||
Cash, cash equivalents and restricted cash at end of the year(1)
|
10,838,140
|
7,610,384
|
4,243,657
|
(1)
|
As of December 31, 2022, cash and cash equivalents of $13,227 was included in Assets held for sale within Prepaid expenses and other assets.
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Supplement disclosures of cash flow information
|
||||||||||||
Income taxes paid
|
(207,381
|
)
|
(313,755
|
)
|
(318,924
|
)
|
||||||
Interest paid
|
(44,981
|
)
|
(103,335
|
)
|
(119,471
|
)
|
||||||
Supplement disclosures of non-cash activities
|
||||||||||||
Purchase of property and equipment included in accrued expenses and other payables
|
38,742
|
(14,631
|
)
|
6,482
|
||||||||
Purchase of property and equipment included in prepayments
|
58,249
|
(13,171
|
)
|
28,459
|
||||||||
Purchase of intangible assets included in accrued expenses and other payables | 183 | (554 | ) | (4,049 | ) | |||||||
Purchase of intangible assets included in prepayments
|
(3,875
|
)
|
(4,506
|
)
|
8,956
|
|||||||
Conversion and exchange of convertible notes into ordinary shares
|
(826,124
|
)
|
(5
|
)
|
(31,297
|
)
|
||||||
Acquisition of subsidiaries by conversion of convertible notes or issuance of shares
|
1,594
|
6,875
|
–
|
|||||||||
Proceeds from disposal of a subsidiary included in prepaid expenses and other assets
|
270,733
|
–
|
–
|
|
Note
|
No of
ordinary shares |
Ordinary
shares |
Additional
paid-in capital |
Accumulated
other comprehensive income (loss) |
Statutory
reserves |
Accumulated
deficit |
Total Sea
Limited shareholders’ equity |
Non-
controlling interests |
Total
shareholders’ equity |
||||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||
Balance as of January 1, 2021
|
511,931,470
|
255
|
8,526,571
|
4,681
|
2,363
|
(5,150,958
|
)
|
3,382,912
|
37,327
|
3,420,239
|
||||||||||||||||||||||||||||||
Net loss for the year
|
–
|
–
|
–
|
–
|
–
|
(2,046,759
|
)
|
(2,046,759
|
)
|
3,729
|
(2,043,030
|
)
|
||||||||||||||||||||||||||||
Other comprehensive loss
|
– | – | – | (33,541 | ) | – | – | (33,541 | ) | (581 | ) | (34,122 | ) | |||||||||||||||||||||||||||
Acquisition of subsidiaries
|
1,051,731 | 1 | 270,732 | – | – | – | 270,733 | – | 270,733 | |||||||||||||||||||||||||||||||
Appropriation of statutory reserves
|
– | – | – | – | 3,781 | (3,781 | ) | – | – | – | ||||||||||||||||||||||||||||||
Equity component of convertible notes
|
– | – | 486,758 | – | – | – | 486,758 | – | 486,758 | |||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares, net of issuance costs
|
15 | 12,650,000 | 6 | 3,972,410 | – | – | – | 3,972,416 | – | 3,972,416 | ||||||||||||||||||||||||||||||
Conversion of convertible notes into Class A ordinary shares
|
20,039,849
|
10
|
826,114
|
–
|
–
|
–
|
826,124
|
–
|
826,124
|
|||||||||||||||||||||||||||||||
Capital contributed by non-controlling interest
|
– | – | – | – | – | – | – | 339 | 339 | |||||||||||||||||||||||||||||||
Transactions with non-controlling interests
|
–
|
–
|
6,761
|
341
|
–
|
–
|
7,102
|
(15,102
|
)
|
(8,000
|
)
|
|||||||||||||||||||||||||||||
Shares issued to depositary bank
|
12,000,000
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||||
Exercise of share options
|
8,027,170
|
4
|
77,635
|
–
|
–
|
–
|
77,639
|
–
|
77,639
|
|||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued
|
4,125,722
|
2
|
(2
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Share-based compensation
|
–
|
–
|
455,313
|
–
|
–
|
–
|
455,313
|
–
|
455,313
|
|||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank
|
(12,087,982
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2021
|
557,737,960
|
278
|
14,622,292
|
(28,519
|
)
|
6,144
|
(7,201,498
|
)
|
7,398,697
|
25,712
|
7,424,409
|
|
Note
|
No of
ordinary shares |
Ordinary
shares |
Additional
paid-in capital |
Accumulated
other comprehensive loss |
Statutory
reserves |
Accumulated
deficit |
Total
Sea Limited shareholders’ equity |
Non-
controlling interests |
Total
shareholders’
equity |
||||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||
Balance as of January 1, 2022
|
|
557,737,960
|
278
|
14,622,292
|
(28,519
|
)
|
6,144
|
(7,201,498
|
)
|
7,398,697
|
25,712
|
7,424,409
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Adjustments for prior periods from adopting ASU 2020-06
|
– | – | (811,483 | ) | – | – | 113,724 | (697,759 | ) | – | (697,759 | ) | ||||||||||||||||||||||||||||
Net loss for the year
|
–
|
–
|
–
|
–
|
–
|
(1,651,421
|
)
|
(1,651,421
|
)
|
(6,351
|
)
|
(1,657,772
|
)
|
|||||||||||||||||||||||||||
Other comprehensive loss
|
– | – | – | (84,560 | ) | – | – | (84,560 | ) | (4,778 | ) | (89,338 | ) | |||||||||||||||||||||||||||
Acquisition of subsidiaries
|
– | – | – | – | – | – | – | 12,560 | 12,560 | |||||||||||||||||||||||||||||||
Appropriation of statutory reserves
|
– | – | – | – | 6,346 | (6,346 | ) | – | – | – | ||||||||||||||||||||||||||||||
Conversion of convertible notes into Class A ordinary shares
|
252 | – | 5 | – | – | – | 5 | – | 5 | |||||||||||||||||||||||||||||||
Capital contributed by non-controlling interest
|
–
|
–
|
335
|
1,864
|
–
|
–
|
2,199
|
68,677
|
70,876
|
|||||||||||||||||||||||||||||||
Transactions with non-controlling interests
|
– | – | (14,889 | ) | – | – | – | (14,889 | ) | – | (14,889 | ) | ||||||||||||||||||||||||||||
Disposal of interest in a subsidiary
|
– | – | – | – | – | – | – | (701 | ) | (701 | ) | |||||||||||||||||||||||||||||
Shares issued to depositary bank
|
7,000,000
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||||
Exercise of share options
|
3,412,987
|
1
|
50,210
|
–
|
–
|
–
|
50,211
|
–
|
50,211
|
|||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued
|
3,809,600
|
2
|
(2
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Share-based compensation
|
–
|
–
|
713,222
|
–
|
–
|
–
|
713,222
|
–
|
713,222
|
|||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank
|
(7,201,957
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2022
|
564,758,842
|
281
|
14,559,690
|
(111,215
|
)
|
12,490
|
(8,745,541
|
)
|
5,715,705
|
95,119
|
5,810,824
|
|
Note
|
No of
ordinary shares |
Ordinary
shares |
Additional
paid-in capital |
Accumulated
other comprehensive loss |
Statutory
reserves
|
Accumulated
deficit |
Total
Sea Limited
shareholders’ equity |
Non-
controlling interests |
Total
shareholders’
equity |
||||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||
Balance as of January 1, 2023
|
|
564,758,842
|
281
|
14,559,690
|
(111,215
|
)
|
12,490
|
(8,745,541
|
)
|
5,715,705
|
95,119
|
5,810,824
|
||||||||||||||||||||||||||||
Net income for the year
|
–
|
–
|
–
|
–
|
–
|
150,726
|
150,726
|
11,956
|
162,682
|
|||||||||||||||||||||||||||||||
Other comprehensive income
|
– | – | – | 3,215 | – | – | 3,215 | 1,305 | 4,520 | |||||||||||||||||||||||||||||||
Appropriation of statutory reserves
|
– | – | – |
–
|
4,491
|
(4,491
|
)
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Conversion of convertible notes into Class A ordinary shares
|
1,581,165 | 1 | 31,296 | – | – | – | 31,297 | – | 31,297 | |||||||||||||||||||||||||||||||
Capital contributed by non-controlling interest
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
1,336
|
1,336
|
|||||||||||||||||||||||||||||||
Deconsolidation of a subsidiary
|
– | – | (1,352 | ) | – | – | – | (1,352 | ) | (5,961 | ) | (7,313 | ) | |||||||||||||||||||||||||||
Shares issued to depositary bank
|
6,000,000
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||||||||||||
Exercise of share options
|
1,603,859
|
1
|
10,642
|
–
|
–
|
–
|
10,643
|
–
|
10,643
|
|||||||||||||||||||||||||||||||
Restricted share awards and restricted share units issued
|
4,101,762
|
2
|
(2
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Share-based compensation
|
–
|
–
|
683,596
|
–
|
–
|
–
|
683,596
|
–
|
683,596
|
|||||||||||||||||||||||||||||||
Settlement of share incentives with shares held by depositary bank
|
(5,705,621
|
)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2023
|
572,340,007
|
285
|
15,283,870
|
(108,000
|
)
|
16,981
|
(8,599,306
|
)
|
6,593,830
|
103,755
|
6,697,585
|
1. |
ORGANIZATION
|
|
(a)
|
As of December 31, 2023, significant subsidiaries of the Company include the following entities:
|
Entity
|
Date of
incorporation/
acquisition
|
Place of
incorporation
|
Percentage of
direct ownership
by the Company
|
Principal activities
|
||||||||
2022
|
2023
|
|||||||||||
Garena Online Private Limited (“Garena Online”)
|
May 8, 2009 | Singapore | 100 | 100 |
Game operations and software development
|
|||||||
Shopee Limited
|
January 16, 2015
|
Cayman Islands
|
100 | 100 | Investment holding company | |||||||
Shopee Singapore Private Limited
|
February 5, 2015
|
Singapore
|
100 | 100 | Online platform | |||||||
|
||||||||||||
PT Shopee International Indonesia
|
August 5, 2015
|
Indonesia
|
100 | 100 |
Online platform
|
|||||||
|
||||||||||||
Sea Services Limited (formerly known as Sea Capital Limited)
|
January 30, 2020 |
Cayman Islands |
100 |
100 |
Investment holding company |
|||||||
|
||||||||||||
Sea Services Holdings Limited (formerly known as SEA Capital C1 Holdings Limited)
|
June 30, 2021 |
Cayman Islands |
100 |
100 |
Investment holding company |
1. |
ORGANIZATION (continued)
|
|
(b) |
VIE structure
|
|
(i) |
Contractual arrangements that give the Company control of the VIEs
|
1. |
ORGANIZATION (continued)
|
(b) |
VIE structure (continued)
|
|
(i) |
Contractual arrangements that give the Company control of the VIEs (continued)
|
1. |
ORGANIZATION (continued)
|
|
(b) |
VIE structure (continued)
|
|
(i) |
Contractual arrangements that give the Company control of the VIEs (continued)
|
1. |
ORGANIZATION (continued)
|
|
(b) |
VIE structure (continued)
|
|
(i) |
Contractual arrangements that give the Company control of the VIEs (continued)
|
1. |
ORGANIZATION (continued)
|
|
(b) |
VIE structure (continued)
|
|
(i) |
Contractual arrangements that give the Company control of the VIEs (continued)
|
1. |
ORGANIZATION (continued)
|
|
(b) |
VIE structure (continued)
|
|
(ii) |
Securitizations
|
(c) |
VIE disclosures
|
1. |
ORGANIZATION (continued)
|
|
(c)
|
VIE disclosures (continued)
|
As of December 31,
|
||||||||
2022 |
2023 |
|||||||
$ |
$ | |||||||
ASSETS
|
|
|
||||||
Current assets
|
||||||||
Cash and cash equivalents
|
79,922
|
63,187
|
||||||
Loans receivable, net |
– | 148,246 | ||||||
Amounts due from intercompanies(1)
|
153,070
|
241,740
|
||||||
Others |
85,787 |
123,046 |
||||||
Total current assets
|
318,779
|
576,219
|
||||||
Non-current assets
|
||||||||
Property and equipment, net
|
86,229
|
123,094
|
||||||
Long-term investments
|
14,500
|
1,475
|
||||||
Deferred tax assets
|
40,561
|
35,280
|
||||||
Others | 18,059 |
27,174 |
||||||
Total non-current assets
|
159,349
|
187,023
|
||||||
Total assets
|
478,128
|
763,242
|
1. |
ORGANIZATION (continued)
|
(c) |
VIE disclosures (continued)
|
As of December 31, |
||||||||
2022 |
2023 | |||||||
$ |
$ |
|||||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Accrued expenses and other payables | 110,526 |
128,917 |
||||||
Deferred revenue | 192,243 |
169,059 |
||||||
Amounts due to intercompanies(1) | 88,639 | 230,884 | ||||||
Others | 12,658 | 15,864 | ||||||
Total current liabilities | 404,066 |
544,724 |
||||||
|
||||||||
Non-current liabilities | ||||||||
Deferred revenue | 23,886 | 16,658 | ||||||
Amounts due to intercompanies(1) | 83,958 | 61,165 | ||||||
Borrowings |
– | 119,323 | ||||||
Others | 4,579 | 19,529 | ||||||
Total non-current liabilities | 112,423 |
216,675 |
||||||
Total liabilities | 516,489 |
761,399 |
|
(1)
|
Amounts due from or to intercompanies consist of intercompany receivables or
payables to the other companies within the group arising from intercompany transactions, and funds advanced for working capital purpose.
|
Year ended December 31,
|
||||||||||||
2021 |
2022 |
2023
|
||||||||||
$ | $ | $ | ||||||||||
Revenue
|
||||||||||||
- Third-party customers
|
690,383
|
722,607
|
551,978
|
|||||||||
- Intercompanies
|
195,639
|
176,072
|
248,637
|
|||||||||
Net income
|
22,390
|
20,425
|
40,776
|
Year ended December 31, |
||||||||||||
2021 |
2022 |
2023 |
||||||||||
$ |
$ | $ |
||||||||||
Net cash generated from (used in) operating activities
|
61,875
|
22,449
|
(21,369
|
)
|
||||||||
Net cash used in investing activities
|
(14,847
|
)
|
(89,160
|
)
|
(189,617
|
)
|
||||||
Net cash generated from financing activities
|
15,030
|
44,442
|
232,420
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
(a) |
Basis of preparation
|
(b) |
Principles of consolidation
|
(c) |
Use of estimates
|
(d) |
Foreign currency
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(e) |
Cash and cash equivalents
|
|
(f) |
Restricted cash
|
|
(g) |
Accounts receivable, loans receivable and allowance for credit losses
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(h) |
Inventories
|
|
(i) |
Property and equipment
|
- Computers
|
3 to 5 years
|
- Office equipment, furniture and fittings
|
3 to 10 years
|
- Leasehold improvements
|
Over the shorter of lease term or the estimated useful lives of the assets
|
- Transportation assets
|
4 to 10 years
|
- Warehouse equipment
|
3 to 10 years
|
- Land use right
|
Over the land use term
|
- Building
|
6 to 20 years
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(j) |
Goodwill
|
|
(k) |
Intangible assets
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
(k) | Intangible assets (continued) |
- Licensing fee
|
Over the shorter of licensing period or the estimated useful lives of the intangible assets
|
- IP right
|
1 to 6 years
|
- Trademarks
|
10 years
|
- Software
|
3 to 6 years
|
- Customer relationships
|
3 to 8 years
|
|
(l) |
Investments
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(l) |
Investments (continued)
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(l) |
Investments (continued)
|
(m) |
Impairment of long-lived assets
|
|
(n) |
Fair value of financial instruments
|
|
(o) |
Revenue recognition
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(o) |
Revenue recognition (continued)
|
|
(i)
|
Digital entertainment revenue
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(o) |
Revenue recognition (continued)
|
(i) |
Digital entertainment revenue (continued)
|
(a)
|
Item-based revenue model
|
(b)
|
User-based revenue model
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(o) |
Revenue recognition (continued)
|
|
(ii) |
E-commerce
|
(iii) |
Digital financial services
|
(iv) |
Rendering of services
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(o) |
Revenue recognition (continued)
|
|
(v) |
Sales of goods
|
|
(p) |
Cost of revenue
|
|
(q) |
Advertising expenditure
|
|
(r) |
Research and development expenses
|
|
(s) |
Leases
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(s) |
Leases (continued)
|
|
(t) |
Income taxes
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(u) |
Share-based compensation
|
|
(v) |
(Loss) Earnings per share
|
|
(w) |
Segment reporting
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(x) |
Employee benefits
|
|
(i) |
Defined contribution plan
|
|
(ii) |
Employee leave entitlement
|
|
(y) |
Transfers of financial assets
|
|
(z) |
Recently adopted accounting pronouncements
|
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
(aa) |
Recently issued accounting pronouncements not yet adopted
|
3. |
CONCENTRATION OF RISKS
|
(a) |
Credit risk
|
(b) |
Business, supplier, customer and economic risk
|
(i) |
Business risk – The Company mainly derives its net revenues from its e-commerce, digital financial services and digital entertainment
operations. If competitors introduce new marketplace platforms, credit product offerings and services or new online games that compete with, or surpass the Company’s
offerings, the Company’s operating performance will be affected.
|
(ii) |
Supplier risk – The Company’s e-commerce and digital financial service businesses engage third-party logistics service providers, payment channels and other third parties as
its service providers. The Company’s digital entertainment business licenses certain games from third-party game developers. The term of the game license agreements with the game developers typically ranges from two to nine years, renewable upon both parties’ consent.
The Company may not be able to develop or procure new games or renew existing licenses on terms acceptable to both parties. The Company’s game developer partners may terminate its agreements prior to their expiration if the Company is not
in compliance with the relevant terms or conditions and the Company may fail to remedy such non-compliance in time, or the game developer partners may refuse to renew the agreements. No individual third-party logistics services provider, third-party game developer or other third-party business partner accounted for more than 10% of the Company’s net cost of revenue for the years ended December
31, 2021, 2022
and 2023.
|
3.
|
CONCENTRATION OF RISKS (continued)
|
|
(b) |
Business, supplier, customer and economic risk (continued)
|
(iii) |
Customer
risk – No individual customer accounted for more than 10% of net revenues for the years ended December 31, 2021, 2022 and 2023. The Company relied on several distribution channels to publish its mobile games. Revenue generated through one of the distribution channels accounted for approximately 19%, 13% and 6% of the Company’s net revenues for the years ended December 31, 2021, 2022 and 2023, respectively.
|
(iv) |
Political, economic, social, legal and regulatory uncertainties – The Company’s businesses could be adversely affected by the varying
political, economic, social, legal and regulatory uncertainties in the diverse markets that it operates in. In addition, the Company may be unsuccessful in adapting its business practices, culture and operations in new markets.
|
(v) |
Regulatory restrictions – Complex laws, rules and regulations including but not limited to those relating to game operations, e-commerce,
digital platforms, payments, lending, banks and data privacy, in all markets where the Company operates. Laws and regulations and their enforcement vary from jurisdiction to jurisdiction and are often evolving, unclear or inconsistent with
other applicable laws which may in turn cause uncertainty to our business operations. The Company may require more time than expected to adapt to these new requirements and may face delays during the implementation period.
|
(c) |
Currency convertibility risk
|
3.
|
CONCENTRATON OF RISKS (continued)
|
(d) |
Foreign currency risk
|
4.
|
GOODWILL
|
Digital
Entertainment
|
Digital
Financial
Services
|
Other
Services
|
Total
|
|||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
Balance as of January 1, 2022
|
168,731
|
56,102 | 314,791 |
539,624
|
||||||||||||
Acquisitions
|
11,715
|
48,980 | – |
60,695
|
||||||||||||
Impairment
|
(177,663
|
)
|
– | (177,280 | ) |
(354,943
|
)
|
|||||||||
Foreign currency translation
|
(2,783
|
)
|
(7,868 | ) | (4,517 | ) |
(15,168
|
)
|
||||||||
Balance as of December 31, 2022
|
–
|
97,214 | 132,994 |
230,208
|
||||||||||||
Impairment |
– | – | (117,875 | ) | (117,875 | ) | ||||||||||
Foreign currency translation |
– | 873 | (424 | ) | 449 | |||||||||||
Balance as of December 31, 2023 | – | 98,087 | 14,695 | 112,782 |
4.
|
GOODWILL (continued)
|
5. |
PREPAID EXPENSES AND OTHER ASSETS
|
|
As of December 31,
|
|||||||
2022 | 2023 | |||||||
|
$ |
$ | ||||||
Current | ||||||||
Other receivables
|
782,022
|
1,153,627
|
||||||
Taxes receivable
|
168,266
|
207,172
|
||||||
Deferred payment channel costs |
271,194 | 197,814 | ||||||
Securities purchased under agreements to resell
|
390,002
|
160,289
|
||||||
Prepaid expenses
|
121,049
|
111,986
|
||||||
Security deposits |
16,828 | 14,898 | ||||||
Assets held for sale |
25,954 | – | ||||||
Others
|
23,336
|
16,056
|
||||||
1,798,651
|
1,861,842
|
|||||||
Non-current
|
||||||||
Security deposits
|
47,314
|
41,984
|
||||||
Prepayment of long-lived assets (including renovation-in-progress)
|
61,733
|
24,318
|
||||||
Deferred payment channel costs
|
8,476
|
12,089
|
||||||
Other receivables
|
6,821
|
2,652
|
||||||
Others
|
11,272
|
6,662
|
||||||
135,616
|
87,705
|
6. |
LOANS RECEIVABLE, NET
|
As of December 31,
|
||||||||
|
2022
$
|
|
2023
$
|
|||||
Consumer and SME loans
|
2,268,844
|
2,656,484
|
||||||
Other loans
|
45,405
|
150,297
|
||||||
2,314,249
|
2,806,781
|
|||||||
Allowance for credit losses
|
(238,819
|
)
|
(321,568
|
)
|
||||
2,075,430
|
2,485,213
|
6.
|
LOANS RECEIVABLE, NET (continued)
|
|
As of December 31, 2022
|
|||||||||||||||||||||||||||
Year of origination
|
||||||||||||||||||||||||||||
|
2022
|
2021
|
2020
|
2019
|
2018
|
Prior
|
Total
|
|||||||||||||||||||||
Consumer and SME loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Delinquency:
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Current
|
2,050,721
|
641
|
807
|
2,790
|
1,702
|
786
|
2,057,447
|
|||||||||||||||||||||
Past due
|
||||||||||||||||||||||||||||
- 1 to 30 days
|
70,761
|
206
|
143
|
97
|
66
|
14
|
71,287
|
|||||||||||||||||||||
- 31 to 60 days
|
49,493
|
341
|
96
|
490
|
560
|
190
|
51,170
|
|||||||||||||||||||||
- 61 to 90 days
|
44,065
|
581
|
18
|
16
|
22
|
–
|
44,702
|
|||||||||||||||||||||
- More than 90 days
|
26,308
|
16,718
|
913
|
146
|
39
|
114
|
44,238
|
|||||||||||||||||||||
2,241,348
|
18,487
|
1,977
|
3,539
|
2,389
|
1,104
|
2,268,844
|
||||||||||||||||||||||
Other loans
|
||||||||||||||||||||||||||||
Delinquency:
|
||||||||||||||||||||||||||||
Current
|
918
|
6,159
|
30,778
|
4,134
|
1,282
|
923
|
44,194
|
|||||||||||||||||||||
Past due
|
||||||||||||||||||||||||||||
- 1 to 30 days
|
10
|
37
|
117
|
148
|
13
|
–
|
325
|
|||||||||||||||||||||
- 31 to 60 days
|
–
|
–
|
38
|
249
|
32
|
–
|
319
|
|||||||||||||||||||||
- 61 to 90 days
|
–
|
22
|
–
|
1
|
42
|
2
|
67
|
|||||||||||||||||||||
- More than 90 days
|
–
|
64
|
105
|
212
|
79
|
40
|
500
|
|||||||||||||||||||||
928
|
6,282
|
31,038
|
4,744
|
1,448
|
965
|
45,405
|
6. |
LOANS RECEIVABLE, NET (continued)
|
As of December 31, 2023
|
||||||||||||||||||||||||||||
Year of origination
|
||||||||||||||||||||||||||||
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Total
|
|||||||||||||||||||||
Consumer and SME loans | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Delinquency:
|
||||||||||||||||||||||||||||
Current
|
2,448,363
|
4,934
|
–
|
–
|
–
|
–
|
2,453,297
|
|||||||||||||||||||||
Past due
|
||||||||||||||||||||||||||||
- 1 to 30 days
|
64,015
|
1,054
|
–
|
–
|
–
|
–
|
65,069
|
|||||||||||||||||||||
- 31 to 60 days
|
49,419
|
925
|
–
|
–
|
–
|
–
|
50,344
|
|||||||||||||||||||||
- 61 to 90 days
|
42,239
|
2,054
|
–
|
–
|
–
|
–
|
44,293
|
|||||||||||||||||||||
- More than 90 days
|
41,843
|
1,638
|
–
|
–
|
–
|
–
|
43,481
|
|||||||||||||||||||||
2,645,879
|
10,605
|
–
|
–
|
–
|
–
|
2,656,484
|
||||||||||||||||||||||
Current period gross write-off
|
182,145 | 358,503 | 4,834 | – | – | – | 545,482 | |||||||||||||||||||||
Other loans
|
||||||||||||||||||||||||||||
Delinquency:
|
||||||||||||||||||||||||||||
Current
|
104,770
|
927
|
399
|
30,769
|
3,132
|
2,214
|
142,211
|
|||||||||||||||||||||
Past due
|
||||||||||||||||||||||||||||
- 1 to 30 days
|
4,660
|
8
|
6
|
98
|
86
|
17
|
4,875
|
|||||||||||||||||||||
- 31 to 60 days
|
1,776
|
4
|
30
|
38
|
260
|
275
|
2,383
|
|||||||||||||||||||||
- 61 to 90 days
|
10
|
9
|
–
|
28
|
51
|
16
|
114
|
|||||||||||||||||||||
- More than 90 days
|
69
|
52
|
17
|
210
|
242
|
124
|
714
|
|||||||||||||||||||||
111,285
|
1,000
|
452
|
31,143
|
3,771
|
2,646
|
150,297
|
||||||||||||||||||||||
Current period gross write-off
|
– | 16 | 12 | 205 | 775 | 220 | 1,228 |
6.
|
LOANS RECEIVABLE, NET (continued)
|
Consumer
and SME
loans
$
|
Other loans
$
|
Total
$
|
||||||||||
Balance as of January 1, 2022
|
89,977
|
7,699
|
97,676
|
|||||||||
Provision for credit losses
|
494,815
|
(1,202
|
)
|
493,613
|
||||||||
Write-off of loans receivable
|
(331,401
|
)
|
(4,772
|
)
|
(336,173
|
)
|
||||||
Exchange differences
|
(16,012
|
)
|
(285
|
)
|
(16,297
|
)
|
||||||
Balance as of December 31, 2022
|
237,379
|
1,440
|
238,819
|
|||||||||
Provision for credit losses |
624,143 | 3,785 | 627,928 | |||||||||
Write-off of loans receivable |
(545,482 | ) | (1,228 | ) | (546,710 | ) | ||||||
Exchange differences |
1,518 | 13 | 1,531 | |||||||||
Balance as of December 31, 2023 | 317,558 | 4,010 | 321,568 |
7. |
INVESTMENTS
|
As of December 31,
|
||||||||
2022
|
2023
|
|||||||
$ |
$ |
|||||||
Short-term investments
|
||||||||
Debt securities:
|
||||||||
Held-to-maturity
|
557,249
|
1,731,154
|
||||||
Available-for-sale
|
304,453
|
792,908
|
||||||
Equity securities
|
2,556
|
23,582
|
||||||
864,258
|
2,547,644
|
|||||||
Long-term investments
|
||||||||
Debt securities:
|
||||||||
Held-to-maturity
|
64,790
|
49,726
|
||||||
Available-for-sale
|
292,724
|
3,405,098
|
||||||
Equity securities
|
521,742
|
612,729
|
||||||
Equity method investments
|
196,104
|
195,009
|
||||||
Investments carried at fair value
|
178,233
|
–
|
||||||
1,253,593
|
4,262,562
|
7. |
INVESTMENTS (continued)
|
Years ended December 31, |
||||||||||||
2021
|
2022
|
2023 | ||||||||||
$ |
$ |
$ |
||||||||||
Impairment losses
|
||||||||||||
Non-marketable equity securities
|
– |
104,645
|
86,076 | |||||||||
Equity method investments
|
– | 4,201 | 10,608 |
7. |
INVESTMENTS (continued)
|
As of December 31, 2022
|
||||||||||||||||||||||||
Cost or
amortized
cost
|
Gross
unrecognized
gains
|
Gross
unrecognized
losses
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Fair value
|
|||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments
|
||||||||||||||||||||||||
Debt securities:
|
||||||||||||||||||||||||
Held-to-maturity
|
557,249
|
4
|
(2
|
)
|
–
|
–
|
557,251
|
|||||||||||||||||
Available-for-sale
|
304,649
|
–
|
–
|
26
|
(222
|
)
|
304,453
|
|||||||||||||||||
Long-term investments
|
||||||||||||||||||||||||
Debt securities:
|
||||||||||||||||||||||||
Held-to-maturity
|
64,790
|
551
|
(756
|
)
|
–
|
–
|
64,585
|
|||||||||||||||||
Available-for-sale
|
301,020
|
–
|
–
|
151
|
(8,447
|
)
|
292,724
|
|||||||||||||||||
Investments carried at fair value
|
225,709 | – | – | 27,071 | (74,547 | ) | 178,233 | |||||||||||||||||
1,453,417
|
555
|
(758
|
)
|
27,248
|
(83,216
|
)
|
1,397,246
|
As of December 31, 2023
|
||||||||||||||||||||||||
Cost or
amortized
cost
|
Gross
unrecognized
gains
|
Gross
unrecognized
losses
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Fair value
|
|||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments
|
||||||||||||||||||||||||
Debt securities:
|
||||||||||||||||||||||||
Held-to-maturity
|
1,731,154
|
9
|
(23
|
)
|
–
|
–
|
1,731,140
|
|||||||||||||||||
Available-for-sale
|
792,431
|
–
|
–
|
885
|
(408
|
)
|
792,908
|
|||||||||||||||||
Long-term investments
|
||||||||||||||||||||||||
Debt securities:
|
||||||||||||||||||||||||
Held-to-maturity
|
49,726
|
632
|
(193
|
)
|
–
|
–
|
50,165
|
|||||||||||||||||
Available-for-sale
|
3,407,262
|
–
|
–
|
15,002
|
(17,166
|
)
|
3,405,098
|
|||||||||||||||||
5,980,573
|
641
|
(216
|
)
|
15,887
|
(17,574
|
)
|
5,979,311
|
8. |
PROPERTY AND EQUIPMENT, NET
|
|
As of December 31,
|
|||||||
2022
|
2023
|
|||||||
$ |
$ |
|||||||
Computers
|
1,381,797
|
1,472,199
|
||||||
Office equipment, furniture and fittings
|
62,262
|
65,355
|
||||||
Leasehold improvements
|
381,443
|
350,194
|
||||||
Transportation assets
|
123,835
|
64,022
|
||||||
Warehouse equipment
|
36,023
|
140,829
|
||||||
Land
|
272,042
|
278,756
|
||||||
Building
|
14,702
|
40,830
|
||||||
Construction-in-progress
|
51,575
|
44,884
|
||||||
2,323,679
|
2,457,069
|
|||||||
Less: accumulated depreciation
|
(935,784
|
)
|
(1,249,371
|
)
|
||||
1,387,895
|
1,207,698
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
180,140
|
261,582
|
297,406
|
|||||||||
Sales and marketing expenses
|
7,960
|
10,733
|
8,665
|
|||||||||
General and administrative expenses
|
64,187
|
117,593
|
93,972
|
|||||||||
Research and development expenses
|
8,395
|
15,019
|
12,193
|
|||||||||
260,682
|
404,927
|
412,236
|
9.
|
LEASES
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Lease cost
|
||||||||||||
Operating lease cost
|
138,766 |
257,359
|
295,501
|
|||||||||
Short-term lease cost
|
14,831 |
24,507
|
23,172
|
|||||||||
153,597 |
281,866
|
318,673
|
Supplemental cash flow information
|
||||||||||||
Operating cash flows from operating leases
|
128,751 |
228,604
|
292,781
|
|||||||||
ROU assets obtained in exchange for new operating lease liabilities
|
520,354 |
596,887
|
279,526
|
As of December 31, |
||||||||
2022
|
2023
|
|||||||
Weighted-average remaining lease term
|
||||||||
Operating leases
|
5.66 years
|
6.15 years
|
Weighted-average discount rate
|
||||||||
Operating leases
|
7.8%
|
8.3%
|
|
$ |
|||
2024
|
298,070
|
|||
2025
|
250,365
|
|||
2026
|
215,008
|
|||
2027
|
156,217
|
|||
2028
|
119,121
|
|||
Thereafter
|
365,164
|
|||
Total lease payments
|
1,403,945
|
|||
Less: imputed interest
|
(323,643
|
)
|
||
Present value of lease liabilities
|
1,080,302
|
10.
|
INTANGIBLE ASSETS, NET
|
As of December 31, | ||||||||
2022
$
|
2023
$
|
|||||||
Licensing fee |
18,629 | 21,802 | ||||||
IP right
|
42,943 | 44,894 | ||||||
Trademarks
|
10,679 | 10,679 | ||||||
Software, including internal use software under development
|
66,117 | 73,231 | ||||||
Others
|
5,267 | 5,271 | ||||||
Total intangible assets, gross
|
143,635 | 155,877 | ||||||
Accumulated amortization:
|
||||||||
Licensing fee
|
(15,713 | ) | (16,280 | ) | ||||
IP right
|
(37,538 | ) | (40,699 | ) | ||||
Trademarks
|
(5,873 | ) | (6,941 | ) | ||||
Software
|
(17,203 | ) | (38,200 | ) | ||||
Others
|
(2,289 | ) | (2,936 | ) | ||||
Total accumulated amortization
|
(78,616 | ) | (105,056 | ) | ||||
Total intangible assets, net
|
65,019 | 50,821 |
$ |
||||
2024
|
26,642
|
|||
2025
|
17,031
|
|||
2026
|
5,168
|
|||
2027
|
1,669
|
|||
2028
|
281
|
|||
Thereafter
|
30
|
|||
50,821
|
11. |
ACCRUED EXPENSES AND OTHER PAYABLES
|
As of December 31,
|
||||||||
2022
|
2023
|
|||||||
$ | $ | |||||||
Current
|
||||||||
Accrued cost of revenue and operating expenses |
768,312
|
1,066,988
|
||||||
Accrued payroll and welfare expenses | 213,369 | 316,397 | ||||||
Business and other taxes payables
|
133,636
|
246,164
|
||||||
Other payables
|
173,560
|
116,338
|
||||||
Payables and accruals for long-lived assets
|
38,473 | 32,724 | ||||||
Accrued
interest for convertible notes |
3,917 | 3,737 | ||||||
Finance lease liabilities
|
3,138
|
3,715
|
||||||
Liabilities directly associated with the assets held for sale |
12,020 | – | ||||||
Others
|
50,188
|
48,744
|
||||||
1,396,613
|
1,834,807
|
|||||||
Non-current
|
||||||||
Finance lease liabilities
|
11,844
|
10,828
|
||||||
Others
|
75,228
|
68,429
|
||||||
87,072
|
79,257
|
12. |
BORROWINGS
|
13. |
CONVERTIBLE NOTES
|
As of December 31, |
||||||||
|
2022 |
2023 |
||||||
$ | $ | |||||||
2023 Convertible Notes
|
31,237
|
–
|
||||||
2024 Convertible Notes
|
151,459
|
151,764
|
||||||
2025 Convertible Notes
|
1,144,794
|
1,146,369
|
||||||
2026 Convertible Notes
|
2,042,497 |
1,803,416
|
||||||
3,369,987 | 3,101,549 |
2023 Convertible Notes
|
2024 Convertible Notes
|
2025 Convertible Notes
|
2026 Convertible Notes
|
||
Issuance date
|
June 18, 2018
|
November 18, 2019
|
May 22, 2020
|
September 14, 2021 | |
Maturity date
|
July 1, 2023
|
December 1, 2024
|
December 1, 2025
|
September 15, 2026 | |
Principal amount
|
$575,000
|
$1,150,000
|
$1,150,000
|
$2,875,000 | |
Interest rate
|
2.25%
|
1.00%
|
2.375%
|
0.25% | |
Initial conversion rate
|
50.5165 American Depositary Shares
(“ADSs”) per $1 principal amount,
equivalent to $19.80 per ADS
|
19.9475 ADSs per $1 principal amount,
equivalent to $50.13 per ADS
|
11.0549 ADSs per $1 principal amount,
equivalent to $90.46 per ADS
|
2.0964 ADSs per $1
principal amount,
equivalent to $477.01 per ADS
|
|
Agreed conversion date
|
January 1, 2023
|
June 1, 2024
|
September 1, 2025
|
June 15, 2026 |
13.
|
CONVERTIBLE NOTES (continued)
|
As of December 31, 2022 | As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
2023
Convertible
Notes
|
2024
Convertible
Notes
|
2025
Convertible
Notes
|
2026
Convertible
Notes
|
Total
|
2024
Convertible
Notes
|
2025
Convertible
Notes
|
2026
Convertible
Notes
|
Total
|
||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Principal
|
31,300
|
152,048
|
1,149,500
|
2,057,784 |
3,390,632
|
152,048
|
1,149,500
|
1,813,273 |
3,114,821
|
|||||||||||||||||||||||||||
Less: unamortized issuance cost and debt discount
|
(63
|
)
|
(589
|
)
|
(4,706
|
)
|
(15,287 | ) |
(20,645
|
)
|
(284
|
)
|
(3,131
|
)
|
(9,857 | ) |
(13,272
|
)
|
||||||||||||||||||
Net carrying amount
|
31,237
|
151,459
|
1,144,794
|
2,042,497 |
3,369,987
|
151,764
|
1,146,369
|
1,803,416 |
3,101,549
|
13.
|
CONVERTIBLE NOTES (continued)
|
2024 Convertible
Notes
|
2025 Convertible
Notes
|
|||||||
Initial strike price per share
|
$
|
50.13
|
$
|
90.46
|
||||
Initial cap price per share
|
$
|
70.36
|
$
|
136.54
|
14. |
SHARE-BASED COMPENSATION
|
14. |
SHARE-BASED COMPENSATION (continued)
|
(a) |
Option granted to Eligible Persons
|
Number of
options |
Weighted
average exercise price |
Weighted
average remaining contractual term |
Aggregate
intrinsic value |
|||||||||||||
$
|
Years
|
$
|
||||||||||||||
Outstanding, January 1, 2021
|
47,465,720
|
14.76
|
||||||||||||||
Granted
|
4,162,121
|
269.09
|
||||||||||||||
Exercised
|
(5,405,228
|
)
|
14.44
|
|||||||||||||
Forfeited
|
–
|
|||||||||||||||
Outstanding, December 31, 2021
|
46,222,613
|
37.70
|
6.89
|
8,822,987
|
||||||||||||
Vested and expected to vest at December 31, 2021
|
46,222,613
|
37.70
|
||||||||||||||
Exercisable as of December 31, 2021
|
30,707,210
|
14.13
|
6.32
|
6,435,641
|
||||||||||||
Outstanding, January 1, 2022
|
46,222,613
|
37.70
|
||||||||||||||
Granted
|
30,000,000
|
120.00
|
||||||||||||||
Cancelled or forfeited |
(4,012,516 | ) | 279.17 | |||||||||||||
Exercised
|
(3,676,911
|
)
|
13.82
|
|||||||||||||
Outstanding, December 31, 2022
|
68,533,186
|
60.87
|
7.30
|
1,433,420
|
||||||||||||
Vested and expected to vest at December 31, 2022
|
68,533,186
|
60.87
|
||||||||||||||
Exercisable as of December 31, 2022
|
36,880,548
|
22.99
|
5.97
|
1,274,793
|
||||||||||||
Outstanding, January 1, 2023
|
68,533,186
|
|||||||||||||||
Granted
|
1,925,000
|
60.00
|
||||||||||||||
Cancelled or forfeited |
(9,292,295 | ) | 104.02 | |||||||||||||
Exercised
|
(1,336,980
|
)
|
7.19 | |||||||||||||
Outstanding, December 31, 2023
|
59,828,911
|
55.34
|
6.18
|
944,611
|
||||||||||||
Vested and expected to vest at December 31, 2023
|
59,828,911
|
55.34
|
||||||||||||||
Exercisable as of December 31, 2023
|
42,877,386
|
35.29
|
5.51
|
887,174
|
14. |
SHARE-BASED COMPENSATION (continued)
|
(a) |
Option granted to Eligible Persons (continued)
|
Granted in 2021
|
Granted in 2022
|
Granted in 2023
|
||||
Risk-free interest rates
|
0.74% – 1.07%
|
2.79% – 2.84%
|
3.60% – 4.10%
|
|||
Expected term
|
5.6 – 7.5 years
|
5.1 – 7.5 years
|
6.5 – 7 years
|
|||
Expected volatility
|
32.1% – 33.0%
|
48.7% – 55.9%
|
60.2% – 62.0%
|
|||
Expected dividend yield
|
–
|
–
|
–
|
14. |
SHARE-BASED COMPENSATION (continued)
|
|
(b) |
RSAs/RSUs granted to Eligible Persons
|
Number of
RSAs/RSUs |
Weighted
average grant date fair value |
Weighted
average remaining contractual life |
Aggregate
intrinsic value |
|||||||||||||
$
|
Years
|
$
|
||||||||||||||
Unvested, January 1, 2021
|
9,341,928
|
46.36
|
8.64
|
1,859,511
|
||||||||||||
Granted
|
3,551,491
|
258.97
|
||||||||||||||
Vested
|
(4,127,006
|
)
|
40.59
|
|||||||||||||
Forfeited
|
(637,193
|
)
|
102.92
|
|||||||||||||
Unvested, December 31, 2021
and January 1, 2022
|
8,129,220
|
137.76
|
8.47
|
1,818,588
|
||||||||||||
Granted
|
7,320,443
|
99.25
|
||||||||||||||
Vested
|
(3,864,257
|
)
|
110.34
|
|||||||||||||
Forfeited
|
(1,933,175
|
)
|
133.12
|
|||||||||||||
Unvested, December 31, 2022
and January 1, 2023
|
9,652,231
|
120.48
|
8.81
|
502,206
|
||||||||||||
Granted
|
7,119,505
|
63.46
|
||||||||||||||
Vested
|
(4,130,583
|
)
|
109.11
|
|||||||||||||
Forfeited
|
(1,786,921
|
)
|
116.01
|
|||||||||||||
Unvested, December 31, 2023
|
10,854,232
|
90.02
|
8.86
|
439,596
|
|
(c) |
SARs granted to Eligible Persons
|
14. |
SHARE-BASED COMPENSATION (continued)
|
Year ended December 31,
|
||||||||||||
2021
|
2022
|
2023
|
||||||||||
$ | $ | $ | ||||||||||
Share options:
|
||||||||||||
Cost of revenue
|
390
|
–
|
–
|
|||||||||
Sales and marketing expenses
|
5
|
–
|
–
|
|||||||||
General and administrative expenses
|
207,204
|
313,917
|
253,408
|
|||||||||
Research and development expenses
|
33
|
254
|
44
|
|||||||||
207,632
|
314,171
|
253,452
|
||||||||||
Cash received for the exercise in the respective years
|
77,639
|
50,211
|
10,643
|
|||||||||
RSAs/ RSUs:
|
||||||||||||
Cost of revenue
|
8,318
|
11,104
|
12,727
|
|||||||||
Sales and marketing expenses
|
23,350
|
36,812
|
35,988
|
|||||||||
General and administrative expenses
|
67,421
|
67,388
|
99,048
|
|||||||||
Research and development expenses
|
148,592
|
283,747
|
282,381
|
|||||||||
247,681
|
399,051
|
430,144
|
||||||||||
SARs:
|
||||||||||||
Cost of revenue
|
3,389
|
(1,928
|
)
|
383
|
||||||||
Sales and marketing expenses
|
6,850
|
(1,762
|
)
|
710
|
||||||||
General and administrative expenses
|
3,658
|
(2,993
|
)
|
200
|
||||||||
Research and development expenses
|
1,114
|
(643
|
)
|
141
|
||||||||
15,011
|
(7,326
|
)
|
1,434
|
15. |
ORDINARY SHARES
|
16. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
Unrealized
fair value
gain (loss)
on available-
for-sale
investments
|
Foreign
currency
translation
|
Total
|
||||||||||
$ | $ | $ | ||||||||||
Balance as of January 1, 2021
|
981
|
3,700
|
4,681
|
|||||||||
Current year other comprehensive loss
|
(1,278
|
)
|
(32,263
|
)
|
(33,541
|
)
|
||||||
Transactions with non-controlling interests
|
– | 341 | 341 | |||||||||
Balance as of December 31, 2021
|
(297 | ) |
(28,222
|
)
|
(28,519
|
)
|
||||||
Current year other comprehensive loss
|
(6,263
|
)
|
(78,297
|
)
|
(84,560
|
)
|
||||||
Capital contributed by non-controlling interest
|
– |
1,864 | 1,864 | |||||||||
Balance as of December 31, 2022
|
(6,560 | ) |
(104,655
|
)
|
(111,215
|
)
|
||||||
Current year other comprehensive income (loss)
|
4,512
|
(1,297
|
)
|
3,215 | ||||||||
Balance as of December 31, 2023
|
(2,048
|
)
|
(105,952
|
)
|
(108,000
|
)
|
17. |
RESTRICTED NET ASSETS
|
Year ended December 31,
|
||||||||
2022
$
|
2023
$
|
|||||||
At the beginning of the financial year
|
6,144
|
12,490
|
||||||
Transferred from retained earnings
|
6,346
|
4,491
|
||||||
At the end of the financial year
|
12,490
|
16,981
|
18. |
TAXATION
|
18. |
TAXATION (continued)
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Current income tax
|
289,998
|
272,070
|
317,893
|
|||||||||
Deferred tax
|
(975
|
)
|
(140,553
|
)
|
(94,551
|
)
|
||||||
Withholding tax expense
|
43,842
|
36,878
|
39,338
|
|||||||||
332,865
|
168,395
|
262,680
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
(Loss) Income before income tax and share of results of equity investees
|
(1,715,184
|
)
|
(1,500,533
|
)
|
432,394
|
|||||||
Tax expense computed at tax rate of 17%
|
(291,581
|
)
|
(255,091
|
)
|
73,507
|
|||||||
Changes in valuation allowance
|
828,141
|
389,129
|
44,491
|
|||||||||
Non-taxable and non-deductible items
|
17,586
|
25,387
|
(11,306
|
)
|
||||||||
Effect of concessionary tax rate and tax reliefs
|
(183,962
|
)
|
(117,558
|
)
|
(42,696
|
)
|
||||||
Withholding tax expense
|
43,842
|
36,878
|
39,338
|
|||||||||
Foreign tax effects
|
(82,388
|
)
|
85,204
|
154,756
|
||||||||
Changes in unrecognized tax benefits |
– | – | 6,000 | |||||||||
Others
|
1,227
|
4,446
|
(1,410
|
)
|
||||||||
332,865
|
168,395
|
262,680
|
18. |
TAXATION (continued)
|
As of December 31,
|
||||||||
2022
$
|
2023
$
|
|||||||
Deferred tax assets
|
||||||||
Property and equipment
|
11,039
|
16,094
|
||||||
Deferred revenue
|
93,163
|
161,981
|
||||||
Unutilized tax losses and unused capital allowances
|
2,049,196
|
2,197,209
|
||||||
Provision and accrued expenses
|
58,650
|
74,330
|
||||||
Allowance for credit losses |
41,002 | 56,308 | ||||||
Others
|
19,844
|
19,437
|
||||||
Valuation allowance
|
(2,013,288
|
)
|
(2,159,905
|
)
|
||||
Total deferred tax assets
|
259,606
|
365,454
|
||||||
Deferred tax liabilities
|
||||||||
Property and equipment
|
(14,456
|
)
|
(7,853
|
)
|
||||
Deferred payment channel costs
|
(7,111
|
)
|
(24,483
|
)
|
||||
Others
|
(2,780
|
)
|
(4,290
|
)
|
||||
Total deferred tax liabilities
|
(24,347
|
)
|
(36,626
|
)
|
||||
Net deferred tax assets
|
235,259
|
328,828
|
19. |
(LOSS) EARNINGS PER SHARE
|
|
|
Year ended December 31, |
||||||||||
|
2021
$
|
|
2022
$
|
|
2023
$
|
|||||||
Numerator:
|
||||||||||||
Net (loss) income attributable to ordinary shareholders
|
(2,046,759
|
)
|
(1,651,421
|
)
|
150,726
|
|||||||
Denominator:
|
||||||||||||
Weighted-average number of shares outstanding – basic
|
532,705,796
|
558,119,948
|
566,612,815
|
|||||||||
Basic (loss) earnings per share:
|
(3.84
|
)
|
(2.96
|
)
|
0.27
|
Year ended December 31, | ||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Numerator:
|
||||||||||||
Net (loss) income attributable to ordinary shareholders
|
(2,046,759
|
)
|
(1,651,421
|
)
|
150,726
|
|||||||
Denominator:
|
||||||||||||
Weighted-average number of shares outstanding – basic
|
532,705,796
|
558,119,948
|
566,612,815
|
|||||||||
Add: share options
|
–
|
–
|
27,486,226
|
|||||||||
Add: RSAs and RSUs
|
–
|
–
|
306,563
|
|||||||||
Weighted-average number of shares outstanding – diluted
|
532,705,796
|
558,119,948
|
594,405,604
|
|||||||||
Diluted (loss) earnings per share:
|
(3.84
|
)
|
(2.96
|
)
|
0.25
|
19. |
(LOSS) EARNINGS PER SHARE (continued)
|
Year ended December 31,
|
||||||||||||
2021
|
2022
|
2023
|
||||||||||
Share options
|
46,225,613
|
68,800,110
|
32,342,730
|
|||||||||
RSAs/RSUs
|
8,129,220
|
9,652,231
|
10,547,669
|
|||||||||
Convertible notes
|
23,349,154
|
21,635,690
|
20,588,810
|
|||||||||
77,703,987
|
100,088,031
|
63,479,209
|
20. |
RELATED PARTY TRANSACTIONS
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Services provided by:
|
||||||||||||
- Shareholder and its affiliates(1)
|
164,911
|
109,422
|
–
|
|||||||||
- Investee(2)
|
–
|
–
|
11,327
|
|||||||||
Services provided to:
|
||||||||||||
- Investee(2)
|
–
|
–
|
8,624
|
As of December 31,
|
||||||||
2022
$
|
2023
$
|
|||||||
Amounts due from:
|
||||||||
- Investee(2)
|
–
|
281,485
|
||||||
Amounts due to:
|
||||||||
- Investee(2)
|
–
|
63,419
|
|
(1) |
On
September 5, 2022, the director who is an executive officer of Tencent Limited (“Tencent”) resigned from the Board of Directors of the Company and Tencent granted an irrevocable voting proxy with respect to all its shares in the Company to
the Board of Directors of the Company to vote on matters that are subject to the vote of shareholders of the Company. Accordingly, Tencent is no longer a related party of the Company.
|
|
|
|
|
(2) |
In October 2023, the Company deconsolidated a
subsidiary. The Company retained significant influence and the retained investment is accounted for using the equity method. Accordingly, the investee continues to be considered as a related party of the Company. Gain on deconsolidation
is not material to the consolidated financial statements.
|
21. |
SEGMENT REPORTING
|
21. |
SEGMENT REPORTING (continued)
|
Year ended December 31, 2021
|
||||||||||||||||||||||||
E-Commerce
$
|
Digital
Financial
Services
$
|
Digital
Entertainment
$
|
Other
Services
$
|
Unallocated
expenses(1) $
|
Consolidated
$
|
|||||||||||||||||||
Revenue
|
5,122,959
|
469,774
|
4,320,013
|
42,444 | – |
9,955,190
|
||||||||||||||||||
Operating (loss) income
|
(2,766,566
|
)
|
(640,422
|
)
|
2,500,081
|
(177,633 | ) | (498,520 | ) |
(1,583,060
|
)
|
|||||||||||||
Non-operating loss, net
|
(132,124
|
)
|
||||||||||||||||||||||
Income tax expense
|
(332,865
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
5,019
|
|||||||||||||||||||||||
Net loss
|
(2,043,030
|
)
|
Year ended December 31, 2022
|
||||||||||||||||||||||||
E-Commerce
$
|
Digital
Financial
Services
$
|
Digital
Entertainment
$
|
Other
Services
$
|
Unallocated
expenses(1) $
|
Consolidated
$
|
|||||||||||||||||||
Revenue
|
7,288,677
|
1,221,996
|
3,877,163
|
61,869
|
–
|
12,449,705
|
||||||||||||||||||
Operating (loss) income
|
(2,013,360
|
)
|
(277,264
|
)
|
1,971,416
|
(252,162
|
)
|
(916,138
|
)
|
(1,487,508
|
)
|
|||||||||||||
Non-operating loss, net
|
(13,025
|
)
|
||||||||||||||||||||||
Income tax expense
|
(168,395
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
11,156
|
|||||||||||||||||||||||
Net loss
|
(1,657,772
|
)
|
21. |
SEGMENT REPORTING (continued)
|
Year ended December 31, 2023
|
||||||||||||||||||||||||
E-Commerce
$
|
Digital
Financial
Services
$
|
Digital
Entertainment
$
|
Other
Services
$
|
Unallocated
expenses(1) $
|
Consolidated
$
|
|||||||||||||||||||
Revenue
|
9,000,848
|
1,759,422
|
2,172,009
|
131,281
|
– |
13,063,560
|
||||||||||||||||||
Operating (loss) income
|
(550,470
|
)
|
490,209
|
1,177,871
|
(56,728
|
)
|
(836,104
|
)
|
224,778
|
|||||||||||||||
Non-operating income, net
|
207,616
|
|||||||||||||||||||||||
Income tax expense
|
(262,680
|
)
|
||||||||||||||||||||||
Share of results of equity investees
|
(7,032
|
)
|
||||||||||||||||||||||
Net income
|
162,682
|
(1) |
Unallocated expenses are mainly relating to share-based
compensation, impairment of goodwill of prior acquisitions that are not under the Company’s reportable segments, and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to
segments. These expenses are excluded from segments results as they are not reviewed by the CODM as part of segment performance.
|
21. |
SEGMENT REPORTING (continued)
|
Year ended December 31,
|
||||||||||||
2021
$
|
2022
$
|
2023
$
|
||||||||||
Revenue
|
||||||||||||
Southeast Asia
|
6,316,782
|
8,321,249
|
9,179,527
|
|||||||||
Latin America
|
1,850,861
|
2,043,918
|
2,193,758
|
|||||||||
Rest of Asia
|
1,394,342
|
1,727,187
|
1,496,433
|
|||||||||
Rest of the world
|
393,205
|
357,351
|
193,842
|
|||||||||
Consolidated revenue
|
9,955,190
|
12,449,705
|
13,063,560
|
As of December 31,
|
||||||||
2022
$
|
2023
$
|
|||||||
Long-lived assets
|
||||||||
Southeast Asia
|
1,804,846
|
1,699,461
|
||||||
Rest of Asia
|
348,116
|
258,078
|
||||||
Rest of the world
|
257,792
|
316,962
|
||||||
2,410,754
|
2,274,501
|
22.
|
FAIR VALUE MEASUREMENTS
|
22. |
FAIR VALUE MEASUREMENTS (continued)
|
As of December 31, 2022 |
As of December 31, 2023 |
|||||||
Unobservable input(1)
|
Weighted
average(2)
|
Range
|
Weighted
average(2)
|
Range
|
||||
Market adjustment |
(20%)
|
|
(90%) to 7%
|
(54%) |
|
(54%)
|
|
(1)
|
Significant increase (decrease) in the input would result in a significantly higher (lower) fair value measurement, depending on the materiality of the investment. |
(2)
|
Input was weighted based on the fair value of the investments included in the range.
|
22. |
FAIR VALUE MEASUREMENTS (continued)
|
|
As of December 31, 2022
|
|||||||||||||||
Quoted prices in
active markets for
identical assets
(Level 1)
$
|
Significant other
observable inputs
(Level 2)
$
|
Unobservable
inputs
(Level 3)
$
|
Total
$
|
|||||||||||||
Held-to-maturity investments
|
621,346 | – | 490 | 621,836 | ||||||||||||
Available-for-sale investments
|
562,051 | – | 35,126 | 597,177 | ||||||||||||
Equity securities
|
2,008 | 548 | – | 2,556 | ||||||||||||
Investments carried at fair value
|
– | – | 178,233 | 178,233 | ||||||||||||
Other assets | – | – | 9,668 | 9,668 | ||||||||||||
Derivative assets(1) | – | 3 | – | 3 | ||||||||||||
Derivative liabilities(2) | – | (2,277 | ) | – | (2,277 | ) | ||||||||||
Share appreciation rights
|
(5,420 | ) | – | – | (5,420 | ) | ||||||||||
2023 Convertible Notes | – | – | (82,666 | ) | (82,666 | ) | ||||||||||
2024 Convertible Notes | – | – | (190,646 | ) | (190,646 | ) | ||||||||||
2025 Convertible Notes | – | – | (1,148,639 | ) | (1,148,639 | ) | ||||||||||
2026 Convertible Notes | – | – | (1,454,421 | ) | (1,454,421 | ) | ||||||||||
1,179,985 | (1,726 | ) | (2,652,855 | ) | (1,474,596 | ) |
|
As of December 31, 2023
|
|||||||||||||||
Quoted prices in
active markets for
identical assets
(Level 1)
$
|
Significant other
observable inputs
(Level 2)
$
|
Unobservable
inputs
(Level 3)
$
|
Total
$
|
|||||||||||||
Held-to-maturity investments
|
1,780,898 | – | 407 | 1,781,305 | ||||||||||||
Available-for-sale investments
|
4,177,564 | – | 20,442 | 4,198,006 | ||||||||||||
Equity securities
|
23,495 | 87 | – | 23,582 | ||||||||||||
Other assets | – | – | 9,465 | 9,465 | ||||||||||||
Derivative assets(1) | – | 13 | – | 13 | ||||||||||||
Derivative liabilities(2) | – | (2,818 | ) | – | (2,818 | ) | ||||||||||
Share appreciation rights
|
(5,522 | ) | – | – | (5,522 | ) | ||||||||||
2024 Convertible Notes | – | – | (168,410 | ) | (168,410 | ) | ||||||||||
2025 Convertible Notes | – | – | (1,179,739 | ) | (1,179,739 | ) | ||||||||||
2026 Convertible Notes | – | – | (1,556,532 | ) | (1,556,532 | ) | ||||||||||
5,976,435 | (2,718 | ) | (2,874,367 | ) | 3,099,350 |
(1)
|
Included in prepaid expenses and other assets in the consolidated balance sheets and not designated as hedges. |
(2)
|
Included in accrued expenses and other payables in the consolidated balance sheets and not designated as hedges. |
22. |
FAIR VALUE MEASUREMENTS (continued)
|
|
$ |
|||
Available-for-sale investments
|
||||
Balance as of January 1, 2021
|
21,357
|
|||
Additions
|
35,298
|
|||
Conversion into ordinary shares of investees | (21,340 | ) | ||
Net unrealized loss included in other comprehensive income
|
(958
|
)
|
||
Translation gain included in other comprehensive income |
19 | |||
Balance as of December 31, 2021
|
34,376
|
|||
Additions
|
3,198
|
|||
Settlement |
(1,266 | ) | ||
Net unrealized loss included in other comprehensive income
|
(1,193
|
)
|
||
Translation gain included in other
comprehensive income
|
11
|
|||
Balance as of December 31, 2022
|
35,126
|
|||
Settlement | (278 | ) | ||
Impairment |
(3,873 | ) | ||
Conversion into ordinary shares of investee |
(9,945 | ) | ||
Net unrealized loss included in other comprehensive income
|
(588
|
)
|
||
Balance as of December 31, 2023
|
20,442
|
Investments carried at fair value
|
||||
Balance as of January 1, 2021
|
–
|
|||
Additions
|
151,227
|
|||
Net investment gain included in earnings
|
27,071
|
|||
Balance as of December 31, 2021
|
178,298
|
|||
Additions | 74,482 | |||
Net investment loss included in earnings | (74,547 | ) |
||
Balance as of December 31, 2022 | 178,233 | |||
Transfer out of Level 3 due to change in status(1) |
(178,233 | ) | ||
Balance as of December 31, 2023 |
– |
(1)
|
See note 2(l) for more information. |
22.
|
FAIR VALUE MEASUREMENTS
(continued)
|
$ |
||||
Other assets
|
||||
Balance as of January 1, 2021
|
19,024
|
|||
Additions
|
186
|
|||
Disposals
|
(3,513
|
)
|
||
Write-down included in earnings
|
(3,627
|
)
|
||
Translation loss included in other comprehensive income
|
(359
|
)
|
||
Balance as of December 31, 2021
|
11,711
|
|||
Additions
|
56
|
|||
Disposals
|
(679
|
)
|
||
Write-down included in earnings
|
(476
|
)
|
||
Translation loss included in other comprehensive income
|
(944
|
)
|
||
Balance as of December 31, 2022
|
9,668
|
|||
Additions | 122 | |||
Disposals | (464 | ) | ||
Write-down included in earnings | 40 | |||
Translation gain included in other comprehensive income | 99 | |||
Balance as of December 31, 2023 | 9,465 |
23. |
COMMITMENTS AND CONTINGENCIES
|
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
American depositary shares, each representing one Class A ordinary share, par value US$0.0005 per share
Class A ordinary shares, par value US$0.0005 per share*
*Not for trading, but only in connection with the listing of American depositary shares on the New York Stock Exchange.
|
SE
|
New York Stock Exchange
|
|
• |
the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) of the amount paid or agreed to be considered as paid, on the shares
of each member, (ii) the number and category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether
such voting rights are conditional;
|
|
• |
the date on which the name of any person was entered on the register as a member; and
|
|
• |
the date on which any person ceased to be a member.
|
|
• |
the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the
right of the transferor to make the transfer;
|
|
• |
the instrument of transfer is in respect of only one class of shares;
|
|
• |
the instrument of transfer is properly stamped, if required;
|
|
• |
in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four;
|
|
• |
the ordinary shares transferred are free of any lien in favor of us; or
|
|
• |
a fee of such maximum sum as the New York Stock Exchange may determine to be payable, or such lesser sum as the board of directors may from time to time require, is paid to us in respect thereof.
|
|
• |
the designation of the series;
|
|
• |
the number of shares of the series;
|
|
• |
the dividend rights, dividend rates, conversion rights, voting rights; and
|
|
• |
the rights and terms of redemption and liquidation preferences.
|
|
• |
increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution prescribes;
|
|
• |
consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
|
|
• |
convert all or any of its paid-up shares into stock and reconvert the stock into paid-up shares of any denomination;
|
|
• |
sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our ninth amended and restated memorandum of association; provided that in the subdivision the proportion
between the amount paid and the amount, if any, unpaid on each reduced share will be the same as it was in case of the share from which the reduced share is derived; and
|
|
• |
cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so
canceled.
|
|
• |
the statutory provisions as to the required majority vote have been met;
|
|
• |
the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;
|
|
• |
the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
|
|
• |
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.
|
|
• |
a company acts or proposes to act illegally or ultra vires;
|
|
• |
the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and
|
|
• |
those who control the company are perpetrating a “fraud on the minority.”
|
|
a) |
is or is likely to become unable to pay its debts; and
|
|
b) |
intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of a foreign country or by way of a consensual restructuring.
|
|
• |
we do not wish to receive a discretionary proxy;
|
|
• |
there is substantial shareholder opposition to the particular question; or
|
|
• |
the particular question would have an adverse impact on our shareholders.
|
Persons depositing or withdrawing shares or ADS holders must pay: | For: | |
US$5.00 (or less) per 100 ADSs (or portion thereof)
|
Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
|
|
Cancelation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
|
||
US$0.05 (or less) per ADS (or portion thereof)
|
Any cash distribution to ADS holders
|
|
A fee equivalent to the fee that would be payable if securities distributed to ADS holders had been shares and the shares had been deposited for issuance of ADSs
|
Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
|
|
US$0.05 (or less) per ADS (or portion thereof) per annum
|
Depositary services
|
|
Registration or transfer fees
|
Transfer and registration of shares on our share register to or from the name of the depositary or its agent when ADS holders deposit or withdraw shares
|
|
Expenses of the depositary
|
Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement)
|
|
Converting foreign currency to U.S. dollars
|
||
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes
|
As necessary
|
|
Any charges incurred by the depositary or its agents for servicing the deposited securities
|
As necessary
|
|
• |
60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment;
|
|
• |
we delist the ADSs from an exchange on which they were listed and do not list the ADSs on another exchange;
|
|
• |
we appear to be insolvent or enter insolvency proceedings;
|
|
• |
all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;
|
|
• |
there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or
|
|
• |
there has been a replacement of deposited securities.
|
|
• |
are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;
|
|
• |
are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with reasonable care or effort from performing our or its obligations under the deposit
agreement;
|
|
• |
are not liable if we or it exercises discretion permitted under the deposit agreement;
|
|
• |
are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential
or punitive damages for any breach of the terms of the deposit agreement;
|
|
• |
have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on an ADS holder’s behalf or on behalf of any other person;
|
|
• |
are not liable for the acts or omissions of any securities depository, clearing agency or settlement system;
|
|
• |
may rely on any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person; and
|
|
• |
the depositary has no duty to make any determination or provide any information as to our tax status, or any liability for any tax consequences that may be incurred by ADS holders as a result of owning or holding ADSs.
|
|
• |
payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities;
|
|
• |
satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
|
|
• |
compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.
|
|
• |
when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a
dividend on our shares;
|
|
• |
when such holders owe money to pay fees, taxes and similar charges; or
|
|
• |
when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.
|
Name of Entity*
|
Place of
Incorporation
|
Edenway Holdings Limited
|
Cayman Islands
|
Foody Limited
|
Cayman Islands
|
Garena Limited
|
Cayman Islands
|
Happymall Limited
|
Cayman Islands
|
Locust Walk A1 Holdings Limited
|
Cayman Islands
|
Northern Point Technology Limited
|
Cayman Islands
|
Ocha Limited
|
Cayman Islands
|
Ray Eagle Limited
|
Cayman Islands
|
SCommerce Southeast Asia Limited
|
Cayman Islands
|
SCVN Limited
|
Cayman Islands
|
Sea Services Limited
|
Cayman Islands
|
Sea Services Holdings Limited
|
Cayman Islands
|
SeaIn Limited
|
Cayman Islands
|
SeaIn PL Limited
|
Cayman Islands
|
SeaInfra ID Limited
|
Cayman Islands
|
SeaInfra Technology Limited
|
Cayman Islands
|
SeaMoney (Credit) Limited
|
Cayman Islands
|
SeaMoney Digital Services Limited
|
Cayman Islands
|
SeaMoney Holding Limited
|
Cayman Islands
|
SeaMoney Holding PH Limited
|
Cayman Islands
|
SeaMoney International Inc.
|
Cayman Islands
|
SeaMoney (Payment) Limited
|
Cayman Islands
|
SEA Partnerships C1 Holdings Limited
|
Cayman Islands
|
Sea Ventures Limited
|
Cayman Islands
|
Shopee Limited
|
Cayman Islands
|
Shopee Logistics Services Limited
|
Cayman Islands
|
SHPS Limited
|
Cayman Islands
|
SPPIN Limited
|
Cayman Islands
|
SPX Express Limited
|
Cayman Islands
|
Wahoo Holding Limited
|
Cayman Islands
|
Airview Investment Pte. Ltd.
|
Singapore
|
Garena International II Private Limited
|
Singapore
|
Garena Online Private Limited
|
Singapore
|
Garena Mobile Private Limited
|
Singapore
|
Garena Ventures Private Limited
|
Singapore
|
Garena Vietnam Private Limited
|
Singapore
|
Good Mobile Games Private Limited
|
Singapore
|
GRNX Private Limited
|
Singapore
|
Hevolve Private Limited
|
Singapore
|
Lion City Sailors Private Limited
|
Singapore
|
MariBank Singapore Private Limited
|
Singapore
|
Moco Studios Private Limited
|
Singapore
|
Northern Point Technology Holding Private Limited
|
Singapore
|
Northern Point Technology Private Limited
|
Singapore
|
Northern Point Technology II Private Limited
|
Singapore
|
Ray Eagle Private Limited
|
Singapore
|
SCommerce Private Limited
|
Singapore
|
SeaInfra (ID) I Private Limited
|
Singapore
|
SeaIn IG Private Limited
|
Singapore
|
SeaIn IL Private Limited
|
Singapore
|
SeaIn PG Private Limited
|
Singapore
|
SeaMoney (Credit) MY Private Limited
|
Singapore
|
SeaMoney (Credit) PH Private Limited
|
Singapore
|
SeaMoney (Credit) TH Private Limited
|
Singapore
|
SeaMoney Holding PH Private Limited
|
Singapore
|
SeaMoney (Payment) Private Limited
|
Singapore
|
SeaMoney (Payment) TH Private Limited
|
Singapore
|
SEA Partnerships S1 Holdings Private Limited
|
Singapore
|
SeaTalk Private Limited
|
Singapore
|
Shopee International Private Limited
|
Singapore
|
Shopee International II Private Limited
|
Singapore
|
Shopee International IV Private Limited
|
Singapore
|
Shopee International VI Private Limited
|
Singapore
|
Shopee IP Singapore Private Limited
|
Singapore
|
Shopee Logistics Services Private Limited
|
Singapore
|
ShopeePay Private Limited
|
Singapore
|
Shopee Singapore Private Limited
|
Singapore
|
Shopee Taiwan Private Limited
|
Singapore
|
Shopee Ventures Private Limited
|
Singapore
|
SHPS I Private Limited
|
Singapore
|
SHPP Services I Private Limited
|
Singapore
|
SPPIN I Private Limited
|
Singapore
|
SPPIN II Private Limited
|
Singapore
|
SPX Express BR Private Limited
|
Singapore
|
SPX Express Private Limited
|
Singapore
|
SPX Express VN Private Limited
|
Singapore
|
PT Bank SeaBank Indonesia
|
Indonesia
|
PT Commerce Finance
|
Indonesia
|
PT Danadipa Artha Indonesia
|
Indonesia
|
PT Data Center Galaxis
|
Indonesia
|
PT Garena Indonesia
|
Indonesia
|
PT Gudang SPE Indonesia
|
Indonesia
|
PT Nusantara Ekspres Kilat
|
Indonesia
|
PT Nusantara Pasifik Investama
|
Indonesia
|
PT Shopee International Indonesia
|
Indonesia
|
Garena Technology Private Limited Taiwan Branch
|
Taiwan
|
Happymall SCommerce (Taiwan) Co., Ltd.
|
Taiwan
|
ShopeePay (Taiwan) Co., Ltd.
|
Taiwan
|
Shopee (Taiwan) Co., Ltd.
|
Taiwan
|
Shopee Taiwan Private Limited Taiwan Branch
|
Taiwan
|
ShopeePay Joint Stock Company
|
Vietnam
|
Ocha Company Limited
|
Vietnam
|
Shopee Company Limited
|
Vietnam
|
SPX Express Company Limited
|
Vietnam
|
Vietnam Esports and Entertainment Joint Stock Company
|
Vietnam
|
Garena Online Holding 1 (Thailand) Co., Ltd.
|
Thailand
|
Garena Online (Thailand) Co., Ltd.
|
Thailand
|
Scommerce (Thailand) Co., Ltd.
|
Thailand
|
SeaMoney (Capital) Co., Ltd.
|
Thailand
|
SeaMoney (Capital) Holding 1 Co., Ltd.
|
Thailand
|
SeaMoney (Payment) Holding 1 Co., Ltd.
|
Thailand
|
SPX Express (Thailand) Co., Ltd.
|
Thailand
|
ShopeeFood Co., Ltd.
|
Thailand
|
ShopeePay (Thailand) Co., Ltd.
|
Thailand
|
Shopee (Thailand) Co., Ltd.
|
Thailand
|
Unicorn (Thailand) Co., Ltd.
|
Thailand
|
Unicorn Holding 2 (Thailand) Co., Ltd.
|
Thailand
|
SCommerce Philippines, Inc.
|
Philippines
|
SeaBank Philippines, Inc. (A Rural Bank)
|
Philippines
|
SeaInsure General Insurance Co., Inc.
|
Philippines
|
SeaInsure Life Insurance Co., Inc.
|
Philippines
|
SeaMoney (Credit) Finance Philippines, Inc. (dba SPayLater and SLoans)
|
Philippines
|
ShopeePay Philippines, Inc.
|
Philippines
|
Shopee Philippines Inc.
|
Philippines
|
SPX Philippines Inc.
|
Philippines
|
Garena Malaysia Sdn. Bhd.
|
Malaysia
|
SCommerce Trading Malaysia Sdn. Bhd.
|
Malaysia
|
SeaMoney Capital Malaysia Sdn. Bhd.
|
Malaysia
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Shopee Mobile Malaysia Sdn. Bhd.
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Malaysia
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ShopeePay Malaysia Sdn. Bhd.
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Malaysia
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SPX Xpress (Malaysia) Sdn. Bhd.
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Malaysia
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Beijing Shopee Information Technology Co., Ltd.
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China
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Dongjing Investment Co., Ltd.
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China
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Shanghai Dongrui Information Technology Co., Ltd.
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China
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Shanghai Jingle Information and Technology Co., Ltd.
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China
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Shanghai Dongyang Information Technology Co., Ltd.
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China
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Shenzhen Shopee Information Technology Co., Ltd.
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China
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Shenzhen Shopee Logistics Network Technology Co., Ltd.
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China
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Garena Hong Kong Limited
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Hong Kong
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Shopee Hong Kong Limited
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Hong Kong
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SPPIN Services Hong Kong Limited
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Hong Kong
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SPX Express Hong Kong Limited
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Hong Kong
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Turbo Cash Hong Kong Limited
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Hong Kong
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SHPP Brazil Holding Ltda.
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Brazil
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SHPP Brazil Payment Institution and Payment Services Ltda.
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Brazil
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SHPS Technology and Services Ltda.
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Brazil
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SHPX Logistics Ltda.
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Brazil
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SeaInfra (US) Inc.
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United States
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Shopee Korea Company Limited
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Korea
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SPMX Technologies and Services, S.A. de C.V.
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Mexico
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SHPL sp. z o.o.
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Poland
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Date: April 26, 2024
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By:
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/s/ Forrest Xiaodong Li
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Name:
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Forrest Xiaodong Li
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Title:
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Chief Executive Officer
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Date: April 26, 2024
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By:
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/s/ Tony Tianyu Hou
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Name:
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Tony Tianyu Hou
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Title:
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Chief Financial Officer
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Date: April 26, 2024
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By:
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/s/ Forrest Xiaodong Li
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Name:
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Forrest Xiaodong Li
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Title:
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Chief Executive Officer
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Date: April 26, 2024
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By:
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/s/ Tony Tianyu Hou
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Name:
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Tony Tianyu Hou
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Title:
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Chief Financial Officer
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Sincerely yours,
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/s/ LCS & Partners
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LCS & PARTNERS
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TO: Sea Limited
1 Fusionopolis Place
#17-10, Galaxis
Singapore 138522
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DATE: April 26, 2024
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FROM: Kudun and Partners Company Limited
34/3 Vivre Langsuan, 4th, 5th, and 6th Floor,
Soi Langsuan, Lumpini, Pathumwan, Bangkok, 10330,
Thailand
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Re: Annual Report on Form 20-F of Sea Limited
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SEA LIMITED
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Private and Confidential
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1 Fusionopolis Place
#17-10, Galaxis
Singapore 138522
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SENDER’S REF
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RECIPIENT’S REF
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DATE
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PAGE
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TQY/337339/00041
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-
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26 April 2024
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1/1
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1. |
Definitions
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a) |
“Company Group” means the Company and each of its Subsidiaries, as applicable.
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b) |
“Committee” means the Board or the Compensation Committee of the Company.
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c) |
“Covered Compensation” means any Incentive-Based Compensation granted, vested or paid to a person who served as an Executive Officer at any time during the performance period for the Incentive-Based Compensation and that was
Received (i) on or after October 2, 2023, the effective date of the NYSE clawback rule, (ii) after the person began service as an Executive Officer, (iii) at a time that the Company had a class of securities listed on a national
securities exchange or a national securities association and (iv) during the three completed fiscal years immediately preceding the Restatement Date (including any transition period that results from a change in the Company’s fiscal year
within or immediately following these three completed fiscal years, provided that a transition period of nine to twelve months is deemed to be a completed fiscal year).
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d) |
“Effective Date” means December 1, 2023.
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e) |
“Erroneously Awarded Compensation” means the amount of Covered Compensation granted, vested or paid to a person during the fiscal period when the applicable Financial Reporting Measure relating to such Covered Compensation was
attained that exceeds the amount of Covered Compensation that otherwise would have been granted, vested or paid to the person had such amount been determined based on the applicable Restatement, computed without regard to any taxes paid
(i.e., on a pre-tax basis). For Covered Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in a
Restatement, the Company’s Committee will determine the amount of such Covered Compensation that constitutes Erroneously Awarded Compensation, if any, based on a reasonable estimate of the effect of the Restatement on the stock price or
total shareholder return upon which the Covered Compensation was granted, vested or paid and the Committee shall maintain documentation of such determination and provide such documentation to the NYSE.
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f) |
“Exchange Act” means the U.S. Securities Exchange Act of 1934.
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g) |
“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting
officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other
person who performs similar policy-making functions for the Company. Executive officers of the Company’s parent(s) or subsidiaries are deemed executive officers of the Company if they perform such policy-making functions for the Company.
“Policy-making function” does not include policy-making functions that are not significant. Both current and former Executive Officers are subject to the Policy in accordance with its terms.
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h) |
“Financial Reporting Measure” means measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures derived wholly or in part from
such measures. Stock price and total shareholder return are also financial reporting measures. A Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC.
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i) |
“Home Country” means the Company’s jurisdiction of incorporation.
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j) |
“Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the attainment of a Financial Reporting Measure.
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k) |
“Restatement Date” means the date on which the Company is required to prepare a Restatement, with such date being the earlier of: (i) the date the Board, a committee of the Board, or the officer or officers of the Company
authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare a Restatement, or (ii) the date a court, regulator or other legally authorized body
directs the Company to prepare a Restatement. Recovery of any Erroneously Awarded Compensation under the Policy is not dependent on if or when the Restatement is actually filed.
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l) |
“NYSE” means the New York Stock Exchange.
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m) |
“Received”: Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period during which the Financial Reporting Measure specified in or otherwise relating to the Incentive-Based Compensation award is attained,
even if the grant, vesting or payment of the Incentive-Based Compensation occurs after the end of that period.
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n) |
“Restatement” means a required accounting restatement of any Company financial statement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including (i) to
correct an error in previously issued financial statements that is material to the previously issued financial statements (commonly referred to as a “Big R” restatement) or (ii) to correct an error in previously issued financial
statements that is not material to the previously issued financial statements but that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (commonly referred
to as a “little r” restatement). Changes to the Company’s financial statements that do not represent error corrections under the then-current relevant accounting standards will not constitute Restatements. Recovery of any Erroneously
Awarded Compensation under the Policy is not dependent on fraud or misconduct by any person in connection with the Restatement.
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o) |
“SEC” means the U.S. Securities and Exchange Commission.
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p) |
“Subsidiary” means any entities over which the Company directly or indirectly effects control pursuant to contractual arrangements and which is consolidated with the Company in accordance with generally accepted accounting
principles.
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2. |
Recoupment of Erroneously Awarded Compensation
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3. |
Means of Repayment
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4. |
No Indemnification
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5. |
Miscellaneous
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6. |
Amendment and Termination
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7. |
Successors
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Signed:
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Print Name:
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Date:
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