Sea Limited

Good morning and good evening to all and welcome to the Sea Limited third quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star and number one on your telephone keypad. If you would like to redraw your question, please press star and number one again. For operator assistance throughout the call, please press star and then number zero. And finally, I would like to advise all participants this call is being recorded. Thank you. I now would like to welcome Ms. Minju Song to begin the conference call. Please go ahead.

Thank you. Hello, everyone, and welcome to SEAS 2023 Third Quarter Earnings Conference Call. I'm Minju Song from SEAS Group Chief Corporate Officer's Office. Before we continue, I would like to remind you that we may make forward-looking statements, which are inherently subject to risks and uncertainties, and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures, such as the Jesse B. McDowell. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. I have with me C's Chairman and Group Chief Executive Officer, Forrest Lee, Group President, Chief Financial Officer, Tony Ho, and Group Chief Corporate Officer, Yanjun Wang. Our management will share strategy and business updates, operating highlights, and financial performance for the third quarter of 2023. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forrest.

Hello, everyone, and thank you for joining today's call. At our last earnings call, we shared that we would accelerate investment in e-commerce. In the past, our e-commerce business has made some significant shifts in operational focus to adapt to major business environment changes. Before diving into the details of the third quarter results, I would like to first share how the thinking behind each shift has been underpinned by our long-term view of the business. Our strategy for e-commerce is driven by the principle that maximizing the long-term profitability of the business will generate the greatest returns to our shareholders in the long run. And maximizing long-term profitability requires scale and strong market leadership. To achieve this long-term objective, we look at three key operational factors, growth, current profitability, and the market share gain. While all are important and positively correlated in the long run, near-term focus on one can create trade-offs for another. As business conditions change, sometimes rapidly, we need to decide which factor to prioritize for that period. During the pandemic, we focused on growth first, ramping up rapidly to meet surging demand for e-commerce, despite the great operational difficulties created by lockdowns. This allowed us to achieve significant scale and strong market leadership when growth was very efficient. Subsequently, capital became very expensive and less available, so we made a rapid turn to achieve immediate profitability for Shopee as a first priority, while sustaining the platform's scale and market leadership. In both cases, we believe we made the right decisions in response to the shifting business environment. As we focus on long-term profitability and adapt to changes in the business environment. Some short-term fluctuations in our results is inevitable. However, our demonstrated ability to adapt quickly and execute major transitions effectively is a core strength for the long-term success of our business. We are now deploying this strength to realize the next shift in our operational focus in e-commerce. In this period, we will prioritize investing in the business to increase our market share and further strengthen our market leadership. We made this decision in view of three recent developments. First, our move to self-sufficiency and profitability has significantly improved both our cash reserves and operational efficiency. Our group cash position has increased by around $600 million from a year ago to more than $7.9 billion at the end of the third quarter. This puts us in a strong position to pursue more competitive and growth-focused strategies while maintaining financial discipline and a strong balance sheet over the long run. Second, the entrance of new players has intensified competition in our markets. Competition may accelerate market share consolidation, and when markets stabilize, each remaining player will have sustainable profitability. Investing in market share gain now will position us better with even stronger market leadership when that happens. We thrive in a competitive environment. We competed aggressively and effectively in our market for years to emerge as the clear market leader from an underdog position. We now have scale, a deep understanding of our markets, and a strong localized execution across diverse geographies. This gives us a wide competitive moat, and we intend to grow it further. Third, live streaming has become increasingly popular among sellers, buyers, and the creators in our markets. These tailwinds give us a very good opportunity to build our e-commerce content ecosystem efficiently. We believe live streaming e-commerce will become a sizable and profitable part of our platform and extend our long-term growth potential. I want to emphasize that in making investment decisions, we are committed to maintaining a strong cash position, not relying on external funding, and investing within our means at the time and the pace of our choosing. At the same time, Given that e-commerce penetration remains low in most of our markets, we as the market leader have a responsibility to help grow the whole e-commerce ecosystem. Shopee will remain committed to doing so in a healthy and sustainable way and driving value creation for all stakeholders. I hope that this brief sharing on the thinking behind our decisions has been helpful. Being nimble and therefore able to do the right thing at the right time remains a core strength and a competitive advantage for our business. With that, I will invite Yanjun to discuss each business segment in more detail.