Earnings Call: Q4 2020

Mar 2, 2021

Good morning and good evening. Welcome to the Sea Limited 4th Quarter and Full Year 2020 Results Conference Call. All participants will be in a listen only mode. Listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ms. Minju Song. Please go ahead. Hello, everyone, full year earnings conference call. I am Minju Song from Sea's Group Chief Corporate office'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 Q3 realized in the future for various reasons as stated in our press release. Also, this call includes a discussion of certain non GAAP financial measures, such as adjusted EBITDA and net loss excluding share based compensation and changes in fair value of the 2017 convertible notes. Fiscal year 2020. 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 session 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 here with me Sea's Chairman and Group Chief Executive Officer, Forrest Li Group Chief Financial Officer, Tony Ho and Group Chief Corporate Officer, Andrew Q3. Our management will share strategy and business updates, operating highlights and financial performance for the Q4 and for the full year of 2020. This will be followed by a Q and A session in which we welcome any questions you have. With that, let me turn the call over to Forrest. Thank you, Ming Zhu. Hello, everyone, and thank you as always for joining today's call. 2020 was a landmark year for Sea. Our team, users and communities all faced unprecedented challenges as a result of the pandemic. This quarter reinforced the importance of our mission to empower the consumers and the small businesses in our communities with technology. We adapted rapidly to enable our users and the communities to meet the unique challenges of the last year. We are also successfully addressing the fast growing and fast evolving demand from our user For example, we quickly filled up home and living and quarter accelerated our digital payment service offerings and shifted major Esports events online, And we expect the effect to be long lasting. During this time, our team has demonstrated senior resilience, adaptability and strong execution. We believe these capabilities position us very well to capture and drive the significant growth opportunities ahead as a strong market leader. Our results for the Q4 and for the full year of 2020, thanks to the success of our approach. On the group level, in the Q4, we recorded accelerated year on year growth in GAAP revenue compared to the previous quarter. It reached $1,600,000,000 up 102% year on year. We also recorded 102% year on year growth in our 4th quarter gross profit to reach 500 $33,700,000 Our 4th quarter adjusted EBITDA was $48,700,000 compared to an adjusted EBITDA loss of $104,900,000 a year ago. The strong 4th quarter results contributed to an outstanding set of results for the full year of 2020. GAAP revenue for the full year more than doubled compared to that of 2019 to reach $4,400,000,000 Forks Corporate grew 123 percent year on year to reach $1,300,000,000 We also achieved a positive adjusted EBITDA of $107,000,000 for the full year compared This was supported by the strong performance across our digital entertainment and e commerce businesses. For the full year, Garena achieved bookings of $3,200,000,000 and Shopee achieved GAAP revenue plus sales incentive net off $2,500,000,000 Both businesses exceeded our recently raised full year guidance for 2020. Let me now discuss each business individually, starting with digital entertainment. The recent outstanding performance in the previous quarter continued in the 4th quarter as we recorded bookings of $1,000,000,000 up 111% year on year. Adjusted EBITDA in the 4th quarter was 600 and $63,500,000 up 149% year on year, representing 66% of bookings. For the full year, we generated bookings of $3,200,000,000 increasing by 80% year on year. The strong financial performance in the Q4 and the full year was a result support our ability to continually expand our user and paying user base. Every quarter, More gamers globally engaged with our in game content and e sports activities. In the 4th quarter, Quarterly active users reached 610,600,000, an increase of 72% year on year. Quarterly paying users sales year on year. Our paying user ratio measured as quarterly paying users as a percentage of quarterly Continued to grow in the 4th quarter to reach 12%. Free Fire was once again a key driver of Garena's outperformance. According to Fannie, it continues to be the highest grossing mobile Q3 in Latin America and Southeast Asia in the Q4 as well as the full year of 2020. It has maintained the top ranking for 3th consecutive quarter. The strong performance was also evident in India, Where Free Fire was the highest growth in mobile game for the Q4 and for the full year of 2020 based on F and E. We're also pleased to share that Free Fire was once again the most downloaded mobile game in the world in 2020, quarter. This is the 2nd year in a row that Free Fire was ranked 1st globally We believe that Free Fire is formally establishing itself as a strong global gaming franchise and platform. 1 of the key factors in Free Fire's business success is our commitment to keeping our game fresh and engaging. Segments around the world increasingly recognize Arena's reputation for constantly enhancing the Free Fire experience with innovative content, partner In the Q4, for example, we announced the partnership between Free Fire and football legend Cristiano Ronaldo, marking one of the most significant tie up between the Esports Industry and the physical sport industry in recent times. In addition to new in game items and the playable characters, We also introduced the 2 new game modes as part of the partnership with Cristiano Ronaldo. A limited time battle, Royal racing game mode and the team based of 1v1 dual mode. Our users love these new game modes Our user engagement strategy. We made significant progress in deepening engagement with our community in 2020. Despite the Challenge of Holding Live Events. 3 of the 5 top Esports tournaments by peak concurrent viewers In 2020, Free Fire Tournament according to Esports Chart. In 2020, Free Fire was once again the top ranked mobile only video game and the top ranked Bipo Raw video game on YouTube in terms of views. It was also the 3rd ranked game overall on YouTube by view count. Free Fire related content recorded over 72,000,000,000 view counts across YouTube globally over the course of the year. The game was also named the Esports Mobile Game of the Year as the Esports Awards 2020. This e sports activities and online video content helped to drive up gamers engagement around the Free Fire franchise, While we continue to grow Free Fire into a long lasting global franchise, we are also focused on building solid foundations for Garena's long term growth. For example, in the Q4, Phoenix Labs, our AAA gaming studio based in Guangpu, announced the quarter expansion, adding new offices in Montreal and Los Angeles alongside its existing phases Q1 and Seattle. It also unveiled plans to build our team in each of those cities to focus on new game development. We are confident that the expanded Finnish Lab team will deliver great content in the years to call. As we move through 2021, Garena is building strong momentum of 2020 and strengthening our position as the global leader in the digital entertainment industry. We believe that our uniquely nuanced understanding of the taste and the preferences of global game community and our proven ability to build lasting bonds of affinity with gamers in diverse markets around the world We'll continue to drive growth and success for Garena in 2021 and beyond. Moving on to e commerce. 2020 was an extraordinary year for Shopee. In a challenging environment, we have adapted quickly to serve our communities and address the fast evolving needs of our buyers and sellers. As a result, we have semantic Shopee's position as the favorite e commerce platform for both sales of Southeast Asia and Taiwan. We continued to record excellent results for the Q4. Year on year growth for each of gross orders, GMV and GAAP revenue further accelerated compared to the 3rd quarter. In the Q4, Shopee reported 1,000,000,000 gross orders, up 135% year quarter and a GMV of $11,900,000,000 an increase of 113% year on year. GAAP revenue grew 178 percent year on year to $842,200,000 Adjusted EBITDA loss quarter. Order decreased by 41% year on year to $0.41 during the quarter, reflecting the efficiencies we have reached across 2020 even as we continue to invest in growth, especially during the peak shopping season. For the full year of 2020, shortlist gross order totaled CNY4.8 billion, up 133% year on year. GMV was $35,400,000,000 $1,000,000,000 In Indonesia, Shopee's largest market, we continue to grow our leadership position. We quarter. This translates into a daily average of around 4,700,000 orders, Up 128 percent year on year. According to SME, Shopee continues to rank 1st, the initial by average monthly active users, total time spent in app on Android and the download in the shopping category in the Q4 and for the full year of 2020. We are also encouraged to see more sellers and brands around the region doing business on Shopee. For example, Shopee Mall, Our dedicated space for leading brands now features over 23,000 international and local brands. As our communities increasingly embrace e commerce as their top retail toy, we believe Shopee's relentless focus on serving our users ensures that we continue to capture the largest share of the resulting growth. In both the Q4 and for the full year. Shopee was ranked number 1 in the shopping category across Southeast Asia and Taiwan by average monthly active user, total time spending app on Android and the download based on App Annie. In fact, Shopee was ranked the 3rd most downloaded app in the shopping category globally for the full year according to FME. The success of Shopee has also translated into stronger brand recognition across our communities. We see this in Yougolf's recently published Best APAC Bus Ranking 2020, where Shopee was ranked 1st in Asia. Shopee was also the No. 8 ranked brand in Yougault's Best Global Brand 2020, representing being one of the 2 e commerce brands in the world's top 10 ranking. Our strong focus on serving our users will continue to 5 lasting brand affinity across our regions. In each of our markets, e commerce adoption continues to grow at an accelerated pace. And we believe that as the go to online shopping platform, Shaoqi will successfully capture and further drive these growth opportunities. Turning now to Digital Financial Services. SeaMoney had a transformational year in 2020 advisory company as a whole and the particularly strong growth of our e commerce platform. As a result, It's enjoying rapid and efficient growth in the Q4 and the full year of 2020. For the Q4, SeaMoney's mobile wallets recorded total payment volume of $2,900,000,000 with quarterly paying users surpassing 23,200,000. This was partly driven by monthly paying users in Indonesia, which exceeded $10,000,000 during the Q4. For the full year 2020, our mobile wallet total payment volume was $7,800,000,000 Even as our mobile wallet Shopee Pay benefited from the strong growth of Shopee. It also meaningfully reduced the payment friction and improved the user series on Shopee. This synergistic growth of both Shopee and the Shopee Pay showcases the strength of our partnership also grew in 2020 as we continued our initiatives to expand use cases and as we For example, we recently expanded our partnership with Google to offer our mobile wallet as a payment option for the Google Play store in Indonesia in addition to our existing partnership in Thailand. As we onboard more online and offline use cases, we are seeing that our users increasingly appreciate the ease and the convenience of using our mobile wallet services. We also see that SeaMoney's merchant partners increasingly recognize the value of tapping into the vast and rapidly growing user basis of We are excited about opportunity ahead of us to serve a wider set of needs for both new and existing consumers and businesses across our ecosystems. The rapid adoption of digital financial services in our region is expected to have a long term growth prospects, and we will continue to focus on delivering strong, efficient and sustainable growth. Turning now to our guidance for 2021. We believe that we are well positioned to continue delivering value across our communities. For the full year of 2021, we currently expect bookings for digital entertainment to be between $4,300,000,000 $4,500,000,000 representing 38 2017. We also expect GAAP revenue for e commerce to be between 4.5 $1,000,000,000 representing 112% year on year growth at the midpoint of the guidance. I'm also pleased to share Sea has completed the acquisition of Composite Capital, a leading investment management firm founded and led by Dele Ma. I have known David for several years. In the past, he has been a long term shareholder of Sea and share our vision for the business and our passion to serve our communities through technology. David and his team have a demonstrated track record of thoughtful long term investing and the team at Composite Capital to the Sea family. Along with this acquisition, I'm proud to announce the formation of Sea Capital, a new platform to manage Sea's investment effort. Then we will serve as the Chief Investment Officer of C Capital and report directly to me. Sea Capital will focus on identifying partnering with and investing in technology companies that share our vision of bettering the life of consumers and the small businesses through technology. By investing into the growth of our broader ecosystem, we believe ZCapital can help accelerate the growth of the overall digital economy and create real and lasting value for our users, business partners establishment of Sea Capital will further enhance our investment and capital allocation capabilities in support of Sea's long term growth Strategy. I would also like to take this opportunity to welcome as our Group Chief Scientist. Doctor. Yan is a leading expert in the field of artificial intelligence With a particular focus on computer vision, machine learning and multimedia analysis, he is an ACM Fellow CEO of Academy of Engineering Singapore. CAIM Labs intends to attract and collaborate with top talent in artificial intelligence with the goal of exploring and developing long term insights and the technologies related to our existing businesses and the new opportunities beyond. I believe that Doctor. Yan and CAI Labs to advancing technology to drive the development of the digital economy across our region. I'm very proud of the outstanding results our team achieved in 2020 believe we are moving into 2021 primed for the exciting growth opportunity ahead of us. Across the business, we are focused on driving sustained and efficient growth. As we scale towards becoming a top global Internet company. We believe our single-minded goal of delivering value to our users will continue to drive our success. With that, I will invite Tony to discuss our financials. Thank you, Forrest, and thanks to everyone for joining the call. We have included detailed financial schedules together with the corresponding management analysis in today's press release, and Forrest has discussed some of our financial highlights. So I will focus my comments on the other relevant metrics. For Sea overall, total GAAP revenue increased 62% year on year to $1,600,000,000 in the 4th quarter 101% year on year to 4 $4,400,000 for the full year of 2020. This was mainly driven by 10th grade growth in our e commerce business as we continue to grow to better serve our users' needs as well as growth of our digital entertainment business, especially our self Developed Game 3.5. Digital entertainment bookings grew 111% year on year to $1,000,000 segment results in the Q4 and 80% year on year to $3,200,000,000 for the full year of 2020. Segment. GAAP revenue was up 72% year on year to $693,400,000 in the 4th quarter and seventy 8 8% year on year to $2,000,000,000 for the full year of 2020. The growth was primarily driven by the increase fiscal event. Digital Entertainment adjusted EBITDA was 663 $500,000 in the 4th quarter and $2,000,000 for the full year of $2.20 This represents year on year growth full year of 149% 94% for the quarter and the full year, respectively. This was mainly due to strong top line growth and an increased share of our self developed gain among our total bookings. On e commerce, $114,600,000 up 187% year on year. For the full year of 2020. GAAP revenue of $2,200,000,000 included GAAP marketplace revenue of $1,600,000,000 up 155 percent year on year and GAAP product revenue of $600,000 our ability to capture these accelerated growth opportunities created by the rapid expansion of the digital economy. Ecopro's adjusted EBITDA loss was $427,500,000 in the 4th quarter and $1,300,000 for the full year of 2020. Session to serve our users better. Digital Financial Services GAAP revenue was $24,400,000 in the 4th quarter and $60,800,000 for the full year of 2020. Digital Financial Services adjusted EBITDA loss was $171,300,000 in the 4th quarter $511,100,000 for the full year of 2020 as we continue our efforts to drive mobile wallet adoption. Returning to our consolidated numbers. Prior to a net nonoperating loss of $15,200,000 in the Q4 of 2019. Our non operating loss in the Q4 of 2020 was primarily due to investment loss and interest expense on convertible notes. Quarter. For the full year, our net non operating loss was $179,900,000 compared to loss $477,400,000 for the full year of 2019. Our non operating loss for the full year of 2020 was primarily due to interest expense on convertible notes, while cash loss in 20 2019 was primarily due to value loss of $472,900,000 on our 2017 team convertible notes. We had a net income tax expense of $44,200,000 in the Q4 of 2020 100 $41,600,000 for the full year of 2020. This was primarily due to corporate income tax withholding tax recognized in our digital and entertainment business. As a result, net loss $7,000,000 in the Q4 of 2020 $1,300,000,000 for the full year of 2020. With Q and A. Thank you, Faraj and Tony. We're now ready to open the call for questions. Star then 2. In the interest of time, we will take a maximum of 2 questions at a time from each caller. If you wish to ask any more questions, please request to join question queue again after your first questions have been addressed. At this time we will pause momentarily to assemble our roster. The first question today comes from Piyush Mubayah with Goldman Sachs. Please go ahead. Thank you for taking my question and congratulations on the numbers. May I just ask about the guidance that you provided in the gaming side? And looking back at the growth that you seasonally user number in 2020. Could you extrapolate from that and give us a feel for what sort of user growth We can foresee in 2021 that's underpinning the growth in gaming revenues for 2021. And related to that, if you could expand on The driver of the improvement in margins that we're observing on the gaming side, that would be great. I'll go back to the queue. Thank you. Thank you, Piyush. In terms of the user growth, we don't separate forecast that for 2021. But if you look at our past performance, so far our revenue growth or bookings growth for the digital entertainment segment has been driven by both user base growth as well as pay user penetration deepening with a relatively stable average revenue per paying user. And that speaks to the strength of our game, especially our stealth about game Free Fire, which has been a top growth in game in Southeast Asia and LatAm for multiple quarters has also become a top grossing game in India for 2020 as well as the Q4 of 2020. I think that is a very positive trend we are observing. We will continue to grow our user base globally for this game and we are also see very positive diversification of our revenue with Latin America now contributing largest share of revenue. But at the same time, we see other parts of the world, including India, increasingly contribute significant portion of bookings to the show entertainment segment. With this diversification, we're seeing Virena to become increasingly a global flare with revenue coming from all over the world and user base expanding to the rest of the world rapidly. When we reached last quarter, both 3rd quarter, we reached more than 770,000,000 quarterly active users. We thought that was a very good number. And then you see in 4th quarter, our active user base has increased to 600,000,000 users. We're still continuing to see very positive user growth across fall region. And that to us is a very positive sign for the longevity and longer term commercialization of this game full system of itself. In terms of the improvement of digital entertainment adjusted EBITDA margin, we As we mentioned, this is the main attributable to Free Fire being our sales development game, which doesn't require any revenue share with any IP owner or developer. And therefore, we continue to see our margin improvement. Of course, in the longer run, we will also see more diversification of revenue both on self developed as well as supply publishing 5th quarter and we are also focusing on investing into our ecosystem in recruiting top talent in building our technology capabilities and in introducing more IP, including IP collaborations with partners across the different sites, whether on the gaming side as well as on the social and other entertainment front, to further improve our content offering to our user base. So that but in the longer run, we do expect to maintain a very healthy adjusted EBITDA margin for our game business. We'll continue to run it in a very efficient manner. The next question comes from Thomas Chong with Jefferies. Please go ahead. Hi, good evening. Thanks management for taking my questions and congratulations on a solid set of guidance. On Shopee, I would like to ask about our triple digit revenue growth. Can management comment about the business trend Of course, different regions, Indonesia, Singapore, Taiwan, Malaysia, etcetera. I just want to get a sense about which countries are we seeing faster growth for this year. And my second question is on the digital finance side. Can management comment about our strategies for this year? In particular, whether we will step up our efforts in the food delivery or other O2O initiatives. Thank you. Thank you. In terms of the business trends and revenue growth for Shopee, First of all, we are seeing very strong growth across the region. And in particular, our largest market in Indonesia, which we disclosed continued to accelerate growth. So on GMV order as well as take rate side. We see even accelerated year on year growth rates, which speaks to volume again to the strength Our market leadership and our platform growth. Even as most of the countries have open up the in a more of a contained manner as the COVID situation increase in the fee under management. And I think in terms of the growth strong growth in larger markets where we already established very strong market leader position as well the highly accelerated growth in some of the markets that where we see very strong adoption during the COVID period. For example, in the Philippines, Malaysia, Singapore, we see very strong growth as people embrace online solutions during the COVID period and Shopee becoming increasingly the go to platform for people's consumption needs segment. And that trend we're seeing go into 2021 as shown in our guidance before e commerce again. And we are continuing to focus on driving efficient growth across our region and especially focus on serving the new users as well as the sellers being on boarded during this period of time and catering to the shift in lifestyle 3rd quarter and the lockdown measures taken so far, which we believe, as we said before, we believe is going to have a long lasting effect on digitalization of our economy in the region. Fiscal year 2020. In terms of digital financial services, we see again very strong growth even though we started integrating our Shopee Pay and SeaMoney Wallet platform. When Shopee just at the beginning of Last year, we already saw very strong adoption as demonstrated by our paid user ratio, our expanding our partnership with Google to Indonesia. We have also partnered with other offline SMB chain to continue to make our payment and wallet offerings available to a broader user base. Again, this is further accelerated by the fact that now people are increasingly acquired a convenient infrastructure for online payment in a region where credit card penetration remains very low. In terms of food and other initiatives, we see these as category on Shopee that can offer additional value adding to our consumers. We will continue to observe what is based on the consumers' natural consumption behavior in terms of expansion into new categories over time with efficiency. The next question comes from Alicia Yap with Citigroup. Please go ahead. Hi. Good evening, management. Thanks for taking my questions. Congratulations on the strong results. My first question is related to Shopee. There has been a lot of news report mentioned about shall be making good progress in Brazil. So just wondering if you could share with us your overall e commerce thoughts all the strategies for the LATAM America, specifically for Brazil. And then if we can compare between LatAm and Southeast Asia. What are some of the similarities and also the biggest difference between the two regions? If your vision for this Brazil e commerce initiative, what are the things that or foot that you will need to step up in order to achieve your target in Brazil. And then very quickly on the gaming, in terms of your studio that you're setting up in Montreal and Los Angeles and all that. Is this more coming for Potentially, we are planning to license more U. S. IP or is it will come up from our own the key in terms of these new games development. Thank you. Thank you, Alicia. On the e commerce front, established operations on the gaming side in the market. So it's generally efficient for us to offer additional value adding to our sellers. On that front, we also start to see local sellers embarking on our platform and it's well received. We think that's, of course, a positive sign. However, it's still very preliminary for us. We'll continue to observe the market and let the team run with it and see how that progresses over time. And in terms of our comparison between LatAm and Southeast Asia, I think these are very different markets. We wouldn't presume that we know those markets very well at this point. Again, given the early stage of the development there, we will let the team explore a bit more let's see how that goes. And in terms of the Phoenix Lab expansion, so these are, if you recall, we acquired Phoenix Lab and as an active hire effort to bring in top talent based in the West and who has traditionally a long experience of AAA titles and also on PC and console based games. And the team has been expanding into other locations in the U. S. To continue to recruit more gaining talent for our long term self development capabilities. So at the same time, of course, our partners in the U. S. As well as other parts of the direct market have been We've always been close to the patients with them to see that there could be good IP to be brought to our region now have been expanded to not just Southeast Asia but also to include LatAm, India, and the rest part of the world. And we have demonstrated our strong track record in managing, deepening user base as well as commercialization in a pretty much unprecedented massive way in those region for a sustained long period of time with our own IP as well as third party incorporated in So with that strong track record, we believe we're in a very good position to both attract top talent from all over the world, those based in the U. S, Canada or Asia, as well as to attract top IT globally and in partnership with other developers. The next question comes from Piyush Choudhary with HSBC. Please go ahead. Hi, good evening. Congratulations and thanks for taking my questions. Two questions. Firstly, on Shopee, take rate Can you provide us some color on the ranking of the countries in terms of the take rate? And which country has the highest potential of improvement intake rate in 2021. Secondly, on the logistics side, What are the average delivery times? And can you tell us high level plans for Shopee Express? Are there kind of targets for managing the percentage of orders through Shopee Express in 1 year? Thank you. We hope We did the take rate breakdown, but suffice to say that the take rate increase has been dry across different countries over time. We do it in a good pace and by communication well communication with the market and also making sure we understand performance of the needs of our sellers and buyers as well. Most importantly, the increase in the take rate so I think that there could be fluctuations also from time from period to period. It is a dynamic process. We always look at the conditions, the time period, as well It's suffice to say that we think in the longer run on a blended level, we still believe it can still move to even higher rate at an even high single and low double digit range. And I think we're quite on target of getting there over time. And in terms of logistics, our average delivery time is around probably a couple of days, depending on, of course, What part of the region you're talking about in the city, it can be less than a day. So of course, being some foul places that can be a longer period of time. But so far, we don't see that as a bottleneck for ecommerce business growth. Of course, during the COVID period, with the travel strength as well as demand increased demand from all over the different parts of the region. We are quickly ramping up logistics capabilities in partnership with our third party logistics providers as well as by increasing our own capacity last mile express delivery to supplement the 3PL capacity during the peak time. So we will continue to monitor the logistics demand as well as the service levels of our 3PL and help them further grow in their efficiency and capabilities in serving our users, Next question comes from Rajvind Sharma with JPMorgan Singapore. Please go ahead. Hi. Thank you for the presentation and congratulations on the results. Two questions from my side. Firstly, on the gaming guidance, do new games make up any part of this guidance? And if you can share what your new game pipeline might be for this year. Secondly, we have seen Sea expanding into new geographies And within our sale and new services, how should we think about your sales and marketing budget and how are you allocating it to the different services? Thank you. Thank you. In terms of the game guidance, we are Budgeting is based on whatever is currently visible to us as always. We don't specifically discuss pipeline. As we all know, we always been testing prototype ideas and even more best games at any time at any point of time. And so we continue to also diversify our pipeline capabilities across different types of games. So the revenue guidance or bookings guidance is based And in terms of the allocation of sales and marketing, are you referring to digital entertainment segment also? Hi, can you hear me? Yes. Yes, I can. So for e commerce sales and marketing expense, as you can see, we continue to improve our efficiency segment. Our allocation on sales and marketing is a, again, a dynamic process based on the time of the year and what we think is the development pace and pace of growth for the market and efficiency of investment in our market as well as any optimistic media events, for example. So these are a combination of factors we've looked at in allocating sales and marketing. But the gist of it is we continue to focus efficient growth to make sure that every dollar we spend there is describing effective user growth and strong user retention and also increasing user frequency. For example, During Q4, during the peak sales period, this is a very strong shopping period, and so we have a lot of shopping activities as well as media activities across different markets. And these have shown very strong results, as you can see. And We are driving up not just user time spent, but also user frequency on our app. We now see more than 5.7 times purchase frequency order frequency per month. That's another step up from the last quarter's Q3's number. So that is investment into sales and marketing. The next question comes from John Blackledge place with Cowen. Please go ahead. Great. Thank you. On Shopee's EBITDA, any thoughts on EBITDA trend in 2021? Would you expect losses to be higher than in 2020? And more broadly, is there a certain kind of overall take rate range We should think about that would lead to flat or positive EBITDA at choppy. And then also on choppy, so the 4Q 'twenty overall market Displaced take rate was 5.3% in 4Q versus 5.9% in 3Q. So any color on the modest Q over Q decline in the take rate? Thank you. In terms of the EBITDA trends, We don't provide guidance or forecast on EBITDA. I think maybe the previous question also. My answer to the previous question touched upon that is, A, we look at efficiency of investments and B, we look at stage market and timing based on what's the natural pace of growth and how we can invest in that growth fleet efficiency. And 3, there could be optimistic events that could drive EBITDA fluctuations over a period of time. But most Seaportely, I think suffice to say is that we can breakeven if we choose to at this point, Even at this take rate, and our Taiwan take rate is not, for example, that's the 1st market where we broke even and we have achieved a very healthy EBITDA margins there as we previously disclosed before. And the take rate in Taiwan is not 3rd quarter highest even among our existing markets. So it's not to say that we have to drive to a very high take rate to be able to breakeven. Our investment in growth is really by 4th quarter and that's according to the pace that we think is suitable for each market. So we're in a very good position right now In terms of the take rate, our take rate has actually increased quarter on quarter. It didn't decline. Happy to elaborate further offline, but if you look at our past disclosure, there's an increase in the take rate quarter on sales. The next question will come from Varun Ajeerd with Credit Suisse. Please go ahead. I've got two First, can you elaborate a little bit on Sea Capital? What are the objectives on that business? Is it you're looking more like SoftBank kind of investments, renewal turn up fee kind of a thing and what kind of returns time horizon. Any more color will be helpful given There are so many investments that you're looking into, into business also. That's 1. And number 2, there have been, during the last 2 months report about you acquiring a bank in Indonesia. If you can provide more color on that, that will be helpful. Thank you. In terms of Sea Capital, as we shared earlier that we are very happy to have the composite team led by David Ma to join us to further strengthen our investments and capital allocation capability. We think it's very important for a global Internet company to have that capabilities in the longer run. And we will continue to build on our calendar year as well as our pipeline to further strengthen that. We don't have a specific API in terms of the return rate in particular for as a term rate in particular for as it is the 8th phase fund. I think our overall the way the view towards that is still it is an integral part of Sea's growth story. And so whatever we do on the investment side is to further strengthen our growth capabilities in the long run and Our goal to use technology to serve our users, our communities, as well as ecosystem participants 4th quarter in our 4 regions. So I think this is not a any departure from our existing course start trying to grow the business in the long run and maximizing return to our shareholders for the long run. In terms of the Indonesia bank. We have gotten a bank license in Indonesia as well. And we see this as integral part of our SeaMoney segment where we continue to build out the infrastructure for digital payment as well as digital financial services. We'll continue to focus on the technology front share of our business as part of our core DNA. At the same time our focus is to use the technology that we have and our Internet DNA to see how fast to further strengthened the digital economy infrastructure in our region, which we are part fiscal year 2020. And at the same time, we believe there are significant opportunities in the long run that could even exceed the size of our pilot opportunities we're looking at in that segment. So we're going to adopt A very long run view towards that and look at DFS as a highly comprehensive segment and each part an integral part of our long term venture into PFS. Fiscal year 2019. This concludes our question and answer session. I would now like to turn the conference back over to Minju Dong for any closing remarks. Thank you everyone for joining today's call. We look forward to speaking to you all again next quarter. Thank you.