Sea Limited Price & Performance (SE)

Our management will share strategy and business updates operating highlights, and financial performance for the fourth quarter and full year of 2024. 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. Hello, everyone, and thank you for joining today's call. We delivered a great 2024 with all three businesses going back to strong double digit growth, exceeding our original guidance, It was also our second consecutive year with all three of our businesses recording positive adjusted EBITDA, We are very proud of achieving this milestone as we expect each business to remain profitable and self sufficient going forward. This strong set of results validate our strategies we made the right decisions at the right time and executed very well on them. 2024 also marked our fifteenth anniversary. It is rewarding to look back and see how over fifteen years we have created and excelled three separate business verticals: improving the lives of hundreds of millions of people, [indiscernible] Karina brings joy to over 100,000,000 global gamers every day. Shopee is the clear e commerce market leader in all seven of our Asian markets.

With a sizable and growing presence in Brazil, Our e commerce GMV exceeded $100,000,000,000 for the first time in 2024. And Sea Money with the loan book size of over $5,000,000,000 and over 26,000,000 active borrowers is already one of the largest consumer lending businesses in Southeast Asia. I'm very proud of the hard work from all our teams which has made these incredible outcomes a reality. And I'm very grateful to all our investors for your support across this journey. With that, let me take you through each business' performance [indiscernible] Starting with e commerce, Shopee is celebrating its tenth year with a great set of results. GMV surpassed $100,000,000,000 with over 10,000,000,000 orders in 2024. It was our first full year of being adjusted EBITDA positive we reinforced our market leadership by returning to high growth. With GMV growing 28% year on year. And we have become profitable in both Asia and Brazil. [indiscernible] We improved our monetization significantly in 2024. Through higher commission and advertising take rates. This was driven by market becoming more rational and increased adoption of our ad tech offerings [indiscernible] In the fourth quarter, our ad revenue increased by more than 50% year on year and our ad take rate improved by more than 50 basis points compared to the same period last year. 2024 has been a strong demonstration that our e commerce strategy works.

Our results reflected solid execution across our three operational priorities: enhancing price competitiveness, improving service quality to customers, and strengthening our content ecosystem I believe our ability to execute very efficiently and consistently across [indiscernible] priorities set us apart and has made Shopee a beloved household name across our markets. [indiscernible] Our end to end integration with our logistics partners has proven to be a key differentiator of Shopee's service quality. XPX Express in particular helped us to reap many efficiencies to its geographic reach [indiscernible] and cost leadership After years of delivery network and logistics chain improvements, XPX Express is now able to consistently deliver industry leading service standards for buyers and sellers even during seasonal peaks, almost half of XPX Express orders in Asia were delivered within two days of order placement in the fourth quarter. An improvement from the same period last year. At the same time, reduced the shop's overall logistics cost per order by $0.05 year on year in the fourth quarter. The efficiencies we gain from this tight logistics integration allow us to pass on savings to buyers and sellers while giving them assurance of reliable and cost effective logistics solutions. Beyond logistics, we continue to adopt AI to improve service quality in a practical and effective manner.

By using large language models, to understand queries, have made search and discovery more accurate helping users find relevant products faster. We provide our sellers with AI tools to enhance product listings by improving descriptions, images and videos, These initiatives have improved purchase conversion rates while also making sellers more willing to spend on ads boosting our ad revenue We have also used AI to enhance our customer service capabilities. After upgrading our chatbots with AI, we saw a meaningful increase in our customer service satisfaction score over the past year. And the reduction in our customer service cost per contact by nearly 30% year on year. [indiscernible] We also use the large language model capabilities to enhance our buyer return refund process. Addressing a key e commerce pinpoint in the fourth quarter, improved resolution times in our Asian markets by more than 40% year on year. With nearly six in 10 cases resolved within one day. We believe we are still early in the AI adoption curve, and remain committed to exploring AI driven innovations to improve efficiency and deliver better experiences for our users. We continue to strengthen our content ecosystem which has become an integral part of our e commerce ecosystem.

In Southeast Asia, live streaming now contributes around 15% of Shopee's overall order volume physical goods And in the fourth quarter, our average daily unique streamers [indiscernible] grew strongly at over 4030% respectively. Year on year. In Indonesia, we have maintained our lead as the largest live streaming e commerce platform throughout 2024. Our live streaming unit economics also improved consistently across the year. Driven by expanded scale, more optimized marketing spend increased adoption of Shopify Live ads and higher average basket size Continued improvement in live streaming unit economics will help to enhance Shopee's overall profitability in 2025. We continue to see positive momentum from our collaboration with YouTube which enabled video viewers to make seamless purchases from Shopee. It has also attracted many YouTube creators to Shopee's content ecosystem. In Indonesia, average daily orders attributed to YouTube content in January have grown more than sixfold since the collaboration first launched in September. [indiscernible] We are also seeing promising results since launching the collaboration in Thailand and Vietnam. And we look forward to expanding this partnership to more markets this year. Beyond Asia, I'm very proud of our strong performance in Brazil. Both in terms of our market share gains and improving profitability.

Our average monthly active buyers in [indiscernible] in the fourth quarter significantly outpacing the industry average. Our efforts to onboard more brands diversify our product categories and improve delivery speed have attracted more users to our platform and resulted in larger basket size purchases. This gave us a much better unique economics and allowed us to achieve positive adjusted EBITDA for the second consecutive quarter. Looking ahead, we remain excited about Shopee's growth potential in Brazil. In summary, I'm very pleased with Shopee's achievements in 2024. We delivered strong growth and became profitable in both Asia and Brazil, Our competitive modes are deepening empowering us to maintain market share leadership in Asia As market dynamics become more rational, long term success in e commerce will hinge on structural cost advantages and operational excellence both of which Shopee extremely well positioned to leverage. With e commerce penetration still low across many of our markets, we remain confident about our ability to continue delivering profitable growth in 2025. We expect Shopee's full year 2025 GMV growth to be around 20% with improving profitability Next, moving to moving on to digital financial services. [indiscernible] This segment is already a sizable and profitable business and Sea meaningful contributor to our overall growth and profitability.

With annual revenue of $2,400,000,000 and adjusted EBITDA of over $700,000,000 Both our top line and bottom line achieved over 30% year on year growth in 2024. While we have scaled fast, risk management remains our top operational priority for this segment. Today, our digital financial services business offers consumer and SME credit digital payment, digital banking, and the insurtech products in Southeast Asia and Brazil. Credit related business is currently the main driver of our digital financial services [indiscernible] So let us focus on there. We delivered exceptional loan book growth of more than 60% year on year in the fourth quarter. Surpassing $5,000,000,000 as of the end of twenty twenty four, making us one of the largest consumer lending businesses in Southeast Asia. In the fourth quarter, we added approximately five million first time borrowers and we saw 60% year on year growth in our active users which have now grown to more than 26,000,000 Even with this strong growth, our risk exposure has remained stable with ninety day NPL ratio at 1.2% in the fourth quarter, Our credit business strategy focuses on [indiscernible] healthy growth driven by a deep understanding of risk. We currently only operate this business in markets where we already have a strong e commerce presence.

Giving us the ability to very deeply access price and manage the risk in each market. As our large shopping user base continues to grow in our markets, we can take a prudent progressive approach to user acquisition and the product offerings. Allowing us to scale up rapidly at low cost while also maintaining a very stable risk profile. Today, our credit business stands on two pillars: on Shopee as pay later loans and off Shopee cash and as pay later loans In all our markets, [indiscernible] [indiscernible] are the first and very natural touchpoint we have with most of our credit users. It allows them to build an initial credit track record and allows us to build out our credit model for the market. Once we understand the users' credit behavior, we give them access to other products with longer tenures and larger quantums. And when we have built a credit risk model for each market that we feel confident of, we then start to scale our loan book. [indiscernible] Still in our loan book includes diversifying into more offshopping scenarios giving us access to a much larger pool of consumer spend. Across our Asian markets, offshopping loans now account for about half of our loan book.

In most of our markets, credit card penetration is still very low. [indiscernible] acts almost as a virtual credit card. For a massive addressable user base who have a huge underserved demand for credit, With rising digital adoption, we see great potential to tap into more off shop consumption use cases in our markets. In summary, 2024 was a very good year for our digital financial services business. We launched more products to serve more users. And we grew both our top line and bottom line strongly and healthily. We expect this strong momentum to continue into this year. In 2025, expect loan book size to grow meaningfully faster than Shopee's GMV annual growth rate. As we improve credit penetration both on and off Shopee, Finally, moving on to digital entertainment. 2024 was a great year for Garena. Making three fires marking Free Fire's remarkable comeback. After the post pandemic headwind in 2022 and 2023, Free Fire rebounded with annual bookings growing at 34 and we expect continued growth in twenty twenty twenty five. In 2024, 3PAR was the world's largest mobile game by average DAU. And the most downloaded title according to Sensor Tower. XPET is massive scale average DAU in 2024 grew 28% year on year.

Standing well above $100,000,000 With its high levels of engagement and retention, even in this eighth year, we believe Free Fire has secured its place as an evergreen franchise Free Fire Combat was the result of our continuous execution on constantly expanding our user base and relentlessly driving user engagement. We expanded our user base by prioritizing accessibility ensuring that Free Fire remained lightweight enough to run smoothly on a wide range of devices. This gave us a competitive edge in high growth emerging markets with significant untapped potential, As a result, in addition to our increasing presence in Asia and The Americas, Africa has become one of three bars fastest growing regions For instance, after we managed to improve connection speeds for players in Nigeria, active users there searched 90% year on year in December. We kept pushing ourselves to find ways to drive user engagement both within and beyond the game. We elevated gameplay with frequent content updates. High profile collaborations, and immersive experiences that bridge the game and the real world. Major updates like the seventh anniversary event, and collaborations with the demands layer [indiscernible] energized both new and existing users. And we started 2025 with the Free Fire and the Naruto Sleep Pardon IP collaboration.

Our users have responded extremely positively to this collaboration giving Free Fire a strong start to the year. While Free Fire is a global game played in more than 160 markets, Our local teams put a lot of effort into bringing each market's local trend and elements into the game to make it feel hyper local for gamers everywhere. We celebrated local festivals with domestic in game elements from the day of the death in Mexico to tech in Vietnam. In Indonesia, we created a Ramadan campaign that allowed our users to donate in game currency to renovate [indiscernible] invested Java Such efforts have made three feel deeply local for players across different markets. Creating a much richer sense of belonging for our gamers. Free Fire's popularity is also a result of having a strong presence beyond the game heavy It has a powerful following on social media On major social media platforms such as TikTok and YouTube, Free Fire has accumulated more than 1,000,000,000,000 views to date. And our flagship annual esports event the Free Fire World Series' Global Finals, returned to Brazil last November and generated massive excitement Viewership hours increased by 43% compared to the previous year.

Thanks to our partnerships with content creators and game streamers, to build hype around the event. With large scale engagements, fewer word-of-mouth organic growth, keeping Free Fire relevant [indiscernible] are incredibly proud of the system's success of Free Fire and our very own self developed game. And the solid performance of our long standing published games Looking ahead into 2025, we will continue scaling our user base and broadening our content offerings. We now expect Garena to grow double digit year on year. Both user base, and the bookings in 2025, [indiscernible] In closing, we are proud of what we have achieved 2024, our strategies have proven effective and our businesses on are on strong footing to continue growing strongly and improving profitability in 2025. We will continue to work hard and execute well [indiscernible] Our goal for the next phase is to pursue high quality growth by driving both our top line and bottom line expansion in a healthy and sustainable manner. We are in a stronger financial position now than ever and we are a much more experienced company after going through multiple cycles. The fundamental growth opportunities in our markets remains strong. Twenty twenty four's success is just the start 2025 will be another great year for us.

Thank you, as always, for your trust and support. With that, I invite Tony to discuss our financials. Thank you, Boris, and thanks to everyone for joining the call. [indiscernible] total GAAP revenue increased 37% year on year to $5,000,000,000 in the fourth quarter of twenty twenty four.

And 29% year on year to $16,800,000,000 for the full year of 2024. This was primarily driven by GMV growth of our e commerce business and the growth of our digital financial services business.

Our total adjusted EBITDA was $591,000,000 in the fourth quarter of twenty twenty four, compared to an adjusted EBITDA of $127,000,000 in the fourth quarter of twenty twenty three.

For the full year of 2024, our total adjusted billion dollars compared to an adjusted EBITDA of $1,200,000,000 for the full year of 2023. On e commerce, Shopee's gross orders grew 20% year on year to RMB3 billion the fourth quarter of twenty twenty four, and GMV increased by 23% year on year to $28,600,000,000 in the fourth quarter of twenty twenty four. Our fourth quarter GAAP revenue of $3,700,000,000 included GAAP marketplace revenue of $3,200,000,000 up 41% year on year. And GAAP product revenue of $500,000,000 Within GAAP marketplace revenue, core marketplace revenue, mainly consisting of transaction based fees and advertising revenues, was $2,400,000,000 up 50% year on year. Value added services mainly consisting of revenues related to logistic services, was $800,000,000 up 21% year on year. For the full year of 2024, GAAP revenue of $12,400,000,000 included GAAP marketplace revenue of $10,900,000,000 up 38% year on year and GAAP product revenue of $1,600,000,000 E commerce adjusted EBITDA was $152,000,000 in the fourth quarter of twenty twenty four, compared to an adjusted EBITDA loss of $225,000,000 in the fourth quarter of twenty twenty three. For 2024 full year adjusted EBITDA we achieved positive adjusted EBITDA of $156,000,000 compared to an adjusted EBITDA loss of $214,000,000 for the full year of 2023.

Both Asia and other market recorded positive adjusted EBITDA for the fourth quarter of twenty twenty four. Digital financial services GAAP revenue was up by 55% year on year to $733,000,000 in the fourth quarter and up by 35% year on year to $2,400,000,000 for the full year of 2024. [indiscernible] Adjusted EBITDA was up by 42% year on year to $211,000,000 in the fourth quarter of twenty twenty four, and up by 29% year on year to $712,000,000 for the full year of 2024. As of the December, our consumer and SME loans principal outstanding reached $5,100,000,000 up 64% year on year.

This consists of $4,200,000,000 unbooked and $900,000,000 off book loans principal outstanding. [indiscernible] Past due by more than ninety days as a percentage of total consumer and SME loans. Was 1.2%, at the end of the quarter. Digital entertainment bookings were $543,000,000 in the fourth quarter up 19% year on year. And $2,100,000,000 for the full year of 2024. Up 19% year on year. GAAP revenue was $519,000,000 in the fourth quarter and $1,900,000,000 for the full year of 2024. Adjusted EBITDA was $290,000,000 in and $1,200,000,000 for the full year of 2024. Returning to our consolidated numbers, we recognized a net non operating income of $28,000,000 in the fourth quarter of twenty twenty four, compared to a net non operating income of $32,000,000 in the fourth quarter of twenty twenty three. For the full year, our non operating income was $117,000,000 compared to an income of $2.00 $8,000,000 for the full year of 2023. We had a net income tax expense of $89,000,000 in the fourth quarter of twenty twenty four. Compared to net income tax expense of $77,000,000 in the fourth quarter of twenty twenty three. For the full year, our net income tax expense was $321,000,000 compared to $263,000,000 for the full year of 2023.

As a result, net income was $238,000,000 in the fourth quarter of twenty twenty four, as compared to a net loss of $112,000,000 in the fourth quarter of twenty twenty three, For the full year, net income was $448,000,000 as compared to net income of $163,000,000 for the full year of 2023. Thank you, Forrest and Tony. We are now ready to open the call to questions. [indiscernible] We will now begin the question and answer session. Will take a maximum of two questions at a time. From each caller. Your first question comes from the line of Pang Viitt with Goldman Sachs. Bhang, please go ahead.

Hi, and good evening, management. Congratulations for a solid performance. Two questions from me. Number one, on e commerce. Could you help us provide more colors on your 202520% GMV growth guidance, what is the underlying assumption you put in place in terms of competitive landscape, marketing spending service quality investment? And is this already factored in the FX impact in the numbers. On top of this, could you help us understand how profitability will trend in the upcoming quarter as well? That's number one. Number two, on FinTech, strong performance across the board, board the top line and on the bottom line and on the user train as well. Could you help explain the driver behind, especially on the country mix and product mix? And can you help us also [indiscernible] meaningfully faster than Shopee GMV? Thank you. On the first one, Shopee, in 2025, as Farris mentioned in the opening, we expect to grow around 20% on the GMV basis we are assuming the ForEx rate to be similar to the current rate. So we're not taking a on the ForEx forecast for now. If there's a big fluctuation on ForEx, we will look at other situations. And in terms of the things we're doing to drive the growth, the growth is driven by both the user number growth and also the purchase Sea.

As we are executing our key operational priorities. If we look at Asia and Brazil, we expect both market will grow quite well. Although as we have Brazil as a newer market, Brazil probably have a slightly faster [indiscernible] in the Asian market. On the profitability side, we do expect the profitability for 2025 to be better than 2024. [indiscernible] However, as you might know, e commerce does have some seasonality from time to time. So there might be some fluctuation due to the similarities. On the Sea money side of the businesses, The off market growth Very low.

In terms of the loan outstanding. On both the on Shopee as day later and the [indiscernible] of the businesses In terms of the country mix, as you probably know, we grow the loan outstanding from [indiscernible] So in terms of the coming quarters, we will probably see the newer country has slightly buffer growth pace than the order market for the possibility of Yes. Loan book We do believe that because of the country mix and as we expand to a more prime segment of user basis, there might be some impact to the return of asset, our highway rate driven the country mix and some of the user mix that Sea come in. Yes. But overall, we do believe that The absolute EBITDA will grow well in 2025. Just now you mentioned that the outstanding growth meaningfully faster than the Shopee GMV. I think that's partially because we will expect our ASP later penetration on Shopee will further [indiscernible] Even in the the older country like individual Philippines, we will still expect the penetration of escalator to further expand. At the same time, the [indiscernible] The cash part and the escalator offshopy will also further expand. So this will adding together makes our outstanding of the Sea Money grow meaningfully faster than the Shopee GMV.

And your next question comes from the line of Alisa Yap with Citigroup. Alisa, please go ahead.

Hi, thank you. Good evening, management Congrats on the strong results. Thanks for taking my questions. Two questions. First is that I wanted to follow-up on the assumption behind the GMV guidance. So if management could provide a little bit like how much would be driven by the growth of the new users the increase of the purchasing frequency Sea and also the wallet sent by user. And if management can also comment, if there's any change of the consumer behavior that you have served? And how will any change affect our marketing strategy and also the category mix? The second question very quickly on the gaming Garena guidance. When you mentioned you are expecting the active or the user base to also experience double digit growth. Just wondering because I think you're already in 150 markets, So just wondering, are you expecting more deepening penetration in the existing market? Or are you actually looking for some of the new market like you mentioned, for example, the Nigeria where you saw some fast growth. So any colors in terms of the drivers for the bookings and also the active user growth for gaming will be appreciated.

On the first question on the e commerce side, our GMV growth driven both by the purchase Sea and the new users. I don't think that's particular one thing, dominant one from Boise. On the we don't see any particular big shift on the consumer behaviors There were meaningful shift after the COVID, during COVID, etcetera. But if you compare 2024 versus next quarter, the current quarter, we don't see anything that could stand out. Although as we shared that while our priority for Shopee is to improve our service qualities By doing so over time, we do observe that we attract we attract more high quality buyer to our platform.

Which will help us to expand our categories coverage as well. Not only in Asia, but also in Brazil. If we take Brazil, for example, here, in Brazil, we have been working very hard to not only lower down the cost of our delivery, but also improve the delivery [indiscernible] We're seeing a meaningful reduction on delivery speed in Brazil, which will help us essentially be able to serve slightly high end users and be able to serve the categories Sea historically harder to penetrate. And all those things will help us essentially reach out to the better quality segment of users and serve them a better retention over time. I think that's probably less the behavior change, more just As a consequence of Sea execute our strategy, On the Garena guidance, let me start like, okay, the guidance we offer here pretty much based on our existing portfolio. This is including our self developed game Free Fire and our publishing game portfolio like by working together with third party game developers. Sea at this moment, we don't counting too much in terms of the new games although we do have the plan to launch new games this year. But the current guidance is more focused on the the existing game which we have a lot of historical data to to project the forecast.

And [indiscernible] play a very, very big role in the entire portfolio. Sea have observed actually growth is across all the markets. It's including both our existing market and some new market, which say for example, we talk about we highlight some Africa like countries like specifically large market like Nigeria So by adding in putting some specific work like effort in that market, say for example, we set up local server like for Nigeria gamers improve the connection qualities and the result is very, very obvious. Like in December, we see 90% growth in in terms of the user base. So we see that similar trend in some other market in a lot of both part of the world.

I think like overall, our guidance reflects our confidence of the both of the market. I [indiscernible] throughout the entire 2024, we see after like a few years kind of headwinds after COVID pandemic and we see users like the gamers start to back to the to kind of like spend more time to play games and it's kind of back to the normal time compared to the during the post COVID time, a lot of people kind of feel burnout during the COVID and they try to do other things instead of playing games. And I think this also reflects our confidence about what we have done with the Free Fire in the past few years. We mentioned that before. We have been very, very focused on the market speed of the product. And specifically on the accessibility of the game we want to make the game not just offer a great gaming experience, but it's more inclusive. It's a make the [indiscernible] And I think we probably one of the best company like to to focus on this and to execute this well. And this is to us, it's a great formula. So we still see there is a lot of part in this world and that the gamer is still not get a great game experience and the Free Fire will be a natural feed for them.

So to offer them a one point experience, And another things we see have been really helpful is considering the skill of a very far and continually like as I mentioned just now, we continually like focus on to capture the local trends and capture the local kind of the hot topic and into the game and make game more relevant and both on the global level and the local level. So Free Fire is not just a game anymore, it's become a phenomenon like from Hot Topic trendy topic always across the social media. And this will help us continually adding adding kind of attract more users, right, and to play the game and also keep our existing gamers very, very engaging for the content we offer. Through the game. I think I've put all those things together. That's gave us the confidence into a continued growth of this year and although we have a pretty decent very decent growth 2024, And so far, we have observed the momentum is continuing into Q1 this Sea. Which give us a very good start of the year. And your next question comes from the line of Divya Chauth with Morgan Stanley.

Divya, please go ahead.

Thank you very much. Two questions from me. One on logistics and the other is on Brazil. On logistics, we're seeing that Shopee is selectively participating in fulfillment now in some countries like Brazil as well as Singapore. Can you elaborate more on the benefits of engaging this? And does this require more cap or even subsidies which would mean wider logistics losses in the near term. And do we plan to do fulfillment in more markets? That's the first question. And my second question is on Brazil. Could you talk about the profitability in this market given the high growth we've Sea, but last time you mentioned that the profitability could be choppy to quarter, So would be keen to know how profitability in this market was the guidance for 2025 is? And also if you could comment on the latest AOV in this market and the growth of the FinTech business?

On first Sea, for the fulfillment, it's Sea are in a very early stage of fulfillment businesses in Brazil. It's a proven model that some of our competitors has been engaging with in the market. The purpose of buying fulfillment is to serve sellers and especially brand sellers from the categories we were historically not very strong at. There are a group of sellers who prefer to be fulfilled by the platform rather than themselves. Without the capability, we're not able to [indiscernible] This will also help us to improve the buy experience with the shorter delivery times because these were short term procurement time from the seller side.

Sea don't expect this will meaningfully impact our profitability too much, at least in the near term because as I shared, it's still in early stage, so it's a pretty small size.

And number two is Sea run we don't own the the fulfillment centers. We rent it and Sea operate in a pretty CapEx [indiscernible] Regarding whether we will do fulfillment in other markets, actually Sea do have fulfillment in other in Asia. For quite a while. We do serve the brand sellers especially in many of our markets for those sellers who prefer [indiscernible] or they couldn't and they could not find anyone who can do it well for them. So we do have the fulfillment business for them.

And again, we don't expect this will meaningfully impact our CapEx [indiscernible] In the foreseeable future. So that's The on the LV trend in Brazil, we do increase in average order size in Brazil because of the effort we are taking Part of that is Sea have a better delivery qualities delivery speed, so people are willing to buy a higher basket item from us and part of that comes from the expansion to new categories that I mentioned just now. [indiscernible] profitability in Brazil, I think as for Q4, both Asia and Brazil are profitable.

I think Sea are able to grow Brazil in a pretty a good way with profitable EBITDA and whether we would further impact to grow or not, I think something we will observe and decide. But with the current profitability EBITDA for Brazil, we are able to grow in a pretty fast pace already. For the FinTech part of the businesses in Brazil, We do have good growth in Brazil in the positive quarter [indiscernible] two, three quarters ago, we are able to find a way to credit rate our users in Brazil in a pretty stable fashion. After that, we're able to increase the penetration of escalator in Shopee's quarter over quarter. At the same time, we also launched via cash loan in Brazil as well. Actually, we customized the product for Brazil in the way the cash loan user and escalated user shared the same pool of limit, which is different from Asia. In Brazil, we also incorporate a lot more data as there are more data available in the market. And in Brazil, we're also putting quite a lot of different way of engaging the users on the [indiscernible] and cash on-site. So all this help us to grow the fintech businesses in Brazil.

Quite well in the past few quarters. And we will expect Brazil will be one of our faster growing market [indiscernible] And your next question comes from the line of Piyush Shudari with KeyCast Busy. Piyush, Yes. Hi. Thanks a lot and congratulations to the team on greater set of results. Two questions, both on e commerce. Firstly, as 50% of your orders are now delivered through Shopee Express in Asia in less than two days, Are there any operational targets or priorities for delivery of orders in less than one day? And are you seeing any kind of meaningful increase in order frequency as delivery speed has been improving? If you can give some examples of any examples of the country where that material difference is coming? That's the first question. Secondly, on Shopee core marketplace, take rate, which has increased to 8.5% now. What is the outlook on the take rate? And any seasonality we should expect in take rate trend going forward as ad revenue has become larger portion? Thank you.

On the first question on the deliveries, as you mentioned, we do have about half of our audit delivered for Aspects within two days Within that, there is a meaningful growth of Sendai delivery as well. But it's a little bit sort of depends on different countries on the same deliveries. For example, in Indonesia, we have a sizable standard deliveries around there. [indiscernible] In Thailand and Malaysia as well, in Vietnam as well, we also started same day delivery business services. In country like Singapore, same day is still quite rare in the market due to the cost structure. I think it's going to be a country by country view for how much do we push the same day versus the next day deliveries. It's correlated with the cost structure It correlates with how the seller behaves in the market [indiscernible] we do would like to improve the service qualities and the delivery speed is part of it. And part of the delivery speed [indiscernible] or next day where possible is something we would like to achieve and grow over time. As a consequence of that, I think you're absolutely right, we do see improvement on order Sea. For the user who enjoy the same day or next day deliveries services.

And it's not only the speed, but also the cost as well. In many markets, while we are reducing delivery cost, this will also help the retention rates and will translate to the other Sea as well. Regarding the take rate, so take rate has two main parts. One is the commission part, another part is the [indiscernible] so both front, we do see that the potential room to grow. And I think as as you pointed out, over time become a bigger part of the take rate and probably the bigger part of the growth drivers. The arsenalities in this like for example, in certain period of time, if they Sea it on holiday for a long period of time, it does impact the exit rate. But we do believe that there's still quite much room to grow our aggregate quarter to quarter. Or year to year And the seasonality probably would not the fluctuation of the netities will not impact the trend so much, but it does but it does impact, but it's just like it's still Sea can still grow it [indiscernible] for the ASP part. And your next question comes from the line of Saj Salgawankar with BofA.

Sachin, please go ahead.

Hi.

Thank you for the opportunity and congrats on a great set of numbers. Two questions from my side. First question, we've seen your competitors in Southeast Asia increase take rates in last few quarters and the gap between your and their take rate? Has narrowed. So I actually want to understand how do you think about slightly increasing take rates And I know there are levers like add and others, but any thoughts on charging merchant slightly more? And second, given the fact that every business is now throwing good amount of cash you also have a good amount of cash on the balance sheet. Any directional thoughts on proceeds on uses of cash Is there a thought, eight, to go internationally at some point in future? B, give dividends apart from any debt repayment which is there out there. So I would love to know your thoughts on this.

Thanks. On your first question, I think we talked a lot about on the active grade just now. On the commission side, the feedback from our ecosystem, our take rate is still quite healthy. We review our commission take rate from time to time, actually month to month, taking into account the factors the seller house, how the seller margins how is the competition is as you mentioned, and also the overall economical situations for the countries So I think it's still a dynamic process. We still believe there is a potential to grow it over time. Although probably in a slower speed as you probably observed in the last year.

On the commission side.

And in terms of the usage and the deployment of our cash reserves. Yes, so you're absolutely right. And at this moment, we have we see our cash position is getting stronger. Quarter after quarter. And I think that it's a very good position to be. I think this is instilled some stability of our not just on the financial side, but on the interim of our how we want to execute our day to day operation right? And with enough resources and financial resources on Hain, it give us a more levers, give us more like room to execute our day to day operations. And on top of operations and we remain open minded and by the end of the day, we will see what is the best way, what is the best return we can generate through the our cash. And as for certain Sea, I think it's definitely on the table as you mentioned, it's Sea could be the dividend and could be the share buyback. So we are actively reviewing all the the possibilities we are also like seeing how our financial results can help us to serve our customers better, right, in terms of the catching up and building up a new capabilities, say for example, like there is a there is a lot of initiatives, like there is a lot of thinking for us like how we how we continually improve our service qualities and our efficiency through using the AIs, right?

And there is a certain requirement, capital requirement in terms of the deploy and develop the AI capabilities. And but at this moment, this doesn't mean we're going to have big client from software CapEx investment like some our industry peers doing. At this moment, we want to be in a critical and cautious way. But as think with the certain level of cash on hand, it's give us a more flexibility as well. And in terms of the maybe some equity opportunity where Sea in our history where we always focus on like Sea self kind of like organic growth, right? And I think increasingly with our cash on hand, we are also remain open minded to to kind of continue to build up. Like by the other days, like [indiscernible] improve our capability and to to serve our customers better. I think that will be a key considerations as well. And your next question comes from the line of Thomas Chong with Jefferies. Thomas, Hi. Good evening. Thanks management for taking my question. My question is about AI. I think management talks quite a lot on how AI reshaping our business, of course, different segment I just want to get some color with regard to the benefit from AI.

Are we at actually seeing cost efficiency Sea the use of AI actually saves a lot of the manual labor cost So that helps to achieve a lot of cost saving Or are we actually Sea the monetization is getting better coming from AI. Thanks. Sea. Thanks for the questions. We're seeing both in fact For example, in our search and recommendations, we actually use the large language model to better understand user queries making search and discovery a lot more accurate and helping users to find relevant products. So essentially, when the user make a query, the new technology can help us expand what it means from the query. Not only just from the text, but also from the word knowledge. We are also using the AI to understand the product a lot better. Like for typically, historically, it was syntax matching, but now we can use existing pictures and the descriptions and the reviews to generate a lot more richer understanding of the product and all those help us to essentially matching our product to users intention a lot better. We are also having a lot of AIGC, AI generated content in our platform.

We provide that as a tool to our sellers to be able to produce an image a description of the product or the videos especially a lot better compared to what they had before. And both of this increase our conversions meaningfully in our platform. On the other side, on the cost saving side, I think in first opening, we talked about the chatbot. The If you look at our CS queries, about 80% of the queries are answered by the chat bot already, which is the meaningful cost savings for the for our operations. I think that's also why you can see that our cost management for e commerce is doing quite well. Even for the 20% answered by the agent, we have an AI tool for the agent to be able to understand the context a lot better, so we can help them to respond a lot faster to the customers, which help us to manage the total population of our agents for customer service. Another example is we're using AI model to better make better judgment on the return refund decisions Typically, when there is a return refund happening, come to the platform, sometimes the platform historically to use the people to make judgment.

Or when there's escalation or disagreement between the buyer and sellers, they will We built an AI engine to be able to make a lot better judgment on this and make it a lot faster This contributed to the resolution times reductions as we mentioned earlier, and also reduced the number of agents required to intervene for our return refunds. I think there are many other things that we can talk about if we have time. But yes, back to your question, we see the impact on businesses on both sides. This concludes our question and answer session. I would now like to I would now like to turn the conference back over to Ms. Rebecca Lee for any closing remarks.

Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

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