Are fintech and online businesses better businesses?

[LITTLEREDDOT]

Uber whistle-blower says current business model 'absolutely' unsustainable​

Mr Mark MacGann identified himself as the source who leaked the more than 124,000 company files. PHOTO: AFP

Nov 3, 2022

LISBON – Mr Mark MacGann, the whistle-blower behind the so-called Uber Files, said on Wednesday the ride-hailing company seemed to be taking steps towards improving its work culture, but that its business model was still “absolutely” unsustainable.
The Guardian and Le Monde newspapers reported in July that Uber Technologies broke laws and secretly lobbied politicians as part of an aggressive drive to expand into new markets from 2013 to 2017.
Mr MacGann, who led Uber’s lobbying efforts to win over governments, identified himself as the source who leaked the more than 124,000 company files.
Mr MacGann said he decided to speak out because he believed Uber knowingly flouted laws and misled people about the benefits to drivers of the company’s gig economy model.
In response to the newspaper reports, Uber said in July: “We have not and will not make excuses for past behaviour that is clearly not in line with our present values.”
Mr MacGann said Uber’s current chief executive officer, Mr Dara Khosrowshahi, and his executive team “have done a lot of good things but they have so, so far to go”.
When asked for comment, an Uber spokesman on Wednesday referred Reuters to a 2020 New York Times opinion piece by Mr Khosrowshahi, in which he said “our current employment system is outdated and unfair”.

Mr Khosrowshahi had said gig workers would lose the flexibility they had today if they became employees and that rides would be more expensive. The CEO wrote that workers wanted both flexibility and benefits, and added that new laws were required to help them.
“I am proposing that gig economy companies be required to establish benefits funds which give workers cash that they can use for the benefits they want, like health insurance or paid time off,” Mr Khosrowshahi wrote in the op-ed.
At a news conference during Europe’s largest tech conference, the Web Summit, in Lisbon, Mr MacGann said: “My message to Uber is: ‘You have done well, (but) you can do it so much better (because) the current model is absolutely not sustainable’.“
He said Uber recently reiterated that the “core of its business model is independent contractors, since everybody wants to be self-employed, everybody wants flexibility”.
He said the facts, however, contradicted this view as there were Uber drivers suing the company in various countries to “have a basic minimum of social protection such as sick pay”.
“Uber is pumping tens of millions of dollars in Europe, the United States other parts of the world fighting legislation,” he said. REUTERS

 

[LITTLEREDDOT]

Paying S$229 million for a business that is losing money, and lost $17.7 million in its last financial year!!??
That is a PER of -12.9 times

MoneySmart expected to list on SGX next year in reverse takeover move​

MoneySmart founder and CEO Vinod Nair said the company is in a good position to continue its growth. PHOTO: ST FILE

Adeline Tan


NOV 4, 2022

SINGAPORE - Personal finance platform MoneySmart Group is seeking a listing on the Singapore Exchange (SGX) through a reverse takeover deal with hotel operator Asia-Pacific Strategic Investments (APS).
The deal is valued at US$161.7 million (S$229 million) and both companies signed a sales and purchase agreement recently.
A reverse takeover is a process whereby private companies can become publicly traded companies without going through an initial public offering. This is also known as a “backdoor listing”.
The result of the agreement will see MoneySmart owning the majority of the shares in the new entity and taking control of it, said founder and chief executive Vinod Nair on Friday.
MoneySmart is expected to be listed in the second quarter of next year once procedures such as auditing and regulatory approval are completed.
APS will subsequently cease its real estate business and dispose of its assets.
MoneySmart said the capital injection will be used to grow the company’s insurance business, as well as to pursue other potential mergers and acquisitions.

The company launched its new digital insurance platform, Bubblegum, about two weeks ago.
Bubblegum offers car and travel insurance, and is looking at offering term life insurance as its next product. It is aimed at the younger generation of digital natives who prefer to do their own research on online sites instead of having to talk to an insurance agent.
Mr Nair said: “While the market is volatile and uncertain at the moment, we believe this presents a good opportunity for well-capitalised companies to pursue strategic acquisitions.”

MoneySmart has been growing steadily over the past few years and is in a good position to continue its growth despite the challenging macroeconomic outlook, he added. The company will also be considering expanding into other developed markets in Asia, given the high financial literacy and financial product penetration rates in those countries.
The firm was founded in 2009 and operates in Singapore and Hong Kong. It produces financial content such as comparisons between different types of credit cards and loans.
APS is a real estate developer and owns a 113-room luxury boutique hotel in Huzhou in China’s Zhejiang province. It was incorporated in Singapore in 2006 and listed on the SGX in 2007.
In a filing on the SGX on Friday, APS said its business operations in China have experienced significant disruptions caused by the coronavirus pandemic and that this has resulted in losses for the company.
APS reported a full-year net loss of $17.7 million, up from a $5.1 million loss a year ago, for its 2022 financial year.
The company has thus been looking to explore new investments and acquisitions to improve its financial performance, it said.
It added: “The proposed acquisition would allow the company to enter the financial services industry in Singapore and in the region, and will also enable the company to transform its business.”
APS shares closed at 0.2 cent on Friday after trading resumed following a trading halt on Tuesday.

 

[blackmondy]

Much more profitable running a religion. Just ask this guy.

 

[LITTLEREDDOT]

The Collapse Of Singapore's Largest Company​

 

[LITTLEREDDOT]

E-WALLETS VIRTUAL BANKING

Reuben Lai Is the Latest in a Series of High Profile Exits for Grab’s Fintech Business​

by Rebecca Oi November 8, 2022

GXS Bank (GXS)’s executive director and Head of Regional Office, Reuben Lai, has decided to leave the Bank at the end of 2022.
Along with his resignation as an executive director, Reuben will be stepping down from his appointment as a director in GXS’ Board in Singapore. He remains a director on the Board of the digital bank in Malaysia.

Reuben Lai

“Grab has taught me to think big and use technology to solve real-life problems for humanity,”

said Lai who has moved from his Grab Financial Group (GFG) role in May 2022 and has since been a full-time employee of GXS.
He added that there are indeed many problems, including the biggest risk (and opportunity) facing humanity now – climate change.”

Lai is one of the most senior leaders and a board member of GXS, the Singapore-based tech giant’s digibank. It was launched in Singapore this year after getting a full digital bank licence in 2020.
Grab has been hit by a series of high-profile departures recently, raising questions about the company’s ability to retain talent and grow its businesses.
Ankur Mehrotra, who quit as managing director of Grab Financial after a six-year stint to serve as president of Julo, an Indonesian fintech startup, is one of the latest high-profile executives to leave the company.
Chris Yeo and Jeffrey Goh, who were among the earliest executives at Grab’s fintech business, have also exited the company.
Yeo headed Grab’s payments and rewards business and has been with the company for nearly six years, while Goh led the payments gateway business.
The latest departures come as Grab’s losses rose to $3.6 billion in 2021, while revenue rose 44 percent, with investors focusing on how the firm plans to stem losses.

 

[LITTLEREDDOT]

Fall of world’s hottest stock costs Sea founders US$32 billion​

Mr Forrest Li is now worth just a little more than US$3 billion as Sea shares have slid 87 per cent from their peak. PHOTO: SINGAPORE NATIONAL OLYMPIC COUNCIL (SNOC)


NOV 14, 2022

SINGAPORE – Sea’s pain was supposed to be short term.
The maker of wildly successful battle royale game Free Fire knew that the pandemic-fuelled boost in users was over, but chief executive officer Forrest Li was still optimistic earlier in 2022 that problems would be short-lived. He considered his company to be internally strong and had taken steps to maximise long-term potential – including spending more on growth.
Instead, Sea is now dealing with an economic slowdown and surging inflation, as well as intensifying competition and a broader tech sell-off. The gaming and e-commerce giant has slashed jobs, shuttered operations in some European and Latin American markets, and reduced expenses.
After a brief moment in 2021 as Singapore’s richest person with a US$22 billion (S$30.2 billion) fortune, Mr Li’s wealth has plummeted, according to the Bloomberg Billionaires Index. He is now worth just a little over US$3 billion as Sea shares have slid 87 per cent from their peak.
Co-founders Gang Ye and David Chen are down a combined US$13.5 billion, with Mr Ye’s wealth – once US$12 billion – now about US$2 billion and Mr Chen no longer a billionaire.
Along with other top executives, the three have given up their salaries until the company reaches “self-sufficiency”, without specifying when that might be.
It is a stark reversal for what once was the world’s hottest stock. Now, analysts estimate Sea’s quarterly loss will widen when it posts results on Tuesday.

“Challenges are abundant,” said head of research Ke Yan at Singapore-based DZT Research. “It has to prove that e-commerce can be profitable. Then it needs to show that it is able to launch more hit games to drive the growth in the gaming segment. It is not conclusive for now.”
Mr Li is among the billionaires whose wealth surged at an eye-popping rate during Covid-19 before crashing as the world moved on from the pandemic. Zoom Video Communications founder Eric Yuan, the father-son duo behind used-car dealer Carvana, and Moderna chief executive Stephane Bancel saw similar declines in fortunes.
A native of Tianjin, China, Mr Li moved to Singapore after finishing an MBA at Stanford University and founded Sea – then called Garena – as an online games provider in 2009.

Emboldened by the global success of Free Fire, the company branched out into e-commerce. Its Shopee platform is now driving growth, accounting for more than half of the US$2.9 billion in second-quarter revenue. In late 2020, Sea won a digital-banking licence in Singapore to accelerate its push into financial technology.
But soon came a series of setbacks, just as Sea’s expansion led to mounting losses. In January, Tencent Holdings, its biggest backer, trimmed its stake and India announced the following month it would ban Free Fire. Shopee pulled out from the India market, as well as from France and Argentina, among others.
A Sea representative declined to comment.
While Mr Li was still optimistic in March, he has since changed his tone. He conceded in September that the current difficulties were not a “quickly passing storm” and are likely to persist into the medium term.
With weaker gaming demand and Shopee’s reduced reach, analysts estimate Sea’s adjusted loss before interest, taxes, depreciation and amortisation will widen to US$453.6 million in the third quarter, data compiled by Bloomberg shows. Revenue is projected to grow to US$3 billion from US$2.7 billion a year earlier.

Ark Investment Management founder Cathie Wood is among those who have exited: Three of her funds have been offloading Sea shares, with just one still holding the stock.
While the cost cuts show the company has put a new focus on profitability, investors will scrutinise Sea more closely than its regional peers because it is a more mature business, said Bloomberg Intelligence analyst Nathan Naidu.
Sea has been publicly traded since 2017, while ride-hailing and delivery firm Grab Holdings and Indonesia’s biggest tech firm, GoTo Group, listed only in the past year.
“Investors are potentially starting to look at Sea as less of a growth stock,” Mr Naidu said. “There’s a lot more pressure on Sea to achieve profits.” BLOOMBERG

 

[LITTLEREDDOT]

Sea e-commerce arm Shopee cuts jobs in third round of layoffs this year, including in Singapore​

This is at least the third round of job cuts Shopee has made this year. PHOTO: ST FILE

Adeline Tan
UPDATED

NOV 17, 2022

SINGAPORE - E-commerce giant Shopee on Monday started another round of layoffs, which affected some people in Singapore, in yet another instance of job woes as its parent Sea struggles towards profitability.
This is at least the third round of job cuts Shopee has made this year, following its most recent layoffs in September.
Unlike the previous rounds, sources told The Straits Times that the latest exercise was subdued and not many people had known about it, although there had been rumours earlier that there were plans to let people go.
Teams affected this time round included those in human resources and from learning and development, according to sources and posts on professional networking platform LinkedIn.
A LinkedIn user who worked as a multimedia artist at the firm said in a public post that she arrived in the office at around 9am and received the news when she was about to start work on one of her projects.
“That is when I got the news, we had an urgent meeting, and we were told that there will be another round of layoffs today, and some of us will be affected,” she said, adding that the news had hit her harder when she learnt that her entire team had been affected.
The past few months had been uncertain for her, and she had always felt uneasy since the previous round of layoffs.

When she read the e-mail on Monday morning, she found the situation “surreal” and “numbing”, but added that she understood that things have not been easy for companies because of the poor macroeconomic conditions.
Another LinkedIn user who works as a graphic designer at Shopee also posted on the platform that most of her colleagues were affected by the layoffs.
It is unclear how many people in Singapore have been affected by the latest job cuts.

In a statement to ST, Shopee said: “We continue to carefully review our business projects and priorities to ensure we are optimising operating efficiency, in line with our goal of achieving self-sufficiency.
“We are also working to support our affected colleagues during this transition.”
In June, Shopee laid off workers in its food delivery arm ShopeeFood and online payment ShopeePay teams in South-east Asia, and also part of its teams in Mexico, Argentina and Chile.
In September, it axed more employees, including those in Singapore. Employees were informed that cuts would be made in human resources, regional operations, marketing, product and engineering teams, The Business Times reported.
That same month, the e-commerce firm also rescinded dozens of job offers, including positions at its headquarters in Singapore.
Other tech giants, such as Meta and Twitter, have also slashed jobs in the past few months. About 11,000 workers globally were affected by the round of job cuts at Meta last Thursday.
As at 10.50pm Singapore time, Sea’s shares were trading at about US$47, down by about 4.5 per cent from its previous close. Sea is listed on the New York Stock Exchange.

 

[LITTLEREDDOT]

Tech giant Sea posts Ebitda loss of $490 million for third quarter​

The company also said it would not provide a 2023 forecast for its businesses, citing ongoing macroeconomic uncertainties. PHOTO: SEA LIMITED

Adeline Tan


NOV 15, 2022

SINGAPORE - Technology giant Sea has sunk deeper into the red, posting an adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) loss of US$358 million (S$490 million) for its third quarter ending September.
The company also said it would not provide a 2023 forecast for its businesses, citing ongoing macroeconomic uncertainties.
The group’s adjusted Ebitda loss for the third quarter surged 116 per cent compared with its US$166 million loss in the same period a year ago. Compared with the previous quarter, however, losses narrowed by about 29 per cent.
Revenues for the New-York listed company increased by about 17 per cent year on year to hit US$3.2 billion in the third quarter. It also saw a net loss of US$569 million, flat year on year but improving by about 40 per cent quarter on quarter.
In an earnings call on Tuesday, Sea’s chairman and group chief executive Forrest Li said the company’s focus on achieving self-sufficiency as soon as possible is the right strategy, even if it may result in poor growth in the interim.
Mr Li said: “We remain highly confident about the long-term growth prospects of our businesses and the market. Once we achieve self-sufficiency, we will be in a position to decide to re-accelerate growth again, in a much more efficient and long-term sustainable manner.”
He added that the target is for its e-commerce arm Shopee to break even on its adjusted Ebitda by the end of 2023.

Adjusted Ebitda losses for Shopee narrowed significantly in the third quarter to US$496 million, improving by 28 per cent year on year.
The improvement in Shopee’s adjusted Ebitda was driven by strong topline growth as well as improvement in cost efficiencies, said Sea.
In recent months, Sea has implemented a slew of cost-cutting measures, including workforce layoffs and curbed company expenses. Its top management will also forgo salaries to help the company reach self-sufficiency.
Shopee has gone through at least three rounds of layoffs in 2022, with the latest starting on Monday.
The recent cuts in headcount were related mostly to certain initiatives being given less importance, said Sea’s group chief corporate officer Wang Yanjun.
She added that the savings from these actions, among others, may become more visible in the next few quarters.
Meanwhile, adjusted Ebitda for Sea’s digital entertainment arm, Garena, fell to US$290 million for the third quarter, down from US$334 million in the previous quarter. It was also down by about 60 per cent year on year.
Digital financial services arm SeaMoney recorded an adjusted Ebitda loss of US$68 million, improving by about 57 per cent year on year and 40 per cent from the previous quarter.
Sea said: “The improvement was predominantly driven by more targeted sales and marketing spending for the mobile wallet business, and our credit business maintaining its healthy profitability while generating cash for the group.”

 

[LITTLEREDDOT]

Sea posts $12.4 billion surge after cost-cutting push​

Sea, South-east Asia’s largest tech firm, continues to adjust to a fallout in demand for its core games operations. PHOTO: BLOOMBERG


NOV 16, 2022

NEW YORK – Sea shares shot up 36 per cent in its biggest single-day jump after the gaming and e-commerce company posted a smaller-than-expected quarterly loss, helped by drastic cost cuts.
Sea has cut about 7,000 jobs, or roughly 10 per cent of its workforce, in the past six months, according to a person familiar with the matter. It has also closed down operations in India and some European and Latin American markets to trim costs.
Headcount reduction is an “ongoing exercise”, said chief corporate officer Wang Yanjun during a conference call, signalling more cuts may be in the works.
While growth is decelerating, the pathway to profitability for Sea’s e-commerce arm Shopee is “becoming clear”, said Morgan Stanley analyst Mark Goodridge in a note to investors.
The company has said that it will “work towards” breaking even for Shopee on an adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) basis by the end of 2023.
Sea’s adjusted Ebitda loss widened to US$357.7 million (S$490 million) from US$165.5 million a year ago, the company said on Tuesday. Analysts had estimated US$457.4 million on average. Net loss stood at US$569 million, little changed from 2021. Sales at Shopee climbed 32 per cent to US$1.9 billion.
The results prompted CGS-CIMB analyst Ong Khang Chuen to raise his recommendation on the company to “add” from “hold”.

Sea’s market valuation climbed to US$35 billion after the report, adding US$9 billion (S$12 billion) in a single day. That is still far below its peak valuation of more than US$200 billion in 2021.
South-east Asia’s largest tech firm continues to adjust to a fallout in demand for its core games operations. Revenue at its digital-entertainment arm Garena tumbled 19 per cent in its biggest year-on-year drop ever, as hit mobile game Free Fire’s momentum wanes.
Sea cut its full-year forecast for Garena’s bookings to between US$2.6 billion and US$2.8 billion, from its previous guidance of US$2.9 billion to US$3.1 billion, set to be its first annual decline. It said it is not providing financial guidance for 2023.
The decision of management to not provide future guidance will “no doubt” add more uncertainty on future forecast, said Citigroup analyst Alicia Yap in a note to investors. BLOOMBERG

 

[LITTLEREDDOT]

Grab’s Q3 net loss narrows to $449m as revenue more than doubles​

On the back of the positive showing, Grab has lifted its FY2022 revenue guidance to between US$1.32 billion and US$1.35 billion. PHOTO: ST FILE
Sharanya Pillai

NOV 16, 2022


SINGAPORE - South-east Asian on-demand player Grab narrowed its net loss to US$327 million (S$449 million) for the third quarter ended September, an improvement from the US$970 million loss in 2021. This was mainly due to the elimination of non-cash interest expenses from Grab’s convertible redeemable preference shares upon its December 2021 listing.
Revenue for the company grew 143 per cent to US$382 million in the third quarter, lifted by a doubling in mobility revenue and 250 per cent growth in deliveries’ revenue year on year. This came as gross merchandise value (GMV) was up 26 per cent to US$5.1 billion.
With this set of earnings, Grab’s deliveries segment has hit positive adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for the first time, three quarters ahead of previous guidance. This was possible due to the optimisation of incentive spend and contributions from its Malaysian retail chain, Jaya Grocer.
The food-delivery sub-segment also turned adjusted-Ebitda positive in the third quarter, two quarters ahead of previous guidance.
On the back of the positive showing, Grab has lifted its FY2022 revenue guidance to between US$1.32 billion and US$1.35 billion, up from the US$1.25 billion to US$1.3 billion range. It has also revised its second-half 2022 adjusted Ebitda guidance to negative US$315 million, an improvement from negative US$380 million.
Under its cash-preservation strategy, Grab will repurchase up to US$750 million of an outstanding US$2 billion term loan. The facility was issued in January 2021 and has a tenor of five years.
The repurchase is expected to create significant interest expense savings, Grab said, adding that it had US$5.3 billion in net cash liquidity as at end-September, providing an “ample net cash buffer”. The company expects to hit group-adjusted Ebitda break-even in the second half of 2024.

The continued easing of Covid-19 curbs, as well as efforts to improve driver supply, lifted Grab’s third-quarter mobility revenue up 101 per cent to US$176 million. The segment’s adjusted Ebitda was likewise up 112 per cent to US$135 million. Driver numbers are, however, still short of pre-pandemic levels, with the monthly average number of active drivers in the third quarter at 80 per cent of that of the fourth quarter of 2019.
In the deliveries segment, the focus on higher-quality GMV transactions and contributions from Jaya Grocer sent revenue up 250 per cent to US$171 million. Grab also posted a commission rate of 21.2 per cent, up from 18.2 per cent in 2021. This brought the segment into the black, with an adjusted Ebitda of US$9 million, in contrast to the US$22 million adjusted Ebitda loss in 2021.
The financial services segment, however, sank deeper into the red, with a US$104 million adjusted Ebitda loss, wider than the year-ago US$76 million adjusted Ebitda loss. This came despite revenue having risen 44 per cent to US$20 million. The bottom line was weighed down by expenses in digibank operations.
Nevertheless, Grab highlighted that its loan disbursements are up 121 per cent year on year. The number of active drivers with a loan from Grab has more than doubled, while non-performing loans are in “low single digits”.

Revenue for the company’s enterprise and new initiatives unit, which includes its nascent GrabMaps business, more than doubled to US$15 million, driven by contributions from advertising services. The segment’s adjusted Ebitda was US$8 million, up from US$1 million in 2021.
Grab co-founder Anthony Tan said the third-quarter results show the company’s ability to drive growth and profitability at the same time, with deliveries’ break-even coming earlier than expected. “We accomplished this by staying laser-focused on our cost structure and incentives, while innovating on services that increase synergies within our super app ecosystem to promote transaction frequency, user retention and engagement,” he said. THE BUSINESS TIMES

 

[LITTLEREDDOT]

Indonesia’s GoTo cuts 1,300 jobs, including in S’pore, as tech layoffs deepen​

GoTo Group CEO Andre Soelistyo during an IPO event in Jakarta on March 15, 2022. PHOTO: AFP

Tay Hong Yi

NOV 18, 2022

SINGAPORE – Indonesian tech conglomerate GoTo Group will lay off 1,300 employees, including in Singapore, in a bid to curb costs and reach financial self-sufficiency more quickly in a persistently volatile global economic environment.
The cuts amount to 12 per cent of GoTo’s workforce, said the firm, a major ride-hailing, e-commerce and fintech player in South-east Asia, in a statement on Friday.
The company declined to disclose how many were laid off in Singapore and its latest headcount here.
GoTo had nearly 300 employees in Singapore as at April, with the bulk of them running ride-hailing and food delivery app Gojek’s operations here, according to The Business Times.
The group, formed through a merger of ride-hailing company Gojek and e-commerce firm Tokopedia in May 2021, has nearly 10,000 permanent employees as at June 30, according to its second-quarter results for 2022.
Those affected would be notified right away, added GoTo, which announced the exercise in a meeting for all employees on Friday chaired by chief executive Andre Soelistyo.
“They will be provided with a package that goes beyond what is mandatory and has been developed to not just help them financially, but also to help them with their job search,” said the company.

They will receive at least one additional month of salary beyond what is required by law, as well as payment in lieu of their notice period, it added.
Affected employees will also get to keep their laptops, access online training resources, and be added to an alumni directory shared with GoTo’s business network.
Psychological, financial and career counselling will also be provided to those who need it, until the end of May 2023, said the firm.

In a memo sent to employees and shared with The Straits Times, Mr Soelistyo wrote that inflation, geopolitical uncertainties and the pall cast by the Covid-19 pandemic – all factors beyond the firm’s control – will continue to linger.
This means the firm will need to manage its costs and make sure its business remains agile while accelerating its path to financial independence from external capital, he added.
The company went public in April with a US$1.1 billion (S$1.5 billion) stock sale, in one of the year’s biggest initial public offerings. But share prices have since slid almost 40 per cent, with flagging investor confidence in the tech sector.
GoTo said it has saved around 800 billion rupiah (S$70 million) in costs in the first half of 2022 by improving efficiency in technology, marketing and outsourcing.
But the job cuts were still needed to ensure the company is equipped to navigate challenges ahead, it added.
GoTo’s exercise is the latest in a series of cuts from tech giants such as Meta and Twitter, made amid a dimmer global outlook than expected after a Covid-19 pandemic-driven digitalisation boom.
Shares of GoTo rose 2.8 per cent on Friday after it announced the job cuts.
GoTo is set to announce its third-quarter results next Monday, hot on the heels of Friday’s layoffs, a move to narrow the firm’s losses from the 4.14 trillion rupiah adjusted loss before interest, taxes, depreciation and amortisation it reported in August for the second quarter of 2022.
GoTo will focus on its core offerings of on-demand, e-commerce and financial technology services in its accelerated push towards financial sustainability, the company added.

 

[LITTLEREDDOT]

PropertyGuru posts $7.4m loss in Q3 after higher expenses​

Singapore remains PropertyGuru's largest market, contributing $18.1 million of the group’s revenue. ST PHOTO

Nov 21, 2022

SINGAPORE – Online property portal PropertyGuru on Monday posted a net loss of $7.4 million for the quarter ended Sept 30, a reversal from last quarter’s profit-making results.
This comes as higher expenses weighed on the group’s bottom line, even though it reported a net profit of $3.8 million last quarter, the first time since being listed on the New York Stock Exchange in March.
But this third quarter’s loss is still an improvement from 2021, which saw a net loss of $9.6 million. Revenue for the quarter came in at $34.6 million, 47 per cent higher than the $23.5 million a year ago.
This was supported by consistent growth in all markets and segments on PropertyGuru’s business. Revenue captured from its Vietnamese market showed the most significant growth as its marketplaces revenue – which excludes revenue from its fintech and data services business – nearly trebled from $2.4 million to $6.1 million in the third quarter. Singapore, however, remains its largest market, with its marketplaces contributing $18.1 million to the group’s revenue.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) was positive at $5.7 million for the quarter, while loss per share for the quarter stood at five cents.
The group anticipates a full-year revenue of between $134 million and $138 million as a result of greater fiscal policy uncertainty stemming from rising global inflationary pressures, near-term actions by the Vietnamese government to limit access to credit, and the recent Malaysian election.
It added that the Singapore property market remains strong, and that it expects an adjusted Ebitda of between $8 million and $12 million for the financial year 2022.

“We remain encouraged by our market penetration as we enter the final quarter of 2022, although we understand that near-term market headwinds resulting from global inflationary pressures and subsequent governmental counteractions will need to be closely monitored,” said Mr Joe Dische, chief financial officer of PropertyGuru. THE BUSINESS TIMES

 

[Leckmichamarsch]

MAS HAS CECA
AS CHIEF FINTECH OFFICER

 

[LITTLEREDDOT]

Carousell cuts 10% of total headcount, including about 50 job roles in S’pore​

All affected regular employees will be paid a minimum of three months’ salary, among other measures. PHOTO: ST FILE

Tay Hong Yi


DEC 2, 2022

SINGAPORE – Home-grown online marketplace Carousell cut 110 jobs on Thursday, or 10 per cent of the firm’s total headcount, as part of efforts to rein in costs amid dimmed growth prospects.
Only some business units would be affected, co-founder and chief executive Quek Siu Rui said on Thursday in an e-mail sent to all employees and uploaded on the group’s media portal.
He did not specify the affected units or the number of workers laid off in Singapore.
However, a spokesman for the firm told The Straits Times that about 50 of the affected roles were based in Singapore.
The remaining cuts were spread across the seven other regional markets that the firm has a presence in, including Malaysia and Indonesia.
A source told ST that the cuts hit several units in Singapore, including performance marketing.
Those affected were informed via an e-mail that invited them to a meeting with a team leader and a human resources business partner, said Mr Quek.

“I am deeply sorry for this outcome and I take responsibility for the decisions that have led us here,” he added.
All affected regular employees will be paid a minimum of three months’ salary, receive cash in lieu of their remaining paid time off and have their medical benefits extended till June 30, 2023, among other measures, he said.
Those with a tenure of between six months and a year, and who hold employee stock options, will have the vesting for 25 per cent of their stocks accelerated.

Mr Quek also said the company will hold a meeting on refinements to its strategy, built on what it has learnt from the current exercise.
Eager to reignite growth in its core classifieds business after Covid-19 lockdowns eased, as well as ramp up new initiatives to make transactions more convenient and trusted, the firm created more teams and hired new employees, he said in the e-mail.
“Looking back, I had made the following critical mistakes: First, I was too optimistic about the pace of our impact versus our increase in investments.
“The reality is that we were quick to grow our expenses and hire, but the returns took longer than expected.
“Second, while it is easy to blame market conditions, I also underestimated the impact of growing our team size too quickly – larger teams lead to lack of clarity in decision-making and the additional coordination required to get things done.”


Mr Quek also said that high inflation, geopolitical risks and supply chain disruptions continue to challenge the global economy and dampen growth expectations, with a broad-based slowdown expected in 2023.
He said leaders in the company, including himself, had spent the last few months finding ways to cut as much cost as possible without affecting workers, such as moving to an office with significantly lower rent and having voluntary pay cuts.
However, the moves were “far from enough”, he said.
“As we do not know when market conditions will improve, it is only prudent that we get to profitability as a group as quickly as possible, to be masters of our destiny and build an enduring company,” he said.
“It is important to act swiftly, course correct and rightsize our investment levels to better align with this new reality.”
In a statement, the Creative Media and Publishing Union (CMPU), which represents e-commerce employees in Singapore, said it is working closely with Carousell to ensure that the retrenchment exercise is fair, transparent and responsible.
CMPU, which is affiliated to the National Trades Union Congress, added that Carousell and itself are working with NTUC’s Employment and Employability Institute to provide employment assistance, including career coaching and job-matching services, for affected employees.
“The union stands in solidarity with the affected employees and its immediate priority is to continue working closely with Carousell to ensure that these workers receive the necessary assistance and support,” CMPU said.
The job cuts at Carousell follow a spate of high-profile layoffs at major tech employers, including Sea’s Shopee, Meta and Stripe, as the global economic outlook darkens from when expansion plans were set in motion.
The Carousell group reached unicorn status after it raised US$100 million (S$135 million) at a US$1.1 billion valuation in September 2021.
Carousell saw revenue triple in 2020 but growth slowed last year to 21.8 per cent, with turnover at US$49.5 million, online tech publication Tech in Asia reported on Thursday.
Still, the privately held company narrowed pre-tax losses by 33.5 per cent to US$43.9 million as it slashed expenses by 14.4 per cent to US$95.4 million.

 

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Two years on, Singapore’s digital banks face long road to success​

GXS CEO Charles Wong says a key focus next year is tackling pain points which hinder Singaporeans from accessing credit. PHOTO: LIANHE ZAOBAO

Prisca Ang

DEC 11, 2022


SINGAPORE – Singapore’s digital banks are mostly up and running but newcomers face plenty of challenges in trying to establish a secure foothold in the financial sector, say observers.
Such banks will have to overcome hurdles such as fierce competition from incumbent players and customers’ resistance to change.
Three contenders have already thrown their hat into the ring, with a fourth seemingly putting its launch on hold.
GXS Bank, Anext Bank and Green Link Digital Bank opened their virtual doors for business this year, about two years after the Monetary Authority of Singapore (MAS) gave the green light to the digital banks in a move to liberalise the financial industry. These banks do not have physical branches and their customers bank purely online.
MAS expected the banks to start operations from early 2022 and cater especially to underserved businesses and individuals. These include firms which lack data for lenders to assess their creditworthiness and self-employed people facing cash flow issues, said observers and players.
GXS, an entity backed by Grab and Singtel, is a digital full bank and can serve retail and corporate customers. It launched a savings account in August that is by invitation only.
The Straits Times understands that part of the reason for this is a restricted phase imposed by MAS that aims to minimise the impact of initial operational issues and allow the banks to fine-tune their business before catering to the broader public.

These banks must cap their aggregate deposits at $50 million – excluding wholesale deposits if they have a paid-up capital of at least $100 million – and restrict their depositor base in their first one to two years of operation.
GXS chief executive Charles Wong told ST that one-third of the bank’s invitation list is reserved for consumers such as platform workers, home business owners and those in the early stages of their careers. “The remaining two-thirds are an equal split between employees and customers of our ecosystem partners, Grab and Singtel,” he added.
“Another key focus for us next year is tackling the pain points which hinder Singaporeans, especially those in the underserved segment, from accessing credit.”


Meanwhile, tech giant Sea has largely been quiet about its Singapore digital bank MariBank. It recently said its digibanks are still in “a very nascent stage” – it has a licence in Malaysia under a consortium and its e-commerce platform Shopee operates SeaBank in Indonesia.
“We have started some pilot programmes for MariBank, where we’ve opened up limited features to employees,” said group chief corporate officer Yanjun Wang at Sea’s latest earnings call.
The company has reportedly cut about 10 per cent of its workforce in the past six months and shut down operations in several markets to trim costs.

DBS Group Research analyst Lim Rui Wen noted that traditional banks have increased interest rates of their flagship savings accounts and fixed deposits, and there are other high-yielding alternative instruments in the market.
Digital banks also have to deal with competition from other players, including Trust Bank, which operates only online but does not compete on an equal footing with the other new entrants. It is backed by heavyweights Standard Chartered and FairPrice Group and holds a full bank licence that allows it to function in a similar way to traditional lenders.
Trust has launched products such as a savings account and credit card, and gained over 300,000 users in its first two months. Its perks such as free rice have helped to attract customers, with more than 200,000 online reward redemptions in the same period.
Ms Lim said digital banks will have to go beyond offering promotional rebates and high deposit rates to attract and retain customers.
The tech sector’s headwinds might also affect them in terms of potential funding, with the banks being pressed for a faster path to profitability by their investors, she added.
Mr Anton Ruddenklau, partner and head of financial services at KPMG in Singapore, said customers are generally reluctant to switch from their existing banks to a new player for activities such as making deposits and taking loans.
This is why digital banks globally have found it hard to turn a profit even as they gained consumer awareness, he said, adding: “People leave most of the profitable products with their existing bank and they just use (the digital bank) as a glorified e-wallet or credit card.”

It takes around seven years for the world’s top 10 per cent of digital banks to break even, according to KPMG’s research.
Singapore’s small market does not help either, said Mr Ruddenklau. But he added that digital banks will use Singapore to establish themselves and reach their real prize of South-east Asia, where there are more customers and opportunities to cater to different segments such as mass retail and affluent clients.
Mr Paul Sommerin, partner and Asia-Pacific digital and technology leader at management consultancy Capco, said new entrants tend to want to launch the perfect bank when they actually need to build a reputation and trust.
“Overall, a disciplined approach that focuses just on building what people will buy is a key priority,” he said.
Singapore is well-banked, but there is a gap around mature and decentralised financial products, especially for the fast-growing small and medium-sized enterprise (SME) market, he added.
Digital wholesale bank Anext started offering a dual-currency deposit account in August that gives businesses daily interest. ST understands that about 70 per cent of the account’s customers are micro businesses and the rest are small enterprises.
The bank has also launched a programme where partners such as e-commerce marketplaces and other fintech firms can offer Anext’s financial services on their platforms to SME clients with cross-border operations.

Green Link Digital Bank likewise offers businesses products such as fixed deposits, term loans and supply chain financing.
Unlike digital full banks, these banks do not have to go through a restricted phase where there is a cap on aggregate deposits.
Mr Rohit Narang, managing director for Asia-Pacific at cross-border payments company Currencycloud, said players can reach the market faster by integrating banking services offered by others into their own platforms.
“This means avoiding the hefty cost of developing apps in-house and freeing up resources for more pressing tasks, like enhancing the customer experience.”
Digital banks can also seize opportunities in areas such as supply chain payments and buy now, pay later options on marketplaces for businesses, noted Mr Narang.
“A digital bank anchoring the payment value chain is a confidence booster for international buyers and sellers as it gives them greater peace of mind about the legitimacy of their e-transactions.”

 

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A difficult game: Why tech giant Sea’s cost-cutting casualties included Singapore football players​

Rising interest rates and the need for tech firms to conserve cash have been a reality check​

David Kuo

The Lion City Sailors’ training facility in Mattar Road. The club announced the departure of six highly paid players a few weeks ago. ST PHOTO: DESMOND WEE

DEC 9, 2022

The shock departure of players from Singapore football club Lion City Sailors, and Singapore-based online gaming and e-commerce company Sea laying off 7,000 workers – what do these two events have in common? They show the effect of higher interest rates and a global slowdown hitting home, even in resilient Singapore.
Sea is the parent company of Shopee, the largest online shopping platform in South-east Asia, and the maker of popular games like Free Fire. It was founded by Singapore billionaire Forrest Li, who went on to buy Lion City Sailors, the Singapore Premier League’s first privatised club.
Just a few weeks ago, the club announced the departure of six highly paid players, including Gabriel Quak, Faris Ramli, Shahdan Sulaiman and Hassan Sunny, who have a laudable combined tally of 289 caps for the national team.
The move follows a massive cost-cutting drive Sea has embarked on over the past six months. It has laid off some 7,000 staff spanning many business functions in Singapore, reduced expenses, and shut operations in European and Latin American markets.
In theory, being a footballer should be one of the most secure occupations during a downturn and furthest removed from the tech industry’s woes. But the series of events only goes to show that nobody’s job is safe in an economic downturn. Not when the tentacles of technology giants like Sea have reached far and wide into the most unexpected places in their earlier expansionary phase, when money was cheap and a positive reputation arising from supporting the local football scene could be secured for a pretty penny.
A global economic storm of epic proportions is brewing around the world as supply chain shocks and surging demand have pushed up prices of goods and services, and a slew of layoffs threatens to unleash a wave of unemployment. Yet here in Singapore, real median wages have grown by 2.1 per cent. Employment has ticked up in the resident workforce.

The optics of keeping footballers but firing techies​

Indeed, in the case of the hapless Lion City Sailors and Sea, this might be as much a case of optics as it is about hard dollars and cents.

It would be incongruous for Mr Li – Sea’s chief executive, whose wealth has fallen from US$22 billion (S$30 billion) in 2021 to just over US$3 billion as the company’s shares fell 87 per cent from their peak – to keep bankrolling his beloved football club on the one hand while dishing out severance packages to employees at his tech enterprise on the other. Sea would not only appear insensitive to staff made redundant, but also have its business priorities called into question by shareholders.
But where the cull at Lion City Sailors arising from Sea’s belt-tightening measures is concerned, the inconvenient question must be asked: Did Sea really need to be that brutal and thorough in getting the company back in the black?
Sure, the alarm bells of a rougher ride ahead for businesses have been sounded. Central banks around the world – with the notable exception of the Bank of Japan and the People’s Bank of China – are in monetary tightening mode. They are hoisting interest rates and shrinking their balance sheets through quantitative tightening. The United States Federal Reserve is committed to withdrawing US$95 billion a month throughout 2023. In other words, more than US$1 trillion will disappear from the global economy next year.

On the other hand, amid all this, Sea still has about US$10 billion of cash on its balance sheet as at the last count. How much cash can it possibly need?
The answer? It needs much more. In its annual filing to the US Securities and Exchange Commission, Sea’s cash flow from operations in 2021 was negative to the tune of US$2 billion. Essentially, it might have only five years of available cash to keep its business afloat if it continues to burn cash at this rate.
Having enough to ride out five years might seem like a decently sized war chest. But let’s not forget that after the bursting of the dot.com bubble in 2000, it took nearly a decade for the telecoms, media and technology, or TMT, sector to recover. It could take just as long this time, if not longer, for investors to rediscover their once-insatiable appetite for growth at any cost.

Why the need for a cash hoard?​

Many seasoned investors believe that cash is king for good reason. Cash is one of the most valuable assets to have in times of uncertainty. Without cash, a business cannot pay its wages, rent, suppliers – or the taxman.
Cash is also an especially reassuring buffer for an e-commerce and gaming company to have during a period of volatility when many once-reliable revenue streams and giant cash cows could come under assault, as consumer behaviours change and people curb spending. In this storm, cash provides the business with security in meeting financial commitments and providing affirmation to shareholders it can weather this downturn without going bust.

It would be incongruous for Sea CEO Forrest Li to keep bankrolling his beloved football club while dishing out severance packages to his tech employees. PHOTO: The BUSINESS TIMES
Beyond being a vital lifeline, a strong balance sheet packed with cash can be a resource multiplier, allowing Sea the financial flexibility to take advantage of beaten-down, undervalued stocks and snap up new business opportunities.
But how much cash should a company hold before it’s punished for not putting that capital to better use? That really depends on its sector. Experienced companies in cyclical sectors such as property and commodities should have enough cash on their balance sheets to cope with predictable downturns.
A technology company, meanwhile, should try to hold enough cash to survive at least six months of cash burn. Many tech start-ups like Grab and Gojek are still unprofitable and very cash-hungry. But six months’ worth of cash might be insufficient if this bearish market persists. So isn’t it better to be safe than sorry?
Plus, it’s one thing for flavour-of-the-year start-ups to burn through cash when the global economy is awash with liquidity and investors have the risk appetite to stomach losses in exchange for some lofty, long-term and remote objective of market dominance. But not when money is tight and investors might be tempted to cash out, the way Tencent, Sea’s biggest backer, did in January when it trimmed its stake.
Consequently, the problem is that cash burned today is increasingly difficult to replenish tomorrow, whether through selling more shares or issuing debt when interest rates are high and stock markets are volatile. Better then, as Sea has decided, to stretch every dollar on hand.

Times are rough​

That leaves cost-cutting as the only way to stabilise the ship and rein in spending for the next little while – whether this involves retrenching staff, mothballing cash-hungry projects, slaughtering sacred cows or jettisoning vanity projects like bankrolling a beloved soccer club.
Sea seems to understand that the coming onslaught will be a brutal test in which only the fittest will survive. Full marks then for the company. It has taken the bull by the horns, with three rounds of job cuts. It has axed staff in supporting functions like human resources and learning and development – disciplining business units that are cost centres while being more careful about touching profit-generating departments.
But what this means is that other Sea divisions not generating profit and producing significant cash flow could be in peril.
The trouble is, the company has only one profitable business segment: Garena. The video-game publisher made US$2.5 billion in operating profit in 2021. That division has helped to prop up Sea’s unprofitable e-commerce and fintech businesses. Those two divisions, by comparison, made operating losses of US$2.76 billion and US$640 million in 2021, respectively.
The question is whether Sea really needs to be that brutal with its restructuring. After all, it still had US$10.2 billion of cash on its balance sheet at the end of its 2021 financial year. However, by the end of the third quarter in 2022, that cash pile had shrunk to US$6.2 billion. It had burned through US$4 billion in nine months. That is a lot of cash going up in smoke. It can’t afford to carry on as before.
Garena, its profit engine, is stalling as fewer people are playing video games in a post-pandemic world. Additionally, an unexpected ban on its battle royale game, Free Fire, in India, which is one of its fastest-growing markets, has put a pause on growth.
Consequently, Sea has set out a clear strategy to forestall the coming financial storm by shifting away from expansion into consolidation mode. Investors will expect more out of this South-east Asia tech darling, the world’s best-performing stock in 2020, given its maturity relative to younger peers like Grab and Gojek, which listed only in the past year.
The unfortunate result is the long list of casualties, hailing from the unlikeliest places like Lion City Sailors.
There are many who say a recession will not arrive on Singapore’s shores in 2023 even as the city state battles a long period of inflation, high interest rates and slower growth. But as Sea’s decisions show, the body count is piling up.
And for tech companies reading the tea leaves of this latest saga to discern wisdom, they would do well to learn that adopting a Pollyanna attitude will not help companies get through the downturn. But enough cash in the bank could.

• David Kuo is co-founder of online magazine The Smart Investor.

 

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Grab to implement some hiring, salary freezes amid uncertain economic climate: CEO in memo​

Grab has been trying to stem losses by focusing on higher-paying customers and lowering spending on incentives. PHOTO: ST FILE


DEC 15, 2022

SINGAPORE – Grab Holdings, South-east Asia’s biggest ride-hailing and food delivery company, is rolling out cost-cutting measures to cope with an uncertain macroeconomic situation, the company’s chief executive told staff in a memo.
The measures include a freeze on most hirings, salary freezes for senior managers and cuts in travel and expense budgets, according to the memo, whose contents were confirmed by a company spokesman.
“None of these decisions were easy, but are meant to help us get leaner and fitter, as we accelerate even faster towards sustainable, profitable growth,” chief executive Anthony Tan said in the memo, which was sent to staff on Wednesday and was viewed by Reuters. “More so than ever, all Grabbers need to adopt a frugal and prudent mindset as we prepare for 2023.”
In November, Grab raised its 2022 revenue forecast, reported a narrower adjusted operating loss and said its food and grocery delivery business broke even three quarters ahead of the company’s expectations.
Mr Tan said in the memo that South-east Asia has not, and will not, be spared rising prices and interest rates, and the consequent effects on growth.
Grab’s new measures “will also help us avert knee-jerk reactions that may interrupt our plans down the road,” he said.
Decade-old Grab, a household name in eight South-east Asian countries, has been trying to stem losses by focusing on higher-paying customers and lowering spending on incentives. Singapore-based Grab had about 8,800 staff at the end of 2021.

In September, Grab’s chief operating officer, Alex Hungate, told Reuters that the company did not envision having to undertake mass layoffs as some rivals, including Uber have done. Instead, Mr Hungate said, the company would selectively hire, while reining in its financial-services ambitions.
The memo circulated on Wednesday said Grab would “freeze the majority of current open job requisitions which are not in offer stage”. Mr Tan wrote that requests to backfill and fill critical roles would need to be approved.
Certain leaders at the company would not be eligible for raises in their upcoming reviews, while the travel and expense budget will be reduced by another 20 per cent from the last guidance, according to the memo.
Grab has more than five million registered drivers and more than two million merchants on its platform. It caught global attention in 2018 when it acquired Uber’s South-east Asian business after a costly five-year battle.
Mr Tan said the company has been cautious with how it has spent money over the past two years, streamlining some businesses, tapering down incentives as well as slowing down hiring. These measures had helped Grab get closer to its profitability goals, he said. REUTERS

 

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Grab’s cost-cutting moves no surprise as firm strives towards profitability: Analysts​

Grab is rolling out cost-cutting measures to cope with an uncertain macroeconomic situation. PHOTO: LIANHE ZAOBAO

Adeline Tan

Dec 18, 2022

SINGAPORE – The recent cost-cutting measures by Grab are not a surprise and will help the ride-hailing and food delivery giant move closer to its break-even target amid a challenging macroeconomic climate, analysts said.
The South-east Asian technology company, which is aiming to reach adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) break-even for the group in the second half of 2024, said last Thursday that it would be cutting costs amid rising prices and interest rates, and their impacts on the company’s growth.
In a memo to staff seen by Reuters, Grab’s co-founder and chief executive Anthony Tan said there would be a pause on most hiring, salary freezes for senior managers, and also cuts in travel and expense budgets.
Mr Nirgunan Tiruchelvam, head of consumer and Internet at Aletheia Capital, said this may be a move to avoid reaching the point of having to lay off workers, the path that many other tech companies have gone down in recent months.
He said: “Grab is taking action on cost, but at the same time, trying to protect the jobs of its employees. So it is trying to balance the need to generate lower costs and at the same time maintain the headcount levels that it has.”
Of the three areas that Grab is operating in – deliveries, mobility and financial services – the financial services segment is the worst-performing, recording an adjusted Ebitda loss of US$104 million (S$141 million).
For its deliveries segment, its adjusted Ebitda was positive at US$9 million, and the best performer was its mobility segment, which saw a positive Ebitda of US$135 million.


One reason why Grab may not be doing too well in its financial services segment, which includes its payment system GrabPay, could be because the space is highly competitive, said senior equity analyst Kai Wang of financial services firm Morningstar.
He said: “The digital payments and fintech space is also pretty saturated across Asia. Grab can do user acquisition from its platform, but outside of that, not only are you competing against other fintech or commerce platforms, but you have to also compete against the brick-and-mortar banks that have an online set-up.”
The decision to reduce spending now is also wise, with money being a lot more expensive given high interest rates, and with break-even targets on the line, he added.
Mr Rolf Bulk, an analyst at New Street Research, said the cost-cutting measures are no surprise, given that similar actions have been taken by other technology companies.
In the past, these gig-economy companies were primarily focused on capturing market share through aggressive promotions. But now, they are reducing incentive spending and focusing on achieving profitability, he said.
Mr Venugopal Garre, a tech equity analyst at research and brokerage firm Bernstein, said Grab’s recent moves can be seen as a positive step and investors do not need to be too concerned.

The decision to cut costs is a move towards profitability and should not be used to judge the company’s growth prospects, which are still promising, given its market dominance, he said.
Grab operates in more than 480 cities across eight countries in South-east Asia, including Singapore, Indonesia and Thailand.
Mr Garre added: “Grab is an unprofitable company overall and hence it is essential to control costs, reduce cash burn, and head to profitability. This is a prudent step, given the focus is on areas of operations that Grab has adequate staff for.”

 

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Singapore’s Sea freezes salaries, cuts bonuses as tougher 2023 looms​

The gaming and online-retail giant has lost some 77 per cent of its value this year on questions about its prospects in an era of rising interest rates and intensifying competition. REUTERS

Dec 22, 2022


SINGAPORE – Sea Ltd. is freezing salaries for most staff and paying out lower bonuses this year, bracing for what founder Forrest Li warned could be a worsening global economic environment in 2023.
The Asian internet giant needs to focus on profitability after a difficult 2022, the chief executive officer announced in an internal memo this week seen by Bloomberg News. Li warned that, with the war in Ukraine and inflation around the world, 2023 may prove to be “even more challenging.” It’s doing away with salary increases for staff who aren’t promoted, Li added.
“I want to assure you we will be starting 2023 on stable footing,” Li wrote. “Most of the big changes we need to make are complete.”
The gaming and online-retail giant has lost some 77 per cent of its value this year on questions about its prospects in an era of rising interest rates and intensifying competition. A representative for Sea declined to comment on Li’s memo.
Sea cut about 7,000 jobs, or roughly 10 per cent of its workforce, as it fought to stem ballooning losses and win back investors. It’s also shuttered e-commerce operations in some European and Latin American markets and said it would reduce expenses to cope.
In November, the company announced a smaller than expected quarterly loss, spurring hopes that measures to curtail expenses will help it achieve profitability even as growth slows.
“I know such news can be hard to bear, especially around the holiday season,” Li wrote. “These are temporary but necessary measures to help us build toward a bigger, brighter future.” BLOOMBERG

 

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Singapore tech stock rout intensifies with $148 billion wipeout in 2022​

Sea shares have plunged 78 per cent in 2022, while ride-hailing firm Grab Holdings has more than halved. PHOTOS: MARK CHEONG, SEA LIMITED

Dec 28, 2022

SINGAPORE - Investors betting on Singapore’s two largest Internet companies are staring down hefty losses as rising interest rates and recession risks extended a tech rout that wiped out US$110 billion (S$148 billion) from their market capitalisation.
E-commerce platform operator Sea has plunged 78 per cent in 2022, while ride-hailing firm Grab Holdings has more than halved. The two companies, both listed in New York, are the largest tech firms in Singapore by market value.
They were added to the MSCI Singapore Index with much fanfare in the past two years when there was still appetite for tech stocks in the region. But higher interest rates and a slowing economy could spell another challenging year ahead as investors question their ability to turn a profit.
The MSCI Singapore gauge has lagged the Straits Times Index – which does not count Grab and Sea as its members – by about 20 percentage points in 2022. The underperformance was largely due to Sea’s slide and the stock could continue to be a major driver of the dispersion between the indexes in 2023, according to Mr Brian Freitas, an analyst who publishes on research website Smartkarma.
The MSCI Singapore Index is down 14 per cent in 2022, with Sea holding the fourth-largest weighting at 8.4 per cent and Grab at about 2 per cent In contrast; the Straits Times Index – dominated by old-economy sectors such as banks and property – is up about 5 per cent.
The outlook for the Singapore-based tech firms remains dim as worries about a recession have triggered layoffs, closures of business units and other measures to rein in expenses across the tech industry. Still, the “recent cost-cutting measures should help both companies weather any storms better,” Mr Freitas said.
Last week, Sea founder Forrest Li announced in an internal memo the company was freezing salaries for most staff and paying out lower bonuses this year, bracing for a worsening global economic environment in 2023. Grab will also implement measures including hiring and salary freeze, Reuters reported this month, citing a staff memo.

Investors have also punished other loss-making tech stocks in the region with Indonesia’s GoTo Group hitting record lows over the past month. Meanwhile, start-ups in India have slumped amid valuation concerns. BLOOMBERG