Sea’s Fourth Quarter 2022 Results

2023-3-7

Dear Sailors,

Earlier today we reported our results for the fourth quarter of 2022, a summary of which is attached.

Six months ago, we embarked on a journey towards self-sufficiency. It has been a painful time, requiring us to live with many difficult decisions as we quickly shifted gears, trying to turn our ship amid choppy waters.

Today, I am glad to share that we are starting to see the positive results of these hardships. Our revenue, gross profit, and net income have all increased quarter-on-quarter, and our cash balance, excluding cash consideration used to repurchase outstanding convertible bonds, has increased from last quarter.

Most significantly, we reported positive net income for the first time as a public company. Moreover, all three businesses have each become profitable this quarter.

The first profitable quarter is a landmark milestone for any public company, and one I’m incredibly proud of you all for achieving – not least because you have done so amid a very difficult external environment!

I know these results have come about only with significant discomfort and sacrifice. The many big moves we had to make created uncertainty, worry, and frustration for you. I know the leadership team has asked for a lot from you over these past six months. Thank you for giving us your trust to steer the ship in the direction we believed we needed to go.

As a company, it is our first time going through a crisis of this magnitude. Crises are inevitable; they will come for every organisation at one time or another. The bigger question is how an organisation responds. Does it fall apart from indecision and infighting, or does it come together with determination to do what it takes to get through it?

These past six months, I have seen you come together with determination. I have watched teams become more serious, targeted, and laser-focused on improving our business fundamentals. You have found ways to improve efficiencies, reduce costs, and enhance user experiences across our businesses. This is what has led to this quarter’s good report. It is a result that speaks for itself.

Taking major action early in this crisis – much earlier than most in our industry – was painful, but has put us in a stronger position today. It meant that we received negative press, since others were not making the moves that we were at that time. But, as a result, we have been able to adapt to the harsh external environment more quickly, with our efforts already starting to bear fruit. And, this quarter’s results demonstrate that our business fundamentals are strong: not many companies would have been able to reach this turning point in such a short time, or even reach it at all.

I use the phrase “turning point” deliberately, because our job is not yet done. Self-sufficiency means sustained profitability, and the world will be watching to see whether this quarter’s result is just a momentary blip or the start of a long-term trend. We need to prove – not just to our investors, but to ourselves – that we can remain profitable for the long haul.

As I said to you in my end-year note in December, we are starting 2023 on much stabler footing. For those who still feel worried and uncertain about what is to come, I want to assure you that, assuming no major shift in our external environment, our large-scale changes are complete, and we do not foresee further major changes.

The task for all of us is to continue with our mission of doing less, but doing it better: getting the core of our businesses right, and building a strong foundation for future growth.

Over the next few months, I plan to travel more to meet you in your markets. The leadership team will also be holding more frequent town halls to ensure that we hear your views and address your concerns. Thank you to those who have already provided your feedback and ideas. I look forward to speaking with many more of you soon.

Thank you all for this good quarterly result, which is a direct outcome of your hard work and determination. Let us continue in this direction.

Sincerely,

Forrest