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Sea Limited (SE 2.03%)
Q4Â 2019 Earnings Call
Mar 3, 2020, 7:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and good evening. Welcome to the Sea Limited Fourth Quarter and Full Year 2019 Results Conference Call.
[Operator Instructions] Please note this event is being recoded. I would now like to turn the conference over to Ms. Yanjun Wang. Please go ahead.
Yanjun Wang -- Group Chief Corporate Officer
Welcome to Sea's 2019 fourth quarter and full year earnings conference call. I am Yanjun Wang, Sea's Group Chief Corporate Officer. Before we continue, I would like to remind you that we may make forward-looking statements, which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release.
Also, this call includes discussions of certain non-GAAP financial measures such as adjusted revenue, adjusted EBITDA and net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures.
For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release.
I have here with me Sea's Chairman and Group Chief Executive Officer, Forrest Li and Group Chief Financial Officer, Tony Hou. Forrest and Tony will share strategy and business updates, operating highlights and financial performance for the quarter. This will be followed by a Q&A session in which we welcome any questions you have.
With that, let me turn the call over to Forrest.
Forrest Li -- Chairman and Group Chief Executive Officer
Hello, everyone, and thank you, as always, for joining today's call. 2019 has been an extremely successful year for Sea and a year when we achieved a number of significant milestones. In particular, we celebrated our 10th anniversary last year. This milestone gave us an opportunity to look back at just how far Sea has come over the last decade.
Our business has grown rapidly and has been constantly evolving. In just the 10 years, we have grown from being a PC game publisher to a leading game publisher and developer with a diverse mobile and PC game portfolio. We have evolved from being a game platform to a consumer Internet platform that covers Digital Entertainment, e-Commerce and the Digital Financial Services.
And we have expanded from our humble beginning as a start-up in a small shop house in Singapore to become a regional leader with strong footprint across global high growth markets. Observers might be surprised by the pace and extent of Sea's growth and the evolution over the last few years.
While we benefit from economic and the technology tailwinds in our markets, we believe the key reason for Sea's success is our firm focus on identifying what we see as the largest opportunities in the consumer internet industry and our relentless efforts to capture these opportunities with the right business model, timing and execution.
We started our Digital Entertainment business, Garena in 2009, because we passionately believed that gamers in our region deserved a better way to access and enjoy top-quality games and e-sports. Over the past of 10 years, Garena has evolved from a PC game publisher in Southeast Asia and Taiwan to a leading global game publisher and developer.
Our first self-developed mobile game Free Fire is a global hit and was ranked the world's most downloaded mobile game in 2019. The success of Free Fire has significantly expanded our total addressable markets globally. For example, the Latin America or LatAm markets, with their large and faster growing populations and faster deepening mobile penetration have become the second largest regional market for our Digital Entertainment business after Southeast Asia and Taiwan.
Collectively, the LatAm markets and the other faster growing frontier markets such as India, Russia and the Middle East already accounted for about half of our Digital Entertainment adjusted revenue for the fourth quarter of 2019.
Our proven capabilities in both game publishing and development as well as our strong track record in global growth markets, which are highly complex and diverse have driven sustained, strong financial performance. In 2019, our Digital Entertainment adjusted revenue grew by over 167% year-on-year to reach $1.8 billion, while our adjusted EBITDA grew by over 289% to over $1 billion. More importantly, we believe we have built a very strong foundation and developed the core strengths that position us very well for continued growth, globally.
Looking to the decade ahead, our focus for Garena is to continue to bring top-quality content and the more billion dollar games to our global users through both our own development capabilities and our stable of top tier publishing partnerships. We will also focus on strengthening our in-house capabilities with global top talent through both organic growth and strategic acquisitions and partnership.
Just as Garena's success was built on addressing the unmet needs of gamers in our markets, Shopee was built on addressing the unmet needs of consumers and the small businesses in our market. Shopee was also able to grow quickly, thanks to the local operational strengths we developed through our Digital Entertainment business. We launched the Shopee in all seven markets in Southeast Asia and Taiwan simultaneously in late 2015. Within a short period of time, Shopee has grown to become the leading e-Commerce platform across our region.
In 2019, just about four years from its inception, Shopee achieved over $17 billion in GMV with over 1.2 billion orders. It was the world's fifth most downloaded shopping app and it ranked first in key user engagement metrics of monthly active users and download across Google Play and iOS app store combined in both Southeast Asia and Taiwan.
Meanwhile we have significantly deepened monetization over the last year. In 2019, Shopee generated more than $942.1 million of adjusted revenue, representing more than 224% of year-over-year growth, while adjusted revenue as a percentage of total GMV reached 5.4%, benefiting from an increasing economy of scale with growing market leadership.
We also saw rapidly improving unit economics for Shopee. For example, adjusted EBITDA loss per order decreased significantly year-on-year from $1.34 in the fourth quarter of 2018 to $0.70 in the fourth quarter of 2019.
We believe that Shopee's strong track record is attributable to our managerial, organizational and executional capabilities. These strength have enabled us to quickly identify and gain a deep understanding of the emerging trends of social commerce among the mobile native generation, determining the right business model and the timing to enter the right markets.
Build and rapidly scale a new business across diverse complex markets with high efficiency to achieve market leadership enjoying strong network effect and economy of scale and are constantly focused on high quality decision making and execution with hyper localized operations.
Looking ahead, we will continue to focus on growing our e-Commerce business with efficiency, expanding our market leadership to maximize long-term returns and deepening monetization over time. More importantly, we believe that the capabilities we have demonstrated in growing Shopee from a standing start to the regional leader, will continue to help us to achieve greater success in building up a full ecosystem surrounding our consumer Internet platform. This in turn presents huge growth opportunities that we are deeply focused on capturing.
Our third core business in Digital Financial Services, SeaMoney is a key component of this ecosystem and the crucial structure that presents significant long-term growth and monetization opportunities. We started SeaMoney in 2014 with the firm belief that Digital Financial Services or DFS is a key infrastructure for our consumer internet ecosystem and it represents one of the largest growth opportunities in the digital economy of our region.
Based on our recent Google, Temasek, Bain report, the DFS industry in the six largest economies of Southeast Asia is expected to grow at a 22% CAGR between 2019 and 2025 to reach $38 billion in revenue. Based on the report, three out of every four adults in Southeast Asia have insufficient access to financial services, and 49% are unbanked. By comparison just the 7% of people in the United States are unbanked and 20% in China, according to U.S. Government and World Bank data respectively.
Similarly World Bank estimates that just a 5% of adults in Southeast Asia have access to credit cards compared to 66% in the U.S. and 21% in China. This reflects that the region has massive untapped opportunities in DFS and these opportunities will only continue to grow as the overall digital economy of this region expands, and we believe that Sea is very well positioned to capture the most significant portion of this growing pie.
First, we are building on our core strengths in identifying and capturing market trends and strong execution. And more importantly, we are the market leader in both e-Commerce and the Digital Entertainment, which are two of the largest, fastest growing and highest quality and frequency use cases in the digital economy served by DFS. This is well demonstrated by the rapid growth of our SeaMoney business in 2019.
Our quarterly paying users for our e-wallet services have exceeded 8 million in the fourth quarter as we deepened integration of our e-wallet with the Shopee platform and further expanded our e-wallet services to third party online and offline merchants and use cases. In January 2020, about a year after we started integrating our e-wallet with Shopee in Indonesia, more than 30% of Shopee's gross orders in that market were already paid using our own e-wallet services. Such integration have shown clear benefits in reducing payment friction and improving user experience for consumers on Shopee.
To sum up, we believe that our core businesses of e-Commerce, Digital Entertainment and Digital Financial Services represents the three largest opportunities in the digital economy of our region. As we begin a new decade, we will continue to focus on strengthening our market leadership and the core competencies across all three segments to position us well for long-term continued growth and profitability.
More importantly, our leadership and strength across these businesses provide us an unparalleled opportunity to develop a comprehensive consumer Internet ecosystem that generates significant value for the consumers and the small businesses on our platforms. With this reflection on what we have achieved so far in the past decade, and the path of growth we will continue to focus on for the future, I will now turn to a more detailed discussion of our strong results for the fourth quarter.
Looking first at Garena's performance. In the fourth quarter, we, once again, hit new high for adjusted revenue and EBITDA. Our adjusted revenue was $479.9 million, up 107.4% year-on-year; while adjusted EBITDA was $266.4 million, up 153.2%. This was primarily driven by continued quarterly active user growth and further deepening of paying user penetration. And in particular, the continued strong performance of our self-developed game Free Fire.
Let me highlight some of the key drivers of Free Fire's success this quarter. First, our user base continued to grow. I'm pleased to note that Free Fire recently set a new historical high with over 60 million peak daily active users. According to App Annie, in the fourth quarter Free Fire was ranked among the top 10 games globally by monthly active users and was the fourth most downloaded game globally on Google Play.
Second, we continued to deepen engagement with our massive user base. Last November, we held our largest ever Esports event for Free Fire, the Free Fire World Series in Rio. According to Esports Charts, this event attracted the most concurrent viewers for any mobile Esports event in history, with over 2 million viewers watching the live streamed final.
At the same time, the success of our Esports content is reflected in Free Fire's popularity of streaming side. Free Fire was the fourth most watched game on YouTube globally in 2019, behind only Minecraft, Fortnite and Grand Theft Auto. It was also the most watched mobile-only game.
Third, as we mentioned before, we are increasingly building Free Fire into a social platform for the hundreds of millions of people around the world who play Free Fire. It is not simply a games that they play, it has to become a community. Our players meet up with their friends in Free Fire. They watched our Esports events and they cheered for their favorite team. They even enjoy music created just for our players.
For instance, we launched a music video featuring characters from the game in a virtual band performing a song in multiple languages that we commissioned specifically for Free Fire. To accompany the video, we launched a specific in-game events and promotions as well as special schemes and other in-game items. The launch was a huge success with our players with the video attracting over 10 million viewer online within a week.
Over the last two years, we have developed a unique ability to build and sustain huge and the highly engaged Free Fire communities across diverse markets globally. We are also seeing that holders of other high-quality IP want to work with us to reach these communities. We recently unveiled a partnership with Gravity, the developers of the classic MMORPG game Ragnarok, to launch a range of exclusive in game content in Free Fire based on Ragnarok's IP. Generations of gamers across Southeast Asia and the Latin America have a strong affinity with Ragnarok and its characters. And the response to this in-game collaboration has been very encouraging.
We will continue to focus on growing the user base and deepening user engagement for Free Fire with an increasing emphasize on building the game into a well-loved and a long lasting IP and the highly active social platform serving hundreds of millions of global users. We believe that this will, in the longer term, translate into sustained strong performance for Free Fire.
Another exciting recent development is our acquisition of Phoenix Labs, one of the top independent game development studios in North America. This brings a team of more than 100 of the best AAA developers in the industry into the Garena family and significantly enhances our in-house content creation capabilities and our ability to serve diverse markets globally. The acquisition also underlines how Garena is increasingly being recognized as a leading industry player worldwide, thanks to our strong global footprint.
For Garena as a whole, we are moving into 2020 in a great position and with exciting plans for growth. Our focus for the year ahead will be to continue creating captivating content that will help us grow and engage more deeply with our global communities and to continue strengthening our game development capabilities and publishing network to bring to market more global hits and the top grossing games.
Our Digital Entertainment guidance for the coming year reflect our confidence in our ability to continue deepening engagement with gamers globally and to build on the momentum that made 2019 a standout year for Garena. For the full year of 2020, we currently expect adjusted revenue for Digital Entertainment to be between $1.9 billion and $2.0 billion.
Turning to Shopee, in the fourth quarter, we have recorded another impressive set of results. Growth in the e-Commerce industry in our region continues to accelerate and the Shopee, as the clear market leader, is gaining an outsized slice of the pie. Across the region, our order growth is accelerating with gross orders for the quarter growing about 113% year-on-year to $440.5 million.
GMV for the fourth quarter also reached a $5.6 billion, an increase of more than 64% year-on-year. As we continued to expand our market leadership, Shopee saw sustained strong user engagement. In both Southeast Asia and in Taiwan, Shopee ranked number one in the Shopping category by average monthly active users across Google Play and the iOS App Store combined in the fourth quarter according to App Annie.
By total time spent on app, which App Annie measures on Android phones, Shopee also ranked number one in Southeast Asia as a whole and in each of our five largest markets. In fact, worldwide, Shopee was among the top five most downloaded app in the Shopee -- shopping category across Google Play and the iOS App Store combined in both the fourth quarter and the full year of 2019 based on App Annie's estimates.
At the same time, we are seeing that consumer are building an increasing affinity with the Shopee brand. According to YouGov 2019 Global Brand Buzz rankings, which merits the brands with the most buzz with consumers in different markets around the world, Shopee was the top ranked brand across all categories in each of Indonesia, Thailand and Malaysia and the top ranked e-Commerce brand in Vietnam.
We are also encouraged to see that Shopee is enjoying strong user retention as we continue to strengthen our market leadership. Shopee three-year order retention from January 2017 to December 2019 was close to 70%, with order retention rate in Indonesia, our largest market even higher than the group rate for the same period.
In Indonesia, Shopee further solidified its market leadership. In the fourth quarter, we recorded an average of 2 million orders a day. That is more than double the same number from the same quarter a year ago. In fact, year-on-year growth for Shopee's GMV and orders accelerated each quarter in 2019.
Shopee also continued to rank as the top app in the shopping category in Indonesia by monthly active users and download on Google Play and the iOS App Store as well as time spent in app on Android in the fourth quarter according to App Annie.
As we continued to benefit from our growing regional leadership and the deepening monetization, we recorded strong growth on the top line and further improvements in operating efficiency during the quarter.
E-Commerce adjusted revenue increased over 182% year-on-year to $358.3 million in Q4, an increased over 224% year-on-year to reach $942.1 million for the full year, which meant that we exceeded the high end of our twice increased guidance for 2019. Adjusted revenue as a percentage of GMV reached 6.3% in the fourth quarter, a new high for Shopee. This strong revenue performance is a result of a dedicated focus to enhance the services we offer to our sellers and the buyers and grow the platform to create more value to them.
We also recorded a positive gross profit for the fourth quarter of 2019. During the quarter, we also continued to drive improvements in cost efficiency. Adjusted EBITDA loss per order decreased by 47.8% to $0.70 in the fourth quarter of 2019, compared to $1.34 a year ago and $0.79 in the third quarter.
I'm also pleased to note that Shopee was gross profit positive in the fourth quarter as we continued to benefit from economies of scale that come with market leadership as well as our improved operating efficiency. Moreover, in Taiwan, our second largest market, we continued to record a positive quarterly adjusted EBITDA after allocation of the headquarters' common expenses. Adjusted EBITDA margin in Taiwan before allocation of the headquarters' common expenses already exceeded 20% in the fourth quarter of 2019.
Looking to the year ahead, Shopee is in an ideal position to continue capturing the lion's share of the growth in our region's e-Commerce market. We are increasingly benefiting from the scale and the brand recognition we enjoy as the clear industry leader and we will continue to invest prudently to extend our leadership by continuing to grow our seller and the consumer base and building ever-stronger bonds of affinity we've done across the regions.
Our e-Commerce guidance for 2020 underlines our belief that we will continue to scale the platform with speed and efficiency while further deepening monetization. For the full year of 2020, we currently expect adjusted revenue for e-Commerce to be between $1.7 billion and $1.8 billion.
As I mentioned at the start, 2019 was a year of major successes for Sea. We have been fortunate to be in this region at a time when the market has been growing rapidly. We have been in the right place to capture this growth opportunities. But we also have been highly strategic in areas we have chosen to focus on, highly disciplined in how we build and scaled our businesses and highly skilled in managing their growth.
We see huge growth opportunities ahead in each of our business lines, leveraging our proven capabilities in building and scaling businesses with efficiency and our ability to achieve strong profitability in diverse growth markets. We believe we are in an ideal position to capture these and other global growth opportunities that may present themselves in the coming years.
I'm more excited than ever as we move into 2020 and would like to close by thanking our investors and partners on behalf of all of us at Sea for your support over the last decade. We have big goals for 2020 and beyond and we are humbled to have your continued backing.
With that, I will invite Tony to discuss our financials.
Tony Hou -- Group Chief Financial Officer
Thank you Forrest. And thanks to everyone for joining the call. We have included detailed quarterly financial schedules together with the corresponding management analysis in today's press release. So, I will focus my comments on the key financial metrics.
For Sea overall, our fourth quarter total adjusted revenue was $909.1 million, an increase of 134% year-on-year. This was mainly driven by the growth of our Digital Entertainment business, especially our self-developed game Free Fire and our continued monetization efforts in our e-Commerce business in the past quarters.
Digital Entertainment adjusted revenue was $479.9 million, an increase of 107% year-on-year. The growth was primarily driven by the increase of our active user base and the deepened paying user penetration, and in particular, the continued success of our self-developed game Free Fire.
Digital Entertainment adjusted EBITDA was $266.4 million, an increase of 153% year-on-year, mainly due to strong top-line growth and our self-developed game accounting for an increased share of revenue.
E-Commerce adjusted revenue was $358.3 million, up 182% year-on-year. Within this, marketplace revenue was $283.5 million, up 224% year-on-year, while product revenue was $74.7 million, up 90% year-on-year. This growth is a result of our commitment to continue enhancing our service offerings as we seek to create greater value for our platform users.
E-Commerce adjusted EBITDA loss was $306.2 million as we continued our investment to fully capture the market opportunity in the region. We will continue to invest prudently and drive high-quality growth by serving the user's needs better in the long run.
Digital Financial Services adjusted revenue was $3.6 million, an increase of 18% year-on-year from $3.1 million in the fourth quarter of 2018. Adjusted EBITDA loss was $49.8 million in the fourth quarter of 2019 compared to a loss of $9.8 million in the same period of 2018. This was primarily due to our continued efforts to integrate our e-wallet services with our Shopee platform across different markets. We have also been expanding the use cases of our e-wallet services outside of Sea's platforms to include other online and offline merchants along with a variety of third-party use cases.
Returning to our consolidated numbers, we recognized a net non-operating loss of $15.2 million in the fourth quarter of 2019 compared to a net non-operating income of $53 million in the fourth quarter of 2018. This was primarily due to a fair value loss of $6.8 million in the fourth quarter of 2019 as compared to a fair value gain of $61.2 million in the fourth quarter of 2018 arising from the fair value accounting treatment for the 2017 convertible notes.
We had a net income tax expense of $36 million in the fourth quarter of 2019, which was primarily due to withholding tax and corporate income tax recognized in our Digital Entertainment Business. Finally, net loss excluding share-based compensation and changes in fair value of the 2017 convertible notes was $240.2 million in the fourth quarter of 2019 as compared to $321.2 million for the same period in 2018.
With that, let me turn the call back to Yanjun.
Yanjun Wang -- Group Chief Corporate Officer
Thank you, Forrest, and Tony. We are now ready open the call for questions. Operator?
Questions and Answers:
Operator
We'll now begin the question-and-answer session. [Operator Instructions] The first question comes from Alicia Yap from Citigroup. Please go ahead.
Alicia Yap -- Citigroup -- Analyst
Hi, good evening, management. Thanks for taking my questions. Congrats on the strong set of results. The first question is on the e-Commerce. Can you share with us currently what is the percentage of the GMV or orders on Shopee that's coming from merchants in China? And have we seen any disruption during this period, given the virus outbreak?
On the other hand, have you seen increase for the online shopping in countries such as like Thailand and Singapore or even Indonesia as more people are turning to online given the outbreak?
And then the second question is on the growth -- adjusted revenue guidance for the gaming business, is that mainly based on the existing games and should we expect that it does not include any potential new games contribution? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
Thank you, Alicia. On e-Commerce, in terms of cross-border business, we do have a very strong cross border business. However our e-Commerce marketplace is primarily local to local. In terms -- so we don't give the specific breakdown, but suffice to say it's in the range of -- overall cross border business is in the range of low teens from GMV perspective and part of it also from other countries within Southeast Asia as well as outside of China, inside Asia.
And so far, we haven't seen much of impact from the virus situation. As you can see from our revenue guidance for e-Commerce, which we budget for 80% to 90% year-on-year growth still. And of course, if this virus situation become an extended issue that impacts global supply chain or regional economy as a whole, we might become similarly impacted.
On the other hand, we also see that especially in our region, while people are looking for online alternatives and to shop for certain things relate -- especially in FMCG or cleaning categories. And as the market leader, Shopee does take more of a lion's share in terms of the demand that might come online. So, that could also foster some user habit in purchasing things online.
But in general, as you can see, Shopee see very strong year-on-year growth in order at a more than 100% range. And being the market leader, we actually are growing at a faster pace than our peer companies which are significantly smaller than us in most of the market that we are big in. And that also shows that we -- that the growth is very robust and continue to be very strong for Shopee and that comes from both the user number growth as well as frequency growth.
We mentioned before that Shopee users shopped around three to four times a month on our platform, and that number has increased to four times to five times. In our largest market, Indonesia, that number has exceeded five times. So that has also been part of the growth driver for our Shopee platform. So overall, we are very optimistic of the fundamentals and the network effect from the -- our strengthening market leadership over time.
In terms of Digital Entertainment guidance, again, to put all the things into perspective, our adjusted revenue for 2019 has shown a very significant growth from previous years. Thanks to our own self developed game, which not only strengthened our revenue and the revenue generation capabilities for the longer run, but also significantly expanded our global footprint.
As Forrest mentioned earlier, markets outside of Southeast Asia and Taiwan now contribute close to 50% of our revenue and that would include markets like LatAm as well as the new frontier markets like India. We also start to see encouraging growth in markets as diverse as United States.
So this is very encouraging for us and we -- for this year, we'll continue to focus on promoting the user growth for Free Fire and deepening user engagement and monetization over time.
As we mentioned in our earnings, our peak daily active user has reached 60 million globally and that is, we believe, a very impressive number we have achieved for this single game. And we also increasingly may see deepening monetization in large markets like India, for example, with very high user growth. We also start to see faster growth in pay user ratio, while the ARPPU, the average revenue per paying user also continue to increase.
So, that is a very good sign for us. We also see some encouraging signs from a diverse market like the United States, of course with very high ARPPU. So on all fronts, I think we see 2020 to be continuing a year of strong performance for our Digital Entertainment. Of course, we don't -- as usual we don't discuss game pipeline specifically, but as we always assure our investors, everything we do, we are focused on building the long-term potential and maximizing our ability and opportunity to create the next billion dollar game. At the same time, we want to maximize the potential of the existing billion dollar game we already have.
Alicia Yap -- Citigroup -- Analyst
Thank you.
Operator
The next question comes from Miang Chuen Koh from Goldman Sachs. Please go ahead.
Miang Chuen Koh -- Goldman Sachs -- Analyst
Hi, thank you for the opportunity. So the first question is, just wondering how we should think about the revenue as well as the cost impact for the gaming business from integrating Phoenix Labs. And the second question is, how should we think about cash burn for both your e-Commerce and Payments divisions this year? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
So, Phoenix Labs is an investment we recently made. It's a AAA lab based -- a studio based in Vancouver with also operations in both Canada and the U.S. They have more than 100 developers with 10, 20 years of experience from creating AAA titles across different platforms and diverse markets with the key focus on developed markets.
We believe their skill set and focus and expertise are highly complementary to our existing skill set and experience across global emerging markets. And so, the acquisition is more of a talent acquisition and so we look long-term in terms of developing more IP and strengthening our self-development capabilities as opposed to evolve an IP acquisition where we just look at a single game.
So, in terms of that, I think it really strengthen our development capabilities in the longer run. And I mentioned that we are looking at the next decade, in terms of our development capabilities and generating top IP across the globe.
In terms of our cash burn for e-Commerce and DFS. So, on the e-Commerce side, I think our position has been very consistent. We have a strong market leadership and our market leadership has been strengthening over time and for e-Commerce, as we all know, it enjoys very strong network effect, and therefore, strong market leadership eventually leads to better profitability and competitive modes in the longer run.
So, we will continue to invest to maximize our market leadership and also continue to invest to provide better services to our sellers and buyers to build a better ecosystem to serve them over time. By that, we generate more value and derive more profitability over the longer run. So, on that front, I think our investment is highly efficient.
If you look at our EBITDA, adjusted EBITDA loss per order has actually being decreasing quite rapidly quarter-on-quarter and we continue to focus on efficiency -- efficient growth as well as monetization at the same time for our e-Commerce business going into 2020 and beyond.
In terms of Digital Financial Services, as we mentioned earlier, we believe it is a core infrastructure for our digital ecosystem as well as a key part of the digital economy of our region, which has a large unbanked, underserved population by financial services in general, and we see this as one of the largest opportunities in the digital economy of our region and a very long-term opportunity.
In -- as always we oftentimes don't jump onto opportunity without first carefully thinking about the size, the timing, our comparative advantage in running that opportunity and our playbook in executing that, and we always try to maximize the -- in terms of all these features that we closely look at. So, same thing applies to Digital Financial Services, as how we did in game as well as in e-Commerce.
So, we evaluate that opportunity carefully. We understand the total addressable markets there. We understand the timing and we also understand how we are going to approach it from our core strengths. And we believe the fact that we have two of the largest Digital Entertainment segment as well as the e-Commerce segment, which are two largest digital consumption opportunities in our economy, really help to grow the Digital Financial Services on our platforms with the captive user base, high frequency use case, as well as high quality data that allow us to build out into a bigger platform over the long run, not only serving our users but also serving third party use cases and the merchants.
And with just one year of integration with Shopee platform, we already see very strong natural adoption rising to more than 30% of gross orders in Indonesia by January. And that is very encouraging sign of how this is welcomed by our users. And at the same time, we have already achieved more than 8 million quarterly paying users in the fourth quarter of 2019 for our e-wallet services. Again, we believe the spending is highly efficient and we will continue to go with that in an efficient manner.
Operator
The next question comes from Thomas Chong from Jefferies. Please go ahead.
Thomas Chong -- Jefferies -- Analyst
Hi, thanks, management for taking my questions and congratulations on a strong set of guidance for Shopee. May I ask about the take rate trend across difference geographies such as Indonesia, Singapore and Taiwan going into the next couple of years? And on the other hand, going back to the gaming piece a minute. Can management comment about the performance of Call of Duty, as well as any new titles from Tencent in 2020? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
Thank you. As we mentioned, we'll be deepening monetization on our Shopee platform as we continue to grow the platform and we will continue to raise take rates across different markets over time as we provide more services and enhance our services to our sellers as well as buyers and grow the platform. While we don't give a specific guidance on the -- on the rates, as you can tell from the guidance we have given on Shopee's full year adjusted revenue that this also incorporate increased deepening monetization on the platform.
In terms of Digital Entertainment, we see very strong performance on Call of Duty Mobile so far in our region, which is also a bright spot among the global region, we believe, and it's still at very early stage since it was launched October last year and we'll observe how it continue to perform and we'll closely, with Tencent and Activision, to continue to improve the game and tailor it to our markets.
In terms of new titles from Tencent in 2020, of course, under our close partnership with Tencent as well as the Right of First Refusal arrangement, we have full visibility of the pipeline. As usual, we don't specifically talk about any game pipeline but, rest assured that we'll continue to work with Tencent as well as all our partners to bring the top titles that we think are highly promising to our markets over time.
Operator
The next question comes from Mike Olson from Piper Sandler. Please go ahead.
Michael Olson -- Piper Sandler -- Analyst
Hey, thanks for taking my questions. Just two questions, specifically, on competition. On the SeaMoney side, what competitive environment would you describe is there relative to the competition that you see in your other core markets of gaming and e-Commerce? And then on the e-Commerce side, are you seeing any increased competitiveness or aggressiveness I should say from competitors from the standpoint of free or subsidized shipping or other marketing spend? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
Thank you. In terms of SeaMoney, we think that, at this stage, the market is still highly underdeveloped and fragmented. We have seen some players in the market who have spent to educate the market, grow the pie for -- of us and which we think will also stand to benefit as we look to serve more users and use cases who have already been educated on digital wallet.
Ultimately, we think our core competence and advantages in owning the two of the largest use cases is going to help us drive growth and also build out a comprehensive Digital Financial Services ecosystem. And I think, of course, the competitive landscape, in e-Commerce for us is quite different. We are the market leader and we continue to -- as I mentioned, we continue to grow at a faster pace in our markets, despite being a larger than our competitors.
As, for example, Indonesia, we mentioned, our order number actually doubled, more than double year-on-year to reach more than 2 million per day and for some of the competitors who also announced their growth rate, while there are significantly smaller than us, their growth rate is also significantly lower than ours. And we also start to see some of our peers switching gear toward focusing more on profitability and cost cutting over time.
I mean we fully respect our competitors and believe they're doing better for the business. But while we continue to see great potential opportunity for us to maximize our market share as well as increasing the -- building up the full ecosystem under the e-Commerce business.
Operator
The next question comes from John Blackledge from Cowen. Please go ahead.
John Blackledge -- Cowen and Company -- Analyst
Great, thank you. On SeaMoney, could you help us think about some key targets or metrics for SeaMoney in 2020 and kind of what should investors be looking for in terms of progress of SeaMoney as we get through the year? And then on Shopee, I know there's been a couple of questions on cash burn. EBITDA loss, was 2019 the peak EBITDA loss year for the segment and how should we think about longer-term EBITDA margins for Shopee? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
Thank you. In terms of SeaMoney, I think we'll continue to integrate our e-wallet services with our Shopee platform across the region. And same time with the large captive user base we already have, we also have been approached by third-party merchants and the partner wanting to work with us and we will continue to expand into other third-party use cases and merchants. So, on that we will continue to focus on growing [Phonetic] the user base as well as use of frequency and quality of used case on the SeaMoney side.
And in terms of the e-Commerce, as I mentioned before, we don't give guidance on adjusted EBITDA loss and we also still think it is against competitive -- our competitive interest to specifically guide on that part, but on the overall, as you can see, we have been growing with increasing efficiency.
And the EBITDA, adjusted EBITDA loss per order actually being dropping quite rapidly. And we are very much focused on growth efficiency, as always. And the EBITDA loss from e-Commerce is mainly actually covered by our internal cash flow generated from operations. And also, more importantly, if you think about the longer-term, we think e-Commerce, once it achieve strong market leadership, it brings high profitability.
One example we have given is Taiwan market, where we have achieved a very strong market position quickly in that market. And as we mentioned in the earnings that in the fourth quarter, our adjusted EBITDA before common expense allocation for Taiwan already exceeded 20%. We first announced our adjusted EBITDA for Taiwan, excluding common expense being positive at the beginning of 2019.
So, within the course of one year, the margin expansion has been quite rapid and we've continued to grow the Taiwan market and deepen monetization there. The take rate in Taiwan market is actually not significantly above the Group level. So, we continue to see strong monetization potential over time and that's a good example of how profitable the business could eventually be when we turn on the tap.
So at this time, I would say it's our choice in deciding how fast we can grow the market. And of course, always keeping a close tab on the market -- natural pace of growth so that we're not growing at an inefficient level, but always ahead of the market.
Operator
The next question is from Ranjan Sharma from J.P. Morgan. Please go ahead.
Ranjan Sharma -- J.P. Morgan -- Analyst
Hi, good evening. It's Ranjan from JPM. Congratulations on your achievements over the last decade. Maybe I can start the first question on the -- with regards to Dauntless and what it means for you. I see that it's a very high spec game. Going into mobile launch, is this game going to be more geared to the developed markets rather than emerging markets like India or Indonesia?
The second question is on the e-Commerce business. I know you have shared previously that Brazil is a market which was being targeted more as a bottom-up project of your cross border team. But have your aspirations been changing recently because I think you've been hiring more people for Shopee Brazil? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
Yeah. Thank you. In terms of Dauntless, it's a product by Phoenix Lab, which we recently acquired. And as mentioned, they're a AAA studio focused on AAA titles and developed markets across platforms and that is why exactly we believe their skill sets are highly complementary to ours, where we have shown very strong track record in global emerging markets.
I think they're always possible that we'll continue to work with the studio on this and future IP that we collectively might bring to the market across the different market in the world and we believe that our expertise combined, we can address a wide range of markets and further expand our global TAM.
In terms of e-Commerce in Brazil, we're -- this is a cross-border project and by popular demand of our cross-border sellers who of course would always prefer the platform which can offer more markets to them for the same amount of work they pretty much need to do, integrating with a platform and the fact that that we have already operational capabilities from the game side and understanding of the market give us a comparative advantage in served them in this regard. I think our team will continue to serve our sellers as they need us.
Operator
The next question comes from of Varun Ahuja from Credit Suisse. Please go ahead.
Varun Ahuja -- Credit Suisse -- Analyst
Yeah, hi. Thanks for the opportunity. I've got three questions, first on the gaming side. So, if you look at your EBITDA margin on a sequential basis, it has declined, but it seems to me that Free Fire has been growing. So given it's your self-developed games, so just wanted to understand why there is 5% sequential decline in EBITDA margin on the gaming side, that will be helpful.
Secondly, if you look at sales and marketing spend as a percentage of GMV, it has been growing for the last three, four quarters. Earlier it was used as a benchmark to show that as you gain, attain scale, you may achieve more toward profitability. So, wanted to understand the dynamics, how should we think about the sales and marketing spend. Are you spending more to kind of continue to grow the market, so that some color will be helpful?
And lastly, of the three businesses that you have, which opportunity are you more excited about, whether it's Gaming e-Commerce or the Digital Financial Services? Thank you.
Yanjun Wang -- Group Chief Corporate Officer
Thank you. So, in terms of the adjusted EBITDA margin, our Q4 margin is at 55.5% [Phonetic], which is very high compared to, we understand, the industry average and the sequential declines really related to launch of new games such as Call of Duty Mobile as well as our Esports events recently we had in Brazil, as well India and across different markets, which as we mentioned in our earnings release as highly successful at making the most viewed game on YouTube for the mobile-only category and with more than 30 billion views and that allow us to increase our user base as well as engagement with our users, which eventually lead to higher monetization for Free Fire.
I think this is a highly efficient spending for us and we will continue to looking for opportunities while being highly mindful of our adjusted EBITDA margin because of course we run game highly focused on a cash basis view. In terms of sales and marketing spend as a percentage of GMV, it's been quite stable, I would say, across the quarters at around 4.4% to 4.5% range. And even -- but if you look at our Q4, it is a -- the shopping season, holiday season with Double 11, Double 12 and all kinds of events and we show extremely strong order and GMV growth as well as revenue growth for the quarter.
So, I would say the spending is highly efficient. Again, I would guide people to look at adjusted EBITDA loss per order. And as we increasingly spend on branding to promote Shopee brand and affinity with the Shopee brand across different markets, we might again make opportunistic spending in terms of sales and marketing at different times of year, but we're very focused on efficiency of spending and the result it generates as you can see from all the rankings; YouGov survey, where Shopee is ranked the top brand and sometimes the top e-Commerce brand and sometimes even beating all the other long-term classic IP brands that already exist in country and the buzz we generate across the world.
For example, our collaboration with Cristiano Ronaldo has created more than 500 million views of the Shopee clip and that is highly efficient for us. So I think, this, we will continue to be optimistic, but while mindful of the efficiency of the spending.
And in terms of the -- all the three businesses, which we are most excited about. I think these are our three children. And we believe each of them represents a huge opportunity and collectively they represent the biggest opportunities in the digital consumer internet segment of our region and we are very fortunate to be able to capture those opportunities. So, in a very good position to capture that and we'll continue to execute on it with efficiency and with good execution.
On the gaming side, our focus in the longer run is, A; continue to expand globally and increase our presence in diverse markets and also strengthen our development capabilities to maximize our opportunity to get the next billion-dollar game and also highly derisk the gaming business overall.
So, if you look at, as I mentioned, our revenue contribution that's being increasingly diverse and outside of just Southeast Asia and Taiwan, with new markets like India and LatAm markets contributing significantly to our user base as well as our monetization contribution. And we hope to -- with acquisition of AAA titles and studios, as well as experience we gained in operating game in across more than 130 markets globally, we are able to significantly expand our business and that offers huge upside in terms of monetization of future profitability.
In terms of e-Commerce business, we have already achieved very strong market leadership and with the network effect, we can see how things rolling out in our eyes. So, we follow eyes exactly according to the playbook. We told people years back when we -- when we started IPO process and we will continue to execute on this significant opportunity and e-Commerce with its own high profitability margin as well as the ancillary opportunity it might bring in building out an entire ecosystem presents a huge chance for us to continue to grow our business in this region and even beyond it.
At the same time on Digital Financial Services, that links both e-Commerce as well as Digital Entertainment Business, enable people to make purchases online and offline. We think this is -- also remains the, one of the largest under tapped opportunities in our region and with us owning the two largest online use cases, we believe that we, in a best position to capture that opportunities and we'll continue to -- to do that to focus on growth and servicing our users in the longer run.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Ms. Yanjun Wang for any closing remarks.
Yanjun Wang -- Group Chief Corporate Officer
Thank you, operator. Thank you, everyone for joining today's call. We look forward to speaking to you all again next quarter.
Forrest Li -- Chairman and Group Chief Executive Officer
Thank you.
Operator
[Operator Closing Remarks]
Duration: 66 minutes
Call participants:
Yanjun Wang -- Group Chief Corporate Officer
Forrest Li -- Chairman and Group Chief Executive Officer
Tony Hou -- Group Chief Financial Officer
Alicia Yap -- Citigroup -- Analyst
Miang Chuen Koh -- Goldman Sachs -- Analyst
Thomas Chong -- Jefferies -- Analyst
Michael Olson -- Piper Sandler -- Analyst
John Blackledge -- Cowen and Company -- Analyst
Ranjan Sharma -- J.P. Morgan -- Analyst
Varun Ahuja -- Credit Suisse -- Analyst
