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Sea Limited (NYSE:SE)
Q4 2020 Earnings Call
Mar 02, 2021, 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 2020 results conference call. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Ms. Minju Song. Please go ahead.

Minju Song -- Senior Manager and Group Chief Corporate Officer

Hello, everyone, and welcome to Sea's 2020 fourth-quarter and full-year earnings conference call. I am Minju Song from Sea's group chief corporate officer's office. Before we continue, I would like to remind you that we may make forward-looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA, and net loss excluding share-based compensation, and changes in fair value of the 2017 convertible notes.

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 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; group chief financial officer, Tony Hou; and group chief corporate officer, Yanjun Wang. Our management will share strategy and business updates, operating highlights and financial performance for the fourth quarter and for the full year of 2020.

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, Chief Executive Officer

Thank you, Minju. Hello, everyone, and thank you as always for joining today's call. 2020 was a landmark year for Sea. Our team, users, and communities all faced unprecedented challenges as a result of the pandemic.

This further reinforced the importance of our mission to empower the consumers and small businesses in our communities with technology. We adapted rapidly to enable our users and the community to meet the unique challenges of the last year while also successfully addressing the fast-growing and fast-evolving demands from our users for Sea's products and services. For example, we quickly build up home and the living and the grocery offering on the Shopee platform, rolled out sellers' support program to help local merchants to get back on their feet faster, accelerated our digital payment service offerings, and shifted major e-sport events online. Each with highly successful results.

The lockdown and the social distancing measures to curb the pandemic have materially accelerated the -- the digitalization of our economies, and we expect the effects to be long-lasting. During this time, our team has demonstrated their resilience, adaptability, and strong execution. We believe these capabilities position us very well to capture and drive the significant growth opportunities ahead as a strong market leader. Our results for the fourth quarter and for the full year of 2020 speak to the success of our approach.

On the group level, in the fourth quarter, we recorded accelerated year-on-year growth in GAAP revenue compared to the previous quarter. It reached $1.6 billion, up 102% year on year. We've also recorded 102% year-on-year growth in our fourth quarter gross profit to reach $533.7 million. Our fourth quarter of adjusted EBITDA was $48.7 million, compared to an adjusted EBITDA loss of $104.9 million a year ago.

The strong fourth-quarter results contributed to an outstanding set of results for the full year of 2020. GAAP revenue for the full year more than doubled compared to that of 2019 to reach $4.4 billion. Gross profit grew 123% year on year to reach $1.3 billion. We also achieved the positive of adjusted EBITDA of $107 million for the full year, compared to a loss of $178.6 million for 2019.

This was supported by the strong performance across our digital entertainment and e-commerce businesses. For full year, Garena achieved bookings of $3.2 billion and the Shopee achieved GAAP revenue plus sales incentives net-off of $2.5 billion. Both businesses exceeded our recently raised full-year guidance for 2020. Let me now discuss each business individually starting with digital entertainment.

Garena's outstanding performance in the previous quarter continued in the fourth quarter as we recorded bookings of $1 billion, up 111% year on year. And adjusted EBITDA in the fourth quarter was $663.5 million, up 149% year on year, representing 66% of bookings. For the full year, we generated bookings of $3.2 billion, increasing by 80% year on year. Garena's adjusted EBITDA increased by 94% year on year to reach $2 billion, representing 62% of bookings.

This growth financial performance in the fourth quarter and as a full year was the result of our ability to continually expand our user and the paying user base. Every quarter, more gamers globally engaged with our in-game content and e-sport activity. In the fourth quarter, quarterly active users reached 610.6 million, an increase of 72% year on year. Quarterly paying users hit $73.1 million -- 70 -- 73.1 million, up 120% year on year.

Our paying user ratio measured at quarterly paying users as a percentage of the quarterly active users continues to grow in the fourth quarter to reach 12%. Free Fire was once again a key driver of Garena's outperformance. According to App Annie, it continues to be the highest-grossing mobile game in Latin America and Southeast Asia in the fourth quarter, as well as the full year of 2020. It has maintained the top ranking for six consecutive quarters.

The strong performance was also evident in India where Free Fire was the hype of working mobile game for the fourth quarter and for the full year of 2020 based on App Annie. We're also pleased to share that Free Fire was once again the most downloaded mobile game in the world in 2020 according to App Annie. This is the second year in a row that Free Fire was ranked first globally. As we continue to grow the Free Fire user base worldwide and then build even tighter bonds with global gamers, we believe that Free Fire is still formally establishing itself as a strong global gaming franchise and platform.

One of the key factors in Free Fire's extent of success is our commitment to keeping our game fresh and engaging. Gamers around the world increasingly recognized Garena's reputation for constantly enhancing the Free Fire experience within the weighted content, partnerships, and e-sport activity. In the fourth quarter, for example, we announced a partnership between Free Fire and the football legend, Cristiano Ronaldo, marking one of the most significant tie-ups between the e-sport industry and the physical support industry in recent times. In addition to new in-game items and the playable characters, we also introduced the two new game modes as part of the partnership with Cristiano Ronaldo, a limited-time Battle Royale recent game mode and the team-based of 1V1 duel mode.

Our users love these new game modes as they provide a richer and a more varied gaming experience by morphing different types of gameplay into the Battle Royale genre. Free Fire's huge and the growing e-sport and streaming community is another key pillar of our user engagement strategy. We make significant progress in deepening engagement with our community in 2020 despite the challenge of holding live events. Three of the five top e-sport tournaments by peak concurrent viewers in 2020 were Free Fire tournament according to Esports Charts.

In 2020, Free Fire was once again the top-ranked mobile-only video game and the top-ranked battle royale video game on YouTube in terms of views. It was also the third-ranked game overall on YouTube by view count. Free Fire-related content recorded over 72 billion view count across YouTube globally over the course of the year. The game was also named the Esports Mobile Game of the Year at the Esports Award 2020.

These e-sports activities and online video content helped to drive up gamers' engagement ar -- around the Free Fire franchise while extending its reach to a wider group of communities as the spectator sport. While we continue to grow Free Fire into a long-lasting global franchise, we're also focused on building solid foundations for Garena's long-term growth. For example, in the fourth quarter, Phoenix Labs, our triple-A gaming studio based in Vancouver, enough to further expansion, adding new offices in Montreal and the Los Angeles, alongside its existing -- existing bases in Vancouver and Seattle. It also on well planned to build out teams in each of those cities to focus on new game development.

We are confident that the expanded Phoenix Labs team will deliver great content in the years to come. As we move through 2021, Garena is building on the strong momentum of 2020 and it's strengthening our position as the global leader in the digital entertainment industry. We believe that our uniquely newfound understanding of the taste and the preferences of global games community and our proven ability -- ability to build lasting bonds of affinity with gamers in diverse markets around the world will continue to drive growth and success for Garena in 2021 and beyond. Moving on to e-commerce.

2020 was an extraordinary year for Shopee. In a challenging environment, we adapted quickly to serve our communities and addressed the fast-evolving needs of our buyers and sellers. As a result, we have cemented Shopee's position as the favorite e-commerce platform for both buyers and sellers across Southeast Asia and the Taiwan. We continue to record excellent results for the fourth quarter.

Year-on-year growth for each of gross order, GMV, and the GAAP revenue further accelerated compared to the third quarter. In the fourth quarter, Shopee reported 1 billion gross order, up 135% year on year, and a GMV of $11.9 billion, an increase of 113% year on year. GAAP revenue grew 178% year on year to $842.2 million, as adjusted EBITDA loss for order decreased by 41% year on year to $0.41 during the quarter, reflecting that efficiencies we have reached across 2020 even as we continue to invest in growth, especially during the peak shopping season. For the full year of 2020, Shopee's gross order totaled 2.8 billion, up 133% year on year.

GMV was $35.4 billion, an increase of 101% year on year. GAAP revenue grew 150% year on year to achieve $2.2 billion. In Indonesia, Shopee's largest market, we continue to grow our leadership position. We recorded more than 430 million orders in the fourth quarter.

These translate into a daily average of around 4.7 million orders, up 128% year on year. According to App Annie, Shopee continued to rank first in Indonesia by average monthly active users, total time spent in app on Android, and the downloads in the shopping category in the fourth quarter and the for the full year of 2020. We are also encouraged to see more sellers and the brand around the region doing business on Shopee. For example, Shopee Mall, our dedicated space for leading brands, now features over 23,000 international and the local brands.

As our communities increasingly embrace e-commerce as their top retail choice, we believe Shopee's relentless focus on serving our users ensure that we continue to capture the large share of the results in growth. In both the fourth quarter and for the full year, Shopee was ranked the No. 1 in the shopping category across Southeast Asia and Taiwan by average monthly active users, total time spent in app on Android, and the downloads based on App Annie. In fact, Shopee was ranked the third most downloaded app in the shopping category globally for the full year according to App Annie.

The success of Shopee has also translated into stronger brand recognition across our communities. We see this YouGov's recently published "Best APAC Buzz Rankings 2020" where Shopee was ranked first in Asia. Shopee was also the No. 8 ranked brand YouGov's "Best Global Brands 2020", representing one of the two e-commerce brands in the world's top 10 ranking.

Our strong focus on serving our users will continue to drive lasting brand affinity across our region. In each of our markets, e-commerce adoption continues to grow at an accelerated pace. And we believe that as the go-to online shopping platform, Shopee will successfully capture and further drive this growth opportunity. Turning now to digital financial services.

SeaMoney had a transformational year in 2020 as it successfully captured opportunities presented by both the acceleration of digitalization in our economy as a whole and then the particularly strong growth of our e-commerce platform. As a result, it's enjoyed rapid and efficient growth in the fourth quarter and in the full year of 2020. For the fourth quarter, SeaMoney's mobile wallets reported a total payment volume of $2.9 billion with quarterly paying users surpassing 23.2 million. This was partially driven by monthly paying users in Indonesia, which exceeded 10 million during the fourth quarter.

For the full-year 2020, our mobile wallet total payment volume was $7.8 billion. Even at our mobile wallet, ShopeePay, benefited from the strong growth of Shopee. It also meaningfully reduced the payment friction and improved the user experience on Shopee. This synergistic growth of both Shopee and ShopeePay showcases the strength of our platforms in terms of adding value for our consumers.

Both platform online and offline use cases and the partnerships also grew in 2020 as we continued our initiatives to expand the use cases and as we saw more natural adoption by users who appreciate accessibility and convenience of our mobile wallet services. For example, we recently expanded our partnership with Google to offer our mobile wallet as a payment option for the Google Play Store in Indonesia in addition to our existing partnership in Thailand. As we onboard more online and offline use cases, we are seeing that our users increasingly appreciate the ease and the convenience of using our mobile wallet services. We also see that SeaMoney's merchant partners increasingly recognize the value of tapping into the vast and the rapidly growing user -- user bases of Shopee and SeaMoney.

We are excited about opportunities ahead of us to serve a wider set of needs for both new and existing consumers and the businesses across our ecosystem. The rapid adoption of digital financial services in our region is expected to have a long-term growth effect and we will continue to focus on delivering strong, efficient, and sustainable growth. Turning now to our guidance for 2021. We believe that we are well-positioned to continue delivering value across -- across our community.

For the full year of 2021, we currently expect bookings for digital entertainment to be between $4.3 billion and $4.5 billion, representing 38% year-on-year growth at the midpoint of the guidance. We also expect that revenue for e-commerce could be between $4.5 billion and $4.7 billion, representing 112% and year-on-year growth as a mid-point of the guidance. I'm also pleased to share that we had the complete acquisition of Composite Capital, a leading investment management firm founded and led by David Ma. I have known David for several years.

In the past, he has been a long-term shareholder of Sea and he shares our vision for the business and our passion to serve our communities through technology. David and his team have demonstrated a track record of thoughtful long-term investing with a deep understanding of industry trends and the business globally. I'm very excited to welcome David and the team at Composite Capital to the Sea family. Along with this acquisition, I'm proud to announce the formation of the Sea Capital, a new platform to manage this investment effort.

David will serve as the chief investment officer of Sea Capital and then report directly to me. He kept the world focused on identifying pioneering ways and investing in technology companies that share our vision of bettering the lives of consumers and small businesses through technology. By investing into the growth of our broader ecosystem, we believe Sea Capital can help accelerate the growth of the overall digital economy and create real and lasting value for our users, business partners, and the community. In line with this commitment, we are advocating an initial $1 billion for Sea Capital to deploy in the coming years.

We believe the addition of the Composite team and establishment of Sea Capital will further enhance our investment and the capital allocation capabilities in support of Sea's long-term growth strategies. I would also like to take this opportunity to welcome Dr. Yan Shuicheng who has joined the Sea family to build and lead Sea AI Labs as our group chief scientist. Dr.

Yan is a leading expert in the field of artificial intelligence, with a particular focus on computer vision, machine learning, and multimedia analysis. He is an ACM fellow and fellow of the Academy of Engineering Singapore. Sea AI Labs intends to attract and collaborate with top talent in artificial intelligence with the goal of exploring and developing long-term insights and technologies related to our existing businesses and new opportunities beyond. I believe that Dr.

Yan and Sea AI Labs will strengthen our capabilities in innovation and research, in line with our commitment to advancing technology to drive -- to drive the development of the digital economy across our regions. I'm very proud of the outstanding results our team achieved in 2020 and I believe we are moving into 2021 primed for the exciting growth opportunity ahead of us. Across the business, we are focused on driving sustained and efficient growth. As we feel toward becoming a top global internet company, we believe our single-minded goal of delivering value to our users will continue to drive our success.

With that, I will invite Tony to discuss our financials.

Tony Hou -- Chief Financial Officer

Thank you, Forrest. And thanks to everyone for joining the call. We have included detailed financial sketches together with the corresponding management analysis in today's press release and Forrest has discussed some of our financial highlights. So, I will focus my comments on the other relevant metrics.

For Sea overall, total GAAP revenue increased 102% year on year to $1.6 billion in the fourth quarter, and 101% year on year to $4.4 billion for the full year of 2020. This was mainly driven by thick rate growth in our e-commerce business as we continue to grow our tools to better serve our users' needs, as well as the growth of our digital entertainment business, especially self-developed game Free Fire. Digital entertainment bookings grew 111% year on year to $1 billion in the fourth quarter, and 80% year on year to $3.2 billion for the full year of 2020. GAAP revenue was up 72% year on year to $693.4 million in the fourth quarter, and 78% year on year to $2 billion for the full year of 2020.

The growth was primarily driven by the increase of our active user base and deepened paying user penetration as we continue to engage the community through news content rollouts and e-sports events. Digital entertainment adjusted EBITDA was $663.5 million in the fourth quarter and $2 billion for the full year of 2020. This represents year-on-year growth of 149% and 94% for the quarter and the full year respectively. This was mainly due to strong top-line growth and an increased share of our self-developed game among our total bookings.

On e-commerce, our fourth-quarter GAAP revenue of $842.2 million included GAAP marketplace revenue of $627.6 million, up 175% year on year. And GAAP product revenue of $214.6 million, up 187% year on year. For the full year of 2020, GAAP revenue of $2.2 billion included GAAP marketplace revenue of $1.6 billion, up 155% year on year, and GAAP product revenue of $0.6 million, up 173% year on year. The strong results demonstrated the deepening penetration of e-commerce and our ability to capture these accelerated growth opportunities created by the rapid expansion of the digital economy.

E-commerce adjusted EBITDA loss was $427.5 million in the fourth quarter and $1.3 billion for the full year of 2020. As we continued our investments to fully capture the opportunities in our markets, we remain committed to efficiency investing in and growing the ecosystem to serve our users better. Digital financial services GAAP revenue was $24.4 million in the fourth quarter and $60.8 million for the full year of 2020. Digital financial services adjusted EBITDA loss was $171.3 million in the fourth quarter and $511.1 million for the full year of 2020, as we continue our efforts to drive mobile wallet adoption.

Returning to our consolidated numbers. We recognize a net non-operating loss of $124.5 million in the fourth quarter of 2020, compared to our net non-operation -- operating loss of $15.2 million in the fourth quarter of 2019. Our non-operating loss in the fourth quarter of 2020 was primarily due to investment loss and interest expense on convertible notes. For the full year, our net -- net non-operating loss was $179.9 million, compared to a loss of $477.4 million for the full year 2019.

Our non-operating loss for the full year of 2020 was primarily due to interest expense on convertible notes, while such loss in 2019 was primarily due to the fair value loss of $472.9 million on our 2017 convertible notes. We had a net income tax expense of $44.2 million in the fourth quarter of 2020 and $141.6 million for the full year of 2020.This was primarily due to corporate income tax and withholding tax recognized in our digital and entertainment business. As a result, net loss excluding share-based compensation and changes in fair value of 2017 convertible notes was $430.7 million in the fourth quarter of 2020 and $1.3 billion for the full year of 2020. With that, let me turn the call to Yanjun.

Yanjun Wang -- Group Chief Corporate Officer

Thank you, Forrest and Tony. We are now ready to open the call for questions.

Questions & Answers:


Operator

Thank you. We will now begin the question-and-answer session. [Operator instructions] At this time, we will pause momentarily to assemble our roster. The first question today comes from Piyush Mubayi with Goldman Sachs.

Please go ahead.

Piyush Mubayi -- Goldman Sachs -- Analyst

Thank you for taking my question and congratulations on the numbers. May I just ask about the guidance that you provided on the gaming side. And looking back at the -- the growth that you've seen in the user number in 2020, could you extrapolate from that and give us a feel for what sort of user growth we can foresee in 2021 that's underpinning the growth in gaming revenues for 2021? And related to that, if you could expand on the driver of the improvement in margins that we are observing on the gaming side that would be great. I'll go back to the queue.

Thank you.

Yanjun Wang -- Group Chief Corporate Officer

Thank you, Piyush. In terms of user growth, we don't separate forecast for 2021, but if you look at our past performance, so far, our revenue growth or bookings growth for the digital entertainment segment has been driven by both user base growth as well as pay user penetration deepening., with a relatively stable average revenue for paying user. And that speaks to the strength of our game, especially our self-developed game Free Fire, which has been a top-grossing game in Southeast Asia and LatAm for multiple quarters and has also become a top-grossing game in India for 2020, as well as the fourth quarter of 2020. I think that is a very positive trend.

Also, we will continue to grow our user base globally for this game and we also see player positive datafication of our revenue with Latin America now contributing the largest share of revenues. At the same time, we see other parts of the world including India increasingly contribute a significant portion of booking to the digital entertainment segment. With this datafication, we're seeing Garena to become increasingly a global player with revenue coming from all over the world and user base expanding to the rest of the world rapidly. When we reached the last quarter -- third quarter we reached 170 million quarterly active users.

We thought that was a very good number. And then, you're seeing the fourth quarter, our active user base has increased to 601 million users. We're still continuing to see very positive user growth across all our regions. And that to us is -- is a very positive sign for the longevity and longer-term commercialization of this game as well as a return to our effort to build this get you to a long-lasting IT, a strong platform, and increasing the ecosystem of itself.

In terms of the improvement of digital entertainment adjusted EBITDA margin, we're seeing, as we mentioned, this is the many attributable to Free Fire being our self-development game, which doesn't require any revenue share with any IT owner or developer and therefore we continue to see much improvement. Of course, in the longer run, we will also see more datafication of revenue both from self-developed as well as supply publishing side and we are also focusing on investing into our ecosystem in recruiting top talent in building our technology capabilities and introducing more IT including IT collaboration with partners across different sites whether it's on the gaming side as well as on the social or other entertainment fronts to further improve our content offering to our user base. So that in the long run, we do expect to maintain a very healthy adjusted EBITDA margin for our gaming business. I will continue to run it in a very efficient manner.

Operator

The next question comes from Thomas Chong with Jefferies. Please go ahead.

Thomas Chong -- Jefferies -- Analyst

Hi, good evening. Thanks, management, for taking my questions, and congratulations on a solid setup of guidance. On Shopee, I would like to ask about our triple-digit revenue growth. Can management comments about the business trend? Of course, different regions of Indonesia, Singapore, Taiwan, Malaysia [Inaudible].

I just want to get a sense about which country are we seeing the fastest growth for this year? And -- and my second question is on the digital finance side. Can management comments about our strategies for this year, in particular, whether we will step up our efforts in the food delivery or other O2O initiative? Thank you.

Yanjun Wang -- Group Chief Corporate Officer

Thank you. In terms of the business trends and revenue growth for Shopee, first of all, we're seeing very strong growth across the region, in particular, our largest market in Indonesia which we disclosed continues to accelerate growth. So, on GMV order as well as take-rate side, we see it even accelerate at young year growth rate, which speaks to volumes again to the strength of our market leadership and our platform growth even as most of the country has opened up, you know, been in more of a contained manner as the COVID situation increasingly being under management. And I think, the in terms of the growth rates across different markets, we don't specifically give that breakdown but usually, we see very strong growth in larger market rally already established very strong market leader position as well as highly accelerated growth in some of the markets that where we see very strong adoption during the October period.

For example, in the Philippines, Malaysia, Singapore, we see very strong growth and people embrace online solutions during the COVID period and Shopee becoming increasingly a go-to platform for people's consumption needs across various -- various segments. And that trend we're seeing going into 2021 as showing you all our guidance for e-commerce again. And, you know, we're continuing to focus on driving efficient growth across our region and especially focus on setting the new users, as well as the sellers, be on board during this period of time and catering to the shift in lifestyle choices not accelerated by the pullback and then locked down measures taken so far, which could be, as we said before, we believe it's going to have a long-lasting effect on the visualization of our economy in the region. In terms of digital financial services, we see, again, very strong growth.

Even though we started integrating our Shopee pay and SeaMoney's wallet platform where Shopee, just at the beginning of last year, you already saw a very strong consumption as demonstrated by our pay user ratio, our pay user number as well a TPV growth and will continue to drive efficient growth to Shopee user base and also content to extend it to a third-party merchant. As we mentioned, we are expanding our partnership with Google to Indonesia. We have also partnered with other offline mods and SMB chains to continue to make our payment and wallet offerings available to a broader user base. Again, this is further accelerated by the fact that now people are increasingly looking for -- looking for alternative contactless payment method and shifting their consumption online that requires a convenient infrastructure for online payment in a region where credit card penetration remains very low.

In terms of food and other initiatives, we see these as category on Shopee that can offer additional value-adding to our consumers. We will continue to observe what is based on the consumer's natural consumption behavior in terms of expansion into new categories over time with efficiency.

Operator

The next question comes from Alicia Yap with Citigroup. Please go ahead.

Alicia Yap -- Citi -- Analyst

Hi, good evening, management. Thanks for taking my questions. Congratulations on the strong results. My first question is related to Shopee.

There has been a lot of news report mentioned about Shopee making good progress in Brazil. So, just wondering if you could share with us your overall e-commerce thoughts or the strategies for the Latin America specifically for Brazil. And then if you -- if we can compare between Lat-Am and Southeast Asia, what are some of the similarities and also the biggest difference between the two regions. And if your visions for these Brazil e-commerce initiative, what are the things that -- or efforts that you would need to step up in order to achieve your target in Brazil? And then very quickly on -- on the gaming, in terms of your studio that you are setting up in Montreal and Los Angeles and all that, is this more coming for potentially we are, you know, planning to license more U.S.

IP or is it -- they'll come up from our own IP in terms of these new games about them. Thank you.

Yanjun Wang -- Group Chief Corporate Officer

Thank you, Alicia. On the e-commerce front that we mentioned, Brazil is initiated by our cross-border team to offer more markets to our cross-border sellers, given that we already have established operations on the gaming side in the markets. So, it's generally efficient for us to offer additional value-adding to our sellers. On that front, we also start to see local sellers embarking on our platform and it's well-received.

We think that of -- of course, is a positive sign. However, it is still very preliminary for us and we'll continue to observe the market and let the team round with it and see how that progresses over time. And in terms of our, you know, comparison between Lat-Am and Southeast Asia, I think these are very different markets and we wouldn't presume that we know those markets very well at this point. Again, you know, given the only stage of the development there, we will -- the -- the team explore it more and see how that goes.

And in terms of the Phoenix Labs expansion. So, these are if you recall, we acquired Phoenix Labs in, you know, a -- acquire effort to bringing top talent base in the, you know, the West and who has tradition and long history of experience with AAA titles and also on PC and console-based games. And the team has been expanding into other locations in the U.S. to continue to recruit more gaming talent for our long-term self-development capabilities.

So, at the same time, of course, our partners in-- in the U.S. as well as other parts of the direct markets have been, you know, always in close communications with them to see if there could be good IP to be brought to our region now has been expanded to not just Southeast Asia but offer to include Lat-Am, India, and Mena, and the rest part of the world. And we have demonstrated our strong track record in managing deepening user base as well as commercialization in pretty much unprecedented massive way in those regions for a sustained and long period of time with our own IP, as well as the [Inaudible], our -- stuff about games. So, with that strong track record, we believe we're in a very good position to both attract top talent from all over the world tell us to use those based in the U.S., Canada, or Asia, as well as to attract top IP globally and in partnership with other developers.

Operator

The next question comes from Piyush Choudhary with HSBC. Please go ahead.

Piyush Choudhary -- HSBC -- Analyst

Yeah. Hi, good evening. Congratulations and thanks for taking my questions. Two questions, partly Shopee take rate has been improving.

Can you provide us some color on the ranking of the countries in -- in terms of the take rate and which country has the highest potential of improvement in take rate in 2021? Secondly on the logistic side, what are the average delivery times and can you tell us high-level plans for Shopee Express? You know, are there kind of targets for managing, you know, books and date of orders to Shopee Express in one year? Any color with that will be helpful. Thank you.

Yanjun Wang -- Group Chief Corporate Officer

Thank you, Piyush. We don't give the take rate breakdown. But suffice it to say that the take rate increase has been dry across different countries over time. We do it, you know, the pace and size of communication -- well communication with the market and also making sure we understand the performances and needs of our sellers and buyers as well.

Most importantly, that increase in the take rate is driven by advertisement as well transaction-based fees across different markets. So, I think that there could be fluctuations also sometimes from period to period. It is a dynamic process. We always look at the -- the condition, the time period, as well as the performances of our ecosystem to decide how best to manage that take rate over time.

Suffice to say that we think in the longer run, on the blended numbers, we still believe that it can still move to an even higher range at -- at a -- even high-single and low-double-digit range and I think we're right on target of getting there all the time. And in terms of logistics, our average delivery time is around probably a couple of days depending, of course, you know, what part of the region you're talking about. In the city, it can be less than a day. Of course, in some far places, then it can be, you know, a longer period of time.

But so far, we don't see that as a bottleneck for our e-commerce business growth. Of course, during the COVID period with travel constraints as well as demand -- increased demand from all over the different parts of the region, we -- we are quickly ramping up logistics capabilities in partnerships with our parties, logistics providers, as well as by increasing our own capacity in LazMall express delivery to supplement the 3PL capacity during that peak time. So, we'll continue to monitor the -- the logistics demand as well as the service levels of our 3PL and help them further grow in their efficiency and capabilities in serving our users. At the same time, ramping up our own capability as needed but in a very efficient manner.

Operator

The next question comes from Ranjan Sharma with J.P. Morgan Singapore. Please go ahead.

Ranjan Sharma -- J.P. Morgan Singapore -- Analyst

Hi. Thank you for the presentation and -- and congratulations on the results. Two questions from my side. Firstly, on the gaming guidance, do new games miss on any part of this guidance and -- and if you can your game pipeline might be for this year? Secondly, we have seen -- see expanding into new geographies and we are now selling to new services, how should we think about the sales and marketing budget and how are you allocating it to -- to the different services? Thank you.

Yanjun Wang -- Group Chief Corporate Officer

Thank you. In terms of the -- the game guidance, we are budgeting it based on whatever is currently visible to us as always. We don't specifically discuss pipelines but as -- as we all know, we've always been testing prototypes, ideas, and even more advanced games at any time -- at any point of time. And so, we continue to diversify our pipeline, genres, and capabilities across different types of games.

So, the -- the revenue guidance or bookings guidance is based on our reasonable estimates for 2021 based on whatever is currently visible to us. And in terms of the allocation of sales marketing, are you referring to digital entertainment segment also? Ranjan?

Ranjan Sharma -- J.P. Morgan Singapore -- Analyst

Predict -- hi, can you hear me?

Yanjun Wang -- Group Chief Corporate Officer

OK. Yes. Yes, I can. So, for e-commerce sales marketing expense, as you can see, we continue to improve on our efficiency, and our allocation sales marketing is a -- again, a dynamic -- dynamic process based on the time of the year and what we think is the development pace and pace of growth for the market and efficiency of investments in the markets, as well as any opportunistic media events, for example.

So, these are a combination of factor we look at in allocating sales and marketing. And thought -- the gist of it is we continue to focus on efficient growth to make sure that every dollar we spend there is -- is driving effective user growth and with strong use -- with strong user retention, and also increasing use of frequency. For example, we -- during Q4, during the peak sales period, this is a very strong shopping period and we have a lot of shopping activities, as well as media activity across different markets. And these have shown very strong results as you can see.

And more importantly, we're driving up not just user timestamps but also user frequency of our apps. We now see more than 5.7 times purchase frequency -- order frequency per month. And that's another step up from the last quarter's Q3's number. So, that is a very good testament to the strength of our platform and efficiency of our -- our investment into sales and marketing.

Operator

The next question comes from John Blackledge with Cowen. Please go ahead.

John Blackledge -- Cowen and Company -- Analyst

Great. Thank you. On -- on Shopee's EBITDA, any thoughts on EBITDA trends in 2021? Would you expect losses to be higher than in 2020? And more broadly, is there certain kind of overall take rate range we should think about that would lead to flat or positive EBITDA at Shopee? And then also on Shopee, so the -- the 4Q '20 overall marketplace take rate was 5.3% in 4Q versus 5.9% in 3Q. So, any color on the modest Q-over-Q decline in the take rate? Thank you.

Yanjun Wang -- Group Chief Corporate Officer

In terms of the EBITDA trends, we don't provide a guidance or forecast on EBITDA. I -- I think that maybe the previous question answer -- my answer to the previous question, to touch upon that, is a, we look at efficiency of investments. And b, we look at each market and timing based on the -- what's the natural pace of growth and how we can invest in that growth with -- with efficiency. And three, there could be optimistic events that could drive EBITDA fluctuations over a period of time.

But most importantly, I think, suffice it to say is that we can break even if we choose to at this point, even at this take rate. And our Taiwan take rate is not -- for example, that's a first the market where we focus even and we have achieved a very healthy EBITDA margins there as we've previously disclosed before. And the take rate in Taiwan is not the highest even among our existing markets. So, it's not -- to say that, you know, we have to drive to a very high tax rate to be able to break even.

Our investment in growth is really by choice and -- and according to the pace that we think is suitable for each market. So, we're in a very good position right now where our destiny is in our own hands and then we can control the pace of investments and allocation of each market in a highly dynamic and elastic way to drive efficient growth. In terms of the take rate, our take rate has actually increased quarter on quarter. That doesn't decline.

Happy to elaborate further offline but if you look at our past disclosure, there's increase in the take rate quarter on quarter.

Operator

The next question will become -- will come from Varun Ahuja with Credit Suisse. Please go ahead.

Varun Ahuja -- Credit Suisse -- Analyst

Yeah. Hi, good evening everyone, and thanks for the opportunity. I got two questions. First, can you elaborate a little bit on the seed capital? Where that objectives on that business? Is it you're looking more like a certain kind of investments that then you would come up with new kind of footing? And what kind of returns, time horizon, any more color will be helpful given that so many investments that you're looking into in the business also, that's one.

And number two, there have been -- during the last few months, report about you acquiring a bank in Indonesia. If you can provide more color on that, that will be helpful. Thank you.

Yanjun Wang -- Group Chief Corporate Officer

In terms of seed capital, as we shared, we are that -- we are very happy to have the composite team lead by David Ma to join us to further strengthen our investments and capital allocation capabilities. We think it's a very important for a -- a global internet company to -- to have that capabilities in the longer run and we will continue to build on our talent forward, as well as our pipeline to fund and strengthen that. We don't have a, you know, specific case yet in terms of the return rate in particular for -- as it's a -- it's a -- ace fund. I think our overall weight -- view to it that is still it is an integral part of Cisco story.

And whatever we do on the investment side is to further strengthen our growth capabilities in the long run and to further strengthen our ecosystem on -- as well as to further our miss -- mission and vision to grow -- to use technologies to serve our users, our communities, as well as ecosystem participants in our core regions. So, I think this is a -- not a -- any departure from our existing course of trying to grow the business in the long run and maximizing return to our shareholders for the long run. In terms of the Indonesia bank, we have gotten a bank license in Indonesia as well. And so, we see this as integral part of policy money segment where we continue to build out the infrastructure for digital payment as well as digital financial services.

We'll continue to focus on the technology front of our business as a, you know, as part of our core DNA. But at the same time, our focus is to use the technology that we have and our internet DNA to see how best to further strengthen the digital economy infrastructure in our region which were products, and at the same time, we believe there are significant opportunities in the long run that even exceed the size of our current opportunities we're looking at in that segment. So, we're very -- we're going to adopt a very long-run view toward that and look at the asset as a highly comprehensive settlement and each part and integral part of our long-term venture into the asset.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back -- conference back over to Minju Song for any closing remarks.

Minju Song -- Senior Manager and Group Chief Corporate Officer

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

Operator

[Operator signoff]

Duration: 62 minutes

Call participants:

Minju Song -- Senior Manager and Group Chief Corporate Officer

Forrest Li -- Chairman, Chief Executive Officer

Tony Hou -- Chief Financial Officer

Yanjun Wang -- Group Chief Corporate Officer

Piyush Mubayi -- Goldman Sachs -- Analyst

Thomas Chong -- Jefferies -- Analyst

Alicia Yap -- Citi -- Analyst

Piyush Choudhary -- HSBC -- Analyst

Ranjan Sharma -- J.P. Morgan Singapore -- Analyst

John Blackledge -- Cowen and Company -- Analyst

Varun Ahuja -- Credit Suisse -- Analyst

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