SEA’s Layoffs Hit Fintech Business

Southeast Asia-based superapp Sea is making layoffs in its e-commerce business, Shopee, according to media reports.

The headcount «adjustments» will impact Southeast Asia, Latin America and Europe, «Tech in Asia» reported, citing an internal company announcement. An email sent to employees from Shopee CEO Chris Feng said the layoffs will affect both fintech ShopeePay and ShopeeFood, the «Tech in Asia» report said.

«DealStreetAsia» reported, citing two sources aware of the matter, that around half of Shopee Thailand’s payment and food delivery teams have been hit by the layoffs.

Sea didn’t immediately respond to messages — sent over WhatsApp and via email — from seeking comment .

Superapp Status

The SeaMoney business offers mobile wallet services and payment processing as well as credit, insurtech and digital bank services under the brands ShopeePay, SPayLater, SeaBank and other names, according to the annual report. The superapp has e-commerce operations under the Shopee brand and video-gaming under Garena.

To be sure, in growing tech companies, layoffs are relatively common as the business moves from buildouts of infrastructure to a maintenance approach.

The reports of layoffs are despite Sea reporting in May that in the digital financial services segment, including SeaMoney, revenue for the first quarter jumped around 360 percent from the year-earlier quarter to US$236 million, and its operating loss narrowed to US$133.91 million from US$156.83 million in the year-ago quarter.

The cuts came as the company’s stock has post a sea of red, falling around 68 percent so far this year; the shares traded down 7.4 percent Monday. The plunge tracked a drop off in video-gaming as many countries ease Covid-related movement restrictions, and as investors eye its continued net losses. The shares have also been caught in a general selloff of tech names.

Tapping the Unbanked

Forrest Li, founder, CEO and chairman of Sea, had said on the conference call after the earnings release that the opportunity size for SeaMoney was «massive and has only been expanding.»

SeaMoney has grown in tandem with a boom for e-commerce services in Southeast Asia, a trend which accelerated due to the pandemic. The region still has a large unbanked population, creating gaps in the ability to collect payments – such as a dearth of credit card use — which aren’t typically seen in developed markets.

Of the around 400 million adults in Southeast Asia, around 198 million are unbanked — or don’t have a bank account — while another 98 million are underbanked, with a bank account, but without access to credit, investments and insurance, according to the e-Conomy SEA 2019 report published by Google, Temasek and Bain & Co. in October 2019, prior to the start of the Covid-19 pandemic.

In 2021, gross transaction value of digital payments in Southeast Asia grew to US$707 billion, up 9 percent from US$646 billion in 2020, according to the e-Conomy report for 2021, published November 2021. Consumer e-wallet usage is up 45 percent from pre-Covid levels, the 2021 report said.

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