Management Takes Drastic Steps to Ensure Financial Stability
In an effort to protect Sea from the economic downturn affecting tech companies, the CEO and top management will forgo their salaries, while the company implements stricter spending policies. This decision comes as the Singaporean gaming and e-commerce powerhouse faces significant challenges.
Forrest Li, the company’s CEO, announced in a memo on Thursday (September 15) that the leadership team would not take any cash compensation until Sea achieves financial self-sufficiency. “We recognise that the current conditions will not be short-lived; the economic challenges may persist into the medium term,” he stated.
In his comprehensive 1000-word communication, which was obtained by Bloomberg News, Li discussed Sea’s struggle in the face of rising interest rates, inflation, and market volatility. Since reaching a peak market value in October, the company has lost approximately US$170 billion, amid concerns over its financial sustainability and the global decline in tech stock performance.
Li further acknowledged the difficulty of raising funds in the current climate, as investors turn to safer options. “We do not anticipate being able to raise capital in the market in the near term,” he said. The company’s primary goal over the next 12 to 18 months is to achieve positive cash flow.
To tighten its belts, Sea will impose strict limits on business expenses. These include capping business travel to economy class, limiting daily meal allowances to US$30, restricting hotel stays for business trips to US$150 a night, and cutting back on entertainment and meal reimbursements.
Li emphasised the necessity of becoming self-sufficient in order to reduce reliance on external capital: “The only way to free ourselves from this is by generating enough cash to meet our needs and fund our projects internally.”
Facing mounting pressure to balance growth with cost control, Sea is adjusting its focus. Rising interest rates and inflation are curbing consumer spending, and investors are demanding profitability before further funding. Following a series of setbacks—including a ban of its flagship game in India—the company is shifting from aggressive expansion to a more sustainable approach aimed at achieving profitability. This year, Sea expects its gaming division, Garena, to see its first decline in bookings, and it has also retracted its e-commerce growth forecast for 2022.
