Tencent-backed tech firm Sea declares 5 per cent pay rise for most employees, signalling a strong rebound in e-commerce, video gaming

The billionaire founder of Singapore-based tech conglomerate Sea has declared a 5 per cent pay increase for most employees starting July, sending a strong signal to investors he thinks the e-commerce and video gaming business has turned the corner after years of bleeding losses.

Workers who joined the company on or before March 31 will get the salary bump, Forrest Li said on Monday in a memo to employees seen by Bloomberg News. He said Sea has reached “self-sufficiency” as its cash balance is now increasing rather than shrinking every quarter, a goal it achieved months ahead of a target set last year.

The across-the-board pay rise marks a reversal from just a couple of quarters ago, when Li surprised investors with a companywide salary freeze and deep lay-offs.

The Tencent Holdings-backed Southeast Asian internet leader’s about-face may presage a broader recovery for the region’s technology sector, which like elsewhere has endured deep job losses and downward-spiralling valuations after a Covid-19-era online spending boom sputtered out in 2022.

Sea reported its first-ever quarterly net profit in March, about 14 years after its founding. The company took brutal measures last year to convince investors of its profit-making ability, including cutting thousands of jobs, retreating from major markets and slashing more than US$700 million from its quarterly sales and marketing expenses.

In his 1,300-word missive, sent out about a week before Sea is set to report its next earnings, chairman and chief executive Li addressed head-on the painful struggles the company went through during its turnaround effort.

Sea, which operates e-commerce platform Shopee and video game publisher Garena, was at one point in 2020 the world’s best-performing stock, buoyed by hopes the company would embody Southeast Asia’s nascent e-commerce and entertainment boom.

But the company then lost about US$160 billion of market value since a peak in October 2021 on questions about its moneymaking prospects and a global decline in tech stocks.

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“This past year was probably the most difficult period in the history of our company,” Li said, describing “painful” decisions including lay-offs the management had to take to navigate a worsening business environment.

Last year, Sea cut about 3,500 people from its workforce, according to its annual report. In September, the leadership team said they would forgo their salaries and tighten company expense policies until the company reaches self-sufficiency.

“The external environment is still a challenging one,” Li said. “With self-sufficiency, we have a foundation for strong growth once again.”