SEA Q3 Earnings Call Highlights

Key Points

• Sea posted record Q3 revenue of $8.6 billion, with net income up 34% to $502 million and adjusted EBITDA up 29% to $931 million. Executives gave different year-over-year revenue growth figures: CEO Forrest Li cited 43%, while CFO Tony Hou cited 23%.
• Shopee grew GMV 23% to $39.7 billion and adjusted EBITDA 45% to $269 million, which Li called its most profitable quarter. Sea expects roughly 25% full-year GMV growth and $1 billion in Shopee adjusted EBITDA.
• Monee revenue rose 64% to $1.6 billion, and loan balances grew 60% to $12.6 billion; Sea hopes to list the business separately within one to three years, subject to conditions. Loans more than 90 days past due were 1.3%, and management said it had tightened underwriting for some customer groups.

SEA NYSE: SE reported record third-quarter revenue of $8.6 billion and net income of $502 million, as growth in its Shopee e-commerce and Monee financial services businesses helped lift results. The company also outlined plans for a potential Monee listing and an additional $1 billion share repurchase.

Adjusted EBITDA rose 29% from a year earlier to $931 million, while net income increased 34%, Chief Financial Officer Tony Hou said. Management gave conflicting figures for revenue growth: Chairman and CEO Forrest Li said revenue rose 43%, while Hou put the increase at 23%.

Shopee Growth and Profitability

Shopee’s gross merchandise value, or GMV, rose 23% to $39.7 billion, and gross orders increased 26% to 4.5 billion. Revenue reached $6.1 billion, while adjusted EBITDA increased 45% to $269 million, which Li described as Shopee’s most profitable quarter.

Li said advertising revenue grew more than 55% as the number of sellers paying for ads rose more than 35%. Average monthly active buyers increased 20%, while new average monthly active buyers grew more than 50%.

The company continued to invest in delivery, fulfillment, its ShopeeVIP subscription program and video content. ShopeeVIP membership exceeded 21 million at the end of September, up more than 40% from the prior quarter, and members contributed close to a quarter of Shopee’s GMV.

President Chris Feng said Shopee’s video and livestream content business achieved a positive contribution margin during the quarter. He cautioned that shared costs made it difficult to calculate a separate adjusted EBITDA figure for content.

Li said Sea remains on track for Shopee GMV growth of around 25% and adjusted EBITDA of $1 billion for the full year. Feng said future monetization gains would partly support profit growth and partly fund further investment. He added that the company had not yet seen a major slowdown in Shopee’s GMV growth, although some consumers were becoming more value-conscious.

Monee Listing Plans and Credit Growth

Li said Sea hopes to list Monee as a standalone business within the next one to three years, depending on market conditions, the macroeconomic environment and regulatory requirements. He said a listing could provide Monee with a dedicated capital base and more flexibility to grow beyond Shopee, while the two businesses would continue to work closely together.

Monee’s revenue rose 64% to $1.6 billion, and adjusted EBITDA increased 15% to $298 million. Its consumer and small-business loan principal outstanding grew 60% to $12.6 billion at the end of September, while active credit users reached nearly 44 million.

Loans more than 90 days past due represented 1.3% of the portfolio. Li attributed a modest increase in the ratio primarily to changing credit conditions, especially in Thailand and Brazil, as well as shifts in the company’s market and product mix. He said Monee had tightened underwriting and adjusted credit limits for selected customer segments showing early signs of weakness.

Garena, Sea Cloud and Buybacks

Garena bookings rose 6% to $890 million, while revenue increased 29% to $840 million. Adjusted EBITDA grew 46% to $458 million. Li said Free Fire delivered strong bookings growth and Arena of Valor maintained momentum during its 10th-anniversary celebrations.

Sea is also developing Sea Cloud, an early-stage business intended to offer other organizations AI capabilities built for its own operations. Li said the company plans to focus on software and customer relationships rather than owning large amounts of computing infrastructure. It expects no significant financial impact from the venture for now.

During the question-and-answer session, management said Sea Cloud had not secured any enterprise contracts. Li said the company would evaluate opportunities deal by deal, seeking clear customer commitments and attractive returns. He also said Sea could invest in GPUs or data centers primarily for its own needs, separate from the cloud business.

Sea had nearly completed the $1 billion share repurchase program announced a year ago and plans to buy back an additional $1 billion of shares, Li said.

About SEA (NYSE:SE)

Sea Limited is a Singapore-based technology company operating digital entertainment, e-commerce and digital financial services businesses. Founded in 2009 as Garena, the company adopted the name Sea Limited in 2017. Its digital entertainment business, Garena, publishes and develops online games and also provides a platform for users to access games and connect with other players. Shopee, Sea's e-commerce platform, serves consumers and merchants in Southeast Asia and other markets, including Taiwan and parts of Latin America.

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