Sea Limited (SE) Q1 2025 Earnings Call May 13, 2025 07:30 AM ET Speaker0 Good morning and good evening to all, and welcome to the Sea Limited First Quarter twenty twenty five Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. Thank you. I'd now like to welcome Mr. Elson Choi to begin the conference. Please go ahead. Speaker1 Hello, everyone, and welcome to twenty twenty five First Qua ...

Financial Performance - The company's GAAP revenue reached $48411 million in Q1 2025[19] - Gross profit was $22 billion in Q1 2025[13] - Operating income amounted to $4564 million in Q1 2025[19] - Adjusted EBITDA reached $9465 million in Q1 2025[16] E-commerce (Shopee) - E-commerce GAAP revenue was $35 billion in Q1 2025[19] - E-commerce adjusted EBITDA was $2644 million in Q1 2025[19] - Content-driven orders accounted for approximately 20% of physical goods order volume in Q1 2025[26] Digital Financial Services - Loans principal outstanding grew over 75% year-over-year in Q1 2025[45] - Digital Financial Services GAAP revenue was $7871 million in Q1 2025[19] - Digital Financial Services adjusted EBITDA was $2414 million in Q1 2025[19] - NPL90+ ratio was relatively stable at 11% in Q1 2025[45] Digital Entertainment (Garena) - Digital Entertainment bookings reached $775 million in Q1 2025, a 51% year-over-year increase[9, 59] - Digital Entertainment adjusted EBITDA was $4582 million in Q1 2025[19]

Market Capitalization Changes - Tesla's market capitalization increased by 6.75% to $1,025.4 billion [3] - TSMC's market capitalization rose by 5.93% to $969.7 billion [3] - Tencent's market capitalization grew by 4.66% to $609.8 billion [3] - Netflix's market capitalization decreased by 2.65% to $472.3 billion [3] - Oracle's market capitalization increased by 4.58% to $440.8 billion [3] Notable Performers - Shopify saw a significant increase of 13.7% in market capitalization, reaching $136.2 billion [4] - AppLovin experienced a remarkable rise of 89% to $1.177 billion [4] - AMD's market capitalization increased by 5.13% to $175.3 billion [5] - Uber's market capitalization rose by 6.39% to $184.2 billion [5] Decliners - Pinduoduo's market capitalization fell by 6.14% to $165.2 billion [4] - Xiaomi's market capitalization decreased by 2.11% to $163.4 billion [4] - Spotify's market capitalization declined by 4.23% to $127.3 billion [4] Other Companies of Interest - Adobe's market capitalization increased by 3.3% to $168.7 billion [4] - Qualcomm's market capitalization rose by 4.78% to $167.0 billion [4] - Intel's market capitalization increased by 3.55% to $96.7 billion [5] - Airbnb's market capitalization grew by 5.64% to $828 million [5]

Group 1 - Sea is expected to report Q1 2025 financial results on May 13, with revenue projected to grow 29.7% year-over-year to $4.91 billion and earnings per share increasing significantly from $0.21 to $0.93 [1] - The growth in revenue is anticipated to be driven by the continued expansion of its digital financial services, particularly in consumer and SME lending in Southeast Asia and Brazil, with loan growth exceeding 60% year-over-year in Q4 2024 [1] - Sea's digital entertainment segment, Garena, is expected to perform well in Q1 due to the successful collaboration with "Naruto" for "Garena Free Fire," which is anticipated to enhance user engagement and revenue [1] Group 2 - The end-to-end logistics integration through SPX Express is expected to positively contribute to Sea's Q1 2025 performance, with SPX Express achieving nearly 50% of packages delivered within two days in Asia [2] - However, seasonal weakness in the e-commerce sector at the beginning of the year is likely to negatively impact growth momentum for Sea's e-commerce platform, Shopee, in Q1 [2] - The e-commerce sector remains highly competitive, which may pressure Shopee's fee rates and necessitate ongoing investments in service quality [2]

Core Viewpoint - Sea Limited is expected to report first-quarter 2025 results on May 13, with earnings estimated at 93 cents per share and revenues projected at $4.91 billion, indicating a year-over-year growth of 29.7% [1] Group 1: Earnings and Revenue Expectations - The Zacks Consensus Estimate for Sea Limited's first-quarter earnings is unchanged at 93 cents per share, compared to 21 cents per share in the same quarter last year [1] - Revenue expectations are pegged at $4.91 billion, suggesting a year-over-year growth of 29.7% [1] Group 2: Recent Performance Trends - Sea Limited has missed the Zacks Consensus Estimate in the last four quarters, with an average negative surprise of 22.65% [2] - The credit segment, a key revenue driver, recorded over 60% year-over-year loan book growth in Q4 2024, indicating strong potential for revenue expansion in Q1 2025 [3] Group 3: Business Segments Performance - The Garena gaming segment, particularly the Free Fire franchise, is expected to perform well due to a collaboration with NARUTO SHIPPUDEN, enhancing user engagement and revenue [4] - SPX Express's logistics integration is anticipated to positively impact performance, with nearly 50% of parcels delivered within two days, reflecting year-over-year improvements [5] Group 4: Challenges and Competitive Landscape - Seasonal softness in the e-commerce sector is expected to hinder Shopee's growth momentum in Q1 2025, alongside a highly competitive landscape that may pressure take rates [6] Group 5: Earnings ESP and Zacks Rank - Sea Limited has an Earnings ESP of -4.84% and a Zacks Rank of 3 (Hold), indicating lower odds of an earnings beat compared to other stocks with more favorable metrics [7]

Core Viewpoint - Sea Limited is expected to report significant year-over-year growth in earnings and revenues, with analysts projecting earnings of $0.93 per share and revenues of $4.91 billion for the upcoming quarter, reflecting increases of 342.9% and 29.7% respectively [1] Earnings Projections - The consensus EPS estimate has been revised downward by 1% in the past 30 days, indicating a reassessment by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3] Revenue Estimates - Analysts estimate 'Revenue- E-Commerce' to be $3.63 billion, representing a year-over-year increase of 32% [5] - The consensus for 'Revenue- Digital Financial Services' is projected at $733.24 million, indicating a growth of 46.8% from the previous year [5] - 'Revenue- Other Services' is expected to reach $36.04 million, reflecting a year-over-year increase of 23.9% [5] User Metrics - Analysts project 'Quarterly paying users' to reach 53, up from 49 a year ago [6] - 'Quarterly active users' are expected to total 657, compared to 595 in the previous year [6] EBITDA Estimates - 'Adjusted EBITDA- Digital Entertainment' is projected at $322.55 million, an increase from $292.21 million reported in the same quarter last year [6] - 'Adjusted EBITDA- Digital Financial Services' is expected to be $225.87 million, up from $148.66 million a year ago [7] Stock Performance - Sea Limited's shares have returned +19.7% over the past month, outperforming the Zacks S&P 500 composite's +11.3% change [7]

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Core Viewpoint - The recent executive order by President Trump calling for increased deep-sea mining is expected to benefit Rio Tinto Group, positioning it for potential upside in the coming months [4][5][10]. Group 1: Company Overview - Rio Tinto Group is a multinational mining company that specializes in deep-sea mining and has the expertise needed to meet the new demand for minerals and materials [3][5]. - The stock has a current price of $58.54, with a 52-week range between $51.67 and $74.24, and a dividend yield of 7.62% [1]. Group 2: Market Activity - Recent trading activity indicates strong interest in Rio Tinto, with the stock outperforming the S&P 500 by 10% over the past quarter, driven by a rally following the announcement [6]. - There has been significant call options activity, with up to 7,453 call options opened, indicating bullish sentiment among traders [7]. Group 3: Institutional Investment - Capital Advisors increased their holdings in Rio Tinto by 3.7%, translating to a net position size of $25.5 million, reflecting institutional optimism [8][9]. - Analysts maintain a consensus price target of $73 per share, suggesting a potential upside of 23% from current levels [10]. Group 4: Financial Metrics - Rio Tinto offers a dividend payout of $4.46 per share, resulting in a 7.5% annualized yield, which is attractive for investors [12]. - The stock is currently trading at 80% of its 52-week high, presenting an asymmetrical risk-to-reward setup for investors [11]. Group 5: Future Outlook - The anticipated increase in demand for mining and materials due to the executive order is expected to lead to better earnings per share outcomes in upcoming financial results [13]. - The combination of dividend yield and potential price appreciation makes Rio Tinto an appealing consideration for investors [12][13].

Group 1: Company Performance - Sea Limited Sponsored ADR closed at $134.05, reflecting a +0.1% change from the previous day, which lagged behind the S&P 500's gain of 0.15% [1] - Over the last month, the company's shares increased by 1.1%, underperforming the Computer and Technology sector's gain of 1.15% but outperforming the S&P 500's loss of 0.21% [1] Group 2: Upcoming Earnings - The earnings report for Sea Limited is scheduled for May 13, 2025, with an expected EPS of $0.93, indicating a 342.86% increase from the same quarter last year [2] - Revenue is projected to be $4.91 billion, reflecting a 29.69% rise from the equivalent quarter last year [2] Group 3: Full Year Projections - For the full year, earnings are estimated at $3.94 per share and revenue at $21.84 billion, representing increases of +134.52% and +28.91% respectively from the prior year [3] Group 4: Analyst Estimates - Changes in analyst estimates for Sea Limited are crucial as they reflect short-term business trends, with upward revisions indicating analysts' positive outlook on the company's operations [4] - The Zacks Rank system, which considers these estimate changes, provides a rating system that can help investors make informed decisions [5] Group 5: Zacks Rank and Valuation - Sea Limited currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate having decreased by 7.24% over the past month [6] - The company is trading at a Forward P/E ratio of 34.02, which is a premium compared to its industry's Forward P/E of 26.51 [7] Group 6: Industry Context - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 141, placing it in the bottom 44% of over 250 industries [7] - The top 50% rated industries outperform the bottom half by a factor of 2 to 1, highlighting the importance of industry strength in stock performance [8]

Industry Overview - Georgia's tourism industry is experiencing significant growth, with 7.4 million international visitors in 2024, representing a 4.2% increase from the previous year [1] - Batumi is highlighted as a leading travel hotspot due to its attractive Black Sea coastline and vibrant atmosphere [1] Company Expansion - Wyndham Hotels & Resorts is expanding its presence in Georgia, introducing the La Quinta by Wyndham brand to tap into the growing tourism market [2] - The La Quinta by Wyndham Batumi hotel is strategically located near Batumi Beach and the international airport, enhancing its appeal to travelers [2] Hotel Features - La Quinta by Wyndham Batumi features 98 rooms, including various types such as king and twin rooms, catering to diverse traveler needs [3] - The hotel offers amenities like on-site parking, a 24/7 fitness center, wellness facilities, an international restaurant, and a bar [3] Strategic Vision - Wyndham's commitment to the Georgian market is part of a broader EMEA growth strategy, recognizing the long-term potential of the region [2] - The hotel aims to provide a premium experience that aligns with the expectations of international travelers [4] Brand Recognition - La Quinta by Wyndham is part of a global portfolio of over 900 hotels, known for its quality service and guest experience [4] - Wyndham Hotels & Resorts is the largest hotel franchising company globally, with approximately 9,300 hotels across over 95 countries [6]