Investment Rating - The investment rating for the company is "Buy" with a target price of $168.00 [7][8]. Core Insights - The company's revenue for Q1 2025 was $4.84 billion, representing a year-on-year increase of 29.6%, slightly below the consensus estimate of 31.2% due to deferred gaming revenue and lower-than-expected e-commerce revenue [1]. - Adjusted EBITDA for Q1 2025 was $950 million, exceeding the consensus estimate of $700 million, indicating a positive trend in profitability as scale effects become more apparent [1]. - The management maintains a guidance of 20% growth in e-commerce GMV for 2025, with expectations of double-digit growth in active users and bookings in the gaming segment [1]. E-commerce Segment - E-commerce revenue increased by 28.3% to $3.52 billion in Q1 2025, slightly below the consensus estimate of 30.3% [2]. - The adjusted EBITDA for the e-commerce segment was $260 million, with an EBITDA margin of 7.5%, improving by 8.3 percentage points year-on-year [2]. - The number of e-commerce orders and GMV grew by 19% and 22% respectively, with management focusing on enhancing service quality to drive more merchants to use advertising tools [2]. Electronic Payment Segment - Electronic payment revenue surged by 57.6% to $790 million in Q1 2025, outperforming the consensus estimate of 51.3% [3]. - Adjusted EBITDA for this segment was $240 million, reflecting a year-on-year increase of 62.4%, with an EBITDA margin of 30.7% [3]. - The company rebranded its payment service from SeaMoney to Monee to highlight its synergy with e-commerce, with a loan balance of approximately $5.8 billion at the end of Q1 2025 [3]. Gaming Segment - Gaming revenue grew by 8.2% to $500 million in Q1 2025, below the consensus estimate of 15.0% due to significant deferred revenue [4]. - Adjusted EBITDA for the gaming segment was $460 million, with an EBITDA margin of 92.5% [4]. - The net bookings reached $780 million, up 51.4% year-on-year, with management confident in achieving double-digit growth in active users and bookings for 2025 [4]. Profit Forecast and Valuation - The company has revised its adjusted EBITDA forecasts for 2025, 2026, and 2027 upwards by 15.7%, 14.7%, and 13.2% respectively, reflecting better-than-expected profit release from various business lines [5][27]. - The target price is set at $168.00 based on a sum-of-the-parts valuation, with the gaming segment valued at $38.8 per share, e-commerce at $104.0 per share, and electronic payments at $25.2 per share [30][31].

Core Viewpoint - Sea's Shopee has shown strong growth in Q1 FY25, driven by seasonal factors, improved monetization rates, and cost optimization strategies [1][3] Group 1: Growth Drivers - Seasonal factors contributed to growth, as Ramadan fully fell in Q1 for the first time [1][3] - The company improved its monetization rate, with advertising monetization increasing by 50 basis points compared to last year [1][3] - Cost optimization efforts led to a significant reduction in transportation costs, along with improved sales, marketing, and operational expenses through AI solutions [1][3] Group 2: Market Position and Resilience - The macro environment has not significantly impacted Shopee's growth, as it operates primarily as a local market platform with minimal cross-border trade influence [2][4] - Shopee's price leadership in markets with low e-commerce penetration helps attract users seeking lower-priced products, enhancing market penetration [2][4] - The demand-driven nature of Shopee's market means it is less affected by discretionary spending fluctuations, with foreign exchange rates being the only potential risk factor [2][4] Group 3: Financial Performance and Projections - The company maintains a GMV growth guidance of 20% for the full year, with a long-term EBITDA target of 2% to 3% of GMV [1][3] - Short-term strategies focus on growth without excessively squeezing the ecosystem, ensuring both EBITDA improvement and sustained growth [1][3] Group 4: Regional Insights - In Brazil, Shopee's growth is supported by pricing advantages and significant infrastructure improvements, including reduced delivery times [7] - The company has successfully launched a VIP membership service, enhancing purchase frequency and user retention, which does not conflict with VAS revenue growth [7] Group 5: Financial Technology and Market Potential - Monee's strong performance is attributed to increased penetration of Shopee financial products and growth in non-Shopee business segments [5][6] - The Brazilian market shows significant growth potential for financial technology, with the company integrating more data to enhance service offerings [9]

Core Insights - Sea Limited (SE) reported adjusted earnings of 86 cents per share in Q1 2025, missing the Zacks Consensus Estimate by 7.53% and down from 21 cents per share in the same quarter last year [1] - Revenues reached $4.8 billion, a year-over-year increase of 29.6%, driven by growth in e-commerce and digital financial services [1] Financial Performance - Digital Entertainment (Garena) revenues were $495.6 million, up 8.2% year-over-year, with quarterly active users at 661.8 million, an increase of 11.3% [3][4] - E-commerce (Shopee) service revenues totaled $3.1 billion, reflecting a 28.7% year-over-year growth, with gross orders reaching 3.1 billion, a 20.5% increase [5][6] - Digital Financial Services revenues increased 57.6% year-over-year to $787.1 million, supported by a loan book growth of 76.5% to $5.8 billion [6][7] Profitability Metrics - Gross profit rose 43.9% year-over-year to $2.24 billion, with adjusted EBITDA more than doubling to $946.5 million from $401.1 million in the prior year [8][9] - Digital Entertainment's adjusted EBITDA increased 56.8% to $458.2 million, while E-commerce adjusted EBITDA reached $264.4 million, a turnaround from a loss of $21.7 million [9] Balance Sheet and Cash Flow - As of March 31, 2025, SE had cash and cash equivalents of $2.18 billion, down from $2.41 billion at the end of 2024 [10] - The company generated $756.9 million in cash from operating activities in the reported quarter, compared to $1.02 million in the previous quarter [10]

Group 1 - The core viewpoint of the article highlights the strong financial performance of Sea Group in Q1 2025, with significant revenue growth and a turnaround in net profit [1][2][3] - Sea Group reported a revenue of $4.841 billion, representing a year-on-year increase of 29.6%, and a net profit of $411 million, reversing a loss of $23 million in the same period last year [1] - The company's three main business segments showed improved profitability, with the e-commerce platform Shopee achieving a gross merchandise value (GMV) of $28.6 billion, up 21.5%, and total orders reaching 3.1 billion, an increase of 20.5% [1] Group 2 - The digital financial services segment, rebranded as "Monee," generated revenue of $787 million, a year-on-year growth of 57.6%, with a stable non-performing loan rate of 1.1% [1] - The digital entertainment segment benefited from collaborations with popular games, resulting in 662 million active users and 64.6 million paying users, with revenue of $496 million and a booking revenue of $775 million [2] - The total EBITDA for the company reached $947 million, doubling compared to the previous year, driven by growth across all three business segments [3]

Core Insights - Sea's Q1 2025 revenue increased by 29.6% year-over-year to $4.84 billion, slightly below analyst expectations of $4.89 billion [1] - The company reported a net profit of $411 million, a significant turnaround from a net loss of $23 million in the same period last year [1] - Adjusted EBITDA reached $946.5 million, marking a 136% year-over-year increase, indicating substantial improvement in profitability [1] E-commerce Segment - E-commerce revenue was $3.524 billion, up 28.3% year-over-year, with Gross Merchandise Value (GMV) at $28.6 billion, reflecting a 21.5% increase [1] - E-commerce accounted for 72.8% of total revenue, with core market revenue (including transaction and advertising fees) growing by 39.2% to $2.4 billion [1][2] - Value-added services revenue, including logistics, grew by 4.1% to $752 million [1] Digital Financial Services - Digital financial services contributed 16.3% to total revenue, driven primarily by growth in consumer and SME credit businesses, with revenue increasing by 57.6% to $787 million [1][2] - The segment's adjusted EBITDA contribution was $241 million, a 62.4% increase year-over-year [2] Digital Entertainment - Digital entertainment revenue was $496 million, up 8.2% year-over-year, with bookings reaching $775 million, a 51.4% increase [1] - This segment accounted for 10.2% of total revenue, with adjusted EBITDA contribution of $458 million, reflecting a 56.8% year-over-year growth [2] User Metrics - The company reported 661.8 million quarterly active users, an 11.3% increase year-over-year, and 64.6 million paying users, up 32.2% [2] Cost Structure - Total costs for the quarter were $2.605 billion, a 19.5% increase year-over-year, with specific costs for e-commerce, digital financial services, and digital entertainment reported as $1.934 billion, $106 million, and $181 million respectively [2] - Sales and marketing expenses totaled $930 million, up 20.8% year-over-year, with notable increases in digital financial services and digital entertainment marketing costs [2] Market Reaction - Following the earnings report, Sea's stock surged over 13% in pre-market trading, with a current market capitalization of $90.6 billion [3]

Financial Performance - Total GAAP revenue for Q1 2025 was $4.8 billion, up 29.6% year-on-year[4] - Total gross profit for Q1 2025 was $2.2 billion, an increase of 43.9% year-on-year[4] - Total net income for Q1 2025 was $410.8 million, compared to a net loss of $23.0 million in Q1 2024[4] - Total revenue for the first quarter of 2025 reached US$4.84 billion, up from US$3.73 billion in the same period of 2024, representing a growth of approximately 29.7%[39] - Basic earnings per share attributable to Sea Limited's ordinary shareholders was US$0.68 in the first quarter of 2025, compared to a basic loss per share of US$(0.04) in the first quarter of 2024[26] - Operating income for the first quarter of 2025 was US$456.4 million, a substantial increase from US$71.1 million in the first quarter of 2024[39] - Non-operating income for the first quarter of 2025 was US$89.2 million, a turnaround from a non-operating loss of US$(17.5) million in the first quarter of 2024, primarily driven by interest income of US$88.8 million[22] - Adjusted EBITDA for the group was $946.5 million, up 135.9% year-on-year[9] - Adjusted EBITDA for the consolidated segments was US$946.5 million in the first quarter of 2025, compared to US$401.1 million in the first quarter of 2024, indicating a growth of approximately 135.9%[37] E-commerce and Digital Services - E-commerce GMV reached $28.6 billion in Q1 2025, up 21.5% year-on-year, with gross orders totaling 3.1 billion, a 20.5% increase[8] - Digital financial services revenue grew by 57.6% year-on-year to $787.1 million, driven by a 76.5% increase in consumer and SME loans principal outstanding to $5.8 billion[8] - Digital entertainment revenue increased by 8.2% year-on-year to $495.6 million, supported by a strong user base and collaboration success[12] - Digital Financial Services segment revenue for the three months ended March 31, 2025, was $787.1 million, a 57.7% increase from $499.4 million in the same period of 2024[46][47] - Operating segment income for the Digital Financial Services segment was $228.6 million for the three months ended March 31, 2025, compared to a loss of $97.3 million in the same period of 2024[46][47] User Metrics - Quarterly active users reached 661.8 million, an increase of 11.3% year-on-year, while quarterly paying users grew by 32.2% to 64.6 million[8] Expenses and Provisions - The provision for credit losses increased by 74.3% to $281.9 million in Q1 2025, reflecting growth in lending activities[20] - Research and development expenses decreased by 2.8% to $295.9 million in Q1 2025[21] - Income tax expense increased to US$136.3 million in the first quarter of 2025 from US$78.8 million in the first quarter of 2024[23] Assets and Liabilities - Total current assets as of March 31, 2025, were US$17.78 billion, up from US$16.86 billion as of December 31, 2024[40] - Cash and cash equivalents decreased to US$2.18 billion as of March 31, 2025, from US$2.41 billion as of December 31, 2024[40] - The total liabilities increased from $14,147.9 million as of December 31, 2024, to $14,768.7 million as of March 31, 2025, marking a 4.4% rise[41] - Total current liabilities increased from $11,296.2 million as of December 31, 2024, to $11,801.3 million as of March 31, 2025, reflecting a 4.5% increase[41] - Shareholders' equity rose to $9,074.3 million as of March 31, 2025, up from $8,477.6 million as of December 31, 2024, indicating a 7.0% increase[42] Cash Flow - Net cash generated from operating activities increased to $756.9 million for the three months ended March 31, 2025, compared to $468.5 million for the same period in 2024, reflecting a 61.5% growth[43] - The net cash used in investing activities for the three months ended March 31, 2025, was $1,114.7 million, primarily due to an increase in loans receivable of $942 million[43] - The company’s cash, cash equivalents, and restricted cash at the end of the period increased to $4,016.0 million as of March 31, 2025, from $3,969.4 million at the end of the previous period[43] Business Segments - The company operates three core businesses: digital entertainment (Garena), e-commerce (Shopee), and digital financial services (Monee), with significant growth in each segment[30]

Core Insights - Sea Limited reported a revenue of $5.12 billion for the quarter ended March 2025, marking a 35.2% increase year-over-year and exceeding the Zacks Consensus Estimate by 4.21% [1] - The company's EPS was $0.86, which is an increase from $0.21 in the same quarter last year, although it fell short of the consensus estimate of $0.93 by 7.53% [1] Financial Performance Metrics - Quarterly paying users reached 65 million, surpassing the average estimate of 53 million [4] - Quarterly active users totaled 662 million, slightly above the average estimate of 657 million [4] - E-Commerce revenue was reported at $3.52 billion, which is a 28.3% year-over-year increase but below the average estimate of $3.63 billion [4] - Digital Financial Services revenue was $787.12 million, exceeding the estimate of $733.24 million and reflecting a 57.6% year-over-year growth [4] - Other Services revenue was $34.21 million, slightly below the estimate of $36.04 million, with a year-over-year increase of 17.6% [4] Adjusted EBITDA Performance - Adjusted EBITDA for Digital Entertainment was $458.21 million, significantly higher than the estimate of $322.55 million [4] - Adjusted EBITDA for E-commerce was $264.42 million, exceeding the estimate of $169.07 million [4] - Adjusted EBITDA for Digital Financial Services was $241.44 million, above the estimate of $225.87 million [4] - Unallocated expenses showed an adjusted EBITDA of -$8.44 million, slightly worse than the estimate of -$7.46 million [4] - Other Services had an adjusted EBITDA of -$9.11 million, better than the estimate of -$11.98 million [4] Stock Performance - Sea Limited's shares have returned +20% over the past month, outperforming the Zacks S&P 500 composite's +9.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Financial Data and Key Metrics Changes - Total GAAP revenue increased by 30% year on year to $4.8 billion in Q1 2025, driven primarily by GMV growth in e-commerce and digital financial services [31] - Total adjusted EBITDA was $947 million, compared to $401 million in the same period last year [31] - Net income was $411 million in Q1 2025, compared to a net loss of $23 million in Q1 2024 [33] Business Line Performance Changes E-commerce (Shopee) - Gross orders grew by 20% year on year to $3.1 billion, while GMV increased by 22% year on year to $28.6 billion in Q1 2025 [31] - Ad revenue grew by more than 50% year on year in Q1 2025 [9] - Adjusted EBITDA for e-commerce was $264 million in Q1 2025, compared to an adjusted EBITDA loss of $22 million in Q1 2024 [31] Digital Financial Services (Money) - Revenue grew by 58% year on year to $787 million, with adjusted EBITDA up by 62% year on year to $241 million [31] - Loan book grew by over 75% year on year to reach $5.8 billion, driven by the expansion of the user base [16] - Active users for consumer and SME loan products exceeded 28 million, representing more than 50% growth year on year [17] Digital Entertainment (Garena) - Total bookings grew by 51% year on year, with adjusted EBITDA growing by 57% [24] - Free Fire's average daily active users in Q1 were close to peak levels during the pandemic [26] Market Data and Key Metrics Changes - Shopee maintained market leadership with improved profitability across Asia and Brazil [8] - In Brazil, the loan book surpassed $1 billion, driven by higher penetration of S Pay Later on Shopee [18] - The overall portfolio quality for Money remained healthy, with a 90-day NPL ratio of 1.1% [17] Company Strategy and Development Direction - The company rebranded its digital financial services business from SEA Money to Money, aiming to create a seamless connection with Shopee [6] - The focus remains on enhancing price competitiveness, improving service quality, and strengthening the content ecosystem [9] - The company is committed to capturing long-term opportunities in underserved markets, particularly in Brazil [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance, citing strong growth and improving profitability across all businesses [5] - The macroeconomic environment has not materially impacted Shopee's growth, as the company operates primarily as a local marketplace [40] - Management emphasized the importance of risk management and maintaining asset quality in the financial services segment [22] Other Important Information - The company celebrated its 16th anniversary and highlighted the importance of technology in enabling financial inclusion [5][6] - The Shopee VIP membership program has seen encouraging adoption, with members purchasing more frequently and spending significantly more than regular buyers [12] Q&A Session Summary Question: What drives the improvement in Shopee's profitability and outlook for GMV growth? - Management attributed the growth to seasonality, improved take rates, and cost optimization, while maintaining confidence in the 20% GMV growth outlook despite macro uncertainties [36][39] Question: Can you elaborate on the strong performance of Money? - Growth was driven by higher penetration of S Pay Later on Shopee and strong performance in non-Shopee products, with a focus on prudent risk management [44] Question: What is the outlook for gaming bookings and potential volatility? - Management acknowledged strong Q1 performance but cautioned about potential quarterly volatility due to seasonality and specific collaborations [52] Question: How does the competitive landscape in Brazil affect margin expansion? - The competitive landscape remains stable, with margin improvements driven by better cost structure and operations, while monitoring the impact of new entrants like TikTok Shop [70] Question: What are the differences in asset quality management between Brazil and ASEAN markets? - Brazil presents a higher interest rate environment, requiring different risk assessment approaches, but the company has integrated more data to manage risks effectively [75]

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]