Investment Rating - The report maintains a "Buy" rating for the company with a target price raised to $170, indicating a potential upside of 19% from the current price of $142.45 [2][4][17]. Core Insights - The company reported a strong performance in Q1 2025, with revenue of $4.84 billion, a year-on-year increase of 30%. Adjusted EBITDA reached $950 million, exceeding market expectations by 36%, with an adjusted EBITDA margin of 19.6% [1]. - E-commerce revenue grew by 28.3% year-on-year, with GMV increasing by 21.5%. The adjusted EBITDA margin for e-commerce improved to 7.5%, driven by scale expansion, cost optimization, and enhanced monetization capabilities [1]. - The digital financial services segment saw a 58% year-on-year revenue growth, with over 4 million new borrowers and a loan principal of $5.8 billion. The business has been rebranded as Monee, positioning it as one of Southeast Asia's largest unsecured consumer loan companies [2]. - The gaming segment experienced an 8% year-on-year revenue growth, with game revenue increasing by 51.4%, largely due to successful IP collaborations [2]. Summary by Sections Financial Performance - For FY25E, the company expects revenue to reach $21.14 billion, with an adjusted EBITDA of $3.59 billion and a net profit of $1.77 billion, reflecting significant growth from previous years [4][9]. - The adjusted net profit margin is projected to improve to 8.4% by FY25E, with a continued upward trend in profitability expected through FY27E [9]. Business Segments - E-commerce remains a key growth driver, with a focus on local market penetration and resilience against tariff uncertainties due to low cross-border trade exposure [1]. - The digital financial services segment is expected to continue its rapid growth, supported by effective credit risk management and adaptability to macroeconomic changes [2]. - The gaming segment is anticipated to maintain double-digit growth in users and revenue, bolstered by successful game launches and collaborations [2]. Market Position - The company is well-positioned in the market with strong competitive advantages, including localized operations and a robust product offering that minimizes the impact of discretionary spending fluctuations [1][2].

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-over-year increase of 29.6%, slightly below the consensus estimate of 31.2%. The adjusted EBITDA was $950 million, exceeding the consensus estimate of $700 million. 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][5]. Summary by Sections E-commerce - E-commerce revenue grew by 28.3% year-over-year to $3.52 billion, slightly below the consensus estimate of 30.3%. The adjusted EBITDA for this segment was $260 million, with an EBITDA margin of 7.5%, improving by 8.3 percentage points year-over-year. The order volume and GMV increased by 19% and 22%, respectively. Management is focused on enhancing service quality for sellers to drive more usage of advertising tools, with the number of participating sellers and average ad spend increasing by 22% and 28%, respectively [2]. Digital Payments - Digital payments revenue surged by 57.6% year-over-year to $790 million, outperforming the consensus estimate of 51.3%. The adjusted EBITDA for this segment was $240 million, up 62.4%, with an EBITDA margin of 30.7%. As of the end of Q1 2025, the loan balance for Monee was approximately $5.8 billion, with a non-performing loan ratio of about 1.1%, showing a decrease quarter-over-quarter. The brand name was changed from SeaMoney to Monee to reflect synergy with Shopee [3]. Gaming - Gaming revenue increased by 8.2% year-over-year to $500 million, below the consensus estimate of 15.0%, primarily due to deferred revenue. The adjusted EBITDA for this segment was $460 million, up 56.8%, with an EBITDA margin of 92.5%. The net bookings reached $780 million, a year-over-year increase of 51.4%. The active user count for Q1 2025 was 660 million, up 11.3%, with paying users at 64.6 million, a 32.1% increase [4]. Profit Forecast and Valuation - The profit forecast for 2025, 2026, and 2027 has been raised by 15.7%, 14.7%, and 13.2% to $3.52 billion, $4.53 billion, and $5.39 billion, respectively. The target price has been adjusted to $168.00 based on a sum-of-the-parts valuation model [5][30]. Financial Metrics - The projected revenue for 2025 is $20.89 billion, with a year-over-year growth rate of 24.2%. The net profit attributable to the parent company is expected to reach $1.89 billion, reflecting a significant increase of 325.79% year-over-year. The EPS for 2025 is projected at $3.20, with a PE ratio of 48.23 [6][39].

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]