Sea Limited Q2 Earnings Miss Estimates, Revenues Rise Y/Y

Core Insights - Sea Limited (SE) reported adjusted earnings of 85 cents per share in Q2 2025, missing the Zacks Consensus Estimate by 14.14% and showing an increase from 46 cents per share in the same quarter last year [1] - Revenues reached $5.3 billion, a 38.2% year-over-year increase, driven by growth in e-commerce and digital financial services, surpassing the Zacks Consensus Estimate by 4.67% [1] Revenue Breakdown - Digital Entertainment (Garena) revenues were $559.1 million, up 28.4% year-over-year, supported by an increase in active users and paying user penetration [2] - Quarterly active users reached 664.8 million, a 2.6% increase year-over-year, while paying users increased by 17.8% to 61.8 million, raising the paying user ratio to 9.3% from 8.1% [2] - E-commerce (Shopee) service revenues totaled $3.8 billion, a 33.7% year-over-year increase, including GAAP marketplace revenues of $3.3 billion and GAAP product revenues of $0.5 billion [3] - Gross Merchandise Value (GMV) increased by 28.2% year-over-year to $29.8 billion, with gross orders reaching 3.3 billion, a 28.6% increase [4] - Digital Financial Services revenues surged 70% year-over-year to $882.8 million, driven by a loan book growth of 94% to $6.9 billion [5] Profitability Metrics - Gross profit increased by 52.1% year-over-year to $2.41 billion, with gross margin expanding by 420 basis points to 45.8% [7] - Adjusted EBITDA rose 84.9% year-over-year to $829.2 million, with an adjusted EBITDA margin of 15.8%, expanding by 400 basis points [9] - Digital Entertainment's adjusted EBITDA increased by 21.6% to $368.2 million, while E-commerce adjusted EBITDA reached $227.7 million, a significant turnaround from a loss of $9.2 million in the prior year [9] Cash Flow and Balance Sheet - As of June 30, 2025, Sea Limited had cash and cash equivalents of $2.17 billion, slightly down from $2.18 billion as of March 31, 2025 [11] - The company generated $1.62 billion in cash from operating activities in the reported quarter, compared to $756.9 million in the previous quarter [11]