Sea Limited (SE) Earnings Comment: To the Moon and Back? 

TradingKey - Sea Limited released its earnings for the second quarter of the fiscal 2025 on August 12th before the start of the trading session and the stock price simply skyrocketed, as it finished the day 19% higher.  

The company demonstrated impressive top line growth in all the three business segments. The EPS was a miss, but this was mostly due to tax adjustments.

Shopee

Sea’s e-commerce platform achieves 28.2% year-over-year growth in terms of Gross Merchandise Volume to $29.8bn (versus $28.6bn expected). The number of orders was also higher than expected (3.30 billion vs 3.03 billion). All this led to e-commerce revenue of $3.77 billion, beating the initial estimate of $3.632 billion.

A year ago, the management decided to dedicate efforts towards growth on the expense of short-term monetization. At the call yesterday, Sea explicitly mentioned GMV growth is higher than the peers’, consolidating more market share in both Southeast Asia and Latin America.

Monee

Monee, the fintech arm of Sea achieved a remarkable revenue growth of 70% year-over-year ($880 million versus the estimate of $800 million). This growth was primarily driven by growth in their loan portfolio and expansion of services such as digital payments, buy-now-pay-later and digital banking. Also, Monee is growing on the back of Shopee, as payments become integral part of the company’s e-commerce product.

Garena

Garena, the gaming platform of Sea also performed solidly. The revenue was $559 million versus the estimated $520 million, with growth of 28% year-over-year. Garena’s flagship game, Free Fire, continued to drive growth, maintaining approximately 100 million daily active users.

Profitability

Despite prioritizing top-line growth over profitability, the company’s operating income still improved quite significantly from $488 million in 2025Q2 vs $83 million the same quarter last year. This five-fold increase was driven mainly by scalability of Sea businesses, as e-commerce, fintech and gaming having rather fixed infrastructure costs and as they scale, the network effect allows the costs to be distributed across the users (aka better unit economics).

Conclusion and Outlook

Sea Limited’s management outlook for both Q3 and Q4 2025 was highly positive, expecting the growth momentum to continue with above 20% growth of GMV for Shopee and Free Fire to continue monetizing. 

Just 2-3 years ago, Sea was at the bottom, as the e-commerce business was under immense pressure from competitors like Lazada and TikTok, while Garena’s Free Fire was banned in India. That time the stock dropped 90%.

In the years after, Sea was able to recover by optimizing its e-commerce operations. This happen by exiting Europe and India – two unprofitable markets and focusing only on Southeast Asia and Latin America. They also propped up their logistics capabilities which resulted in faster delivery and better customer experience.

Right now, it all seems to work fine, however the risks still remain. Garena performance is largely tied to only one game (Free Fire) which may not be very sustainable. On the e-commerce front, the markets they operate are still in early stages of development and competitors like Lazada, Mercado Libre or even TikTok may turn the game in their favor.

After the results, the company is trading at 124 times the earnings, a very generous valuation driven by the overall business growth. However, the embedded uncertainty is still quite high.

TradingKey - Sea Limited will release its earnings for the second quarter of the fiscal 2025 on August 12th before the bell.

Shopee (E-commerce)

The most important metric for e-commerce businesses is gross merchandise value (GMV), and Shopee is expected to sustain the high level of GMV growth of above 20%. This hypergrowth is driven by both improvement of ad-related take rate, as well as improving logistics efficiencies.

Competitive Landscape

However, monetization of Shopee is also quite dependent on the competitive landscape. In the recent quarters, we saw a strong momentum for Shopee, with its growth outpacing Lazada, Tokopedia and Temu in Southeast Asia and MercadoLibre in Latin America. However, the competition in these markets is till intense and the roles can reverse very quickly.

Monee

Monee is the fintech platform that operates along with Shopee and Garena, it does digital payments, buy now pay later, as well as digital banking. This is the fastest growing segment when it comes to revenue. For investors, it is important to track the degree of penetration of Monee in Latin America (a market which is still in a very early stage of development) as well as the integration of Monee with Shopee, the e-commerce business.

Garena

We should also not ignore the legacy business of Sea – the Gaming platform Garena. Garena still remains a cash cow for the firm with its mature high margins. The performance of the segment would give us a valuable insight into the current state of the gaming industry. Also, aspects like daily active users, average spending per users, as well as performance of the newly released games would weight on the stock price.

To sum up

As a company that recently turn profitable, SEA PE is quite high but we do expect very high growth especially from Monee and Shopee. However, Sea is historically notorious for missing revenue and EPS guidance, thus a lot of volatility from the earning report is quite possible.

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