Sea 2Q25 Earnings Preview: Shopee is Still Rocking?
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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