Can SE's Rapidly Expanding DFS Unit Sustain Its Revenue Strength?

Sea Limited’s SE Digital Financial Services (DFS) segment has become one of its most powerful growth drivers. In the third quarter of 2025, DFS revenues surged more than 60% year over year, driven by strong loan demand, rising user adoption and improved monetization across the Monee ecosystem.

SE’s loan book continues to be a major growth engine, rising by nearly $1 billion in the quarter to reach $7.9 billion. This solidifies its position as one of the largest unsecured consumer lenders in Southeast Asia. Credit quality also remains strong, with the over-90-day NPL ratio steady at 1.1%, allowing the company to expand lending without pressuring margins. The move to an AI-driven “all-can-apply” model further boosted financial inclusion by adding more than 5 million first-time borrowers during the quarter.

Geographic and product diversification further reinforce DFS momentum. Thailand exceeded $2 billion in loans outstanding, while Brazil’s loan book more than tripled year over year, with improving portfolio quality. Additionally, ShopeePay’s partnership with Allianz Malaysia to launch new personal accident insurance products marks SE’s strategic push into insurtech, deepening its financial services footprint.

The broader market backdrop is supportive as well. Mordor Intelligence projects the global fintech market to reach $652.8 billion by 2030, growing at a CAGR of 15.27%, offering SE ample room to scale.

A key risk remains rising provisions and customer acquisition costs, which may pressure near-term profitability. However, given SE’s diversified growth strategy and strong execution across markets, the DFS segment appears well-positioned to sustain its momentum in the years ahead.

SE Faces Challenges From Powerful Digital Finance Players

PayPal Holdings, Inc. PYPL remains a major competitor to Sea Limited’s digital financial services, as it combines global scale with strong payments expertise. PayPal’s competitive strengths include brand trust, cross-border reach and a large global user base. PayPal is advancing through BNPL expansion, agentic commerce initiatives, Tap to Pay, its PYUSD stablecoin and crypto payments, reinforcing its relevance even beyond Southeast Asia.

Grab Holdings GRAB stands out as a key rival to Sea Limited’s “Money” platform, as Grab Holdings integrates its fintech services, including GrabPay, lending, insurance and the GXS digital bank across its mobility, delivery and merchant ecosystem. Grab Holdings benefits from strong localization, a focused expansion strategy in Southeast Asia and partnerships with Amazon, BYD and OpenAI, strengthening its competitive position through advanced AI-driven financial and commerce experiences.

SE’s Price Performance, Valuation & Estimates

Sea Limited shares have risen 35.1% year to date, outperforming both the broader Zacks Computer & Technology sector’s return of 26.9% and the Zacks Internet - Software industry’s gain of 9.3%.

SE’s YTD Price Performance

From a valuation perspective, SE stock is currently trading at a forward 12-month price-to-earnings ratio of 25.71, lower than the sector’s 29.08X. SE carries a Value Score of D.

SE’s Valuation

The Zacks Consensus Estimate for SE’s 2025 earnings is pegged at $3.84 per share, which decreased by 5% over the past 30 days. This marks a strong 128.57% surge in earnings compared to 2024.

SE stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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