Sea Limited Q4 2025 Earnings Conference Call

Sea Limited (NASDAQ:SE) reported fourth-quarter financial results on Tuesday. The transcript from the company’s fourth-quarter earnings call has been provided below.

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Operator

Good morning and good evening to all and welcome to the Sea Limited 4th Quarter and Full Year 2025 Results Conference Call all lines have been placed on mute to prevent any background noise. After the Speaker’s prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by one on your telephone keypad. If you would like to withdraw your questions, please press STAR and then one again. For operator assistance throughout the call, please press STAR and zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to introduce Mr. Elson Choi to begin the conference. Please go ahead sir.

Elson Choi (Investor Relations Team Member)

Hello everyone and welcome to Sea 2025 fourth quarter and full year Earnings conference call. I am Elson from SEAS Investor Relations Team. On this call we may make forward looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosure. For the discussion of the use of non GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non GAAP financial measures in our press release. I have with me SEA Chairman and Chief Executive Officer Forrest Lee, President Chris Fer and Chief Financial Officer Tony Ho. Our management will share strategy and business updates, operating highlights and financial performance for the fourth quarter and full year of 2025. This will be followed by Q and a session in which we welcome any questions you have. With that, let me turn the call over to Forrest.

Forrest Li (Chairman and Chief Executive Officer)

Hello everyone and thank you for joining today’s call. 2025 has been a great year for Sea. We generated a record $23 billion in revenue representing 36% year on year growth, an acceleration from 2024. At the same time, we improved our bottom line profit. Our full year net income reached $1.6 billion and adjusted EBITDA reached $3.4 billion representing a 260% and 75% year on year increase respectively. All our businesses scaled well in 2025 exceeding our initial growth expectations. This broad based robust growth is healthy and sustainable underpinned by the growing scale of users that we serve. In 2025, Shopee served around 400 million active buyers and 20 million sellers, achieving $127 billion in GMV money gained over 20 million unique first time borrowers and grew its loan book beyond $9 billion while maintaining stable risk and Garena connected with over 100 million players on average every day throughout the year generating almost $3 billion in bookings. We were successful in 2025 because we chose the right set of strategies and we executed them well. 2026 will be a continuation of this approach. Our strategies will be consistent and execution remains key. We will double down on operational excellence and work towards delivering another year of strong growth and healthy profit. With that, let me take you through each business’s performance first, starting with shopee. Shopee achieved another record setting quarter with new highs in GMV gross order volume and revenue. Our full year GMV grew 27% year on year alongside significant profit improvements. We generated a full year adjusted ebitda of over $880 million in 2025. Our strong GMV growth was driven by tangible improvements we made for both buyers and sellers. We made product discovery easier, broadened our assortment of offerings at competitive prices and widened access to fast reliable shipping. We also improved our monetization further. In the fourth quarter, ad paying sellers increased by more than 20% and their average ad spend increased by more than 45% year on year. As a result, ad revenue grew over 70% and ad take rate increased by more than 80 basis points year on year. The strong set of 2025 results is a validation of the effectiveness of our strategic choices for shopee. We have shown our ability to enhance monetization as demonstrated by our consistently improving take rate over the past two years. For the near term, we choose to prioritize growth while upholding financial discipline. For 2026, we aim to grow Shopee’s annual GMV by around 25% year on year with its full year adjusted EBITDA no lower than 2025 in absolute dollars. We believe this is the right strategy to optimize shopee’s long term profitability. Let me highlight a few areas where we are investing to further enhance our scale and market leadership. These include our continued efforts into logistics, Shopee VIP membership program and expansion of our content ecosystem. The objective is clear. We want to serve more users and engage them better. In 2025, monthly active buyers and average monthly purchase frequency increased by 15% and 10% respectively compared to a year ago. In 2026 we will remain focused on executing these priorities well. It will benefit us with deeper structural modes that can further depreciate Shopee from its PE first Logistics. Our logistics capabilities have become an increasingly important different depreciator for Shopee. SPX Express now processes on average over 30 million parcels every day, making it one of the largest e commerce logistics solution providers in our market. In 2025, we improved speed and cost efficiency across our market while customizing delivery options for different user needs in dense urban areas. We scaled instant and same day delivery for buyers who value speed and convenience. We expanded instant delivery into additional use cases included $240, a 27% increase year on year. Third, we expanded credit use cases beyond Shopee into more consumer spend scenarios, letting us penetrate a much larger and addressable market. Offshore Estate LATER has evolved from a nascent offering into a meaningful contributor to our overall loan portfolio. By the end of 2025, offshore PSA later loans grew over 300% year on year, accounting for over 15% of our total ESTP LATER portfolio in Malaysia. Close to 30% of Estay later usage was already offshopee. Our success with Offshore has been driven by the close attention we pay to user experience. We took great effort to ensure that SAPAY LATER could be activated in seconds and used seamlessly for in store purchases. We integrated SP LATER with national QR payment systems across key markets making it much easier for consumers to use in day to day purchases. We also expanded the use of XP LATER into higher ticket offline categories such as electronics and two wheelers. We are encouraged by the early traction we are seeing with offshore PS3 later and see substantial headroom to expand its use cases. Our credit business expansion in 2025 was made possible by improvements in our risk underwriting capabilities. This improvement tapped on our rich ecosystem data and advancements in AI. Over the year we made good progress training our risk models to better understand and map how user behavior evolves over time. We are better able to assess individual repayment capacity alongside evolving market risk and dynamically adjust the credit limits as needed. Enhancing our model’s precision and performance enabled us to scale rapidly in 2025 while still maintaining a stable risk profile. Our 90 day NPL ratio held steady at 1.1% as of the end of the fourth quarter. Looking ahead, I’m incredibly excited about money’s growth potential. Many of our initiatives are still in early stage with huge opportunities we have yet to capture. We are also making good progress growing our products and services beyond credit from digital banking to insurance and more. We believe money will be a significant long term profit contributor for us to Next Turning to Garena 2025 was a blockbuster year for Garena. Bookings grew 37% year on year and adjusted EBITDA grew 38% year on year. Free Fire extended its reach and scale globally and we saw solid momentum across our broader portfolio from Arena Valor to to new titles such as Delta Force and EA Sports FC Mobile, Freefar’s journey over the last eight years has been truly special. It is remarkable for a franchise of its vintage to still be growing so fast. Freefair has now achieved two consecutive years of bookings growth exceeding 30% with 2025 bookings nearly double the level reported in 2023. Even at its massive scale average, daily active users in 2025 continued to grow year on year. Freefar’s success is driven by our ability to consistently deliver high impact experiences that bring communities together. 2025 was a defining year in this regard, showcasing our excellent execution across a full spectrum of major in game and real world initiatives. We delivered a content packed year. In Q1 we launched Naruto Shipton Chapter 1. In Q2 we released our 8th anniversary map Stellara and in Q3 we launched the three game collaboration and and the Naruto Shipton Chapter 2. This blockbuster year was the product of more than two years of intense preparation, collaboration and game development. We started working on the Naruto Shipton project in 2023 when the global game industry was struggling with the post pandemic headwind. We knew this project required a long development timeline in that difficult time. The easier task would have been to focus on smaller, shorter term wins, but we were convinced that this was the right thing to do and remain committed to the long term vision we had for the project. Our conviction, patience and hard work have been hugely rewarded with the collaboration’s resounding success. Garena’s culture of always prioritizing what is best for our players even through hard times has sustained Free Fire’s popularity and relevance, making it an evergreen game. 2025 was also a big year for our esports ecosystem. The Free Fire World Series Global Finals held in Jakarta in November marked a historical moment for the franchise. More than 600,000 players competed worldwide across grassroots qualifiers, regional leagues and global finals. This earned Freefire the Guinness World Record title for the largest mobile team based esports tournament. Over the past eight years we have built Free Fire into more than just a game. It is now a global franchise spanning gameplay, social engagement and real world experiences. This approach has deepened the game’s emotional connection with players and continues to fuel its organic growth. We are already laying the groundwork for Free Fire’s next phase, including preparations for its landmark 10th anniversary in 2027. Beyond Free Fire, EA Sports FC Mobile has delivered a strong early performance. Since its launch in October, it has become the most downloaded mobile game in Vietnam, according to Sensor tower. We hosted FC Pro Festival 2025, a flagship esports and fan event in Ho Chi Minh City. The event was incredibly popular, reaching 18 million viewers online. To build excitement for the event, we brought in global football icons Luis Figo and Ricardo Kata to play with local footballers and influencers in a friendly match. Our success with this game demonstrates our ability to localize the global franchise through deep engagement with fan communities on the ground. We look forward to further strengthening our long standing partnership with ea. We are very proud of Garena’s sustained success across rebar, our long standing published games and the exciting new titles we have added to our portfolio. Garena is entering 2026 with strong momentum. We will keep delivering high quality content and experiences to our global gaming community. As we enter 2026, we see exciting opportunities across our businesses and markets. Our excellent performance in 2025 has strengthened our conviction in our operational strategies. We will double down on executing these strategies with excellence in the year ahead. As always, we greatly appreciate your trust and support along the way. We look forward to delivering another strong year.

Elson Choi (Investor Relations Team Member)

Thank you Forrest. We are now ready to open the call to Questions

Operator

we are now opening the floor for question and answer session. If you would like to ask a question during this time, simply press Star followed by one on your telephone keypad. If you would like to withdraw your question, please press Star and then one again. In the interest of time, we will take a maximum of two questions at the time from each caller. If you wish to ask more questions, please request to join the question queue again at your first after your first question has been addressed for this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Pang Vit from Goldman Sachs. Your line is now open.

Goldman Sachs Analyst

Hi Management, thank you very much for the opportunities. Two questions from me. First question is on Shopee. Can you provide more details on how you plan to achieve the target growth in 2026 while maintaining at least flat year on year, absolute EBITDA? What assumption in specific are you making regarding the competitive landscape and given the trajectory of lower year on year margin potentially what are the key investment areas and how long should we expect expect the investment to last? That’s question number one. Question number two, this will be on money. The loan book grew very strongly closing the year more than 80% year on year. Can you elaborate on the key drivers of this strong performance? Was this primarily driven by new products, new market pricing or stronger demand? Or how should we think particularly about growth in this year 2026? Likewise, how should we think about the EBITDA margin trend going forward as well?

Forrest Li (Chairman and Chief Executive Officer)

…if you look at the faster deliveries we’re building, I think that is a pure time that we will scale the delivery fleet, et cetera. It’s a separate fleet from the typical SPX services. For example, if you look at the VIP program, there’s a pure time that we will kind of educate the market but and also attract our partners. As we get everything in place. I think the cost structure will be a lot better. I think this being proven in many other markets, as you probably have been aware, if you look at the sort of the overall profitability margins, our Q4 EBITDA margins around 0.55, as you can see compared to the year before 2024, we are actually improving on the margins. If you look at over the years in the early part of the year in 2025, we guided the market to grow around 20% for our top lines over the year we actually realized that we are able to grow the businesses much faster. We end up with much higher than that. If you look at the year to year growth, if you look at Q4 growth, we grow much larger, much higher than 20%. I think essentially over the year we realized that there are areas we are able to drive the market to grow. And we also learned that there are different levers that we can pull to drive the market growth. And 2026 essentially is extension from where we are in Q4 2025. And if you look at sort of like Q4 2025, if you look at the end of the year 2026, I do believe that we are able to extend the margin there as well. And this trend can continue over the years. And I think we talked about a 2 to 3% margin for E commerce businesses over time. I think the belief is still clearly there and we will demonstrate it to the market over the years. And at the same time we also believe that the market potential is probably larger than kind of many Project projection before and the 2026 as we shared earlier, we are able to grow around 25% and of course we will observe how the market behave over the years and over the quarters. The I think the core thing for us is I think the businesses I think is in a shape that we are very confident that there are things we can do to drive the business growth and the things are within our controls and the things we are doing has a clear investment cycles that we can drive over time. Regarding your question on the competitive landscape, I think what we observed is relatively stable competitive landscapes across most of the market. Yeah. And I think that we didn’t observe anything very different from what we see from last quarters. I think that’s sort of a question to the E commerce side. On the money businesses there are multiple drivers driving the growth. On the broader scales we see that there is a different phase of our businesses that we roll out in different market. There are also different products we roll out in different market in different phases. For example, the early market that we start our financial service businesses was Indonesia. So clearly Indonesia was the first country that grow much faster than others. Then over time we start kind of like the services in countries like Thailand and Malaysia etc. So these kind of countries will catch up on the growth and the initial phase of the new market clearly will grow faster than the market has been there for quite pure time. Another example would be like Brazil. If you look at essentially it’s actually our latest market when we launched many of our products. Brazil also in a pretty high growth space as well. The other drivers on the product side as well. In most of countries we started with escalator which is our consumption loans. So you know, that’s the first growth driver. Then later we roll out the cash loan, the personal cash loans. We also route the off-Shopee fees and then the cash loan and off platform loans will be the growth driver. So if you look at the growth on shopee side, we still see more penetration possible on Shopee. And even within Escalator we have differentiated products for different users. Especially for the more higher income segment we offer differentiated product with longer tenure, slightly lower interest rate, et cetera to those segments. So we still see opportunity to grow this segment. And for the off platform lending I think we shared quite some in the opening as well. For example, in some countries like in Malaysia, we see the off-Shopee has been 30% of the overall popular already. And I think all this are driving the growth for our loan books. Regarding the margins, I think the margin influenced quite a lot by the country mix, product mix and also whether we see a good opportunity to acquire users. I think it might fluctuate a little bit quarter to quarter. But the fundamental of this is how is our risk management capabilities that we see. We’re seeing very stable risks. If you look at a particular product for a particular market, the risk is very stable for us. You can see this from our NPL number as well. And we track this very closely internally to make sure that we don’t sort of like grow the loan book. Because we want to grow the loan book on the top line, we want to do it very prudently. At the same time we actually upgrade our risk management models over the years, especially with many of the new AI technology. We’re experimenting with the new AI new risk model with the transformer structure as well to do a sort of long sequence data training fit into our model to utilize many of the E commerce data that we’re not able to use in the traditional risk modeling. And it has been showing us very good performance. And so many of this will help us to manage our risks, to reach out to the user base we are not able to serve before so that we can grow the loan books over time.

Operator

Your next question is from HSBC.

HSBC Analyst

Yeah. Hi, good evening, thanks for the opportunity. First question is on Shopee. You have elaborated on various investment buckets. Could you also elaborate on how long these investment cycle could last in the context of how we should think about margins for 2027 and what are the likely deliverables from your partnership with Google to deepen AI powered solutions for Shopee? And second question is on Gareena. Could you talk about the outlook for the booking growth in 2026 pipeline for any IP collaborations which you can share. Thank you for the investment cycle.

Forrest Li (Chairman and Chief Executive Officer)

As I shared earlier, I think for different initiatives there are different investment cycles and also for different market there are different investment cycles. So it is a little bit sort of like tricky to generalize it I guess from a top down perspective. But as we guided in the openings that we do want to make sure number one that the total probability in the absolute numbers in 2026 is better than 2025. And also if you look at the probability levels, I do believe that if you look at sort of like a end of the year over the years I think it will not be worth in Q4 2025 and it should be able to grow over years. And if you look at we’re not providing guidance let’s say for FY 2027 yet. But you know, as a medium term to long term trend, I think the 2 to 3% EBITDA margin, I think it’s well achievable based on what we see so far. It’s in a way our choices on how much we want to draw on the margins versus the growth levers that we have in our hand. From what we see, we don’t have any concern on that. In terms of the partnership with Google, we are still in the process of developing the product. I think the it shouldn’t take too long I believe. I think when we have the product ready I think we’ll be able to share with everyone. It’s largely sort of working with the We’ve been working with Google for many years on Google Shopping and Google Ads and many other things like YouTube as well. So this is extension of our partnerships. Regarding the outlook for Garena at this moment we still see the double digit growth for Garena for 2026 and in terms of the collaborations pipeline, as we shared we are super excited and motivated by seeing the success of the collaboration with IP such as Naruto. Actually this year we’re going to extend that IP collaboration so this probably the delivery will be around Q3. So based on our current timeline and we are also actively working with other potential like IP collaborations. Meanwhile this year is a big football year so for FIFA World cup and we realized actually the global football community has a very very high overlap with our global gamer community. So during the like the our workup time so we’re going to have a lot of like football related promotion as well.

Operator

Next question comes from the line of Alicia Yap of Citi. Your line is now open.

Citi Analyst

Hi, good evening management. Thanks for taking my questions. Two questions here. Number one, could management provide the you know some insights into the retention rates and also the renewal rates for your VIP member subscription program and then furthermore if you can give us how does the VIP members influence the different purchasing frequencies and also the preferred product category and also are there any difference between the behavior in the customer profile across the different countries and how does this affect your strategy? And then second question is on AI. So wanted to ask you know, given like you know can management share with us on your investment priority given, you know, how are you prioritizing your investment? You know given so how are you prioritizing investment between the E Commerce, FinTech and AI amid the latest competitive environment and also the importance of the AI initiative. So if management can Share how c are leveraging your synergies between your three core business to strengthen your competitive advantage and also to enhance your ecosystem value.

Forrest Li (Chairman and Chief Executive Officer)

Thank you for the Shopee VIP program. It has been growing quite a lot over the past few months in some countries it has been more than 15% of our total GMVs for the VIP members. I think we do believe that this will grow further to to double or triple from where we are right now. The retention has been pretty good actually the renew rate. So one of the core challenge historically for similar program in our region is the payment success rate when sort of when they roll from one month of Sprint to another, many people drop off simply because there’s no credit card available for men of all users in our region versus if you look at the more credit card market I think we solved this by working closely between Shopee and MONEY to enable there’s a smooth payment process for our VIP program and as a result our subscription resubscribe rate has grown from 40% to 70% let’s say for Indonesia over the past few quarters. This is a big achievement for us in terms of how we can retain the VIP members on an ongoing basis. And for most of the VIP members if you look at the average purchasing we do see that much higher frequent purchase and sometimes with the higher baskets as well. I think overall if you look at the general number the VIP member spends 30 to 40% more than the than the average for different market. Actually we see quite similar behaviors in different market. I think probably the difference I guess in the market is probably the offerings because there are different preferences in different market in terms of user behaviors and what people care about. So we actually tailor the VIP offering quite customized tailor for each of the local market. I think that’s probably more the difference that than the sort of, you know the other behaviors on the investment front. So if you look at our different businesses, our money businesses is a very popular businesses and for most of the new user growth or for most of the new initiatives it comes with quite positive customer lifecycle values. So it’s kind of like so in a way is every initiative has a positive ally. I think if you look at the E commerce side we do spend quite a lot of effort on the AI. I think you mentioned about AI investment there. For the investment on the E commerce for AI we also look at the positive return of investment across the initiatives. For example if you look at one of the area we span of Ephelon AI is our search recommendation and also ad systems. The uplift on our ad take rate is a consequence of many of our AI effort. For example, how do we actually expand the description for our products? We can understand the product better. For example, how can we expand the queries from the users? We can understand user intention better. Recently we also rolled out a multimodal search in our platform as well. So users can search a picture plus long description and we are able to serve that just similar to how Gemini or ChatGPT would do. I think all those AI investment has a clear ally. We also spend quite a lot of effort using AI to help our sellers. For example, if you go to many of our countries, you can talk to the sellers with the help of AI already. So we build a chatbot for our sellers. Our seller can customize it for their own purposes. This will help the seller to reduce their manpower and also make it not only reduce cost but also have a better upsell for the for the for the buyers. And we also have tools for the seller to create create videos and picture descriptions for their products, et cetera. All those typically come with a fairly positive return on investments for our ecosystems for the synergy across our businesses. Clearly there is a lot of synergy between E commerce and financial services. The financial services are essentially leveraging a lot of data user behaviors from Shopee to be able to risk assess the users. And we still believe, as I said earlier on the previous questions, we still believe there’s sizable room for the money to penetrate the Shopee user base there not only for credit but also for our banking businesses, insurance businesses, our payment business, etc. The Our Money business also work with our game site to help the game on the payment process as well. That is a collaboration with gaming business from Shopee as well in terms of the merchandising in terms of the user acquisition side. So there are different type of collaboration among our businesses.

Operator

Your next question comes from the line of Divya Gangahar of Morgan Stanley. Your line is now open.

Morgan Stanley Analyst

Thank you very much for the opportunity. My first question is on the Brazil space. Could you comment if you expect GMV growth in Brazil to accelerate this year given all that we are doing on the fulfillment capability and what kind of impact would that have on our Average Order Values (AOVs)? Are the AOV still significantly lower or 1/3 of the market leader and what kind of gap do you expect to be able to cover with this fulfillment uplift. Could you also comment on what the penetration levels for Shopee pay later in Brazil are and should that also see a significant uplift this year? So that’s my first question on Brazil and my second question is on the content ecosystem that you alluded to. Could you comment on where do you see the E commerce content ecosystem plateauing in ASEAN specifically and what are the unit economics now versus shelf E commerce for us and how is our market share trending in this thank you.

Forrest Li (Chief Executive Officer)

For Brazil we come with a pretty high growth rate in 2025. We do believe that growth will continue in 2026. We don’t have a guidance for a particular country on the growth rate but in general we will see pretty good growth in the market. We also believe that we will outgrow the overall market in Brazil on the AOVs. We do believe that the OV will over time grow the gap with many I think it was still have but I think we will narrow down the gap over time for the aspirated penetration. Brazil is still in a very early stage. Honestly I think we grow quite a lot in Brazil and the penetration in Brazil still. I think essentially we start Brazil a lot later in other countries and the penetration lapping bridge is still similar to the early time of where we observed in our early market. So we we believe the trend will continue in term of the penetration of in Brazil in 2026 similar to what we observed in other Asian markets. For the content ecosystem we don’t think it’s cluttering yet for our platform. I wouldn’t comment on the other platforms but our platform we do believe there are further room to grow in the coming quarters. The youth knowing has been improving over years. I mean sometimes there’s a slight fluctuation from month to month but general direction Is the economic still improving over the time? I think the gap between the content ecosystem and the non content union economics it will be narrow over time and it will not be too much difference in future.
Operator

Thank you. This concludes our question and answer session. I would like to turn the conference back to Mr. Elson Choi for any closing remarks.

Elson Choi (Investor Relations Team Member)

Thank you all for joining today’s call. We look forward to speaking to all

of you again next quarter. Thank you for attending today’s call.

Operator

You may now disconnect. Goodbye.

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