Sea Limited Misses On EPS Despite 43% Revenue Growth As Shopee, Garena And Monee Growth Slows And Credit Costs Rise

Sea Limited's third quarter set a revenue record and missed the earnings bar. The company reported earnings of $0.78 per share, 22.0% below the $1.04 consensus and short of the $1.00 Earnings Whisper number. Revenue of $8.582 billion rose 43.4% year over year and beat the $8.32 billion consensus by 3.2%. One caveat matters for the size of the miss. The $0.78 is GAAP diluted EPS, while consensus is on a non-GAAP basis, so part of the gap reflects accounting differences. On Earnings Whispers' normalized comparison, earnings fell 1.3% year over year. The release itself shows GAAP diluted EPS rising from $0.59, so the two figures rest on different bases. Either way, the central tension is clear: Sea is still growing revenue at a rapid clip, but the profit and growth metrics underneath are softening on several fronts at once.

The quality of the quarter deserves scrutiny. Gross profit rose 51.4%, but total operating expenses climbed 54.1%. The main drivers were a 64.0% jump in sales and marketing and an 82.3% surge in the provision for credit losses to $681.5 million. As a result, operating income rose a more modest 39.5% to $664.2 million. Two items further down the income statement also matter:

• Non-operating income doubled to $123.3 million, helped by a $65.2 million investment gain.
• Income tax expense rose 74.0%, holding net income growth to 34.0%.

Group adjusted EBITDA grew 28.9% to $931.3 million, a clear acceleration from 11% in Q2 and 9% in Q1. Even so, the Other Services segment loss widened to $83.9 million from $25.1 million.

Each segment shows a similar gap between headline strength and slowing momentum:

• **Shopee:** Adjusted EBITDA reached a record $269 million, and management reaffirmed the full-year target of roughly $1 billion. However, GMV growth slowed to 23% from 28% in Q2 and 30% in Q1, or about 26% excluding currency effects. Ad revenue growth eased to more than 55% from more than 70% in Q2 and 80% in Q1. Margins were flat sequentially at about 0.68% of GMV because monetization gains are being reinvested, and management did not say when investment would peak. Logistics-driven value-added services revenue was essentially flat year over year. Buyer metrics were stronger: monthly active buyers grew 20%, new buyers jumped 50%, and VIP membership rose to 21 million from 15 million. The content business turned contribution-margin positive.
• **Garena:** Adjusted EBITDA rose 45.9% to $458 million, but that figure flatters the trend. Bookings grew just 5.9%, down from 15% in Q2 and 20% in Q1, while GAAP revenue grew 28.6% as deferred revenue was recognized. The change in deferred revenue fell 73.4% to $49.9 million.
• **Monee:** Revenue jumped 63.9%, but adjusted EBITDA grew only 15.5%. Segment sales and marketing more than doubled, and credit provisions outran revenue. Loan book growth slowed to 60% from 62% in Q2, 71% in Q1 and 80% in Q4. Non-performing loans rose to 1.3% from 1.0% in Q2, with management citing credit softening in Thailand and Brazil and tightening underwriting in some segments. Management also pointed to fuel-price pressure and more value-seeking consumer behavior, a macro backdrop that bears have legitimate ammunition to cite.

The new strategic items cut both ways. Management plans to list Monee separately within one to three years to give it a dedicated capital base, which could highlight the value of the fintech business. The company has nearly finished its first $1 billion buyback program, with $997.2 million spent, and approved a fresh $1 billion authorization. Shopee also gained a Meta Muse AI connector partnership in Singapore and launched instant delivery in Brazil. The launch of Sea Cloud, an AI cloud and agentic software venture, introduces a less defined commitment. Management describes it as capex-light and funded by partners and prepayments, but it has no contracts yet, its return profile is unclear, and it could require spending on owned data centers or GPUs. That matters for a balance sheet where cash and equivalents fell to $2.9 billion from $4.2 billion at year-end. Over nine months, loan growth consumed $4.4 billion of investing cash, capex reached $1.04 billion, and the company redeemed $1.05 billion of convertible notes.

The market had already turned sharply against the stock before the report. As of November 9, ahead of the release, shares stood at $77.96, down 39.0% from the opening price after the August report. They were 40.9% below the inter-earnings high set that day and 19.9% below the 200-day moving average of $97.36. The stock hit a 52-week low of $71.53 on October 26 and had recovered only about 9% from that level. Investor sentiment edged further into negative territory, from -0.005 to -0.069, a modest move that points to growing caution rather than capitulation. Most Earnings Whispers trend readings are negative, though sequential growth and momentum readings are positive, consistent with a business still expanding even as the stock has been sold off.

The bottom line is that Sea delivered the growth and record Shopee profitability its supporters wanted, but the earnings miss and broad slowdown in GMV, advertising, bookings and lending reinforce the concerns behind the stock's 39% slide. Rising credit costs and the open-ended Sea Cloud commitment give skeptics fresh reasons for caution. The buyback, the Monee listing plan and accelerating group EBITDA growth give investors reasons to watch whether the deceleration levels off over the next few quarters.

Read our earnings preview for Sea Limited: https://www.earningswhispers.com/article/SE/22709

This earnings review was originally published on Earnings Whispers.

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