SE Q2 2025: 25% GMV Growth Drives Raised Full-Year Outlook
- Strong E-commerce Momentum: Management expects the robust performance in Q2—including 25% GMV growth in H1—to carry forward into Q3, suggesting upward revisions to full-year guidance. This momentum highlights continued market expansion and growing transaction volumes.
- Resilient Competitive Position in Brazil: Despite competitors’ adjustments such as reduced free shipping thresholds, the Brazil business has maintained strong growth with lower logistics costs and faster delivery speeds, underscoring the strength of the company’s cost structure and market positioning.
- Upside from Ad-tech and AI Enhancements: The firm is driving significant improvements in ad take rate through investments in AI and better seller-facing products. Rising ad participation (with a 20% increase in active ad sellers and a 40% uplift in ad revenue per seller) points to a promising long-term boost in revenue from its digital advertising initiatives.
- Competitive pressure in Brazil: Even though management stated that competitor adjustments (like reducing free shipping thresholds) haven't affected growth so far, there is risk that sustained competitive pressure—including emerging players like Tmall and TikTok with growing order volumes—could eventually erode Sea Limited's market share and pressure margins.
- Margin impact from new initiatives: The rollout of cost-intensive initiatives such as the VIP membership program and instant delivery service has potential to impact profitability. These investments may not yield proportional revenue growth, leading to margin fluctuations in a highly competitive environment.
- Overreliance on flagship gaming title: With Free Fire driving the bulk of the gaming revenue, the reliance on a single title increases vulnerability. Alternative games (e.g., Delta Force) are still in early stages and unproven, which could risk the overall gaming segment’s growth if Free Fire's performance slows.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
GMV Growth | FY 2025 | 20% | 25% | raised |
Bookings Growth | FY 2025 | Double-digit | More than 30% YoY | raised |
Loan Book Growth | FY 2025 | Strong loan book growth | Over 90% YoY to reach $6.9B | raised |
Active Users | FY 2025 | no prior guidance | Exceeded 30 million with >45% YoY | no prior guidance |
90-day NPL Ratio | FY 2025 | no prior guidance | 1% | no prior guidance |
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Growth Guidance
Q: Will growth boost full-year guidance?
A: Management confirmed that the strong momentum—evidenced by 25% year-on-year GMV growth in H1—is expected to carry into Q3 and lead to a raised full-year outlook, underscoring steady operational performance. -
Margin Outlook
Q: Will VIP and instant delivery impact margins?
A: They explained that early investments in Indonesia’s VIP program and instant delivery are driving higher buyer engagement without materially increasing costs, with seasonal fluctuations but an overall trend toward improved EBITDA margins. -
Fintech Strategy
Q: What is the BNPL and fintech plan in Brazil?
A: Management highlighted robust fintech growth in Brazil, noting a 90% increase in the loan book and strong adoption of BNPL and personal cash loans, supported by partnerships and regulatory licenses to sustain low NPL ratios and drive future growth. -
Ad Efficiency
Q: Will ad tech improvements lift take rates?
A: They detailed that enhanced AI-driven ad tools and streamlined seller interfaces have already increased active ad sellers by 20% and boosted ad revenue per seller, indicating ongoing improvements in ad take rates that will benefit overall profitability. -
Competitive Position
Q: How is Brazil’s competitive landscape evolving?
A: Despite competitors reducing free shipping thresholds and new entrants like TikTok and Tmall, management emphasized that strong logistics, lower costs, and a focus on higher-ticket items keep Sea well positioned in Brazil’s market. -
AI Integration
Q: How will AI be used beyond internal gains?
A: Current AI applications are improving ad conversions and customer interactions, and while management is exploring potential external cloud or AI service offerings, no concrete new business has emerged yet, reflecting an ongoing innovation process. -
Gaming Evolution
Q: Can games beyond Free Fire grow via AI?
A: Management noted that while Free Fire remains the key driver, early-stage titles like Delta Force are under fine-tuning, with AI playing a role in boosting creativity and team play, which should gradually enhance player engagement and monetization.
Research analysts covering Sea.