Southeast Asia's "mini-Tencent" Sea is set to release its Q2 2025 earnings before the U.S. market opens on August 12 (Eastern Time). According to Bloomberg analyst estimates, Sea’s Q2 2025 revenue is projected to reach $5.029 billion, with adjusted EPS at $0.84.

Q1 Review

Earnings data showed that Q1 revenue grew 29.6% year-over-year to $4.84 billion, slightly below the analysts’ average expectation of $4.89 billion. Net profit stood at $411 million, compared to a net loss of $23 million in the same period last year. Diluted EPS was $0.65, beating the analysts’ average expectation of $0.63. Adjusted EBITDA (non-GAAP) reached $946.5 million, a 136% year-over-year increase, marking a significant improvement in profitability.

By business segment:

• E-commerce revenue totaled $3.524 billion, up 28.3% year-over-year; Gross Merchandise Value (GMV) reached $28.6 billion, a 21.5% year-over-year growth.

• Digital financial services revenue rose 57.6% year-over-year to $787 million, hitting the largest growth rate in two years.

• Digital entertainment revenue grew 8.2% year-over-year to $496 million; bookings reached $775 million, a 51.4% year-over-year increase.

Q2 Key Focus Areas

As a Southeast Asian internet giant, Sea’s Q2 2025 performance has drawn wide attention. The performance of its three core segments—e-commerce, digital financial services, and digital entertainment—will directly impact the company’s short-term results and long-term strategic layout.

E-commerce: Balancing Growth and Profitability Amid Eased Competition

Shopee, the core e-commerce platform, has benefited from improved market competition. Data from UBS shows that competition among Southeast Asian e-commerce platforms has become more rational, with TikTok Shop scaling back large discounts for new users, cooling the subsidy war. In Q1, Shopee achieved a record GMV of $28.6 billion, up 22% year-over-year, with order volume increasing by 20%. Leveraging the growth of internet users in Southeast Asia and the popularization of mobile shopping habits, Q2 is expected to continue this growth trend.

On the profitability front, Shopee’s logistics costs fell by 6% in Asia and 21% in Brazil in Q1, reflecting significant in cost control. As economies of scale and operational optimizations take effect, Q2 will see rational control of marketing expenses through refined operations, improving profits while maintaining growth—making it a core driver of performance.

Digital Financial Services: Rapid Expansion and Approaching Profit Inflection Point

Sea’s digital financial brand Monee has grown rapidly. In Q1, its loan scale reached $5.8 billion, up over 75% year-over-year, with both revenue and adjusted EBITDA growing by over 50%. Leveraging synergies with Shopee’s e-commerce ecosystem, Monee continues to attract users through payment and installment services. In Q2, it will further expand into consumer credit and small-to-medium enterprise (SME) loan markets.

As customer acquisition subsidies decrease and user costs optimize, Monee is expected to reach break-even around 2025. Q2 will see continued improvement in profit margins, gradually approaching the profit inflection point and emerging as a new profit growth driver.

Digital Entertainment: Maintaining Stability and Exploring New Growth

Garena has reversed its growth decline through refined operations. In 2024, its revenue rebounded to $2.149 billion. In Q1 2025, booking revenue grew 51% year-over-year, with adjusted EBITDA up 57%, primarily driven by IP collaboration marketing such as Naruto. In Q2, Garena will maintain existing player activity through content updates and esports event operations.

Meanwhile, Garena is actively expanding into emerging markets such as Latin America and the Middle East and increasing investment in new game development. While blockbuster products are unlikely to emerge in the short term, progress in market expansion and R&D in Q2 will lay the foundation for long-term growth.

Other Focus Areas and Risks

In technological R&D, Sea continues to invest in AI to optimize e-commerce recommendations and blockchain to enhance payment efficiency. While these efforts will strengthen long-term competitiveness, they may impact short-term profits. In market expansion, Sea will increase investment in overseas markets like Brazil, leveraging local demographic and internet dividends to expand its share.

On the risk front, global economic fluctuations may suppress consumer demand, and changes in e-commerce and financial regulatory policies could affect business operations—both require close attention.

Analyst Views

Wall Street analysts are generally optimistic about Sea, with most giving it a "Buy" rating.

UBS maintained its "Buy" rating on Sea ahead of the Q2 2025 earnings release, setting a target price of $200, implying a 24% potential upside over the next 12 months. UBS is optimistic because the regional e-commerce competition environment has improved, with price wars in Southeast Asia’s e-commerce market (where Shopee operates) cooling down, allowing Sea to balance growth and profit margins. Additionally, the synergies between its e-commerce, digital finance, and gaming segments, combined with management’s cost control, are expected to drive leapfrog profit growth in the next few years.

Goldman Sachs reiterated its "Buy" rating with a target price of $186. Goldman noted that Shopee maintained stable product discounts and subsidy levels during promotional activities, retaining price competitiveness against TikTok, with consumers’ final costs averaging about 6% lower—supporting its resilience argument.

Loop Capital reiterated its "Buy" rating and raised the target price from $165 to $190. Arete Research upgraded Sea's rating to "Strong Buy."

This content is generated based on Tiger AI and Bloomberg data, for reference only.