Known as the "Little Tencent of Southeast Asia," Sea Ltd is set to release its Q3 2025 financial results on November 11 before the US market opens. According to Tiger International APP data sources, Sea Ltd's Q3 revenue is projected to reach $5.65 billion, up over 30% year-over-year, and adjusted earnings per share are expected to be $0.77, up more than 222% year-over-year.

Review of Last Quarter

The second quarter of fiscal year 2025 was a critical milestone in Sea Ltd's development. Multiple financial metrics reached new highs, and the company initiated a new development phase with a clear strategic shift. After the earnings announcement, the stock price rose by 19.72% on that day, significantly boosting market confidence.

Looking at core financial data, the group's overall performance far exceeded market expectations: GAAP revenue reached $5.3 billion, a 38.2% year-over-year increase, marking the fastest growth rate in nearly 12 quarters, well above the market expectation of $5.12 billion. Net profit surged from $79.9 million in the same period last year to $414 million, a year-over-year increase of 418%, demonstrating strong profitability conversion capability. This achievement marks the sustained growth momentum since 2024, maintaining over 30% revenue growth for several consecutive quarters.

All three major business segments achieved double-digit growth, with synergies becoming increasingly significant. As the revenue backbone of the group, the e-commerce platform Shopee performed impressively, contributing $3.8 billion in revenue, a 33.7% year-over-year increase, accounting for 71.7% of the group's total revenue. Gross Merchandise Value (GMV) grew by 25% year-over-year, and core market revenue (including transaction commission and advertising) increased by 46.2% to $2.6 billion, much faster than GMV growth, indicating continued enhancement in platform monetization efficiency. Digital financial services (Monee) became the growth engine, with revenue reaching $883 million, a 70% year-over-year increase. Consumer loan and SME loan balances reached $6.9 billion, with non-performing loan rates remaining at a low 1%, showcasing effective risk control. Digital entertainment business (Garena) maintained steady growth, with revenue reaching $559 million, a 28.4% year-over-year increase. Quarterly active users reached 664.8 million, while paying users were 61.8 million. Management has raised the full-year bookings growth expectation to over 30%.

It is noteworthy that this quarter, Sea Ltd officially announced a strategic focus shift from "profit first" to "growth first." CEO Forrest Li clearly stated that with profitability achieved across business lines and ample cash reserves, the company will increase investments in market acquisition, technology development, and infrastructure. This shift is not a return to the money-burning expansion of 2021 but a sustainable growth strategy based on an efficient operating system.

Current Quarter Outlook

In the Q3 of fiscal year 2025, under the guidance of the "growth first" strategy, Sea Ltd has entered a phase of substantial investment, coupled with intensified competition in emerging markets and regulatory changes. Performance in three key dimensions will determine quarterly results:

1. Can Core Business Growth Momentum Be Sustained?

The sustainability of growth in the three major businesses is a key concern for the market. In e-commerce, Shopee's GMV growth rate is highly anticipated. Pu Yin International predicts that Q3 GMV will grow by 25% year-over-year, continuing the high growth trend, but it will face multiple challenges: the Brazilian market, as a critical overseas expansion front, has achieved top order volume but must contend with sustained competition from MercadoLibre. The effectiveness of its localized logistics construction and user retention rate will directly impact growth quality. Additionally, the impact of commission policy adjustments in Indonesia and Malaysia will further manifest this quarter.

In the digital financial sector, revenue is expected to grow by 50% year-over-year, with the loan size continuing to expand, but profit margins are under pressure. Core markets such as Malaysia and Thailand have seen interest rate declines. Combined with the company's "0% interest rate" marketing campaigns and upfront investment in offline business, Pu Yin International predicts that the adjusted EBITDA margin will decrease to 26% quarter-over-quarter. Balancing risk control with scale expansion will be crucial. In digital entertainment, the partnership performance of IPs like "Free Fire" with "Squid Game" and "Naruto" will determine if the 34% year-over-year revenue growth expectation can be met.

2. The Balance Between Investment Expansion and Profitability Quality

The implementation of the "growth first" strategy will inevitably come with increased investments, and profit margins will be a critical measure of the strategy's sustainability. Overall performance expectations are relatively optimistic: eight analysts unanimously predict Q3 revenue to reach $5.636 billion, and Pu Yin International forecasts adjusted net profit to grow by 58% year-over-year to $530 million, with the adjusted EBITDA margin up 2.8 percentage points year-over-year to 14.8%.

However, profitability pressures have already been seen in detailed business lines. Shopee is expected to see a decrease in the adjusted EBITDA margin to 4.5% quarter-over-quarter due to increased logistics optimization and marketing investments. Though Garena maintains stable profitability, increased R&D investment may drag profit growth. The market will focus on two points: whether investments in logistics infrastructure can translate into improved fulfillment efficiency and whether the "4-hour delivery" service can be scaled across markets; and the resilience of the advertising business, with key indicators being the number of paying sellers and the continuation of ad spend growth of over 20% and 40% year-over-year respectively to offset cost pressures.

3. Implementation of Strategy and Response to External Risks

This quarter is pivotal in testing the implementation of the "growth first" strategy while external environmental challenges cannot be ignored. In terms of strategic execution, the depth of AI technology application will be a key highlight, impacting customer service optimization, game development, and precision marketing, directly influencing operational efficiency improvement. Shopee's market penetration plan in Southeast Asia and further expansion strategy in Brazil will also provide clues for long-term growth.

External risks focus on regulatory and competition fields. The complexity of regulations in Southeast Asia persists, with Indonesia's data localization requirements, Malaysia's content review regulations, and Vietnam's digital payment compliance requirements potentially increasing operational costs. Geopolitical tensions and ASEAN's digital sovereignty movements also bring uncertainties to regional expansion. In terms of competition, in addition to MercadoLibre's sustained pressure in Brazil, the rise of local e-commerce platforms in Southeast Asia may also divert market share, testing Shopee's competitive moat.

This content is generated based on tiger AI data, for reference only.