Sea’s second quarter results were well received by the market, reflecting significant momentum in its core businesses. Management attributed the strong revenue growth to Shopee’s increased order frequency and buyer engagement, as well as expanding digital financial services. CEO Forrest Li highlighted that “all 3 of our businesses have delivered robust healthy growth,” citing Shopee’s continued leadership in Asia and Brazil and improved profitability across segments. Shopee’s advancements in advertising technology and logistics, alongside Garena’s sustained user base for Free Fire, were called out as central to the quarter’s performance.
Is now the time to buy SE? Find out in our full research report (it’s free).
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Pang Vittayaamnuaykoon (Goldman Sachs) asked if the strong e-commerce growth would lead to revised full-year guidance. CFO Tony Hou confirmed current momentum should continue, with full-year growth “better than what we shared before.”
Piyush Choudhary $(HSBC)$ inquired about the Shopee VIP program’s scalability and cost implications. Hou responded that while there is early-stage investment, long-term cost impact should be limited, and VIP expansion should support higher profitability.
Alicia Yap (Citigroup) questioned competitive threats in Brazil from new entrants and higher-ticket items. Hou stated that newcomers remain small players due to tax structure and Shopee’s focus on logistics and pricing keeps it well-positioned.
Divya Kothiyal (Morgan Stanley) asked about take rate upside and seller response to increased commissions. Hou noted that seller response has been reasonable and that take rates could continue to rise due to ongoing ad tech improvements.
Thomas Chong (Jefferies) requested updates on new games and AI’s impact on gaming. CEO Forrest Li said new titles are still in early stages but highlighted AI’s role in increasing development efficiency and enhancing gamer engagement.
In the coming quarters, the StockStory team will be watching (1) the adoption and expansion of Shopee’s VIP membership and instant delivery services across new markets, (2) Sea Money’s continued growth in digital lending and its penetration in Brazil and other emerging markets, and (3) further evidence that AI-powered advertising and content tools can drive incremental engagement and monetization. Progress in Garena’s content pipeline and the impact of new collaborations will also be key markers of execution.
Sea currently trades at $177.20, up from $146.45 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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