Sea Ltd (SE) Q2 2025: Shopee GMV Jumps 28% as Profitability Expands Across All Businesses
Sea’s second quarter marked a decisive acceleration in both scale and profitability, with Shopee’s GMV and Money’s loan book growth outpacing peers while Garena’s bookings reset investor expectations. The company’s disciplined cost structure and AI-driven platform enhancements are enabling it to capture market share and compound operating leverage, particularly in Brazil and Southeast Asia. With all three segments EBITDA-positive and momentum sustained into Q3, Sea is positioned for a multi-year compounding trajectory if execution holds.
Summary
- AI-Powered Monetization: Advertising and conversion gains are driving higher take rates and platform stickiness.
- Logistics and Cost Discipline: Delivery speed and cost structure improvements are reinforcing Sea’s competitive moat in core markets.
- Multi-Segment Operating Leverage: All three businesses are EBITDA-positive, supporting a self-funded growth model into 2025 and beyond.
Performance Analysis
Sea’s Q2 saw broad-based acceleration, with total GAAP revenue up 38% YoY to $5.3 billion, driven by Shopee, e-commerce platform, which delivered 29% YoY order growth and 28% YoY GMV expansion to $29.8 billion. Marketplace revenue climbed 34% YoY, with core marketplace (transaction fees and advertising) up 46%, reflecting deeper seller engagement and improved ad tech deployment. Value-added services, largely logistics, grew modestly, highlighting a shift toward higher-margin activities.
Digital Financial Services (Money) posted 70% revenue growth, with its loan book surpassing $6.9 billion (up over 90% YoY) and active loan users exceeding 30 million. The segment’s adjusted EBITDA rose 55% YoY, underlining prudent risk management and successful cross-market scaling. Garena, digital entertainment arm, saw bookings grow 23% YoY, powered by Free Fire’s sustained user base and new content launches, with adjusted EBITDA up 22% YoY. All three segments delivered positive adjusted EBITDA, driving consolidated net income to $440 million, a more than fivefold increase from last year.
- Shopee Take Rate Expansion: Ad tech and seller adoption pushed ad take rate up 70bps YoY, with further runway ahead.
- Brazil Outperformance: Shopee Brazil’s active buyers rose over 30% YoY, with logistics cost per order down 16% and delivery speed sharply improved.
- Loan Book Diversification: Money’s loan growth was broad-based, with Malaysia crossing $1 billion and Brazil’s fintech ramp accelerating.
Sea’s operating model is compounding scale and margin, with cost efficiency, AI-driven monetization, and disciplined capital allocation underpinning a robust growth platform.
Executive Commentary
"Given the high potential of our market and the stage of our business now, we will continue to prioritize growth. We still see huge opportunities in our market to serve many more users and better many more lives with technology. Expanding both our addressable market and capturing more market share will pave the way for us to maximize our long-term profitability."
Forrest Lee, Chairman and Chief Executive Officer
"Our total adjusted EBITDA was $829 million in the second quarter of 2025, compared to an adjusted EBITDA of $448 million in the second quarter of 2024."
Tony Ho, Chief Financial Officer
Strategic Positioning
1. Shopee’s Platform Flywheel and Monetization
Shopee’s growth engine is increasingly driven by AI-powered ad tech, which has improved traffic allocation and conversion rates while raising ad spend per seller by over 40% YoY. The platform’s ad take rate remains below regional peers at around 2%, providing ample upside as seller adoption (up 20% YoY) and new AI features are rolled out. VIP membership, paid loyalty program, is scaling rapidly, with 2 million subscribers and up to 50% GMV growth in Indonesia, enhancing buyer retention and purchase frequency.
2. Logistics and Cost Structure as Strategic Moat
Sea’s logistics investments are yielding both faster delivery and lower costs, especially in Brazil, where average delivery times have dropped by more than two days YoY and cost per order has fallen 16%. Initiatives like instant delivery (sub-four-hour fulfillment) and intelligent demand forecasting are improving both service quality and unit economics, supporting further margin expansion and competitive insulation.
3. Digital Financial Services: Embedded Growth and Risk Management
Money’s loan portfolio is scaling across geographies and products, with prudent risk controls keeping the 90-day NPL ratio at 1%. Integration with Shopee’s ecosystem and AI-driven underwriting allow Sea to capture prime users, deepen BNPL penetration, and expand off-platform lending. Brazil’s fintech growth, supported by new regulatory licenses and external funding partnerships, is at an early stage with significant runway ahead.
4. Garena: Franchise Durability and Content Innovation
Garena’s Free Fire remains an evergreen franchise, sustaining over 100 million daily active users and delivering double-digit bookings growth through new map launches, IP collaborations, and enhanced social features. AI is accelerating both content production and player engagement, positioning Garena to extend its lifecycle and experiment with new genres and user experiences.
Key Considerations
Sea’s Q2 performance underscores a business compounding both scale and profitability, with technology, logistics, and ecosystem integration as key levers. Investors should monitor the following:
- Ad Tech and Take Rate Upside: Ad take rate remains well below peers, with AI-driven improvements and broader seller adoption likely to drive further monetization.
- Cost Leadership in Brazil: Shopee’s logistics cost and delivery speed advantage appear durable, reinforcing its market leadership despite competitive moves.
- VIP Membership and Buyer Stickiness: Early results from VIP rollout show higher retention and spend, with expansion to new markets a key watchpoint.
- Fintech Scaling and Asset Quality: Money’s growth is broad-based, but continued discipline in risk management and regulatory compliance is critical as loan books expand.
- Content Ecosystem and AI Leverage: Both Shopee and Garena are using AI to drive engagement and efficiency, with further innovation expected.
Risks
Competitive intensity remains elevated, particularly in Brazil, where new entrants and incumbent responses (such as shipping policy changes) could pressure share or margins. Fintech expansion brings regulatory and credit risk, especially as loan books scale in newer markets. AI-driven initiatives, while promising, require sustained investment and may not yield immediate returns. Seasonality and macroeconomic volatility in core markets could also impact growth trajectories or asset quality.
Forward Outlook
For Q3 2025, Sea expects:
- GMV growth momentum in Shopee to remain consistent with first-half trends.
- Continued margin improvement, with all three segments expected to remain EBITDA-positive.
For full-year 2025, management raised Garena bookings guidance to over 30% YoY growth and signaled that consolidated performance will exceed initial expectations:
- Full-year GMV and revenue growth to outpace prior guidance.
Management highlighted several factors that support this outlook:
- Platform investments in AI and logistics are compounding user engagement and cost efficiency.
- Fintech and new market expansion are delivering diversified, high-quality growth.
Takeaways
Sea’s multi-engine model is delivering accelerating scale and margin, with disciplined execution across e-commerce, fintech, and gaming. Investors should focus on the sustainability of Shopee’s cost and monetization advantages, the scaling of Money’s loan book with stable asset quality, and Garena’s ability to extend its franchise through content and AI innovation.
- Shopee’s Monetization Levers: Ad tech, VIP membership, and logistics efficiency are driving both revenue and margin expansion, with further upside from AI and new product rollouts.
- Fintech as a Growth Multiplier: Money’s cross-market scaling and embedded ecosystem integration set the stage for compounding earnings, provided risk controls hold.
- Garena’s Franchise Durability: Free Fire’s continued dominance and content innovation underpin Garena’s raised guidance and multi-year growth runway.
Conclusion
Sea’s Q2 results validate its strategy of disciplined, tech-enabled growth across its core platforms. With all segments EBITDA-positive and operating leverage compounding, Sea is positioned to deliver sustained value creation if it can maintain its cost and innovation edge in increasingly competitive markets.
Industry Read-Through
Sea’s results highlight the growing importance of platform-driven monetization, especially through advertising and AI-powered seller tools, for e-commerce players in emerging markets. Logistics and cost structure are increasingly differentiating winners from laggards, with Sea’s Brazil performance serving as a template for scaling profitably in complex geographies. Fintech integration and embedded lending remain early but critical growth levers for digital commerce ecosystems. Gaming franchises with strong social and content engines, like Free Fire, continue to outperform, but require ongoing innovation and IP partnerships to sustain engagement. AI adoption is rapidly shifting from back-end efficiency to front-end monetization and user experience, a trend likely to accelerate across Southeast Asia and Latin America.