Latest news with #ChrisFeng
Yahoo
4 days ago
- Business
- Yahoo
SE Q1 Earnings Call: Revenue Misses Estimates, But Profitability and User Growth Accelerate
E-commerce and gaming company Sea (NYSE:SE) fell short of the market's revenue expectations in Q1 CY2025, but sales rose 27.8% year on year to $4.84 billion. Its non-GAAP EPS of $0.83 per share was 8.7% below analysts' consensus estimates. Is now the time to buy SE? Find out in our full research report (it's free). Revenue: $4.84 billion (27.8% year-on-year growth) Adjusted EPS: $0.83 vs analyst expectations of $0.91 (8.7% miss) Adjusted Operating Income: $857.6 million vs analyst estimates of $470.9 million (17.7% margin, 82.1% beat) Adjusted EBITDA Margin: 19.6% Paying Users: 64.6 million, up 15.7 million year on year Market Capitalization: $98.14 billion Sea's first quarter performance was defined by rapid growth across all three divisions, supported by expanding user bases and improved monetization efforts. Management attributed the results to operational efficiency measures—particularly in logistics and marketing—across its e-commerce and digital financial services arms. CEO Forrest Li referenced Shopee's record high gross merchandise value and cost reductions, noting, 'Unit economics improved, largely driven by our continued scale expansion, cost optimization and enhanced monetization, especially from advertising.' Garena, Sea's gaming division, posted its strongest quarter since 2021, which management credited to a successful content collaboration and product diversification. The quarter also saw the rebranding of Sea's digital financial services unit as Monee, which posted notable growth in both revenue and loan book size. Looking ahead, Sea's leadership emphasized continued investment in product enhancement and regional expansion, while balancing growth and profitability. Management sees significant runway for Shopee in Brazil and Southeast Asia, with President Chris Feng stating, 'We remain confident of achieving our full year GMV growth guidance of 20% with improving profitability.' The company also expects Monee's off-platform growth and new lending products to drive broader financial inclusion. However, executives highlighted that future performance will be influenced by macroeconomic trends and shifts in consumer behavior. CFO Tony Hou cautioned that short-term margin fluctuations may arise due to evolving country and product mixes, but Sea remains committed to prudent risk management and diversified funding for its credit operations. Management pointed to a combination of product innovation, operational improvements, and geographic expansion as key contributors to first quarter results, while also noting the impact of seasonality and strategic cost discipline. E-commerce efficiency gains: Shopee's improved profitability stemmed from better ad monetization, lower logistics costs, and the rollout of AI-powered tools for sellers. Initiatives like the instant delivery option and the Shopee VIP subscription program, which surpassed one million users, increased purchase frequency and buyer retention. Brazil market expansion: Growth in Brazil was driven by pricing advantages, improved delivery speed, and targeted logistics investments. Sea's management reported that e-commerce penetration in Brazil remains low, offering additional growth opportunities as Shopee expands into underserved segments and diversifies product categories. Digital financial services rebranding: The transformation of SeaMoney into Monee marked a strategic broadening of financial services, including new product launches in unsecured lending, insurance, and banking. Off-platform usage of credit products, such as SPayLater, grew notably in markets like Malaysia and Indonesia. Gaming division momentum: Garena's performance was buoyed by the Free Fire-NARUTO SHIPPUDEN collaboration and localized content strategies. Management highlighted that these campaigns reactivated churned users and drove daily active user counts near pandemic-era peaks, reinforcing Free Fire's market leadership. Operational discipline and funding mix: Management underscored the importance of maintaining healthy margins and asset quality, especially in Monee. CFO Tony Hou explained Sea's preference for diversifying funding sources—rather than relying solely on internal capital—to support sustainable growth in its loan portfolio. Sea expects growth to be supported by ongoing e-commerce expansion, product innovation in financial services, and further gaming engagement, though risks from macroeconomic and competitive factors remain. Shopee's balanced growth approach: Management expects Shopee's growth to continue through enhanced buyer engagement, expanded ad products, and logistics improvements. However, President Chris Feng indicated that the company prioritizes market penetration over maximizing short-term profit margins, given the still early stage of e-commerce in core markets. Fintech diversification and risk management: Monee's forward strategy involves scaling off-platform lending and launching new financial products, while maintaining a focus on prudent underwriting and asset quality. Management stressed the need for diversified funding partners and stated that country and product mix changes could periodically affect margin trends. Gaming content innovation: Garena aims to sustain high user engagement through new game launches, IP collaborations, and locally relevant content. CFO Tony Hou noted that while seasonality and major campaigns may create quarter-to-quarter volatility, the long-term outlook anticipates double-digit growth in user base and bookings. In the coming quarters, the StockStory team will watch (1) the scalability of Shopee's VIP membership and logistics enhancements, (2) Monee's progress in off-platform lending and funding diversification, and (3) Garena's ability to maintain engagement through new game launches and content partnerships. The ongoing development of AI-powered features and expansion in Brazil will also be key indicators of Sea's execution and market positioning. Sea currently trades at a forward EV/EBITDA ratio of 43.9×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Yahoo
14-05-2025
- Business
- Yahoo
Sea Ltd (SE) Q1 2025 Earnings Call Highlights: Record Revenue and Profitability Surge Amidst ...
Total GAAP Revenue: $4.8 billion, up 30% year on year. Total Adjusted EBITDA: $947 million, compared to $401 million in Q1 2024. E-commerce Gross Orders: $3.1 billion, up 20% year on year. E-commerce GMV: $28.6 billion, up 22% year on year. E-commerce Adjusted EBITDA: $264 million, compared to a loss of $22 million in Q1 2024. Digital Financial Services GAAP Revenue: $787 million, up 58% year on year. Digital Financial Services Adjusted EBITDA: $241 million, up 62% year on year. Consumer and SME Loans Principal Outstanding: $5.8 billion, up over 75% year on year. Digital Entertainment Bookings: $775 million, up 51% year on year. Digital Entertainment Adjusted EBITDA: $458 million. Net Income: $411 million, compared to a net loss of $23 million in Q1 2024. Warning! GuruFocus has detected 5 Warning Sign with SE. Release Date: May 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Sea Ltd (NYSE:SE) reported a 30% year-on-year increase in total GAAP revenue, reaching $4.8 billion in Q1 2025. Shopee achieved record-high GMV and gross order volume, with a 22% year-on-year increase in GMV to $28.6 billion. Monee, the rebranded Digital Financial Services business, saw revenue and adjusted EBITDA grow by more than 50% year on year. Garena's total bookings grew 51% year on year, with a successful collaboration with Naruto Shippuden boosting user engagement. Sea Ltd (NYSE:SE) achieved a net income of $411 million in Q1 2025, compared to a net loss of $23 million in Q1 2024. The competitive landscape in ASEAN and Brazil remains challenging, with new entrants like TikTok Shop in Brazil. Currency fluctuations, particularly in some markets, could impact financial performance. The company faces potential margin pressure from increased shipping subsidies and dynamic cost adjustments. The expansion of Monee's off-Shopee services requires careful risk management and could impact margins. The live streaming ecosystem in Brazil is still in its early stages, posing challenges for Shopee Live's growth. Q: What drives Shopee's strong improvement in profitability this quarter, and how should we think about the margin trend in the coming quarters? A: Chris Feng, President of Sea Ltd, explained that Shopee's profitability was driven by seasonality, improved take rates, cost optimization, and the use of AI solutions to automate operations. The company remains confident in achieving a 20% growth outlook, despite macroeconomic uncertainties, due to its local marketplace focus and price competitiveness. Q: Can you share more about the strong performance at Monee and what drives the uplift in the loan book? A: Chris Feng highlighted that Monee's growth is driven by increased penetration of SPayLater on Shopee and strong growth in non-Shopee products like BCL. The company is expanding into new products and geographies, maintaining a focus on risk management and diversification to ensure healthy margins. Q: How is Sea Ltd thinking about incremental capital allocation, particularly for the Monee segment? A: Forrest Li, Chairman and CEO, stated that all three businesses are self-sufficient and cash-generating. The company prefers to diversify funding sources rather than relying solely on internal capital, exploring collaborations with financial institutions and structured products like ABS. Q: What is the outlook for booking growth in the gaming business, and can the current run rate be maintained? A: Forrest Li expressed optimism about Garena's growth, driven by successful collaborations like the Naruto campaign. While acknowledging potential quarterly volatility, he remains confident in achieving double-digit growth for Garena's user base and bookings in 2025. Q: How is Shopee performing in Brazil, and what are the main drivers for its growth there? A: Chris Feng noted that Shopee's growth in Brazil is driven by competitive pricing, improved logistics infrastructure, and better service offerings. The company sees significant potential for continued growth due to low e-commerce penetration in the market. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
