Is the strong rebound of Arena of Valor sustainable for the rest of the year, or is it a one-off due to seasonality and promotions?

The strong performance of Arena of Valor, including record bookings in Q1, is sustainable due to deliberate investments in content and community engagement. 2026 is expected to be a record year for the game. While Q1 is seasonally strong, underlying health and confidence in Free Fire's long-term potential remain high. “This is not a one-off. We have been making deliberate investments in content updates and community engagement that are driving real results. With the content packed year to celebrate the game's tenth and anniversary, we expect 2026 to be a record year for Arena of Valor.”

How should we think about Shopee's margin cadence in Brazil, especially with increased competition? What are the early learnings from the loan book ramp-up in Brazil, and how do returns compare to ASEAN?

Shopee Brazil is growing ahead of the market and has been profitable for several consecutive quarters, with no foreseen change. Investments in fulfillment and VIP programs will continue. Brazil's loan book growth is strong, driven by localized products and leveraging open banking data for better risk assessment, leading to better risk profiles. The market is still early, with significant potential. “We have been possible in Brazil for the last few consecutive quarters. I don't I don't foresee any change towards that at this point in time. We will still continue to grow healthily in Brazil, like with the profitable kind of margins as we see right now.”

How much of the increased e-commerce take rates are reinvested into the seller base or consumer incentives? Are ASEAN e-commerce margins improving, and are sellers accepting these increases given cost inflation?

Increased take rates are largely reinvested to drive growth, particularly in fulfillment and VIP programs. ASEAN margins are generally improving quarter-over-quarter. Seller acceptance is managed by ensuring price competitiveness against peers, reducing sellers' operational costs through AI tools, and driving volume growth, creating a healthy ecosystem despite higher commissions. “The most important thing for us is to look at how the seller commission impact the pricing. We look at the impact of commission increase on pricing compared to the peers in the online market, and we also compare with the pricing compared with the offline market. Pricing is 1 of the most important thing for us, as we mentioned our time.”

Sea (SE) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· May 12, 2026

Source: earnings call transcript

Executive summary

Sea Limited Q1 FY26 — Strong Growth Across Verticals Driven by Strategic Investments and AI

Sea Limited delivered a strong Q1 FY26, with robust revenue and adjusted EBITDA growth across its Shopee, Money, and Garena segments. The company is strategically investing in key areas like logistics, membership programs, and AI to deepen its competitive moat and drive long-term value, while maintaining financial discipline. Brazil emerged as a key growth driver, and AI integration is significantly enhancing operational efficiency and user experience.

Highlights

Total revenue grew 47% year-on-year to over $7 billion.
Adjusted EBITDA exceeded $1 billion for the first time, up 9% year-on-year.
Shopee GMV grew 30% year-on-year to $37.3 billion, with adjusted EBITDA over $220 million.
Money's loan book reached $9.9 billion, increasing over 70% year-on-year, while maintaining a stable 90-day NPL ratio of 1.1%.
Garena bookings were up 20% year-on-year to $931 million, with adjusted EBITDA growing 25% year-on-year.

Concerns

Shopee's adjusted EBITDA decreased to $223 million in Q1 2026 from $464 million in Q1 2025, reflecting increased investments in growth initiatives.
Potential impact of higher fuel prices on operational costs and consumer spending, though management believes it is manageable within guidance.

Guidance & targets

Category	Target	Timeline	Confidence
Shopee annual GMV growth	around 25% year-on-year high materiality	FY26 · 2026	High
Full year adjusted EBITDA	no lower than 2025 in absolute dollar terms high materiality	FY26 · 2026	High
Garena full-year bookings growth	strong year-on-year bookings growth medium materiality	FY26 · 2026	High
Arena of Valor annual performance	record year medium materiality	FY26 · 2026	High
E-commerce EBITDA margin	2% to 3% high materiality	medium to long term	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Shopee Shopee delivered record highs in GMV, gross order volumes, and revenue, driven by strategic investments in logistics, the VIP program, and content. Brazil was the fastest-growing market, maintaining profitability. AI integration significantly improved efficiency and user experience. GMV: $37.3 billion (30% YoY growth)Gross orders: 4 billion (29% YoY growth)GAAP marketplace revenue: $4.5 billion (44% YoY growth)Core marketplace revenue (transaction-based fees and advertising): $3.8 billion (61% YoY growth)Value-added services revenue (logistics): $0.7 billionGAAP product revenue: $0.6 billionAd revenue: 80% YoY growthAd take rate: increased >90 bps YoYPaying sellers and average ad spend: increased ~35% YoYAverage monthly active buyers: 16% YoY increaseBuyer purchase frequency: ~12% YoY growthOrders from live streaming and short-form video: >50% YoY growth (25% of total physical goods orders in Southeast Asia)Orders driven by YouTube: more than doubled YoYMeta affiliates: 4.5 million (up ~30% QoQ)Instant delivery service cost per order in media: ~20% YoY reductionInstant delivery order volumes: >35% growth in Q1Offline stores available on instant services: ~7,000 at end of MarchFulfillment orders: ~25% sequential growthTaiwan collection point network: >3,100 locations (nearly 50% more YoY)Average buyer rating time: 12% YoY improvementShopee VIP subscribers (Asia): >10 million (up >40% QoQ)Shopee VIP program retention: averaging >80%Shopee VIP members contribution to GMV (Asia): ~20%Shopee VIP member spending uplift: double-digit (up to 30-40% in some markets)Brazil GMV from Shopee Mall sellers: more than doubled YoY (now ~15% of GMV)AI purchase conversion rate improvement: 14% YoYAI customer queries handled: ~80%AI customer service cost per contact reduction: ~30% YoY	$5.1 billion	—	—	$223 million adjusted EBITDA
Money Money achieved robust growth in revenue and adjusted EBITDA, primarily driven by its credit business. The loan book expanded significantly while maintaining stable asset quality, supported by localized products and expansion into new user segments and off-Shopee use cases. Consumer and SME loans principal outstanding: $9.9 billion (71% YoY increase)On-book loans: $8.8 billionOff-book loans: $1.1 billionNonperforming loans past due by more than 90 days: 1.1%First-time borrowers: 4.9 million addedActive credit users: 38 million (up >35% YoY)Average loan outstanding per user: ~$250 (25% YoY higher)Brazil loan book: >$1 billion (growing >250% YoY)SPay Later penetration on Shopee Brazil: ~10% of GMVOff-Shopee SPayLater loans in Thailand and Indonesia: exceeded 20% of SPay Later portfolio	$1.2 billion	58%	—	$275 million adjusted EBITDA
Garena Garena had a stellar start to the year, delivering its best quarter since 2021, driven by the strength of Free Fire and record contribution from Arena of Valor. Successful IP collaborations and a globalized content strategy contributed to strong engagement. Bookings: $931 million (20% YoY growth)Free Fire Jujutsu Kaisen collaboration official content views: >$700 millionRamadan campaign global social media platform impressions: exceeded 120 billion (up ~70% YoY)	$697 million	41%	—	$574 million adjusted EBITDA

SE operating KPIs by quarter

SE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Gross merchandise value Shopee	$28.6B On e-commerce, Shopee's gross orders grew 20% year-on-year to $3 billion in the fourth quarter of 2024, and GMV increased by 23% year-on-year to $28.6 billion in the fourth quarter of 2024. Source: earnings call transcript	$28.6B On e-commerce, Shopee's gross orders grew 20% year-on-year to 3.1 billion in the first quarter of 2025 and GMV increased by 22% year-on-year to $28.6 billion in the first quarter of 2025. Source: earnings call transcript	$29.8B On e-commerce, Shopee's gross orders grew 29% year-on-year to $3.3 billion in the second quarter of 2025, and GMV increased by 28% year-on-year to $29.8 billion in the second quarter of 2025. Source: earnings call transcript	$32.2B On e-commerce, Shopee's gross orders increased 28% year-on-year to $3.6 billion in the third quarter of 2025, and GMV increased by 28% year-on-year to $32.2 billion in the third quarter of 2025. Source: earnings call transcript	$36.7B On Shopee, gross orders increased 30% year-on-year to $4 billion in the fourth quarter of 2025 and GMV increased by 29% year-on-year to $36.7 billion in the fourth quarter of 2025. Source: earnings call transcript	$37.3B On Shopee, gross orders increased 29% year-on-year to $4 billion in the first quarter of 2026, and GMV increased by 30% year-on-year to $37.3 billion in the first quarter of 2026. Source: earnings call transcript	—	+1.6%
Orders Shopee	3B On e-commerce, Shopee's gross orders grew 20% year-on-year to $3 billion in the fourth quarter of 2024, and GMV increased by 23% year-on-year to $28.6 billion in the fourth quarter of 2024. Source: earnings call transcript	3.1B On e-commerce, Shopee's gross orders grew 20% year-on-year to 3.1 billion in the first quarter of 2025 and GMV increased by 22% year-on-year to $28.6 billion in the first quarter of 2025. Source: earnings call transcript	3.3B On e-commerce, Shopee's gross orders grew 29% year-on-year to $3.3 billion in the second quarter of 2025, and GMV increased by 28% year-on-year to $29.8 billion in the second quarter of 2025. Source: earnings call transcript	3.6B On e-commerce, Shopee's gross orders increased 28% year-on-year to $3.6 billion in the third quarter of 2025, and GMV increased by 28% year-on-year to $32.2 billion in the third quarter of 2025. Source: earnings call transcript	—	4B On Shopee, gross orders increased 29% year-on-year to $4 billion in the first quarter of 2026, and GMV increased by 30% year-on-year to $37.3 billion in the first quarter of 2026. Source: earnings call transcript	—	—
Bookings Digital Entertainment	$543M Digital entertainment bookings were $543 million in the fourth quarter up 19% year-on-year and $2.1 billion for the full year of 2024, up 19% year-on-year. Source: earnings call transcript	$775M Digital entertainment bookings were $775 million in the first quarter, up 51% year-on-year. Source: earnings call transcript	$661M Digital entertainment bookings grew 23% year-on-year to $661 million. Source: earnings call transcript	$841M Digital entertainment bookings grew 51% year-on-year to $841 million. Source: earnings call transcript	$672M Garena bookings grew 24% year-on-year to $672 million in the fourth quarter and grew 37% year-on-year to $2.9 billion for the full year of 2025. Source: earnings call transcript	$931M Garena bookings grew 20% year-on-year to $931 million. Source: earnings call transcript	—	+38.5%
First-time borrowers added SeaMoney	~5M In the fourth quarter, we added approximately 5 million first-time borrowers, and we saw 50% year-on-year growth in our active users, which have now grown to more than $26 million. Source: earnings call transcript	4M+ In the first quarter, we added over 4 million first-time borrowers, and we see new user cohorts continuing to generate positive profit over time as we scale. Source: earnings call transcript	4M+ We added over 4 million first-time borrowers during the quarter, and our newer cohorts are scaling well with positive unit economics. Source: earnings call transcript	5M+ Moving to this all can apply approach enabled us to add more than 5 million first-time borrowers in the third quarter. Source: earnings call transcript	5.8M In the fourth quarter, we added 5.8 million unique first-time borrowers. Source: earnings call transcript	4.9M In the first quarter, we added 4.9 million first-time borrowers -- our active credit users crossed 38 million at the end of the quarter, an increase of more than 35% year-on-year. Source: earnings call transcript	~5.3M We added around 5.3 million uniques per time borrowers and our active credit users grew around 34% year-on-year to over $40 million at the end of the quarter. Source: earnings call transcript	—
Active borrowers SeaMoney	—	28M+ By the end of the quarter, active users for our consumer and SME loan products exceeded 28 million, representing more than 50% growth year-on-year. Source: earnings call transcript	30M+ At the end of the quarter, active users for our consumer and SME loan products exceeded 30 million for the first time, representing more than 45% year-on-year growth. Source: earnings call transcript	—	37M+ Our active credit users crossed 37 million at the end of the quarter, up more than 40% year-on-year. Source: earnings call transcript	38M+ In the first quarter, we added 4.9 million first-time borrowers -- our active credit users crossed 38 million at the end of the quarter, an increase of more than 35% year-on-year. Source: earnings call transcript	40M+ We added around 5.3 million uniques per time borrowers and our active credit users grew around 34% year-on-year to over $40 million at the end of the quarter. Source: earnings call transcript	—
90-day NPL ratio SeaMoney	1.2% Nonperforming loans past due by more than 90 days, as a percentage of total consumer and SME loans was 1.2% at the end of the quarter. Source: earnings call transcript	1.1% At the same time, our overall portfolio quality remained healthy, with our 90-day NPL ratio staying relatively stable at 1.1%. Source: earnings call transcript	1% Our loan portfolio remains healthy with the 90-day NPL ratio staying stable at 1.0%. Source: earnings call transcript	1.1% Monee has delivered another very strong quarter with revenue growing by 61% and adjusted EBITDA growing more than 35% year-on-year, while our 90-day NPL ratio remained stable at 1.1%. Source: earnings call transcript	1.1% Our 90-day NPL ratio held steady at 1.1% as of the end of the fourth quarter. Source: earnings call transcript	1.1% Our 90-day NPL ratio remained stable at 1.1% at the end of the quarter. Source: earnings call transcript	1% Asset quality remained stable with our 90-day NPL ratio at 1.0%. Source: earnings call transcript	-0.1 pt
Paid subscription members Shopee VIP	—	1M+ Adoption has been encouraging, with more than 1 million users subscribing as of the end of March. Source: earnings call transcript	2M At the end of June, total VIP subscribers in the market reached 2 million. Source: earnings call transcript	3.5M+ By the end of September, VIP members across Indonesia, Thailand, Vietnam surpassed 3.5 million, up more than 75% from the previous quarter. Source: earnings call transcript	7M+ Total subscribers surpassed 7 million at the end of the year, more than double the number from a quarter ago. Source: earnings call transcript	10M+ By the end of March, total subscribers across our Asian market surpassed 10 million up more than 40% from the previous quarter, with strong program retention averaging above 80%. Source: earnings call transcript	15M+ Now life across Asia and Brazil, total membership exceeded $15 million at the end of June, up 25% from the previous quarter. Source: earnings call transcript	—
Stores Taiwan	—	—	—	2,500+ So we expanded our automated locker store network to over 2,500 locations in less than 3 years, making us the only e-commerce player in Taiwan with a locker network at such scale. Source: earnings call transcript	2,800+ By the end of the year, our network has grown to over 2,800 locations. Source: earnings call transcript	—	—	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Shopee VIP program	expansion	April
SPay Later license	milestone	Q1 2026
AI shopping assistant	roadmap	over time
AI seller agent	roadmap	over time

Deals & partnerships

Indomaret and other major convenience stores and pharmacy chains Partnership

Shopee expanded partnerships to include around 7,000 offline stores for instant delivery services, enabling expansion into higher frequency categories.

Meta Partnership

Collaboration with Meta extended in Indonesia to enable seamless product promotion and checkout on Facebook and Instagram, building on over 4.5 million affiliates.

Jujutsu Kaisen Collaboration

Free Fire launched a major collaboration with the popular anime Jujutsu Kaisen, integrating core elements into gameplay and generating significant content views.

Risks & headwinds

Increased investments impacting profitability Q1 2026

Shopee adjusted EBITDA decreased to $223 million in Q1 2026 from $464 million in Q1 2025

Mitigation:Strategic investments in delivery fulfillment, Shopee VIP membership program, and user acquisition are expected to improve unit economics over time and maximize long-term value.

Higher fuel prices Ongoing, more impact expected in Q2

Impacts operational costs, especially last-mile delivery

Mitigation:Leveraging government subsidies, working closely with line haul and airline partners to manage costs. Platform's competitive pricing and essential product offerings help mitigate impact on consumer spending.

Q&A highlights

What are the key drivers for Shopee's 30% GMV growth, particularly the contribution from higher ASP products in Brazil and VIP members in Southeast Asia? Why is the full-year GMV guidance maintained at 25% despite strong Q1 performance?

Shopee's GMV growth is a combination of Brazil's faster growth driven by fulfillment and Shopee Mall, and VIP program traction in Asia. Q1 benefited from seasonality (Ramadan, Lunar New Year) and successful initiatives. The full-year guidance remains conservative due to early stage of the year and market evolution, with potential for updates later.

“For the GMV guidance, Q1 has Ramadan and also both -- and also 10 New Year fall into the quarter. We see very good seasonality attribute positive growth. We also see that the -- many of the initiatives we implemented from last year, including the VIPs, including the instant delivery, including the AI-enabled better discovery that we roll out to our platform. All this contribute to kind of a better growth than we expected in Q1.”

asked by Alicia Yap · answered by Hou Tianyu

3 min read 7 chapters

Detailed narrative

Shopee's Strategic Growth Investments

Shopee's strong Q1 performance was driven by strategic investments in logistics, its VIP membership program, and content ecosystem. Logistics capabilities, including SPX Express and instant/same-day delivery, are being scaled, with instant delivery order volumes growing over 35% and cost per order reducing by 20% year-on-year in media.

The Shopee VIP program has gained significant traction, with over 10 million subscribers in Asia, demonstrating strong retention and double-digit spending uplift. The content ecosystem, including live streaming, short-form video, and partnerships with YouTube and Meta, continues to drive engagement and orders.

AI Integration and Efficiency Gains

Sea Limited is embedding AI across its operations to enhance user experience and drive efficiency. AI-powered search and recommendation algorithms led to a 14% improvement in purchase conversion rates year-on-year. AI-generated content tools assist sellers, and AI-driven personalization contributed to 80% ad revenue growth.

On the cost side, AI chatbots now handle approximately 80% of customer queries, reducing customer service cost per contact by about 30% year-on-year while maintaining high satisfaction. The company is also testing AI shopping assistants and virtual business advisors for future rollout.

Brazil Market Expansion and Profitability

Brazil was Shopee's fastest-growing market in Q1, maintaining profitability while outpacing market GMV growth. This performance is supported by strong fundamentals, including competitive pricing and logistics advantages. The company opened three new fulfillment centers, bringing the total to five, and improved delivery times by over one day compared to last year.

These efforts enabled onboarding more merchants, particularly in Shopee Mall, which saw GMV more than double year-on-year and now contributes around 15% of total GMV in Brazil.

Money's Expanding Credit Business

Money's credit business continues its robust growth, with the loan book reaching $9.9 billion, up 70% year-on-year, while maintaining a stable 90-day NPL ratio of 1.1%. The expansion is driven by deepening existing user relationships, acquiring new users in segments with better risk profiles, and expanding credit use cases beyond Shopee.

Off-Shopee SPayLater loans in Thailand and Indonesia now exceed 20% of the SPay Later portfolio, demonstrating successful diversification. Brazil's loan book grew over 250% year-on-year to exceed $1 billion, supported by localized product offerings and data from open banking networks.

Garena's Strong Gaming Performance

Garena delivered its best quarter since 2021, with bookings up 20% and adjusted EBITDA up 25% year-on-year. This was fueled by the continued strength of Free Fire and a record contribution from Arena of Valor. Free Fire's collaboration with Jujutsu Kaisen generated over $700 million in official content views, showcasing successful IP partnerships.

Garena is also evolving its content strategy to both localize and globalize, as exemplified by the Ramadan campaign which achieved over 120 billion global social media impressions, up 70% year-on-year.

Fuel Price Impact and Mitigation

The company is closely monitoring the impact of higher fuel prices on its operations. While it affects operational costs, particularly last-mile delivery, Sea leverages government subsidies in various countries and works with partners to manage costs. Management believes the impact can be managed within current guidance.

Furthermore, the platform's competitive pricing and focus on essential products help mitigate potential impacts on consumer spending power, as users tend to seek savings during economic pressures.

Fulfillment Infrastructure Development

Sea is strategically building out its fulfillment infrastructure, particularly in Brazil, with a focus on high capacity utilization rather than overbuilding. The company aims for a continuous process of expansion, predicting volume needs to align fulfillment center construction. While the goal is to eventually surpass competitors in absolute fulfillment volumes, this will take several years.

The CapEx for individual fulfillment centers is primarily for equipping rented facilities, leading to a relatively fast return on investment for these specific product investments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.