Sea (SE) Q2 FY26 earnings call: guidance and Q&A

What is the outlook for Shopee's GMV growth, are investments peaking, and what AI initiatives are being implemented for buyers and sellers?

Shopee expects to achieve its full-year GMV growth outlook of around 25%, despite potential ForEx headwinds. Investments in initiatives like fulfillment are CapEx-light and unit economics are improving. AI is being used for seller assistance (IM assistance), buyer conversion (new generative algorithms for search/recommendation), and content generation (AIGC for personalized targeting).

“If we look forward for the full year, we remain well on track and confident of achieving our full year growth outlook of around 25%.”

asked by Piyush Choudhary · answered by Forrest Li

Elaborate on Shopee's outperformance and profitability trends in Brazil, Taiwan, and Southeast Asia, the implications of GMV exceeding guidance for EBITDA, and the stage of fulfillment investment.

Shopee saw good performance across all markets, maintaining or gaining market share. The balance between growth and EBITDA is dynamic, driven by market growth and internal efficiency. Fulfillment is still in early stages with significant room for improvement, focusing on CapEx-light expansion, cost optimization, and integration with SPX logistics.

“For the fulfillment, we believe there's quite a lot of room for us to improve to further penetrate on the fulfillment businesses.”

asked by Alicia Yap · answered by Forrest Li

How much more upside is there for e-commerce take rates, is ASEAN profitable, and what are the drivers for Monee's margins and NPLs, especially with new user acquisition?

Take rates are evaluated based on ecosystem growth, price competitiveness, offline pricing, and seller profitability. Opportunities exist to increase take rates through commissions and paid ads, with healthy ecosystem impact. Monee's margins are influenced by loan mix shifts (e.g., offshore SPL, prime segments) which have lower ROA but contribute to overall outstanding growth. NPLs are stable within segments, and growth is intentional for positive asset returns.

“Going forward, we still see opportunities to increase our take rate, not only from commission, but also from the pay ad we have been able to penetrate more and more over time.”

asked by Divya Kothiyal · answered by Forrest Li

How much more room is there for ad take rate improvement, what AI technologies are driving it, and what is the strategy for Monee's expansion in Brazil?

Ad take rate growth is driven by smart vouchers, AI-powered diagnosis tools for sellers (GMV Max smart diagnosis), in-depth insights for Brand Max, and improved AI algorithms for matching and personalized content. Significant potential remains. In Brazil, Monee plans to launch a ShopeePay-like app with an SCFI license, leveraging e-commerce data and credit scoring to broaden product offerings.

“In the coming quarters, we still see that meaningful potential to increase at take rate, given that many of the tools, many of the algorithm we're implementing are still in progress.”

asked by John Choi · answered by Forrest Li

What is the time frame and path to reach 2-3% e-commerce EBITDA margin, and does increased average loan size in Monee correlate with higher credit risk?

The 2-3% EBITDA margin is considered within reach, driven by maturing investments, fundamental cost structure improvements (logistics, fulfillment), and better take rates. There is no correlation between increased average loan size per user and increased credit risk, as the growth is due to reaching prime segments and country expansion, with NPLs remaining stable within segments.

“We still believe that 2% to 3% is quite within our reach for the year. EBITDA percentage.”

asked by Navin Killa · answered by Forrest Li

Why is H2 EBITDA expected to be higher than H1 for Shopee, unlike last year, and what is the profitability outlook for Brazil given competitor actions?

Higher H2 EBITDA is expected due to continued GMV growth (higher base) and ongoing efficiency initiatives. E-commerce pace is adjusted dynamically based on market growth and competitive landscape. In Brazil, Shopee continues to outpace the market despite competitor actions, maintaining price competitiveness and fundamental strengths, aiming for profitable growth.

“If you do the math, it does mean that in the absolute terms, our EBITDA for second half of the year will be higher than the first of the year.”

asked by Jiong Shao · answered by Forrest Li

What geographies do the new Garena publishing rights cover, and what trends are driving increased credit loss provisions for Monee?

For 'Howard Online', Garena plans a global publishing opportunity. For 'Monster Hunter Outlanders', it will launch in Southeast Asia, Latin America, Taiwan, and potentially the Middle East. Increased credit loss provisions for Monee are primarily driven by a shift in loan mix towards higher-risk segments, specifically off-Shopee SPL and Brazil loans, which naturally require higher provisions despite good underlying performance.

“I think for the provision, it's primarily driven by the loan mix I think there are 2 composing our loan mix, we naturally have high provisions. One is the off Shopee SPL and second one is the Brazil loan outstanding.”

asked by Ranjan Sharma · answered by Hou Tianyu