Sea Limited Q2 Earnings Miss Estimates, Revenues Rise Y/Y

Sea Limited SE reported adjusted earnings of 85 cents per share in the second quarter of 2025, missing the Zacks Consensus Estimate by 14.14%. The company posted earnings of 46 cents per share in the year-ago quarter.

Revenues of $5.3 billion increased 38.2% on a year-over-year basis, primarily driven by growth in Gross Merchandise Value (GMV) for the e-commerce and digital financial services segments. The top line beat the Zacks Consensus Estimate by 4.67%.

SE’s Q2 Top-Line Details

Digital Entertainment (Garena): Digital Entertainment revenues were $559.1 million, marking year-over-year growth of 28.4%. The growth was primarily driven by an increase in the active user base and a deepening of paying user penetration.

Quarterly active users were 664.8 million, up 2.6% year over year.

Sea Limited Sponsored ADR Price, Consensus and EPS Surprise

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Quarterly paying users of 61.8 million increased 17.8% year over year. The paying user ratio was 9.3% in the second quarter compared with 8.1% in the year-ago quarter.

Average bookings per user in the reported quarter were $0.99 compared with $0.83 in the year-ago quarter.

The Garena segment reported strong growth in the second quarter, with total bookings reaching $661.3 million, marking a 23.2% year-over-year increase.

E-commerce (Shopee): E-commerce service revenues totaled $3.8 billion, up 33.7% year over year, which includes GAAP marketplace revenues of $3.3 billion and GAAP product revenues of $0.5 billion.

GMV increased by 28.2% year on year to $29.8 billion in the second quarter.

Gross orders for the quarter reached 3.3 billion, representing a 28.6% year-over-year increase.

Shopee maintained its market leadership in Asia and Brazil, with average monthly active buyers increasing more than 30% year over year in the second quarter, much faster than the industry average growth rate.

Digital Financial Services (Rebranded to Monee): Digital Financial Services’ revenues surged 70% year over year to $882.8 million. The uptick was driven by strong growth in its loan book, which reached $6.9 billion, up 94%.

Non-performing loans over 90 days were stable at 1% of total consumer and SME loans in the reported quarter, indicating strong credit quality.

Sales of goods increased 34.4% year over year to $460.6 million in the second quarter.

Other Services, which encompass a mix of various business activities, increased 51.7% year over year to $44.8 million in the second quarter.

Sea Limited’s Operating Details

Gross profit increased 52.1% year over year to $2.41 billion in the second quarter. The company’s gross margin expanded 420 basis points (bps) year over year to 45.8%.

Sea Limited reported an adjusted EBITDA of $829.2 million in the quarter under review, up 84.9% year over year, representing an adjusted EBITDA margin of 15.8%, which expanded 400 bps.

Digital Entertainment's adjusted EBITDA rose 21.6% year over year to $368.2 million in the second quarter, from $302.8 million in the prior-year period.
    
E-commerce adjusted EBITDA reached $227.7 million in the second quarter, a significant turnaround from a loss of $9.2 million in the same period last year.

Digital Financial Services adjusted EBITDA increased 55% year over year to $255.3 million, up from $164.7 million in the prior-year period.

SE’s Balance Sheet & Cash Flow

As of June 30, 2025, SE had cash and cash equivalents of $2.17 billion compared with $2.18 billion as of March 31, 2025.

The company generated $1.62 billion in cash from operating activities in the reported quarter compared with $756.9 million in the previous quarter.

SE’s Zacks Rank & Stocks to Consider

Currently, Sea Limited carries a Zacks Rank #3 (Hold).

Vipshop VIPS, NetEase, Inc. NTES and Analog Devices ADI are some top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. While Vipshop sports a Zacks Rank #1 (Strong Buy) at present, NetEase and Analog Devices carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vipshop shares have gained 16.5% in the year-to-date period. VIPS is set to report its second-quarter 2025 results on Aug. 14.

NetEase shares have jumped 46.8% in the year-to-date period. NTES is set to report its second-quarter 2025 results on Aug. 14.

Analog Devices shares have returned 9.1% in the year-to-date period. ADI is set to report its third-quarter fiscal 2025 results on Aug. 20.

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This article originally published on Zacks Investment Research (zacks.com).

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