Q3 2025 Sea Ltd Earnings Call
Speaker #1: Good morning and good evening to all, and welcome to the Sea Ltd third quarter 2025 results conference call. All lines have been placed on mute to prevent any background noise.
Speaker #1: After the speakers are marked, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.
Speaker #1: If you would like to withdraw your question, press star one again. For operator assistance throughout the call, please press star zero. Finally, I would like to advise all participants that this call is being recorded.
Speaker #1: Thank you. I would now like to welcome Ms. Rebecca Lee to begin the conference. Please go ahead.
Speaker #2: Thank you. Hello everyone, and welcome to Sea's 2025 third quarter earnings conference call. I am Rebecca from Sea's Investor Relations team. On this call, we may make forward-looking statements, which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons, as stated in our press release.
Speaker #2: Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures.
Speaker #2: For discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release.
Speaker #2: I have with me Sea's Chairman and Chief Executive Officer, Forrest Li; President Chris Huang; and Chief Financial Officer Tony Hou. Our management will share strategy and business updates, operating highlights, and financial performance for the third quarter of 2025.
Speaker #2: This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to.
Speaker #2: Forrest. Hello
Speaker #3: Everyone, and thank you for joining today's call. After a very strong first half of the year, our momentum has continued into the third quarter.
Speaker #3: We achieved a total revenue of $6 billion and adjusted EBITDA of $874 million, representing 38% and 68% year-on-year growth, respectively. Showcase GMV grew by over 28% year-on-year.
Speaker #3: Money's loan book expanded 70% year-on-year while maintaining a stable risk profile. Garena delivered its best quarter since 2021, with quarterly bookings up over 50% year-on-year.
Speaker #3: Our focus remains the same: continuing to deliver high and profitable growth across all three of our businesses. With e-commerce and digital finance penetration in our market still low but increasing, strong growth lays the best foundation to maximize our long-term profitability.
Speaker #3: I'm very pleased with the profitable growth we have consistently delivered, and we will keep on this path. With that, let me take you through each business's performance.
Speaker #3: Starting with e-commerce, Shopee delivered another record-setting quarter, achieving new highs in quarterly GMV, gross order volume, and revenue. We have now achieved five consecutive quarters of sequential GMV growth, driven by more active buyers and higher purchase frequency.
Speaker #3: And we have improved our year-on-year profitability across Asia and Brazil. Our monetization continues its upward trend into the third quarter. Take rates increased both year-on-year and quarter-on-quarter.
Speaker #3: As a big contributor, our efforts to make ad services both simpler and smarter drove broader adoption and higher ad spend by our sellers.
Speaker #3: Ad revenue increased over 70%, and the ad take rate rose by more than 80 basis points year-on-year. The number of sellers using our ad product increased by more than 25%, and their average ad spend increased by over 40% year-on-year.
This helps us serve more users better while improving our operational efficiency even further.
For example, in Indonesia, we saw growing demand from urban buyers for very fast deliveries.
and waiting needs to pay a premium for it.
So, we load out same-day and instant delivery, with delivery times as fast as under 2 hours.
The response was excellent. Orders using this faster option in the greater Jakarta area increased by more than 35% year-on-year in the third quarter.
What region?
We do have a preference for economical delivery.
So, we came up with the delivery solutions that reduce the cost per order by 20% compared to our standard delivery, allowing rural buyers to enjoy free shipping with a much lower minimum spend.
This boosted shop is popular among rural buyers.
Orders delivered outside Java increased by more than 45% year on year in the third quarter.
In Taiwan, we noticed a very different customer demand.
Many buyers preferred sales pickup options.
So we expanded our automated longer store Network to over 2,500 locations in less than 3 years. Making us the only e-commerce player in Taiwan with the locker Network at such scale.
Today, it is the key logistic channel accounting for more than 70% of all our deliveries in Taiwan.
This move has paid off in more than one way.
The lockers run at over 30% lower cost per order than traditional pickup locations.
On top of that, the locker locations double up at Last Mile, serving as hubs for home delivery at a lower cost compared to traditional Last Mile models.
In other words, we are making our buyers happier while reducing our costs.
In the third quarter, our GMV in Taiwan showed double-digit growth year on year, and we still see a lot of room to deepen our penetration further in this highly attractive market.
Today, we have to build STX Express into a clear leader in scale, coverage, and cost in our Asian market.
Our deep local insights have enabled us to customize ground strategies to create the most efficient and effective solutions in every market, reinforcing our cost advantage.
Our logistics capability underpins our strong growth. We have seen from Shopee this year playing a big role in making us the platform of choice for both buyers and sellers.
with our delivery capability while scaled.
All right. Next, to further deepen our logistics, our competitive mode is to enhance our fulfillment capability.
This addresses a more upstream need for our sellers.
Ensuring fast, accurate order handling in addition to speedy and reliable delivery.
We aim to make fulfillment a second core pillar of our overall logistics capability—another way for us to strengthen our reputation among buyers and sellers and ensure high levels of customer satisfaction. Just as we did with delivery,
this efforts are already underway.
In the previous course, I shared updates on initiatives such as intelligent demand forecasting, where we pre-ship commonly ordered products closer to where we anticipate fair demand will be.
This helps us reduce buyer reading time and fulfill orders more cost-efficiently.
For instance, in Indonesia, if we wait until an order comes in from a remote island before shipping the item out from Java.
We must rely on more expensive forms of transport, such as airplanes, to get it there quickly.
But it will have already anticipated this demand. We can use cheaper forms of transport to ship it to the area, allowing us to deliver it quickly and effectively once the order is placed.
We have made further headway in fulfillment by starting to offer warehouse solutions in some of our markets.
Offering fulfillment services benefits everyone. It takes the burden of packaging and shipment off sellers, provides buyers with more consistent service, and allows Shopee to better optimize end-to-end logistics while serving more buyers and sellers.
We are investing in this capability in a capital-efficient way.
For instance, by mostly leading rather than buying land and warehousing.
It would be very difficult to build a fulfillment capability without a deep understanding of logistics needs in our markets and the tightly integrated delivery network to pair it with.
After seven years of experience with XPS Xpress, we have both.
Second, we continue to find new and exciting ways to deepen user engagement.
Our subscription-based shopping EIP membership program is a great example and is continuing to gain strong traction.
In September, we reported our members across Indonesia and Thailand. Vina surpassed 3.5 million.
More than 75% from the previous quarter.
Given the price sensitivity of many customers in our market.
The success of our VIP program shows the high value we are delivering to our customers.
Weip members are demonstrating higher engagement.
In Indonesia, this number spends around 40% more after subscribing to the program.
In the third quarter, Shopee team members also bought three times more frequently and spent five times more than non-subscribers, accounting for over 10% of total GMV in Indonesia.
We have also deepened user engagement by enhancing Sharpie's content ecosystem.
Our partnership with YouTube continues to gain strong traction.
In the third quarter, shopping orders driven by YouTube content in our Southeast Asian markets grew by more than 30% quarter on quarter.
With this strong result, we are now extending this partnership to Brazil.
Late last month, we also announced the collaboration with Meta to launch new tools, allowing seamless product promotion and checkout between Facebook and Shopee accounts.
We are excited to see how this partnership will enrich our buyer community further.
Third, we are committed to embracing AI as a powerful way to improve the whole consumer retail experience.
Our AI efforts have already begun to bear fruit, contributing meaningfully to our monetization gains in the third quarter.
Smarter search, better recommendations, and more personalized content have made Shoppy easier and more enjoyable to shop on.
We have also used AI to enhance product discovery beyond search, helping buyers find relevant and interesting items even when they arrive without a specific purchase in mind.
We empowered sellers with AI tools, enabling them to generate image videos, text descriptions, and virtual showrooms to make their product listings more appealing.
This initiative has increased buyer engagement, improving our purchase conversion rate by 10% year-on-year in the third quarter.
Taken together, all these efforts have resonated with our customers.
Buy purchase frequency across our markets continues to improve, going up a further 12% year on year in the third quarter.
Average monthly active buyers also.
Increase of 15% year on year in the third quarter.
And the shopping remains consistently regarded as the e-commerce platform, offering the most price-competitive products in both our Asian markets and Brazil, based on quality delays.
And I would also like to highlight our progress in Brazil.
We at Shopee continued to deliver exceptional growth while maintaining positive discipline.
Our growth there has been outpacing the market.
Driven by sustained increases in monthly active users, buyer purchase frequency, and average basket sizes over the past several quarters.
Our wide product assortment, highly competitive pricing, and structural cost leadership enable us to scale rapidly.
Our continuous improvements in delivery speed and reliability have enabled us to expand into more upmarket product categories.
Compared to a year ago.
In the greater Apollo area, when three puzzles were delivered the next day and then nearly half within two days.
With these improvements, we are seeing more merchants lifting higher value products, and the new buyer cohorts showing higher spending patterns.
In the third quarter, GMB for shopping more than doubled year on year in Brazil for our premium shopping section.
In conclusion, shopping has delivered another quarter of strong and profitable growth.
With our strong performance year to date, we now expect the shop's 2025 GMV growth to be more than 25%.
Next.
Moving to digital Financial Services.
Via 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%.
The strong growth was broad, driven by both user growth and product expansion across multiple markets.
Our loan book expanded by around $1 billion during the quarter to reach $7.9 billion at the end of September.
The leading position of our company as one of the largest unsecured consumer lenders in Southeast Asia.
Thailand has reached another major milestone, surpassing $2 billion in loans outstanding at the end of September.
In Brazil, our Loop more than tripled year-on-year in the third quarter, with improving portfolio quality and stronger user performance.
Our significant credit history with a very large base of users across many markets allows us to roll out products more widely while maintaining the health of our portfolio.
We used to take a wide list approach to onboarding new users.
Now, any shop user in most of our markets can apply for pay later credits, and we can make credit approval decisions very quickly in many cases, almost instantly.
Moving to this old camp applied approach enabled us to add more than 5 million first-time borrowers in the third quarter.
New user cohorts filled well, with generally positive unit economics.
A testament to our increasingly advanced risk underwriting capability.
At the end of the quarter, active users across our consumer and SME loan products reached 34 million.
Up nearly 45% year-on-year.
Meanwhile, loan disbursement to new users still accounted for less than 10% of total disbursement in the third quarter, as we continue to assess credit quality before cross-selling more products.
We are also making our credit products on shopee at pay later off shopee at pay later and the personal cash loans easier to use in a wider set of use cases.
In many of our markets, where credit card penetration remains low, we are sadly establishing a pay-later option as a trusted and convenient payment method of choice for all kinds of purchases, both online and offline.
On Shopee, Pay Later has grown significantly as penetration continues to deepen across all our markets.
GMV penetration now ranges from single digits in early markets to over 30% in more mature ones.
reflecting our discipline in scaling, only when incremental disbursement are profitable,
We see meaningful room to continue increasing our 'Pay Later' shopping penetration across our markets.
Offshore P.S. Pay Later showed strong traction this quarter, growing over 300% year on year and over 40% quarter on quarter.
It's still only accounts for less than 10% of our total Loom books. As of the end of September, ...
The last upset remains for future growth.
PowerUp, consumer expenditure in many of our markets.
The standalone shopping pay app, posting both online and offline payments across a wide range of merchants, is a key pillar of our strategy to grow our money businesses off Shopee.
In payments, it offers users a faster and more seamless experience, giving them direct access without having to go through the Shopee app.
Beyond payments, it helps us unlock more use cases, positioning Shopee as a one-to-one platform for users' broader financial needs.
Of Shopee, credit insurance, wealth management, and more.
The app has launched in Indonesia, Thailand, Vietnam, and Malaysia, and it's showing strong traction.
More than 20% of our ShopeePay monthly transacting users are using the standalone app.
Personal cash. Loans also grew strongly this quarter.
In Indonesia, we have been offering higher limits and longer channels to attract more Prime users who demonstrate strong repayment behavior.
Long sizes can typically range from a few hundred dollars to over a thousand dollars, allowing us to serve users with larger financial needs.
Building on this success, we have similarly expanded access to Prime users in Thailand and Malaysia, where user adoption is increasing rapidly.
In Brazil, personal cash loans grew close to 50% quarter on quarter, driven by the continued popularity of the combined credit limit. We offer to escalate later users.
In conclusion, money has delivered another excellent quarter, dealing well. We are diversifying our credit portfolio across markets, users, and products.
Our portfolio quality and our unit economics have remained healthy.
And we are extending our pay-later reach beyond e-commerce and integrating it into users' everyday financial use cases.
This will build a pathway for strong offshore people for many years to come.
Finally, moving to Digital entertainment.
Gina has delivered another stellar quarter.
Bookings were up 51% and adjusted EBITDA grew through 48% year on year, making it our best quarter since 2021.
Referencing the strong performance, with the two high-impact campaigns.
We gained, and the Naruto ship, Putin. Chapter 2.
The campaigns received a huge positive response, accelerating our growth momentum from the previous quarter.
Our three-game collaboration incorporated iconic challenges from the Blockbuster Netflix TV series, such as the red light, green light, and the glass bridge.
The event draws strong participation with the right. Light Green. Light challenge being played more than 300 million times in the quarter.
Our Naruto Shupin chapter 2 event expanded on the resounding success of chapter 1 in the first quarter of this year.
Based on gamer feedback and performance insights, we identified new fan-favorite Ninja characters, new attack mechanics, highly sought-after collectible items, and the new 1-on-1 mode allowing players to use signature abilities from the series.
Chapter 2 went on to surpass Chapter 1 in both engagement and revenue.
We saw an extremely high social media share rate for Chapter 2, which has already doubled, setting a high bar established by our 8th anniversary event.
Both Naruto chapters have achieved the highest satisfaction scores of any campaign launched over the past two years.
Our Naruto content was very successful because it focused on what players value: most authenticity through attention to detail.
The strong focus underpins how we take IP collaboration to the next level, and it is driven by growing as a core-created culture.
Shaped to be that by a team of genuine super funds within Arena.
To ensure authenticity and respect for the original work.
Naruto fans love how closely the gameplay mirrors small, but important details from the anime.
For instance, one key storyline from the original anime was about rogue ninjas returning to the ninja village they had been exiled from.
In Chapter 1, we had to build this ninja village into our map and introduced iconic attack skills from the main anime characters.
In Chapter 2, we introduced a tech skill that was specifically from the roof, Ninja characters, like fireballs and exploding birds, and redesigned the map to feature a decent choice version of the Ninja Village.
Continuing, the narrative between the chapters in a way that was true to the original Anime. Created a highly immersive experience.
And the broad first excitement to the next level.
These are details only Super Fun would care about and understand how to incorporate into gameplay.
Second, we take a global yet local approach, bringing global IPS to our market in highly localized ways.
For instance, we took advantage of the huge traction from our Naruto campaign to hold ninja-themed offline events in eight markets across Asia and the Americas, attracting tens of thousands of fans.
The largest of these events was a 2-day international All-Star Ninja Clash esports tournament in Bangkok, with teams of 3 fire players flying in from across Asia and Latin America to compete.
The Bangkok tournament was a huge success, becoming a top trending event on YouTube Gaming and on social media across team markets.
In addition to such events, our teams stay closely connected to players through creator programs and fun. Good.
Typing into a constant stream of feedback and ideas that shape game design position.
This effort feels very strong Community Connection, and the Loyalty across our markets.
Beyond Free Fire, we continue to expand our publishing portfolio with the launch of EA Sports FD Mobile in Vietnam last month.
Strengthening our long-standing partnership with Electronic Arts.
The game quickly became the country's, most downloaded Mobile gaming, October based on sensor Tower.
By combining EA's world-class football franchise with Gina's locals, know how.
We are deepening our expertise in sports games and reinforcing our position at The Trusted publishing partner for Global titles.
With this very strong quarter, Serena remains on track to achieve more than 30% year-on-year growth in bookings for 2025.
Our creative steps, discipline execution, and a close connection with players will continue to drive Greener Scrolls.
In conclusion, all three businesses have to build up strong momentum from the first half of the year and deliver another quarter of exceptional growth.
We will continue to make our digital ecosystems even more vibrant.
Strengthening our leadership position and delivering sustainable and profitable growth to our shareholders.
With that and invite Tony to discuss our financials.
Thank you for us and thanks to everyone for joining the call.
For the overall total GAAP revenue increased 38% year on year to $6 billion in the third quarter of 2025. This was primarily driven by GMV growth of our e-commerce business and the growth of our digital financial services business.
Our total addressable EBITDA was $874 million in the third quarter of 2025.
Compared to an adjusted beta of $521 million in the third quarter of 2024.
by 28% year over year to $32.2 billion in the third quarter of 2025.
Our third quarter GAAP revenue of $4.3 billion included CAP Marketplace revenue of $3.8 billion, up 37% year-on-year, and GAAP product revenue of $0.5 billion.
Within Gap, Marketplace, Revenue core, Marketplace Revenue, mainly consisting of transaction-based fees and advertising revenues, was $3.1 billion, up 53% year-over-year.
Value-added services revenue, mainly consisting of revenues related to logistic services, was $0.7 billion.
Down 6% year on year due to increased shipping subsidies.
E-commerce adjusted. EBA was 186 million in the third quarter of 2025 compared to an adjusted beta of 34 million in the third quarter of 2024.
Digital Financial Services, gaap Revenue was up by 61% year on year to 990 million adjusted. I beta was up by 37% year on year to 258 million.
As of the end of September, our consumer and SME loans, principal outstanding, reached $7.9 billion, up 70% year-over-year. This consists of $6.9 billion unquoted and $0.9 billion of book loans per callable outstanding.
Non-performing loans past due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter.
Digital entertainment booking grew 51% year on year to $841 million.
Gap Revenue was up 31% year on year to 653 million. The growth was primarily due to the increase in our active user base, as well as the deep end paying user penetration.
Digital entertainment agency Betta was up $466 million, representing a 48% year-on-year increase.
Returning to our consolidated numbers, we recognized a net non-operating income of $61 million in the third quarter of 2025 compared to a net non-operating income of $50 million in the third quarter of 2024.
We had a net income tax expense of 161 million in the third quarter of 2025 compared to net income tax expense of 93 million in the third quarter of 2024.
As a result, net income was $375 million in the third quarter of 2025, compared to a net income of $153 million in the third quarter of 2024.
Thank you forest and Tony. We are now ready to open the call to questions. Operator.
We will now begin the question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,
If you would like to withdraw your question, press star 1 again, in the interest of time, we'll take a minimum, a maximum of 2 questions at a time. From each caller. If you wish to ask more questions, please request to join. The question queue. Again, after your first questions have been addressed
at this time, we'll pause momentarily to assemble our roster.
Your first question comes from paying vit with Goldman Sachs.
Hi management and thank you very much for the opportunity. Congrats for the great results. 2 question from me both on the e-commerce side. Number 1 on your growth, guidance of more than 25% year on year for 2025, what do you bake in in terms of the driver and competitive landscape? What do it means for your margin Trend? And how should we think about these Trend carry into 2026? First question number, 1 question, number 2, just to have a good understanding of the margins. So margin trend for e-commerce, came down to 0.6% in the quarter despite higher take rate. Can you help us understand? Where is the investment area? Whether this is in the Fulfillment, as you mentioned, or is there also something else that we should be aware of? Are these more fixed or variable and how long and how much should we expect these Investments?
To be.
A quarter already is basically based on what we see so far in the market on the uh momentum and compared Landscapes, it's pretty much reflective of kind of what we see so far uh as we come into the quarter.
Um, and um, regarding the margin questions. Um, the if you look at the, um, the the previous year versus this year, um, we do see, um, consistent, uh, Improvement of margin if you look at year to year basis, as we share before, um, we were obviously, um, see quarter to quarter fluctuations sometimes for, uh, seasonality reasons of where, um, some of the investment cycle of the initiatives. Um, and could also be, uh, particular, uh, Market status, uh, in terms of where we are pushing some of this initiatives. So I think, um, if you look at a, a, a bit sort of year-to-year trend, uh, even uh, uh, going forward, um, I think we believe that we are able to deliver the 2 to 3% better margin as we share before. And also,
Uh, have Improvement year to year. If you look at, uh, um, the the, the, the, the, the, the, the, the, the yearly basis. Um, in term of where we are investing, um, 1 of the thing, is we mentioned in the, uh, opening. Um, further investment into the logistic capabilities and, um, fulfillment capabilities. Um,
And, uh, beyond that, we also deepen our buying engagement, and one is shared through, for example, our Shopping VIP program that we shared in the opening as well.
Um and all those effort has been showing uh uh pretty good results. Uh I will buy frequency improved, 12% year, and average monthly active buyers. Um increase 15%. Yes. We as well which contribute to our great growth
Uh, this quarter, which is, uh, uh, uh, uh, way above the guidance. We give in the early of the year, which is 20%, um, the the, the most of this investment, um, are less fixed per se. Um, we take, um, relatively asset light approach even coming to our Logistics and fulfillment businesses. Um, the the we we don't own a Land. Uh, most of our capex is just Improvement of building the uh, uh, warehouses or sorting facilities, Etc, uh, for our buying engagement and water share program. So we IPS is also less fixed. Um, obviously, you will see a little bit investment in the early days to get everybody, understand the program and join the program but um uh as time goes it should be a quite possible program as uh you probably have seen in other e-commerce platforms uh across the globe.
Your next question comes from Divya clay with Morgan Stanley.
Uh, thank you very much. Uh, my first question is, uh, on your new market, entry strategy and framework. Uh, could you explain the rationale behind closing? Some of the cross border operations in latam and the re-entry into Argentina? Uh, what Milestones would you monitor for Argentina before making it a localized business? And is this part of your 2026? Uh, priorities? Uh, my second question is on market shares, uh, if you can comment on the market shares in Azan, how are they, how are they moved in the third quarter? And also, if you could comment on Taiwan, uh, due foresee, uh, increasing marketing spend and investments in Taiwan next year, uh, we're also seeing a bigger contribution from cross border with tawba getting more popular there. So if you can comment on the market shares on Azan and Taiwan that would be helpful. Thank you.
Yeah, I think regarding the um, New Market. Uh, we take a very highly selective approach on, um, any new Geographic expansions. Um, many of the initiative will be, uh, um, very early stage testing the market in nature. Um, the reason we, uh, look at Argentina is, um, it's, it's actually a expansion of our capability that built, uh, in Brazil leveraging on our existing cross border infrastructure, um,
And the operational experiences we had already built in in, in, in, in Brazil. Um, the the the the objective is model capture. The opportunity of synergy is across the adjacent regions and open additional channel for our sellers with the minimal increase mental investment.
um, I, I think the, um, we will take some time to, to learn about the market, um, without sort of, um, have a heavy investment into the market, um, at this point of time,
In Columbia, we decide to, uh, wind down our crossborder operation in Chilean Columbia, as part of our ongoing review of our Global business. Priorities to ensure our resources are focused on the, uh, key business priorities in line with our long-term strategy in the region. Um, Latin America is still important market for us, um, that, that we will continue to explore the opportunities to serve the, um, consumers and business. Well, there, um, if you look at the absolute size, uh, in, in Latin America, obviously Brazil is the largest 1 where we are, uh, have a very large presence there Argentina as we mentioned and Colombia and Chile are relatively smaller market and also relatively more distant from from, from Brazil. I guess. That's a, a thinking, uh, around the first question, um, regarding the, uh, market share in South Asia, in in quarter 3,
Um, as we shared our growth has been um above kind of the expectations we shared before, um, and across the region that we actually do believe that we are getting market shares um in South Asia.
Uh, growing faster than the market in South Asia, um, for Taiwan, uh, in particular, the, the, uh, the cross-border to Taiwan has been, uh, in general a smaller part of the businesses, um, given the complexity for the buyer experience on the cross-border side. Um, so we are less concerned about the, uh, uh, cross-border players selling from overseas to Taiwan as a, um, potential impact, uh, to our businesses. Um, actually, if you look at the recent quarters, um, uh,
We grow very well in Taiwan, we grow double digits, which is faster than the overall Market in Taiwan. Um, so we are, uh, pretty confident, uh, that getting we are the largest, um, e-commerce platform with the largest, assortment, with the best pricing. Um, and also, we have the best delivering infrastructure, which is much lower, uh, shipping and fulfillment costs compared to anyone in the market. We are able to, uh, defend our market share. Well, we are able to grow, um, even faster, uh, in Taiwan, um, with our infrastructure, uh, much better built, uh, than previous years.
Your next question comes from Alicia Yap with Croup.
Um, hi. Um, good evening management. Thanks for taking my questions, uh, and congrats on the following results. Uh, 2 questions. Uh, 1 is, um, if you can uh, elaborate a little bit more, uh, overall competitive landscape in Southeast, Asia. So, are there any countries that, uh, we are seeing more intense competition lately and also, um, you know, uh, any countries that where you see peers are going faster, uh, than shopee and do you anticipate, um, the live streaming peers, uh, to start, uh, shift more of the traffic and also the purchase, uh, frequency to the Shelf space, the marketplace model in addition to the live streaming, uh, if, if that is, uh, happening, uh, you know, what could be the, uh, Potential Threat, uh, to shopping. And then second question is, um, should we assume the investment cycle this time around, uh, similar to maybe
Like a couple years ago where there could be some Step Up investment that are more front end loaded, uh, with gnv growth and my share growth, um, to follow through later. Especially for, for example, like you need to ramp up your fulfillment. Um, you know capability uh, in some of the markets, which will yield
Better results uh, later on. So could you um clarify uh if this time the investment cycle could be similar to what we saw last week I mean 2 years ago thank you.
On the competitive Landscapes. Um, what we see is relatively stable compared Landscapes, I think, as you can probably observe as well from your own, uh, sources. Um, we didn't see any particular Market different from another I think has been uh, General Trend across the south Asia uh Market
To, uh, as you probably see from China as well, Etc. Um, but we do see that the nature of the platform is, is different. I think the percentage of Chef Commerce, um, it um, relatively consistent, let's say, from from what we observed. Um, the the, the the also, if they are much more traffic pushing towards that, that is a potential of impacting, um, how the overall app Behavior and the user retention as well. But, but anyway, um, I think that's kind of, uh, uh, similar Behavior. You will see a, you know, in China, in South Asia. Um, well, we wouldn't see that a new thing impacting the uh, compared to the Atlantic uh uh, in a meaningful way uh, on the investment Cycles. I think the short answer is probably not. Um, it's public quite different from uh what you see 2 years ago in term of the investment into the contents ecosystem. If you remember that, um, I think uh,
What we are doing now?
And now we felt it's a good time to scale it even more. Uh, but I I as I shared just now, it's less a capex uh intensive businesses. Are you as you probably imagine? And also as we grow the businesses, it will help our growth as well because this will help us to lower down.
The overall cost to serve as ecosystem and also reduce the delivery time to the user. Uh, so help us to penetrate the user more and many of these contribute to our growth, uh, faster than we, uh, expected early the year as well.
Um, if you take a look at the, uh, uh, VIP, uh, programs. Uh, yes, it's a little bit sort of investment in the early days but, um, we also see that with the investment. Um, we um, the the, the user are willing to spend more with the platform as well. I think for us shared that the uh, the users, uh, purchase 40% more uh, than before. They join the VIP program. So in a way, it's less a big front load investment. Then they return come later. I think, uh, this time you will see it's more, um,
Uh, ongoing investment program to strengthen our, uh, competitive mode as I shared earlier. Um, and this will impact, um, uh, on on the, uh, uh, General growth as we invest,
Your next question comes from Puss. Choerry with HSBC,
Yeah, hi. Thanks for the opportunity. Um, congratulations for great, certain numbers, uh, 2 questions, firstly, uh, for shopping Logistics. Um, what percentage of orders are now fulfilled by xpx Within Asia and Brazil, how has it changed over the last 1 year or so, um, how much of increase in your cost of services is driven by this Logistics investment and and the outlook for this cost item? Um, that is first. Secondly on Gina, can you share the outlook for free fire for 2026 after uh, you know, successful 2025 any planned IP collaborations, um, any new game launches. Um,
Thanks a lot.
Uh, uh, on the, uh, SPX. Um, I believe we shared before that more than half of...
order delivered, uh, through our SPX and um, the percentage has been increasing, let's say overall, uh, over over the last year as we scale our networks, um, on our cost per order, it has been continuing, improving
Uh, year to year. I think that's part of part of that contribute to uh, our growth as well, because this lower down, um, the cost buyer have to pay to receive the, the, the orders. Um, but on top of that also want to highlight not only, we try to uh, not only reduce the cost of our SPX, uh, delivery cost, but we also increase the speed.
For our SPX cost. Uh, as far as mentioned that in Brazil, we reduce the uh, by waiting time by 2 days. If you look at the year to year, um, the, uh, in Asia, we also reduce the digital time quite meaningfully, uh, year to year and quarter quarter quarter as well. Um, by both introducing the faster shipping channel. Um, if you look at, uh, many countries, we have the instant delivery. Now, we also have Same Day, deliveries, but also reducing the normal delivery, um, uh, uh, uh, uh, uh, channels speed. Um, I think this all helped to contribute to our growth, uh, as you see,
Uh, for the, uh, Gina Outlook and, uh, well, we are, we are very, very excited, uh, to to observe the momentum. I think this is the, uh, it's, it's extremely valuable, uh, like, I think the turn around like 2 years after the postcovid headwind, and in the, in the, in 2024, we have a very, very high growth and that is the strong momentum. Uh, continuing to 2005, actually. The growth is, uh, is even accelerated, uh, this year compared to compared to last year. Um, so the momentum is still very, very strong. So we remain very optimistic. And then the, and the positive, like, for the, like, for the 2006, we believe the, the user base will continue to grow, uh, the the, the content that the offerings will will will be more like a in the, The Experience. User experience will be more immersive and I think like the specificity this year. Uh, see with a very very successful uh, IP collaborations,
Deliver the best content. Very unique experience to our large user base? Right. Whatever we put on the platform, put into the game, like a, on a single day, more than 100 million Gamers from all over the world. We are going to be able to experience that. Like, it's a very, very such very, very powerful distribution, uh, platform distribution channels. So we continue to work with the more IPS but of course, where we also very very selective as well. And, uh, uh, we also quite excited, uh, to continue to see what like, uh, the AI can do. So in terms of the boosting, the the product, both the uh, creative side production side and also the user experience side. We think that is a potential uh, boost for the for the future growth as as well. Uh, at this moment we are in the process of like a, like for the detailed planning of of next year, I think probably will have a better sense. We're ready to share to the market. What what will be uh the specific Outlook. We we we see for the arena in
2026. Uh, next quarter.
Um, uh, we always have some new games in our pipeline. We have a, a very, very strong and dedicated experience the developers to specifically focus on, uh, the, the new games. And we are we have several games, uh, already in the in the pipeline or like in the in the, in the, in the summer markets already live in, in the 12, we're learning experiences and, uh, um, at this moment, I think it's a bit premature to project. What is the impact? I think.
Considering the the size of the scale of a free far in terms of the user base and revenue and perfect. Uh, I don't think like at this moment, like, even before I have any new games, uh, at the early stage will be make significant impact in terms of the in front of the user user numbers and the and the and the and the and the revenue and and the financial side. Uh, but we're going to continually to uh, put a lot of effort. And and I think through the new games development, we also learn about different genres and we're also learn the different different about some new market. We haven't been to, I think this will remain at the very very uh good opportunity for future growth.
So when we have, like, when we speak with the, with the right time to, uh, to to share. So we will also keep all our, uh, shareholders and investors. Uh, uh, informed
Your next question comes from Jian Xiao with Barkley.
Thank you very much for taking my questions. Um,
My first question is, on the VIP membership. Um, I'm trying to get a better understanding of that program. Um, that's clearly uh, um, a great thing to do, uh, longer term, I suspect in the near term. I was wondering, what's the unit economics? Look like uh, for the members and, uh,
Uh, what do you think, the the eventual, uh, uh, VIP member penetration, uh, should be, uh, in in, in the region. Um,
So the reason obviously as that is because your gross margins for e-commerce came down a bit quarter over quarter. So I suspect it's kind of negative initially and it's at a time frame to kind of reach break. Even for the member second question is about AI. Um, I think um,
Forrest. The reason they did some media interviews talking about AI May power the company to be 1 of the first trillion dollar company in the region. Um, I was hoping you can talk about uh what are some of the things potentially uh you may do all you want to do uh because some investors are worried about some massive AI cap packs. Uh, there may be Affiliated associate with any kind of new Venture. Thank you.
um, I'm
I we have.
Very early St.
Rolling out the, uh, program. Um, as your public can see. It's only a few months is, um, but we see a very good growth, um, on the users sign up. Um, if you look at sort of quarter to quarter, we see a 75% growth on the, uh, members, um, in terms of the, um, gmv penetrations we're seeing in the early stage, we're still in the teams and we believe this can be a lot higher, uh, public similar to
Um, the percentage you observed in other part of the world in terms of the uh, penetrations. Um, the the, I think the important thing for for, for us to look at the economics is that, um, the the, uh, we would like to make sure the VIP, uh, uh, members not only receive better benefit from the, uh, platform because they are paid members. And they are the uh, uh uh, important core users. We also want to make sure that
To bring the benefit to them as well. Uh, if you look at Indonesia, it was videos. Uh, in the end, we work with um, FTP plays. We also work with tgbt as well. Uh, offer a free program to the VIP members. Uh, I think all those will help us um, to have a good economics for this program, uh, but you are right in the early days. Um, it does require some sort of investment to bring the user over um, 1 thing that we um, monitor very closely is a retention rate. We would like to make sure that the user will bring to the program has good retention. Um, and uh, in that in our early Market, we see the retention improve almost doubles. Um, from the, um,
Uh, last quarter, um, to this quarter period of time, which is, um, a big breakthrough for us, uh, given that in our market, um, credit card is not a common payment method. In many other, uh, markets, uh, people use credit cards to make sure that they can use payments. Um, we are working, um, on multiple.
Uh, uh, uh, ways to ensure that the retention goes well, um, with the program. Well, um, especially together with our digital finance side through, um, pay later as well.
Sure. Uh, uh, John on the, on the AI question. Yeah. I mean, uh, as I as I shared, uh, during the interview you mentioned where we are deeply excited about the about this new technology. I think it's a represent. A fundamental technological Revolution and, uh, which will create massive New Opportunities and The Supercharged Technologies ability to un value and unlock values for for, for people everywhere. And I think the extremely, uh, exciting for the market, we are in which still like, uh, uh, millions of hundreds of millions of people. Uh, it's it's under served, right? And the and we have seen that uplift in the past 10 years through the the, the the mobile internet Revolution. And we, we have observed and how that much that the, the smartphone, the, the, the, the, the, um, the, the, the like a, like a mobile internet, uh, transferred.
And the people's life help bring how much like a joyous convenience to people's lives. And of course, we we are, we are part of this transformation and, and that is what we are really, uh, as a company. What is this? It's about our mission. We, we try to focus on the applications and how to connect those create like a fantastic technology, uh, to the like, people's daily life, uh, every corner of the, like, from every corner of the world and we believe like, uh, we
See, the some are similar pattern of of, of AI Revolution probably, it's we believe this impact and value creation will be much, much bigger uh, at this moment. Uh, so we're like the things you mentioned. Okay, well, we probably were not going to do what the the big Tech is going to do. We're not going to like develop the trying to make some fundamental large language. Model break through. We're not going to build data centers. I think like the for that part we uh, we're very much like a, uh, open to work with all the, like a big Tech like, like for kind of a re we have a lot of admiration respect to how much effort and how much they can do to continually have the bricks through of the technology technology and make technology more powerful and more useful. And what we are going to more focus on applications and how that technology builds the Silicon Valley or anywhere in the world, transformed to a consumer's daily life, a small businesses like
Like in Indonesia, in Vietnam, in Brazil. So that was the specially what we're good at and we have a lot of back practice. We learned in the past decade and I think that is also kind of like a make us a really, really excited. So we're going to to have a very, very practical and bottom up approach. So as I and we are very much focused on the seeing the immediate uh the return. The result as a shared in my uh opening right under, we're very excited like the summer, very practical. You
It's a, it's a, it's a, it's a handled by.
By AI, like a chatbot. And the satisfaction rate is a is a very very high. So that is the all the things like we have, we have seen the result and the progress the bottom up. And we believe with the continuing Improvement capability built uh enabled by the more advanced large large language model and other uh other part of the AI development and there will be more and more things we can apply and into the day-to-day business and which make a positive impact uh into people's daily lives.
this concludes our question and answer session, I would like to turn the conference back over to miss Rebecca, Lee for any closing remarks
Thank you all for joining today's call. We look forward to speaking with all of you again next quarter.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect