Q2 2026 Sea Ltd Earnings Call

August 11, 2026

Operator: Good morning and good evening to all, and welcome to the Sea Limited Second Quarter 2026 Results Conference Call. All lines have been muted to prevent any background noise. After the speakers' remarks, 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 1 on your telephone keypad. If you would like to withdraw your question, press the star 1 again. For operator assistance throughout the call, please press star 0. Finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mr. KC Ng to begin the conference. Please go ahead.

Speaker #1: Good morning and good evening to all, and welcome to the Sea Ltd. Q2 2026 results conference call. All lines have been muted to prevent any background noise.

Speaker #1: After the speakers' remarks, 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 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, please press star (*) 1 again. For operator assistance throughout the call, please press star (*) 0. And finally, I would like to advise all participants that this call is being recorded.

Speaker #1: Thank you. I'd now like to welcome Mr. Casey Ong to begin the conference. Please go ahead.

Speaker #2: Hello everyone, and welcome to Sea's 2026 second quarter earnings conference call. I am Casey 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.

KC Ng: Hello everyone, and welcome to Sea's 2026 Second Quarter Earnings Conference Call. I am KC 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. 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. For a 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. I have with me Sea's Chairman and Chief Executive Officer, Forrest Li, President, Chris Feng, and Chief Financial Officer, Tony Hou.

KC Ong: Hello everyone, and welcome to Sea's 2026 Second Quarter Earnings Conference Call. I am KC 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. 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. For a 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. I have with me Sea's Chairman and Chief Executive Officer, Forrest Li, President, Chris Feng, and Chief Financial Officer, Tony Hou.

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 Feng; and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights, and financial performance for the second quarter of 2026.

KC Ng: Our management will share strategy and business updates, operating highlights, and financial performance for the second quarter of 2026. 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 Forrest.

KC Ong: Our management will share strategy and business updates, operating highlights, and financial performance for the second quarter of 2026. 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 Forrest.

Speaker #2: This will be followed by a Q&A section, in which we welcome any questions you have. With that, let me turn the call over to Forrest.

Speaker #3: Hello everyone, and thank you for joining today's call. Our strong momentum from the first quarter has continued into the second. Sea generated $7.8 billion in revenue, up 48% year on year, and over $917 million in adjusted EBITDA.

Forrest Li: Hello, everyone, and thank you for joining today's call. Our strong momentum from the first quarter has continued into the second. Sea generated $7.8 billion in revenue, up 48% year on year, and over $917 million in adjusted EBITDA. Our investments have enabled Shopee and Monee to continue to strengthen our market leadership while improving our user penetration. Many of our initiatives' unit economics continue to improve, a testament to our strong financial discipline and operational efficiency. We will continue to invest prudently in serving more users and serving them better, broadening our foundation for profitable growth into the future. With that, let me take you through each business's performance. Starting with Shopee. Shopee continued its strong momentum into the second quarter. GMV grew 28% year on year, marking eight consecutive quarters of sequential growth, and we again achieved a new high in gross order volume and revenue.

Speaker #3: Our investments have enabled Shopee and SeaMoney to continue to strengthen our market leadership while improving our user penetration. Many of our initiatives’ unit economics continue to improve, a testament to our strong financial discipline and operational efficiency.

Speaker #3: We will continue to invest prudently in serving more users and serving them better, broadening our foundation for profitable growth into the future. With that, let me take you through each business's performance.

Speaker #3: Starting with Shopee, Shopee continued its strong momentum into the second quarter. GMV grew 28% year-on-year, marking eight consecutive quarters of sequential growth.

Speaker #3: And we again achieved new highs in gross order volume and revenue. We generated an adjusted EBITDA of more than $250 million during the second quarter.

Forrest Li: We generated an adjusted EBITDA of more than $250 million during the Q2. Our improving operational efficiency and growing scale have strengthened our unit economics. We can now profitably serve a wider range of users, enabling us to lean further into user acquisition. We have engaged and re-engaged several user groups through brand awareness campaigns, expanding our content channels, and broadening our logistics offerings to cater to different preferences. This drove remarkable new buyer growth in the Q2. Average monthly new active buyers grew more than 35% year-on-year, a significant acceleration from previous quarters. Average monthly active buyers increased 18% year-on-year, and overall buyer engagement also continued to improve, with purchase frequency increasing by 8% year-on-year. Our monetization strengthened further in the Q2. Ad revenue was up more than 70%, and ad take rate improved by over 90 basis points year-on-year.

Speaker #3: Our improving operational efficiency and growing scale have strengthened our unit economics. We can now profitably serve a wider range of users, enabling us to lean further into user acquisition.

Speaker #3: We have engaged and re-engaged several user groups through brand awareness campaigns, expanded our content channels, and broadened our logistics offerings to cater to different preferences.

Speaker #3: This job saw remarkable new buyer growth in the second quarter. Average monthly new active buyers grew by more than 35% year on year, a significant acceleration from previous quarters.

Speaker #3: Average monthly active buyers increased 18% year on year, and overall buyer engagement also continued to improve, with purchase frequency increasing by 8% year on year.

Speaker #3: Our monetization strengthened further in the second quarter. Net revenue was up more than 70%, and app take rate improved by over 90 basis points year on year.

Speaker #3: We continued to make advertising simpler and smarter for sellers. For example, pairing ads with vouchers that are personalized to buyers to increase purchase conversion and improve the efficiency of sellers' ad spend.

Forrest Li: We continued to make advertising simpler and smarter for sellers. For example, pairing ads with vouchers that are personalized to buyers to increase purchase conversion and improve the efficiency of sellers' ad spend. Ad adoption and spend continued to improve across our seller base. The number of ad-paying sellers grows around 45%, while average ad spend per seller increased more than 15% year-on-year. Our operational priorities remain consistent, improving price competitiveness, service quality, and our content ecosystem. To keep strengthening our execution across these priorities, we continued to deepen our structural modes across logistics, Shopee VIP, and content. Strong logistics capabilities continue to be a key contributor to Shopee's reputation for excellent service. We continued to make delivery faster and more reliable across a wider product assortment in the Q2. Instant and same-day delivery gained strong traction as we captured more everyday purchases.

Speaker #3: As ad adoption and spend continued to improve across our seller base, the number of ads-paying sellers rose by around 45%, while average ad spend per seller increased by more than 15% year on year.

Speaker #3: Our operational priorities remain consistent: improving price competitiveness, service quality, and our content ecosystem. To keep strengthening our execution across these priorities, we continued to deepen our structural moats across logistics, Shopee VIP, and content.

Speaker #3: Strong logistics capabilities continue to be a key contributor to Shopee's reputation for excellent service. We continued to make delivery faster and more reliable across a wider product assortment in the second quarter.

Speaker #3: Instant and same-day delivery gained strong traction as we captured more everyday purchases. Our instant service in Indonesia can now deliver in as fast as one hour in urban areas.

Forrest Li: Our instant service in Indonesia can now deliver in as fast as one hour in urban areas. We continued to extend our presence in high-frequency categories such as the groceries and the pharmacy items to serve our buyers better. Order volumes using instant delivery grew around 80% year-on-year in Indonesia, while cost per order fell by around 20%, driven by economies of scale and efficiency gains. Beyond delivery, we also made good progress in fulfillment, with order volumes up more than 20% quarter-on-quarter. Fulfillment benefits both sides of our marketplace. Sellers offload operational complexity and scale more efficiently, while buyers enjoy faster, more reliable delivery. In some markets, more than 50% of our fulfilled parcels arrive the next day, meaningfully higher than the platform average. The gains are especially noticeable in places where geography makes delivery challenging.

Speaker #3: We continued to extend our presence in high-frequency categories, such as groceries and pharmacy items, to serve our buyers better. Order volumes using instant delivery grew around 80% year on year in Indonesia, while cost per order fell by around 20%, driven by economies of scale and efficiency gains.

Speaker #3: Beyond delivery, we also made good progress in fulfillment, with order volumes up more than 20% quarter-on-quarter. Fulfillment benefits both sides of our marketplace.

Speaker #3: Sellers offload operational complexity and scale more efficiently, while buyers enjoy faster, more reliable delivery. In some markets, more than 60% of our fulfilled parcels arrive the next day—meaningfully higher than the platform average.

Speaker #3: The gains are especially noticeable in places where geography makes delivery challenging. For example, in Mindanao, a mountainous region in the Philippines, fulfillment has far-reaching time by one to three days.

Forrest Li: For example, in Mindanao, a mountain region in the Philippines, fulfillment cuts buyer waiting time by one to three days. Buyers can feel the difference. Listings that converted to fulfillment saw more than a 20% quarter-month uplift in orders on average in Southeast Asia. Second, our Shopee VIP program continued to scale strongly. Now live across Asia and Brazil, total membership exceeded 15 million at the end of June, up 45% from the previous quarter. Across Asia, VIP members contributed 24% of GMV in the quarter. Average monthly retention remains strong at around 80%, and members continued to show higher engagement, spending meaningfully more after subscribing. In Brazil, early adoption has been encouraging since our April launch, with membership already surpassing one million. Beyond buyers, we are seeing encouraging support among both Shopee sellers and external partners for our Shopee VIP program.

Speaker #3: Buyers can feel the difference. Listings that converted to fulfillment saw more than a 20% month-over-month uplift in orders on average in Southeast Asia.

Speaker #3: Second, our Shopee VIP program continued to scale strongly. Now live across Asia and Brazil, total membership exceeded 15 million at the end of June, up 45% from the previous quarter.

Speaker #3: Across Asia, VIP members contributed 24% of GMV in the quarter. Average monthly retention remained strong at around 80%, and members continued to show higher engagement, spending meaningfully more after subscribing.

Speaker #3: In Brazil, early adoption has been encouraging since our April launch, with membership already surpassing 1 million. Beyond buyers, we are also seeing encouraging support among both Shopee sellers and external partners for our Shopee VIP program.

Speaker #3: We have broadened member benefits across travel, dining, and entertainment, improving the program's value proposition. More sellers and partners have come on board to co-fund benefits, demonstrating the value they see in engaging our Shopee VIP buyer base.

Forrest Li: We have broadened member benefits across travel, dining, and entertainment, improving the program's value proposition. More sellers and partners have come on board to co-fund benefits, demonstrating the value they see in engaging our Shopee VIP buyer base. This has helped improve the program's unique economics in Asia. Third, we have continued to improve our content ecosystem to make product discovery more engaging. Orders from live streaming and short-form video grew more than 50% year-on-year, accounting for more than 25% of physical goods orders in Southeast Asia. Unit economics also improved sequentially as we further optimized our marketing spend. We have deepened our relationships with YouTube and Meta to drive order growth. Shopee affiliate orders generated by linked creators on Facebook increased by more than 85% quarter-on-quarter, with Facebook Reels proving to be a very popular channel to drive purchases.

Speaker #3: This has helped improve the program’s unit economics in Asia. Third, we have continued to enhance our content ecosystem to make product discovery more engaging.

Speaker #3: Orders from live streaming and short-form video grew more than 50% year-on-year, accounting for more than 25% of physical goods orders in Southeast Asia.

Speaker #3: Unit economics also improved sequentially as we further optimized our marketing spend. We have deepened our relationships with YouTube and Meta to drive order growth.

Speaker #3: Shopee affiliate orders generated by links creators on Facebook increased by more than 85% quarter-on-quarter, with Facebook Reels proving to be a very popular channel to drive purchases.

Speaker #3: We have now extended our Instagram collaboration to all eight of our core markets, and we are seeing promising early results from Indonesia, the first market where we launched the partnership.

Forrest Li: We have now extended our Instagram collaboration to all 8 of our core markets, and we are seeing promising early results from Indonesia, the first market where we launched the partnership. I am particularly happy with our progress in Brazil, which remained our fastest-growing market in Q2. We once again outpaced the broader market on GMV growth, supported by increases in active buyers, purchase frequency, and average basket size. We continued to invest in and optimize our end-to-end logistics capabilities, expanding our network while ramping up utilization. We improved the delivery speed, reducing average buyer waiting time by 15% year-on-year, and doubled our penetration of fulfillment orders year-on-year. These logistics improvements are also supporting our expansion up-market. We onboarded nearly 500 new official brands during the quarter, while GMV from Shopee Mall sellers more than doubled year-on-year.

Speaker #3: I'm particularly happy with our progress in Brazil, which remained our fastest-growing market in the second quarter. We once again outpaced the broader market on GMV growth, supported by increases in active buyers, purchase frequency, and average fast decide.

Speaker #3: We continued to invest in and optimize our end-to-end logistics capabilities, expanding our network while ramping up utilization. We improved delivery speed, reducing average buyer waiting time by 15% year on year, and doubled our penetration of fulfillment orders year on year.

Speaker #3: These logistics improvements are also supporting our expansion into new markets. We onboarded nearly 500 new official brands during the quarter, while GMV from Shopee's more sellers more than doubled year over year.

Speaker #3: We still see significant headroom for growth in Brazil, and we will continue to invest in this market in a disciplined and profitable manner. I'm pleased that Shopee has delivered a strong first half of 2026.

Forrest Li: We still see significant headroom for growth in Brazil, and we will continue to invest in this market in a disciplined and profitable manner. I am pleased that Shopee has delivered a strong H1 2026. With this solid momentum, we are optimistic that Shopee will achieve the milestone of $1 billion in adjusted EBITDA for the full year. Next, moving to Monee. Monee delivered another great quarter, with continued strong growth in both revenue and adjusted EBITDA. Credit remained the primary driver of growth. Our loan book reached $11.1 billion at the end of June, up 62% year-on-year. Asset quality remains stable, with our 90-day NPL ratio at 1.0%. The Philippines has become our sixth market with the loan book exceeding $1 billion.

Speaker #3: With this solid momentum, we are optimistic that Shopee will achieve the milestone of $1 billion in adjusted EBITDA for the full year. Next, moving to Money, Money delivered another great quarter with continued strong growth in both revenue and adjusted EBITDA.

Speaker #3: Credit remained the primary driver of growth. Our loan books reached $11.1 billion at the end of June, up 62% year-on-year. Asset quality remained stable, with our 90-day NPL ratio at 1.0%.

Speaker #3: The Philippines has become our fifth market, with the loan book exceeding $1 billion. We continue to expand our credit business on three fronts: acquiring new users, deepening our relationships with existing users, and expanding our credit use cases.

Forrest Li: We continue to expand our credit business on 3 fronts: acquiring new users, deepening our relationships with existing users, and expanding our credit use cases. One key enabler of our credit business growth has been the ongoing advances we have made in our credit risk capabilities. Our latest risk models are pre-trained on a broad set of behavioral and transactional data across our ecosystem using transformer architecture similar to those following today's large language models. The model learns from the full sequence of a user's actions over time, capturing richer context around how customers interact with our platform. Recent enhancements to our underwriting model have helped lift approval rates by around 10% when compared to previous models while maintaining a similar level of risk. This further reinforces the scale of our ecosystem as a durable advantage.

Speaker #3: One key enabler of our credit business growth has been the ongoing advances we have made in our credit risk capabilities. Our latest risk models are pre-trained on a broad set of behavioral and transactional data across our ecosystem, using transformer architecture similar to those powering today's large language models.

Speaker #3: The model learns from the full sequence of a user's actions over time, capturing richer context around how customers interact with our platform. Recent enhancements to our underwriting models have helped reduce approval risk by around 10% compared to previous models.

Speaker #3: While maintaining a similar level of risk, this further reinforces the scale of our ecosystem as a durable advantage. To further strengthen this capability, we are also drawing on more external data sources to better assess users who are newer to our ecosystem.

Forrest Li: To further strengthen this capability, we are also drawing on more external data sources to better assess users who are newer to our ecosystem. For instance, through partnerships with local mobile operators in Indonesia and open finance data in Brazil. We have also used AI to build tools to efficiently verify a diverse range of user-submitted income documents across markets, languages, and formats. Review time reduced by around 95% while maintaining a very high level of accuracy, letting us respond to credit limit requests from users almost instantly. Supported by this improvement in risk underwriting, we have been pushing harder on new user acquisition. We have found that many users begin using SPayLater for convenience, and subsequently generate more value through repeat transactions, installment conversion, and adoption of our other credit products.

Speaker #3: For instance, through partnerships with local mobile operators in Indonesia, and open finance data in Brazil. We have also used AI to build tools to efficiently verify a diverse range of user-submitted income documents across markets, languages, and formats.

Speaker #3: Review time was reduced by around 95%, while maintaining a very high level of accuracy, allowing us to respond to credit limit requests from users almost instantly.

Speaker #3: Supported by these improvements in risk underwriting, we have been pushing harder on new user acquisition. We have found that many users begin using Escalator for convenience and subsequently generate more value through repeat transactions, installment conversion, and adoption of our other credit products.

Speaker #3: So, we have broadened the rollout of one-month, interest-free escalator loans, giving borrowers the option to either settle their balances within the month or easily convert purchases into interest-bearing instruments.

Forrest Li: We have broadened the rollout of one-month interest-free SPayLater loans, giving borrowers the option to either settle their balances within the month or easily convert purchases into interest-bearing installments. Similarly, we have been more widely offering promotional interest rates for first-time personal cash loans. Taken together, these efforts contributed to strong new user growth during the quarter. We added around 5.3 million unique first-time borrowers, and our active credit users grew around 34% year-on-year to over 40 million at the end of the quarter. We also saw deeper user engagement. Average loans outstanding per user grew around 20% year-on-year. Off-Shopee SPayLater has continued to scale well, driven by integration with national QR payment infrastructure and continued merchant onboarding.

Speaker #3: Similarly, we have been more widely offering promotional interest rates for first-time personal cash loans. Taken together, these efforts contributed to strong new user growth during the quarter.

Speaker #3: We added around 5.3 million unique first-time borrowers, and our active credit users grew around 34% year over year to over 40 million at the end of the quarter.

Speaker #3: We also saw deeper user engagement; average loans outstanding per user grew around 20% year-on-year. Our Shopee Escalator has continued to scale well.

Speaker #3: Driven by integration with the national QR payment infrastructure and continued merchant onboarding, by the end of the quarter, off-Shopee accounted for over 20% of our total escalator portfolio.

Forrest Li: By the end of the quarter, off-Shopee accounted for over 20% of our total SPayLater portfolio, with this figure as high as 35% in some markets. In Thailand, we are testing a new product, the ShopeePay Unlimited Card. It lets users pay with their SPayLater balance at any merchant that accepts card payment, further expanding SPayLater use cases. The standalone ShopeePay app remains a key pillar of our strategy to grow Monee beyond Shopee, serving as a one-stop platform for users' payment, credit, insurance, and broader financial needs. In the second quarter, monthly transacting users on the app more than doubled. The ShopeePay app is currently live in Indonesia, Thailand, Malaysia, and Vietnam, and we will launch a similar standalone app in Brazil soon. In summary, Monee delivered another strong quarter with a broad-based growth across our products and markets.

Speaker #3: With this figure as high as 35% in some markets. In Thailand, we are testing a new product: the ShopeePay Unlimited Card. It lets users pay with their Escalator balance at any merchant that accepts card payments.

Speaker #3: Further expanding escalator use cases, the standalone ShopeePay app remains a key pillar of our strategy to grow Money beyond Shopee, serving as a one-stop platform for users' payments, credit, insurance, and broader financial needs.

Speaker #3: In the second quarter, monthly transacting users on the map more than doubled. The ShopeePay app is currently live in Indonesia, Thailand, Malaysia, and Vietnam, and we will launch a similar standalone app in Brazil soon.

Speaker #3: In summary, Money delivered another strong quarter, with broad-based growth across our products and markets. The advances in our risk capabilities are compounding—each improvement helps us serve more users, serve them better, and reach further beyond Shopee.

Forrest Li: The advances in our risk capabilities are compounding. Each improvement helps us serve more users, serve them better, and reach further beyond Shopee. We are still at an early stage of growth. Only a fraction of the users across our ecosystem are using Monee's financial products today, and the credit penetration remains low across our markets. This gives us great confidence in Monee's long-term growth and earnings potential. Next, turning to Garena. Garena delivered another strong quarter, with bookings growing 15% year-on-year, with profitability remaining healthy and growing well year-on-year. Free Fire anchors this strong performance. Now in its ninth year, it is still expanding its reach and scale globally, continuing to drawing over 100 million average daily active users. Free Fire's longevity comes from a simple discipline.

Speaker #3: We are still at an early stage of growth; only a fraction of users across our ecosystem are using Money's financial products today, and credit penetration remains low across our markets.

Speaker #3: This gives us great confidence in money's long-term growth and earnings potential. Next, turning to Garena. Garena delivered another strong quarter, with bookings growing 15% year on year and profitability remaining healthy and growing well year on year.

Speaker #3: Free Fire anchored this strong performance. Now in its ninth year, it's still expanding its reach and scale globally, continuing to draw in over 100 million average daily active users.

Speaker #3: Free Fire's longevity comes from a single discipline: we keep the experience fresh with new gameplay and content, and we make it feel both local to the communities who play it and enjoyable for a global audience.

Forrest Li: We keep the experience fresh with new gameplay and content, and we make it feel both local to the communities who play it and enjoyable for a global audience. A great example of this culture was Undersea Mystery, an ocean-themed campaign inspired by Songkran, Thailand's water festival. We interpreted the theme into the land itself, creating a gateway into a new undersea realm. This expanded battleground gave players fresh territory to explore and fight over, and the opportunity to hunt for powerful gear hidden in the Hydro Zone and fishing pond across the map. This continuous reinvention of the core gameplay keeps players engaged over time. We also know the World Cup waves to build excitement and engagement with our players. Our Fire Kickoff campaign brought football into the map itself, turning part of it into a football field.

Speaker #3: A great example this quarter was Under Sea Mystery, an ocean-themed campaign inspired by Songkran, Thailand's water festival. We interpreted the theme into the map itself, creating a gateway into a new undersea realm.

Speaker #3: This extended battleground gave players fresh territory to explore and fight over, and the opportunity to hunt for powerful gear hidden in the hydro zone and fishing ponds across the map.

Speaker #3: This continuous reinvention of the core gameplay keeps players engaged over time. We also rode the World Cup wave to build excitement and engagement with our players.

Speaker #3: Our Fire Kickoff campaign brought football onto the map itself, turning part of it into a football field. Eliminated players were sent to a one-on-one football showdown for a chance at rejoining the match.

Forrest Li: Eliminated players were sent to a one-on-one football showdown for a chance at rejoining the match, and the new football form lets players turn themselves into a football to speed across the map and pull off surprise plays. The campaign also resonated well beyond the game. The original campaign song, "Booyah Olé," became a standout organic driver of social engagement, generating over 350 million social media views. I am also very excited about what lies ahead for our portfolio. We announced the two mobile games, both built on strong, globally recognized IP. Palworld Online is an open-world multiplayer survival-adventure game developed and published by Garena under license from Pocketpair. Monster Hunter Outlanders is a survival hunting action game developed by Tencent based on Capcom's iconic franchise.

Speaker #3: And the new football form lets players turn themselves into a football to speed across the map and pull off surprise plays. The campaign also resonated well beyond the game.

Speaker #3: The original campaign song, 'Buaya Ole,' became a standout organic driver of social engagement, generating over 350 million social media views. I'm also very excited about what lies ahead for our portfolio.

Speaker #3: We announced two mobile games, both built on strong, globally recognized IP. Powerworld Online is an open-world, multiplayer survival adventure game developed and published by Garena under license from Pocket Pair.

Speaker #3: And Monster Hunter Outlanders is a survival hunting action game developed by Tencent, based on Capcom's iconic franchise. Taken together, these titles show how Garena is expanding into new genres, strengthening our development and publishing capabilities, and deepening our relationships with top global partners.

Forrest Li: Taken together, these titles show how Garena is expanding into new genres, strengthening our development and publishing capabilities, and deepening our relationships with top global partners. In summary, Garena delivered another strong quarter. Free Fire is still proving itself as an evergreen franchise, and we continue to work towards diversifying our portfolio. We remain committed to delivering the high-quality experiences our players know us for. In conclusion, this quarter's strong results underscore both our financial discipline and the strength of our business. This promising momentum gives us greater confidence for the rest of the year. With that, I invite Tony to discuss our financial.

Speaker #3: In summary, Garena delivered another strong quarter. Free Fire is still proving itself as an evergreen franchise, and we continue to work towards diversifying our portfolio.

Speaker #3: We remain committed to delivering the high-quality experiences our players know us for. In conclusion, this quarter’s strong results underscore both our financial discipline and the strength of our business.

Speaker #3: This promising momentum gives us greater confidence for the rest of the year. With that, I invite Tony to discuss our financials. Thank you for it, and thanks to everyone for joining the call.

Tony Hou: Thank you, Boris, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 48% year-on-year to $7.8 billion in Q2 2026. This was primarily driven by growth in Shopee and Monee. Our total adjusted EBITDA was up by 11% year-on-year to $917 million in Q2 2026. On Shopee, gross orders increased 27% year-on-year to 4.2 billion in Q2 2026, and GMV increased by 28% year-on-year to $38.3 billion in Q2 2026. Our Q2 GAAP revenue of $5.6 billion included GAAP marketplace revenue of $4.9 billion, up 49% year-on-year, and GAAP product revenue of $0.7 billion. Within GAAP marketplace revenue, core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was $4.3 billion, up 66% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistic services, was $0.7 billion.

Speaker #3: We’ll see you overall. Total digital revenue increased 48% year on year to $7.8 billion in the second quarter of 2026. This was primarily driven by growth in Shopee and Money.

Speaker #3: Our total adjusted EBITDA was cut by 11% year on year to $917 million in the second quarter of 2026. On Shopee, gross orders increased 27% year on year to 4.2 billion in the second quarter of 2026.

Speaker #3: And GMV increased by 28% year on year, to $38.3 billion in the second quarter of 2026. Our second quarter digital entertainment revenue of $5.6 billion included digital entertainment marketplace revenue of $4.9 billion, up 49% year on year, and digital entertainment product revenue of $0.7 billion.

Speaker #3: Within debt marketplace revenue, core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was up 66% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistics services, was $0.7 billion.

Speaker #3: Shopee adjusted EBITDA was up by 12% year over year to $255 million in the second quarter of 2026. Money debt revenue was up by 59% year over year to $1.4 billion in the second quarter of 2026.

Tony Hou: Shopee adjusted EBITDA was up by 12% year-on-year to $255 million in Q2 2026. Monee GAAP revenue was up by 59% year-on-year to $1.4 billion in Q2 2026. Adjusted EBITDA was up by 13% year-on-year to $288 million in Q2 2026. As of the end of June, our consumer and SME loans principal outstanding reached $11.1 billion, up 62% year-on-year. This consists of $10 billion on-book and $1.1 billion off-book loans principal outstanding. Non-performing loans past due by more than 90 days as a percentage of total consumer and SME loans was 1% at the end of the quarter. Garena bookings grew 15% year-on-year to $764 million. GAAP revenue was up by 34% year-on-year to $747 million. The growth was primarily due to the increase in our active user base and deeper paying user penetration.

Speaker #3: Adjusted EBITDA was up by 13% year on year to $288 million in the second quarter of 2026. As of the end of June, our consumer and SME loans principal outstanding reached $11.1 billion, up 62% year on year. This consists of $10 billion on-book and $1.1 billion off-book loans principal outstanding.

Speaker #3: Non-performing loans past due by more than 90 days, as a percentage of total consumer and SME loans, was 1% at the end of the quarter.

Speaker #3: Garena bookings grew 15% year on year, to $764 million. Digital entertainment revenue was up by 34% year on year, to $747 million. The growth was primarily due to the increase in our active user base and deeper paying user penetration.

Speaker #3: Garena adjusted EBITDA was up by 17% year on year to $430 million. Returning to our consolidated numbers, we recognized net non-operating income of $66 million in the second quarter of 2026.

Tony Hou: Garena adjusted EBITDA was up by 17% year-on-year to $430 million. Returning to our consolidated numbers, we recognized a net non-operating income of $66 million in Q2 2026, compared to a net non-operating income of $83 million in Q2 2025. We had a net income tax expense of $251 million in Q2 2026 compared to net income tax expense of $144 million in Q2 2025. As a result, net income was up by 11% year-on-year to $458 million. Thank you, Forrest and Tony. We are now ready to open the call to questions. Operator?

Speaker #3: Compared to net non-operating income of $83 million in the second quarter of 2025, we had a net income tax expense of $251 million in the second quarter of 2026, compared to a net income tax expense of $144 million in the second quarter of 2025.

Speaker #3: As a result, net income was up by 11% year on year to $458 million. Thank you, Flores and Tony. We are now ready to open the call to questions.

KC Ong: Thank you, Forrest and Tony. We are now ready to open the call to questions. Operator?

Speaker #3: 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 one on your telephone keypad.

KC Ng: 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 one on your telephone keypad. If you would like to withdraw your question, press the star one again. In the interest of time, we will take a maximum of two 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 will pause momentarily to address our roster. Our first question comes from the line of Piyush Choudhary with HSBC. Your line is open. Please go ahead.

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 one on your telephone keypad. If you would like to withdraw your question, press the star one again. In the interest of time, we will take a maximum of two 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 will pause momentarily to address our roster. Our first question comes from the line of Piyush Choudhary with HSBC. Your line is open. Please go ahead.

Speaker #3: If you would like to withdraw your question, please press star one again. In the interest of time, we will take a maximum of two questions at a time from each caller.

Speaker #3: 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 will pause momentarily to address our roster.

Speaker #3: Our first question comes from the line of Piyush Chowdhury with HSBC. Your line is open. Please go ahead.

Speaker #1: Thank you. Congratulations, management, on a great set of results. Two questions. Firstly, on Shopee, your investments have been delivering results on the growth. So can you talk a little bit about the outlook for GMV growth, and are we behind the peak investments as margins have improved sequentially?

Piyush Choudhary: Thank you. Congratulations, management on a great set of results. Two questions. Firstly, on Shopee, your investments are delivering results on the growth. Can you talk a little bit about outlook for GMV growth, and are we behind the peak investments as margins have improved sequentially? Is the unit economics improving across VIP and content? Should we expect Shopee margins to improve, or there could be volatility in H2 due to seasonality? That is first question. Secondly, can you give us an update on AI initiatives? Last time, you mentioned about AI shopping assistant for buyers. How have been the pilots? For sellers on your platform, what initiatives you have taken and benefits observed? Thank you.

Speaker #1: Are the unit economics improving across VIP and content? And should we expect Shopee margins to improve, or could there be volatility in the second half due to seasonality?

Speaker #1: That is the first question. Secondly, can you give us an update on AI initiatives? Last time, you mentioned the AI shopping assistant for buyers.

Speaker #1: How have the pilots been for sellers on your platform? What initiatives have you taken, and what benefits have you observed? Thank you.

Speaker #2: I would take this question. If you look at the Shopee outlook for GMV growth, we still see quite good growth in Q2, as we shared in the opening.

Tony Hou: I would take this question. If you look at the Shopee outlook for GMV growth, we still see quite good growth in Q2 as we shared in the openings. We still see the trend continues in the coming quarter. The growth has been doing well across our market, in Southeast Asia, Taiwan, and also Brazil. 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%. That said, we want to make sure that we also anticipate the potential ForEx headwind as well. As you can observe that many of our market has a weaker currency against USD. Q3 and Q4 also have a higher GMV base. But again, we still believe that we are able to achieve the guidance we gave before of around 25%.

Speaker #2: We still see the trend continuing in the coming quarter. Growth has been strong across our markets in South Asia, Taiwan, and also Brazil.

Speaker #2: If we look forward to the full year, we remain well on track and confident of achieving our full-year gross outlook of around 25%.

Speaker #2: That said, we want to make sure that we also anticipate the potential forex headwind, as well, as you can observe that many of our markets have a weaker currency against US dollars.

Speaker #2: Q3 and Q4 also have a higher GMV base, but again, we still believe that we're able to achieve the guidance we gave before of around 25%.

Speaker #2: In terms of investments we're making, for the few initiatives that we shared before — on the VIPs, fulfillment, logistics, et cetera — in general, we see our unit economics have been improving quarter on quarter.

Tony Hou: In term of the investment we are doing for the few initiatives that we shared before on the VIPs, on the fulfillment, on our logistics, et cetera. In general, we see our unit economics have been improving quarter on quarter. I think for our content businesses, which we share that we did an investment for Pure Time. If you look at the unit economics has been as good as the platform already. The new initiative, although we are still in the investment phase, but in general, we do see a positive trend on the economic improvement. Also in general, what we are doing is less a very CapEx-heavy investment. Even with the fulfillment, we usually take a CapEx-light approach that we do not own the fulfillment centers. But usually we rent a place with relatively light CapEx to enable the growth there.

Speaker #2: I think for our content businesses, which we shared that we did an investment for a period of time, if you look at the unit economics, it has been as good as the platform already.

Speaker #2: The newer initiative although we're still in the investment phase, but in general, we do see a positive trend on the economic improvement. And also in general, what we are doing is lesser very CapEx heavy investment even with the fulfillment.

Speaker #2: We usually take a CapEx-light approach, in that we don't own the fulfillment centers but usually rent a place with relatively light CapEx to enable growth there.

Speaker #2: In terms of the margins, I think we shared our full-year ambition of achieving $1 billion in adjusted EBITDA. For the AI initiatives, we're doing quite a lot of work over the past few quarters, both on the buyer and seller side, as you mentioned.

Tony Hou: In term of the margins, I think we shared our full year ambition of achieving $1 billion in adjusted EBITDA. For the AI initiatives, we are doing quite a lot of work over the past few quarters, both on buyer and seller side, as you mentioned. We are launching the IM Assistant for sellers in quite a few of market. Essentially, instead of the seller talk to a KA manager, the IM as we call it, that is a digital IM that they can talk to, which can help them to answer many questions and many enhance if they want to do with their shops. This is also 24 hours available of course, compared to KA manager usually not available 24 hour by seven. This is just one of the example that we are working with the sellers among many others.

Speaker #2: We are launching the IM assistant for sellers in quite a few markets. Essentially, instead of the seller talking to a key account manager, the IM—as we call it—there is a digital IM that they can talk to, which can help them answer many questions or perform many analyses they want to do with their shops.

Speaker #2: This is also available 24 hours, of course, compared to a key account manager who is usually not available 24/7. I think that's just one example of how we're working with the sellers, among many others.

Speaker #2: On the buyer side, we spend a lot of effort on both helping the ads to have better conversions, which reflects in our ad tick rate improvements over time, but also just general conversion for our search recommendations. We've been rolling out our new GR algorithm—general generative algorithm—for recommendation and search, which gives us a meaningful improvement on the conversion rate that we observed.

Tony Hou: On the buyer side, we spend a lot of effort on both helping the apps have better conversions, which reflecting our ethic rate improvement over time, but also just general conversion for our search recommendations. We have been rolling out our new GR algorithm, a generative algorithm for recommendation and search, which gives us a meaningful improvement on the conversion rate that we observed. We are also doing follow-up work on AIGC on content. If you look at our platforms, we have a lot more content can be generated by AI now which can be used to do a personalized targeting for our buyers to improve the conversion as well. Many other work we are doing, I am just sharing with you on top of my mind.

Speaker #2: We are also doing quite a lot of work on AIGC and content. If you look at our platforms, we have a lot more content that can be generated by AI now, which can be used to do personalized targeting for our buyers to improve the conversion as well.

Speaker #2: And many other work we are doing I'm just sharing still on top of my mind.

Speaker #3: Your next question comes from the line of Alicia Yap with Citigroup. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Alicia Yap with Citigroup. Your line is open. Please go ahead.

Alicia Yap: Hi. Good evening. Thanks for taking my questions and also congratulations on the strong set of results. I wanted to follow up a little bit on the e-commerce, the Shopee question. Can management elaborate a little bit the outperformance this quarter and also the profitability trend for Brazil, Taiwan, and Southeast Asia, and also the latest competitive landscape there? On your guidance, I know that you mentioned the 25% is unchanged for the GMV growth. In the case that if the GMV were to further exceed the guided growth rate, is that suggested that there is also further upside on the EBITDA for the H2? Lastly, on the fulfillment investment cycle, just wondering where are we in the timeframe?

Speaker #4: Hi, good evening. Thanks for taking my questions and also congratulations on the strong set of results. I wanted to follow up a little bit on the e-commerce Shopee question.

Speaker #4: Can management elaborate a little bit about performance this quarter, and also the profitability trend for Brazil, Taiwan, and Southeast Asia, as well as the latest competitive landscape there?

Speaker #4: And then, on your guidance, I know that you mentioned the 25% is unchanged for the GMV growth. So, in the case that the GMV were to further exceed the guided growth rate, does that suggest there is also further upside on the EBITDA for the second half?

Speaker #4: And then lastly on the fulfillment investment cycle, just wondering where are we in the timeframe? Are we getting closer to what we wanted to invest or are we still in the early stage of the investment cycle for the fulfilling center?

Alicia Yap: Are we getting closer to what we wanted to invest or are we still in the early stage of the investment cycle for the fulfillment center? Thank you.

Speaker #4: Thank you.

Tony Hou: Across the market, we see relatively good performance both on growth and profitability. I don't think the single market trends, but relatively across the market. Regarding the competitive situation, we do observe that competitive situation to be relatively stable at this point in time. We are able to maintain our market share. In certain markets, we are able to gain market shares as well over the quarters for South Asia and Taiwan. For Brazil, we also observed that our growth is well above the market growth levels. We believe we're growing faster than our close competitors as well there. Regarding the balance between growth and EBITDA, it's always a question on what's the best balance between the growth and EBITDA. I don't think there is a simple answer there.

Speaker #2: Across the market, we see relatively good performance both on growth and profitability. I don't think the single market trend but relatively across the market.

Speaker #2: Regarding the competitive situations, we do observe that the competitive situation is relatively stable at this point in time, and we are able to maintain our market share. In certain markets, we are able to gain market share as well.

Speaker #2: Over the quarters, for South Asia, and Taiwan, for Brazil, we also observe that our growth is well above the market growth levels. And we believe we're growing faster than our close competitors as well there.

Speaker #2: Regarding the balance between growth and EBITDA, it's always a question of what's the best balance between growth and EBITDA. And I don't think there is a simple answer there.

Speaker #2: I think something we always observe—both on how much we can optimize internally, and also look at how fast the market is growing, and, of course, look at the competitive landscape—to do this balancing.

Tony Hou: I think something we always observe both on how much we can optimize internally and also look at how fast is the market growing. Of course, look at competitive landscapes to do this balancing. At this point in time, we have been seeing the competitive situation to be relatively stable as I shared. The main driver of how the balancing work will lie on how we see the market growth rate look like in the rest of the year and how much we can improve our efficiency internally for this. For the fulfillment, we believe there are still quite a lot of room for us to improve to further penetrate on the fulfillment businesses. I think right now both in Southeast Asia and Brazil and Taiwan, we are still ramping up the fulfillment sizes.

Speaker #2: At this point of time, we have been seeing the competitive situation to be relatively stable as I shared. So the main driver of how the balancing work will lie on how we see the market growth rate look like in the rest of the year.

Speaker #2: And how much we can improve our efficiency internally. For this—for the fulfillment—we believe there is still quite a lot of room for us to improve, to further penetrate the fulfillment businesses.

Speaker #2: I think right now, both in South Asia, Brazil, and Taiwan, we're still ramping up the fulfillment sizes. For example, I think we shared that our fulfillment growth was more than 20% quarter-on-quarter.

Tony Hou: For example, I think we shared that our fulfillment grow more than 20% quarter-on-quarter. In quite a few market it is more than double digit already of our businesses. But still, if you compare the size of our fulfillment with some of the other players in our market, especially in Brazil or compare with the sizes of the peers in other markets. If you look at the few players with fulfillment businesses and marketplace, we are still much smaller as a size compared to them. With the good benefits we see from a fulfillment, both on reducing the speed of deliveries and enhance the buyer conversions, and also reduce the effort of sellers selling our platform. We do believe this is a good investment we are taking for our platform.

Speaker #2: In quite a few market, it's more than double digit already of our businesses. But still, if you compare the size of our fulfillment with some of the other players in our market, especially in Brazil, or compare with the sizes of the peers in other markets, if you look at the few players with fulfillment businesses and marketplace, we're still much smaller as a size compared to them.

Speaker #2: And with the good benefits we see from fulfillment, both in reducing the speed of deliveries and enhancing buyer conversions, as well as reducing the effort for sellers selling on our platform, we do believe this is a good investment worth taking for our platform.

Speaker #2: And also, as I shared in the earlier questions, our fulfillment economy has been improving quarter on quarter, driven both by the fact that we are able to optimize the cost structures—I think it's a learning process—and also that it just takes time to optimize the operation in general.

Tony Hou: Also, as I shared in the earlier questions, our fulfillment economic has been improving quarter-on-quarter, driven both by the fact we are able to optimize the cost structures. I think it is a learning process. Also just take time to optimize the operations just in general. That is one. Also, as we grow the scale, with more and more sellers joining the fulfillment businesses, essentially, we have better scale advantage on that. Number three is also because there are more and more buyers recognize the fulfillment businesses that we are offering. This gives us a better economics over time. Another thing that is important to point out is that we are also doing a lot more integrations between fulfillment and SPX. Essentially, to reduce the frictions between how the items in our warehouse moves across entire value chain.

Speaker #2: That's one. Also, as we grow the scale, with more and more sellers joining the fulfillment businesses, essentially we have a better scale advantage on that.

Speaker #2: And number three is also because more and more buyers recognize the fulfillment businesses that we are offering. This gives us better economics over time.

Speaker #2: Another thing that's important to point out is that we're also doing a lot more integrations between fulfillment and SPX. So essentially, to reduce the frictions between how the item in our warehouse moves across the entire value chain.

Speaker #2: So it's so we can realize the cost synergies and cost benefit by running both the warehouse and the logistics together. And all these things help us to build the fulfillment businesses and helping us to gain the advantage as the overall platforms.

Tony Hou: We can realize the cost synergies, and cost benefit by running both the warehouse and logistics together. All these things help us to build the fulfillment businesses and helping us to gain the advantage as the overall platforms. Again, we run fulfillment business in relatively light CapEx fashions that we do not own the land, we do not own the warehouses. When we start a new fulfillment center, we do relatively light CapEx to enable that. We are also experimenting more automation with our fulfillment center recently, which actually reduce our cost to run as well. But that is still in the early stage. We will share more when we scale more to our fulfillment centers over time.

Speaker #2: Yeah, again, we run a fulfillment business with relatively light CapEx, as we don't own the land or the warehouses. When we start a new fulfillment center, we incur relatively light CapEx to enable that.

Speaker #2: We are also experimenting with more automation in our fulfillment center recently, which has actually reduced our cost to run as well. But that's still in the early stage.

Speaker #2: We will share more when we scale more to our fulfillment centers over time.

Speaker #1: Your next question comes from Divya Kathil with is open. Please go ahead.

Operator: Your next question comes from Divya Kaushik with Morgan Stanley. Your line is open. Please go ahead.

Speaker #3: Thank you very much. My first question is on the e-commerce side. We've noticed that both Shopee and TikTok shop have raised commissions in several ASEAN markets this year.

Divya Gangahar Kothiyal: Thank you very much. My first question is on the e-commerce side. We have noticed that both Shopee and TikTok Shop have raised commissions in several ASEAN markets this year. Could you talk about how much more upside do you think there is for this? Can you confirm if ASEAN e-commerce is now profitable? Is that something that has specifically driven the guidance upgrade for e-commerce overall for this year? My second question is on Fintech. Where do you expect Monee's margins to really stabilize? We did see sales and marketing expenses continue to rise. When should we expect Monee's EBITDA growth to re-accelerate to more healthy levels? Could you maybe just talk about any guardrails we should be mindful of in terms of NPLs provisioning, especially as you are acquiring new users? Thank you.

Divya Kothiyal: Thank you very much. My first question is on the e-commerce side. We have noticed that both Shopee and TikTok Shop have raised commissions in several ASEAN markets this year. Could you talk about how much more upside do you think there is for this? Can you confirm if ASEAN e-commerce is now profitable? Is that something that has specifically driven the guidance upgrade for e-commerce overall for this year? My second question is on Fintech. Where do you expect Monee's margins to really stabilize? We did see sales and marketing expenses continue to rise. When should we expect Monee's EBITDA growth to re-accelerate to more healthy levels? Could you maybe just talk about any guardrails we should be mindful of in terms of NPLs provisioning, especially as you are acquiring new users? Thank you.

Speaker #3: Could you talk about how much more upside do you think there is for this? And can you confirm if ASEAN e-commerce is now profitable?

Speaker #3: And is that something that has specifically driven the guidance upgrade for e-commerce overall for this year? And my second question is on Fintech—where do you expect Monet's margins to really stabilize?

Speaker #3: We did see sales and marketing expenses continue to rise. When should we expect monies EBITDA growth to re-accelerate to more healthy levels? And could you maybe just talk about any guardrails we should be mindful of in terms of NPLs, provisioning, especially as you're acquiring new users?

Speaker #3: Thank you.

Speaker #2: When we look at the take rate, we look at take rate from multiple angles. I think one is how much the take rate is being invested to grow the ecosystems.

Tony Hou: When we look at the take rate, we look at take rate from multiple angles. I think one is how much the take rate is reinvesting to grow the ecosystems, which is very important for us to look at. That is number 1. Number 2 is we look at how our price competitiveness is in our platform. So essentially after take rate, do we still maintain a similar gap of price leadership or not compared to the other platforms. Number 3 is we also look at the price of e-commerce, especially on our platform versus the offline pricing. Number 4, we also look at what does it mean for sellers' profitability. I think we put all the things together, in term of consideration for the take rate. From what we observed so far, we have been seeing a very healthy ecosystem, even with the increase of take rate.

Speaker #2: Which is very important for us to look at—that's number one. Number two is, we look at how our price competitiveness is in our platforms.

Speaker #2: So essentially, after the tick rate, do we still maintain a similar gap in price leadership compared to the other platforms? Number three, we also look at the price of e-commerce—essentially, our platform versus offline pricing.

Speaker #2: Number four, we also look at what it means for sellers' profitability. I think we put all the things together in terms of consideration for the take rates.

Speaker #2: From what we observe so far, we have been seeing a very healthy ecosystems even with the increase of tick rate. And the reason for that is that we reinvest a large part of the tick rate to the ecosystem growth as well.

Tony Hou: The reason for that is that we reinvest a large part of the take rate to the ecosystem growth as well. Also that we are able to help the seller to operate online more efficiently over time. With the combination of all the things, our price is still very competitive, not only compared to the other marketplaces in our market, but also compared to the offline alternatives in the market. Going forward, we still see opportunities to increase our take rate. Not only from commissions, but also from the pay ads that we have been able to penetrate more and more over time. Although you can argue that the pace of the fixed commission increase probably will be less than we observed before.

Speaker #2: And also that we're able to help the seller to operate online more efficiently over time. With the combination of all these things, our price is still very competitive, not only compared to the other marketplaces in our market, but also compared to the offline alternatives.

Speaker #2: In the market. Going forward, we still see opportunities to increase our take rate, not only from commissions, but also from the payouts that we have been able to penetrate more and more over time.

Speaker #2: Although you can argue that the fixed commissions probably has the pace of the fixed commission increase probably will be less than we observed before.

Speaker #2: But again, there is still room for us to increase the overall tick rate by both helping the sellers to operate more efficiently, but also helping the sellers grow their volumes by reinvesting part of the things to the ecosystem, and also increase the conversion potentials from the buyer side with all these things together.

Tony Hou: But again, there is still a room for us to increase the overall take rate by both helping the sellers to operate more efficient, but also helping the sellers grow their volume by reinvesting part of the things to the ecosystem and also increase the conversion potentials from the buyer side. With all the things together, I think we are able to grow this even more over time. On the Monee margin question, if you look at individual countries of the Monee businesses, if you look at the EBITDA over the outstanding ratios, it has been relatively consistent. Our NPL has been relatively stable as well over time. I think typically when we operate, we look at by product, by countries, by segment. The shift of the return of assets is primarily driven by the mix of these things.

Speaker #2: I think we are able to grow this even more over time. On the money margin questions, if you look at individual countries of the money businesses, if you look at the EBITDA over the balance, over the outstanding ratios, it has been relatively consistent. Our NPL has been relatively stable as well over time.

Speaker #2: I think that typically, when we operate, we look at products by product, by country, by segment. The shift in the return on assets is primarily driven by the mix of these things.

Speaker #2: For example, in certain countries—for example, let's say in Thailand, or in Malaysia, which is a later country that grows more than the previous countries—the overall ROA is slightly lower.

Tony Hou: For example, certain countries, let's say in Thailand or in Malaysia, which is a later country that grows more than the previous countries. The overall ROA is slightly lower, so which kind of, we mix together, it reflects to the overall numbers. For example, some of the off Shopee SPayLater lending growth which is quite meaningful. More than 20% of the total SPayLater already, as Forrest shared in the opening, has naturally a lower ROA compared to the on-Shopee SPLs. For example, we have been trying to penetrate multiple prime segment users, which naturally have slightly lower interest rates, et cetera. All those growth are intentional. As you observed from the number, that it does require some investment sometimes when we grow into the segment.

Speaker #2: So which kind of like we mix together, it's reflect to the overall numbers. For example, some of the off-Shopee SPL landing growth, which is quite meaningful, more than 20% of the total SPL already as far as shared in the opening.

Speaker #2: It naturally has a lower ROA compared to the un-Shopee SPLs. For example, we have been trying to penetrate more into prime segment users, which naturally have slightly lower interest rates, etc.

Speaker #2: And all those growths are intentional. And as you observe from the numbers, it does require some investment sometimes when we're growing into the segment, and sometimes it does mean that we're able to grow the outstanding a lot more, but with slightly lower ROAs compared to the previous segments or countries or products we focus on.

Tony Hou: Sometimes it does mean that we are able to grow the outstanding a lot more, but with slightly lower ROA compared to the previous segment or countries or products we focus on. So we actually see this as a positive movement rather than the negative views out of this. Our guideline is very simple. We want to maintain a stable NPL for the segment, the product, and the countries when we look at it. Then when we grow a new segment, new product, new countries, we wanted to make sure it brings a positive return of asset to us. That is why as a consequence, we always see that our absolute EBITDA approved profit from Monee has been growing quarter on quarter.

Speaker #2: So we actually see this as a positive movement rather than the negative views out of this. Our guardrail is very simple. We want to maintain stable NPL for the segment, the product, the countries when we look at it.

Speaker #2: And when we grow a new segment, new product, new countries, we want it to make sure it brings a positive return of assets to us.

Speaker #2: That's why, as a consequence, we always see that our absolute EBITDA average profit from money has been growing quarter on quarter.

Speaker #3: Your next question comes from John Choi with Daiwa. Your line is open. Please go ahead.

Operator: Your next question comes from John Choi with Daiwa. Your line is open. Please go ahead.

John Choi: Thanks for taking my question, and congrats on a very strong quarter. I want to focus a little bit on Shopee's advertising take rate. Forrest also mentioned in his prepared remarks that ad take rate was pretty strong for a few reasons, but I think it was up by more than 90 basis points. How further upside do we see? I think you guys also mentioned the advertisers seem to be more keen and taking up more of this. So what are the AI technologies that we're implementing to further improve this ad take rate? How much more room do we see? My second question is on Monee, particularly for Brazil. Also in the slides, you also said you guys are going to launch something, a standalone app in Brazil. What will be the strategy?

Speaker #4: Thanks for taking my question, and congrats on a very strong quarter. I want to focus a little bit on Shopee's advertising take rate.

Speaker #4: I think for us also mentioned in this prepared remarks that add tick rate was pretty strong for us a few reasons. But I think it was up by more than 90 basis points.

Speaker #4: How further upside do we see? And I think that you guys also mentioned the advertisers are seem to be more keen and taking up more of this?

Speaker #4: So what are the AI technologies that we're implementing to further improve this add tick rate? And how much more room do we see? And my second question is on money, a particular for Brazil.

Speaker #4: I think in the slides you also mentioned that you guys are going to launch some external app in Brazil. What will be the strategy?

Speaker #4: Should we be expecting something somewhat similar to the Southeast Asian market? Thank you.

John Choi: Should we be expecting somewhat similar to the Southeast Asian market? Thank you.

Speaker #2: On the ad growth, we do see a pretty good growth on the ads as we shared in the remarks. I think there are a few things helping the ad growth.

Tony Hou: On the ads growth, we do see a pretty good growth on the ads, as we shared in the remarks. I think there are a few things helping the ad growth. I'm just listing some of the examples. One of the things, smart voucher, which is we kind of combine a personalized voucher from a buyer together with ads. So we enhance the seller's ad traffic and increasing the purchase conversions. Another example is we have the Shop GMV Max smart diagnostic tools. So essentially, this AI diagnostic report and tools to help the seller to analyze how can they have better return on the ad. It leverages on the AI capability to analyze the ad's performance and drive improvement. We also have in-depth audience insights for Brand Max. This feature essentially allows more sellers to view the number of shoppers in each stage of their purchase journey.

Speaker #2: I'm just listing some of the examples. One of the things Smart Voucher, which is we kind of combine a personalized voucher from a buyer together with ads.

Speaker #2: So we enhance the seller's ad traffic, increasing the purchase conversions. Another example is we have the Shop GMV Max Smart Diagnosis tools—essentially, these AI diagnosis reports and tools—to help the seller analyze how they can have better return on the ads.

Speaker #2: It's leveraged on the AI capability to analyze the ad performance and drive improvement. We also have in-depth audit insights for brand max this feature essentially allows the more seller to view the number of shoppers in each stage.

Speaker #2: Of their purchase journey. And how does the shopper move between stages? This will give them a more robust and algorithm-driven branding solution to capture the buyers better across their life cycles with the seller.

Tony Hou: How does the shopper move between stages? This will give them a more robust and algorithm-driven branding solution to capture the buyers better across their life cycles with the seller. On top of that, there's also quite a lot of fundamental improvement on the algorithm for the ads. Both on how can we match the buyer's intention to the ad product better. I think that's where the AI-based algorithm, the GR algorithm helps quite a lot when we come to the matching part. The other part is the content presentation. We are using quite a lot of AI tools to create better personalized content for the user when they see the ads. So all this in combination helps our ad take rate to improve.

Speaker #2: And on top of that, there's also quite a lot of fundamental improvement in the algorithm for the ads, both in how we can match the buyer's intention to their ad product better.

Speaker #2: I think that with the AI-based algorithm, the GI algorithm helps quite a lot. When we come to the matching part, the other part is the content presentation.

Speaker #2: We are using quite a lot of AI tools to create better personalized content for the user when they see the ads. So all this in combination helps our ad tick rate to improve.

Speaker #2: In the coming quarters, we still see that there is meaningful potential for us to increase the ad tick rate, given that many of the tools and many of the algorithms we're implementing are still in progress.

Tony Hou: In the coming quarters, we still see that meaningful potential to increase the ad tech rate given that many of the tools, many of the algorithms we are implementing are still in progress. We can see a meaningful optimization potential while we are doing more experiments, while we are optimizing algorithms further in the coming quarters. For Brazil, on the Monee side, we do believe that Monee has a big potential in Brazil. We are seeing very good growth in Brazil for our lending businesses in the past 2 quarters. We were launching an app which is similar to ShopeePay app in Brazil, but with the Financial Institution license, which means we will be similar to what Mercado Pago or other players in the market can offer in Brazil. We believe that Brazil is quite a big market for financial services, which is proven by a few other players in the market.

Speaker #2: We still can see meaningful authorization potential while we are doing more experiments and while we are optimizing the algorithm further in the coming quarters.

Speaker #2: For Brazil, on the money side, we do believe that money has big potential in Brazil. We have seen very good growth in Brazil for our lending businesses in the past two quarters.

Tony Hou: We are seeing very good growth in Brazil for our lending businesses in the past 2 quarters. We were launching an app which is similar to ShopeePay app in Brazil, but with the Financial Institution license, which means we will be similar to what Mercado Pago or other players in the market can offer in Brazil. We believe that Brazil is quite a big market for financial services, which is proven by a few other players in the market.

Speaker #2: We were launching an app that is similar to the Shopee Pay app in Brazil, but with the FTFI license. This means we will be similar to what Mercado Pago or other players in the market can offer.

Speaker #2: In Brazil. We believe that Brazil is quite a big market for financial service businesses, which is proven by a few other players in the market.

Speaker #2: With our e-commerce user base, our e-commerce data and also with our better credit scoring algorithm that's proven in Asia already, but of course we customize for Brazilian flavor.

Tony Hou: With our e-commerce user base, our e-commerce data, and also with our better credit scoring algorithm that is proven in Asia already, but of course we customize for Brazilian flavor. We are able to broaden our product in Brazil over time. If you compare what we offer and what the other players offer, there are many low-hanging fruits that we believe that we can capture just by doing the right product structures, integrating the right data in our platforms to better credit score users. Also with the license we acquired, which is as good as the others already in the market.

Speaker #2: This we are able to broaden our product in Brazil over time. If you compare what we offer and what the other players offer, there are many low hanging fruits that we believe that we can capture.

Speaker #2: Just by having the right product structures, integrating the right data in our platforms to better credit score users, and also with the license we acquired, which is as good as those already in the market.

Speaker #3: Your next question comes from Navin Killa with UBS. Your line is open. Please go ahead.

Operator: Your next question comes from Navin Killa with UBS. Your line is open. Please go ahead.

Navin Killa: Hi. Good evening, and thank you for the opportunity. Two questions from me. Firstly, on the e-commerce business. Obviously we have seen the margins kind of stabilize over the last couple of quarters after inching down through the later part of last year. I just wanted to understand from here on and back to your medium-term kind of aspiration of 2% to 3%, if you could help us understand the path, the time frame, and how you get there. That is, I guess, just a question on longer-term margin evolution for e-commerce. Secondly, on Monee, you did mention, for example, that the average loan size is up some 20% compared to last year. As your loan ticket size increases, does the credit risk also increase?

Speaker #5: Hi, good evening, and thank you for the opportunity. Two questions from me. Firstly, on the e-commerce business—obviously, we have seen the margins stabilize over the last couple of quarters.

Speaker #5: After inching down through the later part of last year, I just wanted to understand from here on and back to your medium-term kind of aspiration of 2 to 3%, if you could help us if you could help us understand the path, the timeframe, and how you get there.

Speaker #5: So that's, I guess, just a question on longer-term margin evolution for e-commerce. And secondly, on money, you did mention for example that the average loan size is up some 20 odd percent compared to last year.

Speaker #5: Now, as your loan ticket size increases, does the credit risk also increase? Or, if I could also just understand, what is the timeframe or duration of these loans?

Navin Killa: Or if I could also just understand what the time frame of these loans is, the duration of these loans is to get a better sense of how the credit risk is being managed with a larger loan book per customer.

Speaker #5: To get a better sense of how the credit risk is being managed with a larger loan book per customer.

Tony Hou: We still believe that 2% to 3% is quite within our reach for the year. It is a percentage. I think in fact, some of the markets are well above that. I think the balance between growth and profitability is something I shared in the previous answers. We do believe this is still a dynamic process on how do we make sure we capture the potential of the growth of the market versus taking more profit out of the ecosystem. I think this is something we will balance over time. But if you look at the numbers, the path from where we are to 2% to 6% is relatively straightforward. Now we are 0.67% or so, and we are talking about 1 plus percent to get where we are. And part of that will come from over time.

Speaker #2: We still believe that 2% to 3% is quite within our reach for the year. In fact, I think some markets are well above that.

Speaker #2: I think the I think the balance between growth and probability is something I shared in the previous answers. We do believe this is still a dynamic process on how do we make sure we capture the potential of the growth of the market versus taking more profit out of the ecosystem.

Speaker #2: I think this is something we'll balance over time. But if you look at the numbers, the path from where we are to 2% to 3% is relatively straightforward.

Speaker #2: Now we are 0.67% or so and we're talking about one plus percent to get where we are. And part of that will come from over time we don't need to invest so much in many of things.

Tony Hou: We do not need to invest so much in many of the things we invest in. Like many of the programs we are doing right now, you will get mature over time. I think we just invest less into it. Part of that comes from our cost improvement, fundamental cost structure improvements. For example, our logistics, our fulfillment cost structure improvements over time. Part of that comes from better tech rates from either ads or other forms. I think if you put that number together, we are really not too far, and we have done this in some markets already for this. We do see, as you mentioned, the outstanding per user increase year to year. I think part of that is because we are reaching out to a new prime segment of users who naturally take bigger ticket sizes. Part of that is also our country expansion.

Speaker #2: We invest in, like, many of the programs we are doing right now; you will get material over time. I think we just invest less into it.

Speaker #2: Part of that comes from our cost improvement, fundamental cost structure improvements. For example, our logistics, our fulfillment cost structure improvements over time. Part of that comes from better tick rates from either ads or other forms.

Speaker #2: I think if you put that number together, we are really not too far. And we have done this in some markets already for this.

Speaker #2: The we do see as you mentioned the outstanding per user increase year to year. I think part of that is because we are reaching out to a new prime segment of users who naturally takes a bigger ticket sizes.

Speaker #2: Part of that is also our country expansion. Some of the country we grow more recently faster than the other. Has a higher income per capitals in the market.

Tony Hou: Some of the countries we grow more recently, faster than the others, has a higher income capital in the market. With all that, we do see a stable credit risk within the country, within the segment, within the product. So we did not see any correlation between the increase of the outstanding per user and the increase of credit risk here. The duration of the large loan, in fact, depends on the product countries. Some can be as long as 18 months, some of them can be 12 months, et cetera. But that is a small percentage for very good prime users or for some specific lending products like offline motorcycles that require a longer period.

Speaker #2: With all that, we do see a stable credit risk within the country, within the segment, within the product. So the so we didn't see any correlation between the increase of the outstanding per user and the increase of credit risk here.

Speaker #2: The duration of the large loan, I mean, it slightly depends on the product countries. Some can be as long as 18 months, some of them can be 12 months, et cetera.

Speaker #2: But that's a relatively small percentage for our very good Prime users, or for some specific landing products like the offline motorcycles, which require slightly longer periods.

Speaker #3: Your next question comes from Xiangshou with Barclays. Your line is open. Please go ahead.

Operator: Your next question comes from Jiong Shao with Barclays. Your line is open. Please go ahead.

Speaker #1: Thank you so much for taking my questions, and please let me add my congratulations as well. I have two follow-up questions around e-commerce. The first one is that you talked about a full year of 2026 EBITDA to be over $1 billion.

Jiong Shao: Thank you so much for taking my questions. Please let me add my congrats as well. I have two follow-up questions around e-commerce. The first one is that you talked about a full year of 2026 EBITDA to be over USD 1 billion. That would suggest a higher EBITDA for the H2 than the H1, which is different from last year. I think last year, the H2 EBITDA was lower than the H1. I was hoping you can talk about the drivers behind that phenomena this year compared to last year. Does that also imply that perhaps your margins may be a bit better in the H2 than the H1 as well? My second question is back to Brazil.

Speaker #1: That would suggest a higher EBITDA for the second half than the first half, which is different from last year. I think last year, the second half EBITDA was lower than the first half.

Speaker #1: I was hoping you can talk about the drivers behind that phenomena. This year compared to last year. Does that also imply that perhaps your margins may be a bit better in the second half than the first half as well?

Speaker #1: My second question is back to Brazil. One of your key competitors in Brazil talked about the momentum they are seeing by lowering the some of the take rates there.

Jiong Shao: One of your key competitors in Brazil talked about the momentum they are seeing by lowering some of the take rates there and lowering the free shipping threshold. But that clearly hasn't stopped you from growing very, very fast. Could you just talk about your profitability outlook in Brazil in the coming quarters and years? Thank you.

Speaker #1: And then lowering the free shipping threshold— but that clearly hasn't stopped you from growing very, very fast. Could you just talk about your profitability outlook in Brazil in the coming quarters and years?

Speaker #1: Thank you.

Tony Hou: As you rightly point out, we share the goal of more than USD 1 billion adjusted EBITDA this year. If you do the math, it does mean that in the absolute term, our adjusted EBITDA for H2 of the year will be higher than H1 of the year. Of course, partially because of the growth of the market. Essentially, the overall GMV, we believe that we still see quarter-over-quarter growth. So the H2 of the year GMV base will be better than the H1 of the year. Part of that comes from the continued work of all the initiatives we talked about. But again, the e-commerce is a business that we adjust the pace, adjust the optimizations based on many parameters, as I shared earlier.

Speaker #2: As you already pointed out, we share the goal of more than $1 billion EBITDA this year. If you do the math, it does mean that, in absolute terms, our EBITDA for the second half of the year will be higher than in the first half.

Speaker #2: Of course, partially because of the growth of the market. Essentially the overall GMV, we believe that we still see quarter and quarter over quarter growth.

Speaker #2: So the second half of the year GMV base will be better than the first half of the year. Part of that comes from the continual work of all the initiatives we talked about.

Speaker #2: But again, the e-commerce is a business that kind of we adjust the pace, adjust the monetizations, based on many parameters as I shared earlier, based on how we are optimizing the businesses, based on how the overall business growth and of the country and also based on how the competitors is.

Tony Hou: Based on how we are optimizing the businesses, based on how the overall business growth of the country, and also based on how the competitive business is. For Brazil, yes, I think your observation is actually correct. We still see that our growth is well above the market in the country. If you look at the price competitiveness, we are still very price competitive, a lot stronger than the competitor in the region, even after their change on the take rate and the free shipping threshold. So we believe that for e-commerce businesses, the fundamentals still hold. The price competitiveness of our assortment is the completeness of our assortment, is the fundamental structure of cost to serve. Its experience on how the buyers can discover the product on our platform and all those things help us to grow faster than the market in Brazil.

Speaker #2: For Brazil, yes, I think your observations is absolutely correct. The we still see that our growth is well above the market in the countries.

Speaker #2: And if you look at the price competitiveness, we are still very price competitive—much stronger than the competitor in the region, even after their change on the take rates and free shipping thresholds.

Speaker #2: So we believe that for e-commerce businesses, the fundamentals still hold. It's the price competitiveness of our assortment, the completeness of our assortment, and the fundamental structure of cost to serve.

Speaker #2: And it's the experience of how the buyers can discover the product on our platform. All those things help us to grow faster in the market in Brazil.

Speaker #2: And if you look forward, we still believe that Brazil has a long way to go in terms of e-commerce growth. We are hoping to grow in Brazil in a profitable fashion, with a growth rate that outpaces the market.

Tony Hou: If you look forward, we still believe that Brazil has a long way to go in terms of e-commerce growth. We are hoping to grow in Brazil in a profitable fashion with the growth rate outpacing the market in the coming quarters.

Speaker #2: In the coming quarters.

Speaker #3: Your next question comes from the line of Ron John Sharma with JP Morgan. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Ranjan Sharma with JP Morgan. Your line is open. Please go ahead.

Speaker #4: Good evening. Can you hear me? Hi. Thank you so much for the opportunity and the presentation. Two questions from my side. Firstly, on the gaming.

Ranjan Sharma: Trinity, can you hear me? Hi. Thank you so much for the opportunity and the presentation. Two questions from my side. Firstly, on the gaming. We discussed new publishing rights. Can you also help us understand which geographies do they cover? Also, earlier in the year, we talked about a possible Naruto collab coming back. If you can remind us when that is going to be. The second question is on fintech. We noticed that the provisions for credit losses have increased quite a bit this quarter. What are the trends that you are seeing in delinquencies, and how does that affect your loan growth going forward? Thank you.

Speaker #4: We discussed new publishing rights. Can you also help us understand which geographies they cover? And also, earlier in the year, we talked about a possible Naruto collab coming back.

Speaker #4: If you can remind us when that's going to be. The second question is on fintech. We noticed that the provisions for credit losses have increased quite a bit.

Speaker #4: This quarter, what are the trends that you're seeing in delinquencies? And how does that affect your loan growth going forward? Thank you.

Speaker #2: Hi, Roger. Thank you for your question. I think for the new publishing games, like we specifically talk about two games this quarter, one is Powered Online. Since this game is our self-developed game, we're going to publish it globally.

Chris Feng: Hi, Reggie. Thank you for your question. I think for the new publishing games, we specifically talk about two games this quarter. One is Palworld Online, and since this game is our self-developed game, we are going to publish it globally. We probably are going to launch the game market by market and gradually, but the plan is this will be a global publishing opportunity for us. For Monster Hunter Outlanders, this is a great collaboration between Garena and Tencent. Tencent developed the game, and also worked together with this fantastic IP owned by Capcom. We target to launch in the market we are very familiar, like Southeast Asia, Latin America, Taiwan. Potentially, we are going also to launch the game in Middle East and some more markets in the pipeline. The target launch time will be this year.

Speaker #2: And we probably were going to launch the game like a market by market and gradually. So but like the plan is we're going to this will be like a global publishing opportunity for us.

Speaker #2: And for Monster Hunter Outlander, this is a great collaboration between Garena and Tencent. Tencent developed the game and also worked together with this fantastic IP owned by Capcom.

Speaker #2: We target to launch in the market—in markets we are very familiar with, like Southeast Asia, Latin America, like Taiwan. And potentially, we’re also going to launch the game in the Middle East and some more markets.

Speaker #2: So in the pipeline. So the target launch time is will be this year.

Speaker #5: Yeah. I think for the provisions, it's primarily driven by the loan mix. I think there are two component our loan mix we naturally have high provisions.

Tony Hou: Yeah. I think for the provision, it is primarily driven by the loan mix. I think there are two components our loan mix, we naturally have high provisions. One is the off Shopee SPayLater. Second one is the Brazil loan outstanding. Although Brazil, we have very good outlay there. But it is a high-interest, high-risk market. The higher mix of these two components contributes to the higher provision you see.

Speaker #5: One is the off Shopee SPLs. And second one is the Brazil loan outstanding. Although Brazil we have very good ROA there, but it's a high interest, high risk market.

Speaker #5: So the higher mix of these two components contribute to the higher provision you see.

Speaker #3: This concludes our question-and-answer session. I would like to turn the conference call back over to Mr. Casey Ong for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference call back over to Mr. K.C. Ng for any closing remarks.

Speaker #4: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

KC Ng: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

KC Ong: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Q2 2026 Sea Ltd Earnings Call

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