Sea Limited Earnings Update: A quick look
5th Consecutive Quarter of Acceleration: Thesis Remains on Track
Sea Limited (SE) just released its financial report for its second quarter of fiscal 2026. We will take a closer look below.
Full disclosure: I am currently long SE at 96.4/share.
Overview
Sea Limited (SE) delivered a robust financial performance in the second quarter of 2026, characterised by strong top-line growth and disciplined operational execution.
They generated $7.8 billion in total GAAP revenue, representing a 48% year-on-year increase. This growth was primarily fuelled by the continued expansion of the Shopee e-commerce platform and the Monee financial services division.
Management successfully balanced aggressive user acquisition with improved unit economics, resulting in $917 million in adjusted EBITDA. The business is performing well due to structural improvements in logistics, the successful scaling of the Shopee VIP program, and the integration of advanced AI-driven risk models within the credit business, which have collectively enhanced operational efficiency and market penetration.
Second Quarter of Fiscal Year 2026 Financial Highlights
Total Revenue: $7.8 billion, up 48% year-on-year.
Consolidated Adjusted EBITDA: $917 million
Net Income: $458.1M, up 10.6% YOY
Shopee GMV: $38.3 billion, a 28% year-on-year increase.
Shopee Adjusted EBITDA: $255.4M, up from $227.7M in Q2 2025
Adjusted EBITDA Margin (% of GMV): 0.7% up from 0.6% QOQ
SeaMoney Revenue: $1.402 Billion up from $0.883 Billion in Q2 2025
Monee Loan Book: $11.1 billion, up 62% year-on-year.
90-day NPL Ratio (SeaMoney): Declined to 1.0% as of end of Q2 2026.
SeaMoney Adjusted EBITDA: $288 Million, up from $255.3 Million in Q2 2025
Q2 2026 Segmental Breakdown Garena Bookings: $764 million, reflecting 15% year-on-year growth.
Garena Adjusted EBITDA: $430 Million, up from $368 Million in Q2 2025.
Financial Guidance and Outlook
Management remains confident in achieving its full-year financial objectives despite potential foreign exchange headwinds. Key highlights include:
E-commerce Growth: Maintaining guidance for 25% year-on-year GMV growth in the e-commerce segment.
Shopee Profitability: On track to reach $1 billion in adjusted EBITDA for the full year 2026.
Operational Expansion: Continuing to scale fulfilment capabilities and expanding the standalone ShopeePay app into new markets, including Brazil, to deepen financial services integration.
Key Takeaways
Shopee:
VIP Expansion: The loyalty program reached over 15 million members by the end of June, a 45% QOQ increase. VIP members contributed 24% of GMV in Asia. Furthermore, the VIP membership launched in Brazil in April and membership has already surpassed 1 Million.
Logistics Efficiency: Shopee’s fulfillment order volumes grew over 20% quarter-on-quarter, with the company utilising a “CapEx-light” approach by renting rather than owning infrastructure.
Content-Driven Commerce: Orders originating from live streaming and short-form video grew over 50% year-on-year, now accounting for more than 35% of physical goods orders in Southeast Asia.
Monee
AI-Driven Credit Underwriting: Monee has implemented transformer-based architecture for credit risk models, similar to large language models, which has increased approval rates by approximately 10% while maintaining stable risk levels.
Garena
Strategic Gaming Partnerships: Garena is diversifying its portfolio by licensing and publishing high-profile titles, including Palworld Online and Monster Hunter Outlanders, to expand beyond the Free Fire franchise
Final thoughts and my plans:
Sea Limited reported a strong quarter, in fact, it was its 5th consecutive quarter of revenue acceleration. Each segment was strong but I was particularly glad to see Shopee’s adjusted EBITDA margin inflecting upward again, and the strength of the VIP program proves that management’s investments are paying off. Lastly, regarding shareholder returns, management repurchased $416.8M worth of shares at an average cost of $88 in Q2. It was good to see the buyback authorisation being utilised.
I was a buyer of this name in the 70’s and 80’s and so it has been nice to see the +75% rebound. (Note all transactions get alerted on Substack and Discord simultaneously)
I plan to remain long, but I will cost-optimise some of my higher-cost shares as the stock continues to move up. The setup into the second half of the year looks strong, though continued execution is required and cost discipline will need to be maintained.
To end, I will leave you with remarks from CEO Forrest Li on the quarter:
“Our strong momentum from the first quarter has continued into the second. Our investments have enabled Shopee and Monee to continue to strengthen our market leadership while improving our user penetration. We will continue to invest prudently in serving more users and serving them better, broadening our foundation for profitable growth into the future.”
On Shopee:
“Shopee has delivered a strong first half of 2026. We again achieved new highs in GMV, gross order volume, and revenue in the second quarter. Our improving operational efficiency and growing scale have strengthened our unit economics. With this solid momentum, we are optimistic that Shopee will achieve the milestone of US$1 billion in adjusted EBITDA for the full year.”
On Monee:
“Monee also delivered another great 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. 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 credit penetration remains low across our markets. This gives us great confidence in Monee’s long-term growth and earnings potential.”
On Garena:
“Garena delivered another strong quarter across bookings and profitability. Free Fire anchored this strong performance, continuing to draw in over 100 million average daily active users. We continue to work towards diversifying our portfolio with two recently announced mobile games: Palworld Online and Monster Hunter Outlanders, both built on strong, globally recognized IP. We remain committed to delivering the high-quality experiences our players know us for.”
Thank you for reading and see you for the next one!