On 11 August 2026, Sea Limited held its second-quarter 2026 results conference call. CEO and Chairman Forrest Li, President Chris Feng and CFO Tony Hou took analysts through the quarter’s performance and answered questions in the Q&A that followed. Below is the transcript, formatted for readability from the call recording.
Prepared remarks
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 one on your telephone keypad. If you would like to withdraw your question, press star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I’d now like to welcome Mr. Casey Ong to begin the conference. Please go ahead.
Casey Ong – Investor Relations
Hello, everyone. 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. 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 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 CEO and Chairman 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. 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.
Forrest Li – CEO
Hello, everyone, and thank you for joining today’s call. Our strong momentum from the first quarter has continued into the second quarter. We generated 7.8 billion dollars in revenue, up 48 percent year on year, and over 917 million dollars in adjusted EBITDA. Our investment has 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 percent year-on-year, marking eight consecutive quarters of sequential growth, and we again achieved new highs in gross orders and revenue. We generated an adjusted EBITDA of more than 250 million dollars during the second quarter. 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 second quarter.
Average monthly new active buyers grew more than 35 percent year on year, a significant acceleration from previous quarters. Average monthly active buyers increased 18 percent year on year, and overall buyer engagement also continued to improve, with purchase frequency increasing by 8 percent year on year. Our monetization strengthened further in the second quarter. Ad revenue was up more than seventy percent, and ad take rate improved by over ninety basis points year on year. 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 ads-paying sellers grew around 45 percent, while average ad spend per seller increased more than 16 percent 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 continue to deepen our structural moats across logistics, ShopeeVIP and content. Strong logistics capabilities continue to be a key contributor to Shopee’s reputation for excellent service. We continue to make it even faster and more reliable across a wider product assortment in the second quarter. 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. We continue 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.
Beyond delivery, we also made good progress in fulfillment, with order volumes up more than 20 percent quarter on quarter. Fulfillment benefits both sides of our marketplace. Sellers offload operational complexity and sell more efficiently, while buyers enjoy faster, more reliable delivery. In some markets, more than 60 percent of our fulfilled parcels arrive the next day – higher than the platform average. The gaps are especially noticeable in places where geography makes delivery challenging. For example, in Mindanao in the Philippines, fulfillment has narrowed delivery time by one to three days. Buyers can feel the difference. Listings that converted to fulfillment saw more than a 20 percent increase in orders, on average, in Southeast Asia.
Second, our ShopeeVIP program continued to scale strongly. Live across Asia and Brazil, total membership exceeded 15 million at the end of June, up 45 percent from the previous quarter. Across Asia, VIP members contributed 24 percent of GMV in the quarter. Average monthly retention remained strong at around 80 percent, and members continued to show higher engagement, spending more after subscribing. In Brazil, early adoption has been encouraging since our April launch, with membership already surpassing one million. We continued to see encouraging support from both Shopee sellers and external partners for our ShopeeVIP program . We have broadened member benefits across channels – dining and entertainment – improving the program’s value proposition. More sellers and partners have come on board, demonstrating the value they see in engaging our ShopeeVIP database. This has helped improve the program’s unit 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 percent year on year, accounting for more than 25 percent 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 creators on Facebook increased by more than 85% quarter on quarter, with Facebook proving to be a very popular channel to drive purchases. 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.
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 purchase size. We continue to invest in and optimize our end-to-end logistics capabilities, expanding our network while ramping up utilization – reducing average buyer waiting time by 16 percent year on year, and doubling our penetration of fulfillment orders year on year. These logistics improvements are also supporting our expansion in the market. We onboarded nearly 500 new official brands, while GMV from shopping mall sellers more than doubled year on year, which gives us significant headroom for Brazil, and we will continue to invest in this market in a disciplined and profitable manner. Shopee has delivered a strong first half of 2026. With this solid momentum, we are optimistic that Shopee will achieve the milestone of one billion dollars in adjusted EBITDA for the full year.
Next, moving to Monee, Monee delivered another great quarter. We continued strong growth in both revenue and adjusted EBITDA. Credit remained the primary driver of growth. Our loan book reached 11.1 billion dollars at the end of June, up 62 percent year on year. Asset quality remained stable, with our NPL ratio at 1.0 percent. The Philippines has become our fifth market with a loan book exceeding 1 billion dollars.
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. 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. Our in-house system uses transformer architecture, similar to those underlying 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 models have helped lift approval rates by around 10% compared to previous models, 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. For instance, through partnerships with local mobile operators in Indonesia and open finance data in Brazil. We also use AI to build tools to efficiently verify a diverse range of users’ submitted income documents across markets, languages, and formats. Review time was reduced by around 95 percent while maintaining a very high level of accuracy, letting us respond to credit limit requests from users almost instantaneously.
We have been pushing harder on new user acquisition. We have found that many users begin using SPayLater for convenience, and it subsequently generates more value through repeat transactions, installment conversion, and adoption of our other credit products. So we have broadened the rollout of one-month interest-free SPayLater loans, giving borrowers the option to either settle their balance 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 percent 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 percent year on year.
SPayLater has continued to scale well, driven by integration with national QR payment infrastructure and continued merchant onboarding. At the end of the quarter, off-Shopee accounted for over twenty percent of our total SPayLater portfolio, with this figure as high as thirty-five percent 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 payments, 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’ payments, credit, insurance, and other 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 soon. In summary, Monee delivered another strong quarter with a broad base of 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.
Next, turning to Garena, Garena delivered another strong quarter with bookings growing 15 percent year on year, with profitability remaining healthy and growing well year on year. Free Fire anchored its strong performance, now in its ninth year. It is still expanding its reach and scale globally, continuing to draw in over 100 million average daily active users. 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. A great example of this was Undersea Mystery, an ocean-themed campaign inspired by Songkran, Thailand’s water festival. We integrated the theme into the map itself, creating a gateway into a new undersea realm – fresh territory to explore and fight over, and opportunities to hunt for powerful gear hidden in the hydro zone and fishing ponds across the map. The continuous reinvention of the core gameplay keeps players engaged over time.
We also used the World Cup wave to build excitement and engagement with our players. Our Fire Kickoff campaign wove football into the map itself, turning part of it into a football field. Eliminated players to take part in a one-on-one football showdown for a chance at rejoining the match. And there’s a new football form that allows players to turn themselves into a football to speed across the map and pull off surprise plays. The campaign also resonated well beyond the game. The campaign song, “Booyah Olé”, became a standout organic driver of social engagement, generating over three hundred and fifty million social media views. I’m also very excited about what lies ahead for our portfolio. We announced 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, 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. In summary, Garena delivered another strong quarter. We continue to prove ourselves 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, and give us greater confidence for the rest of the year. With that, I invite Tony to discuss our financials.
Tony Hou – CFO
Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total revenue increased 48 percent year on year to 7.8 billion dollars in the second quarter of 2026. This was primarily driven by growth in Shopee and Monee. Our total adjusted EBITDA was up by eleven percent year on year to nine hundred and seventeen million dollars in the second quarter of 2026. On Shopee, gross orders increased twenty-seven percent year on year to four point two billion in the second quarter of 2026, and GMV increased by twenty-eight percent year on year to thirty-eight point three billion dollars in the second quarter of 2026.
Our second quarter GAAP revenue of five point six billion dollars included GAAP marketplace revenue of four point nine billion dollars, up forty-nine percent year on year, and GAAP product revenue of zero point seven billion dollars. Within GAAP marketplace revenue, core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues, was four point three billion dollars, up sixty-six percent year on year. Value-added services revenue, mainly consisting of revenues related to logistics services, was 0.7 billion dollars. Shopee adjusted EBITDA was up by 12 percent year-on-year to 255 million dollars in the second quarter of 2026. Monee revenue was up by 59 percent year-on-year to 1.4 billion dollars in the second quarter of 2026.
Adjusted EBITDA was up by thirteen percent year on year to two hundred and eighty-eight million dollars in the second quarter of 2026. As of the end of June, our consumer and SME loans principal outstanding reached eleven point one billion dollars, up sixty-two percent year on year. This consists of ten billion dollars on-book and one point one billion dollars 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 dollars. GAAP revenue was up by 34% year on year to 747 million dollars. The growth was primarily due to the increase in our active user base and deeper paid user penetration. Garena adjusted EBITDA was up by 17 percent to 430 million dollars.
Returning to our consolidated numbers, we recognized a net non-operating income of 66 million dollars in the second quarter of 2026 compared to a net non-operating income of 83 million dollars in the second quarter of 2025. We had a net income tax expense of 250.6 million dollars in the second quarter of 2026 compared to a net income tax expense of 144 million dollars in the second quarter of 2025. As a result, net income was up by eleven percent year on year to four hundred and fifty-eight million dollars.
Casey Ong – Investor Relations
Thank you, Forrest and Tony. We are now ready to open the call for questions.
Q&A Session
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 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 Chowdhury with HSBC. Your line is open. Please go ahead.
Q1: Piyush Chowdhury – HSBC
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 the 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? And should we expect Shopee margins to improve, or could there be volatility in the second half due to seasonality? That is the first question. Secondly, can you give us an update on AI initiatives? Last time, you mentioned an AI shopping assistant for buyers. How have the pilots been, and for sellers on your platform, what initiatives have you taken and benefits observed?
A1: Management
Thank you. 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. The trend continues in the coming quarter. The growth has been doing well across our markets in Southeast Asia, Taiwan, and also Brazil. If we look forward to the full year, we remain well on track and confident of achieving our full-year growth outlook of around twenty-five percent. That said, we want to make sure that we also anticipate potential headwinds as well. As you can observe, many of our markets have a weaker currency against the U.S. dollar. We also have a higher base. But again, we still believe that we’re able to achieve the guidance we gave before of around 25.
In terms of investment, on the few initiatives that we shared before – the bids, the procurement, our logistics, etc. – in general, I think it’s more about the unit economics. For our content business, which we shared we invested in for some time, if you look at the unit economics, it’s as good as the platform already. The new initiatives, although we’re doing the investment phase, we do see a positive trend on the economic improvement. In general, what we’re doing is less of a very capex-heavy investment. Even with the procurement, we usually take a capex-light approach. We don’t own the procurement centers. Usually, we rent a place with relatively light capex to enable the growth there. In terms of the margins, I think we shared our full-year ambition of achieving one billion in adjusted EBITDA.
On the AI side, we’re doing quite a lot of work over the past few quarters. Both on the buyer and seller side, as you mentioned, we are launching the IM assistant for sellers in quite a few markets. Essentially, instead of the seller talking to an account manager, the IM, as we call it, is a digital assistant that they can talk to, which can help them answer many questions or execute what they want to do with their shops. This is also available 24 hours, of course, compared to account managers usually not being available at that time. And this is just one example of what we’re working on with sellers, among many others. On the buyer side, we spend a lot of effort on helping ads have better conversions, which we track our conversion improvement over time. But also just general conversion for our search and recommendations. We’re rolling out our new GenAI algorithm, a generative algorithm for recommendation and search, which gave us a lot of data. We’re also doing a lot of work on AIGC on 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, and many other work we are doing. I’m just sharing a few on top of my mind.
Operator
Your next question comes from the line of Alicia Yap with Citigroup. Your line is open. Please go ahead.
Q2: Alicia Yap – Citigroup
Good evening. Thanks for taking my questions and congratulations on the strong set of results. I wanted to follow up a little bit on the e-commerce, Shopee question. Can management elaborate a little bit on performance this quarter and also the profitability trend across Taiwan and Southeast Asia? And also the latest competitive landscape there. On your guidance, I know that you mentioned the twenty-five percent is unchanged for the GMV growth. So in the case that if the GMV were to further exceed the guided growth rate, is that suggesting that there is also further upside on the EBITDA for the second half? And on the fulfillment investment cycle, just wondering, where are we in the timespan? 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?
A2: Management
Across the markets, we see relatively good performance, solid growth and profitability. We do observe the competitive situation to be relatively stable at this point in time, and we are able to maintain our market share in certain markets, and to gain market share as well over the quarters, for Southeast 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. Regarding the balance between growth and EBITDA, it’s always a question of what’s the best balance between the growth and the EBITDA, and I don’t think there is a simple answer. There, I think, is something we always observe: 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.
At this point in time, we have been saying that the situation is relatively stable. So the main driver of how the balance works is the market growth rate for the rest of the year, and how much we can improve our efficiency internally. For the fulfillment, we believe there’s still a lot of room for improvement and a lot of work to do here. I think right now, both in Southeast Asia and particularly Taiwan, we’re still ramping up the fulfillment sizes. For example, I think we shared that our fulfillment grew more than twenty percent quarter on quarter in quite a few markets. But still, if you compare the size of our fulfillment with some of the other players in our markets, especially in Brazil, or compare with the sizes of the peers in other markets, we’re still much smaller in size compared to them. And with the good benefits we see from the fulfillment business, both on increasing the speed of deliveries and enhancing buyer conversions, and also reducing the effort of sellers, we do believe this is a good investment we’re taking for our platform.
Also, as I said earlier, our procurement spending has been improving, driven by the fact that we are able to optimize the cost structures. I think it’s a learning process and also takes time to optimize the operation in general. As we grow in scale, with more and more sellers joining the fulfillment business, we have a better scale advantage. Number three is also that there are more and more buyers who recognize the fulfillment business that we are offering. This gives us better economics over time. So essentially, we reduce the friction in how the item in our warehouse moves across the entire value chain. We can realize the cost, energy and benefit by running both the warehouse and value chain together. All these things help us to build the fulfillment business and help us gain the advantage as the overall platform. We run fulfillment in a very light-capex fashion. We don’t own the land, we don’t own the warehouses. When we start a new fulfillment center, we do very light capex to enable that. We are also experimenting with more automation in our fulfillment centers, which actually reduces our cost to run as well. But that’s still in the early stages. We will share more when we scale more of our fulfillment centers over time.
Operator
Your next question comes from Divya Kothiyal with Morgan Stanley. Your line is open. Please go ahead.
Q3: Divya Kothiyal – Morgan Stanley
The 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. Can we talk about how much more upside you think there is for this? And can you confirm that ASEAN e-commerce is now profitable? And is that something that has specifically driven the guidance upgrade for e-commerce overall for this year? My second question is on Monee. 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 reaccelerate to more healthy levels? And could you maybe just talk about any guardrails we should be mindful of in terms of NPLs and provisioning, especially as you’re acquiring new users?
A3: Management
When we look at the take rate, we look at it from multiple angles. One is how much the take rate is affecting the growth of the ecosystem, which is very important. When we look at that, that’s number one. Number two is how our price competitiveness compares. Essentially, after take rate, do we still maintain a similar gap of price leadership compared to other platforms? Number three is looking at the price of e-commerce on our platform versus the offline price range. Number four is looking at what it means for sellers’ profitability. I think we put all these things together.
In terms of continuation of the take rate, from what we observe so far, we have been seeing a very healthy ecosystem, even with the increase in take rate. The reason for that is that we reinvest a large part of the take rate into the ecosystem growth, as well as helping the seller to operate 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 markets, 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 ads, which we are able to penetrate more and more over time. Although you can argue that the fixed commissions probably have a pace of increase that will be less than we observed before, there is still room for us to increase the overall take rate – by both helping the sellers to operate more efficiently and reinvesting part of it back into the ecosystem, and also increasing the conversion potential from the buyer side. With all of these things together, we are able to grow that even more over time.
On the Monee margin question, if you look at the individual countries of the Monee business, if you look at the EBITDA-over-outstanding ratio, it’s relatively consistent. Our NPL has been relatively stable as well over time. I think typically when we operate, we look at product by product, by country, by segment, and the shift of the reserve is primarily driven by the mix of those things. For example, in certain countries – let’s say Thailand or Malaysia, where SPayLater grows faster than the rest – the blended rate is lower, and when you mix it together, it reflects in the overall numbers . For example, some of the off-Shopee SPayLater lending growth, which is quite meaningful – more than twenty percent of the total SPayLater already, as we shared in the opening – has naturally lower rates compared to the on-Shopee SPayLater. Similarly, when we penetrate more to prime-segment users, which naturally have slightly lower interest rates, etc. And all those growths are intentional. And as you observe from the numbers, it does require some investment. Sometimes when we grow into the segment, it does mean that we’re able to grow the outstanding a lot more, but we’re spending lower on acquisition compared to the premium segment or countries or products we focus on. So we actually see this as a positive movement rather than negative news. That view is very simple. We want to maintain a stable NPL for the segment, the product, the country when we look at it. And when we grow new segments, new products, new countries, we want to make sure it brings a positive return on assets to us. That’s why, as a consequence, we always see that our absolute profit from Monee has been growing quarter over quarter.
Operator
Your next question comes from John Chui with Daiwa. Your line is open. Please go ahead.
Q4: John Chui – Daiwa
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. I think Forrest also mentioned in his prepared remarks that the ad take rate was pretty strong for us. A few reasons, but I think it was up by more than 90 basis points. How much further upside do we see, and I think you guys also mentioned the advertisers seem to be more keen and taking up more of this? What are the AI technologies that we’re implementing to further improve this ad take rate? And how much more room do we see? My second question is on Monee. I’m looking at your move into Brazil. I think you also mentioned in the slides that Monee’s going to launch a standalone app in Brazil. What will be the strategy? Should we expect something similar to the Southeast Asian market?
A4: Management
Thank you. On the ad growth, we do see pretty good growth on the ads, as we shared in the remarks. I think there are a few things helping ad growth. I’m just listing some examples. One of the things is smart launcher, which is when we compile a personalized launcher for a buyer together with ads, so we enhance the seller’s ad traffic and increase purchase conversions. Another example is we have the Shopee GMV Max Smart Diagnostics tools. Essentially, these AI technologies, reports, and tools help the seller analyze how to have better return on the ads. It leverages AI capability to analyze the ad performance and improve it. We also have an in-depth feature that essentially allows the seller to view the number of shoppers in each stage of their purchase journey and how shoppers move between stages. This gives them a more robust, algorithm-driven solution. And on top of that, there’s also quite a lot of fundamental improvement on the algorithm for the ads – on how we can match the buyer’s intent to the advertised product better. I think that’s where the AI-based algorithm, the GenAI algorithm, helps quite a lot when we come to the matching.
The other part is the content presentation. We are using a lot of AI tools to create better personalized content for the user when they see the ads. In the coming quarters, we still see meaningful potential to increase the ad take rate. Given that many of these are not yet fully developed, we can see meaningful optimization potential while we are doing more experiments and optimizing the algorithms further in the coming quarters. For Brazil, we do believe that there is big potential in Brazil. We are seeing better growth in Brazil for our lending business in the past two quarters. We are launching an app which is similar to the ShopeePay app in Brazil, but with a SCFI license, which means we will be similar to what Mercado Pago or other players in the market can offer. We believe that Brazil is quite a big market for financial services, which is proven by other players in the market. With our e-commerce user base, our e-commerce data, and also with our better credit-scoring algorithm, which we customize for the Brazilian market, this allows us to broaden our products 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 we can capture just by doing the right product structures, integrating the right data in our platforms to better score users, and also with the license we acquired, which is as good as the others already.
Operator
Your next question comes from Navin Killa with UBS. Your line is open. Please go ahead.
Q5: Navin Killa – UBS
Hi, good evening, and thank you for the opportunity. Two questions for me. Firstly, on the e-commerce business. So obviously we’ve seen the margins kind of stabilize over the last couple of quarters, after inching down through the later part of last year. If you could help us understand the path, the time frame, and how you get to your long-term margin. That’s the question on long-term margin evolution for e-commerce. And secondly, on Monee, you did mention, for example, that the average loan size is up some twenty-one percent compared to last year. As your loan size increases, does the credit risk also increase? Or, if I could also just understand what the duration of these loans is, to get a better sense of the credit risk being managed with a larger loan book.
A5: Management
We still believe that three percent is quite within our reach as a percentage. In fact, some of the markets are well above that. 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 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 worth balancing all the time. But if you look at the numbers, the path from where we are to two percent is relatively straightforward. Now we are at zero point six seven percent, and we’re talking about getting to one-plus percent to begin with, and part of that will come over time. We don’t need to invest so much in many of the programs we’re doing right now; they will mature over time and we invest less into them. Part of that comes from our fundamental cost-structure improvement – for example, our logistics and procurement cost-structure improvements over time – and better figures from either ads or other forms. I think if you put those numbers together, we are really not too far, and we have done this in some markets already.
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 new prime-segment users who naturally take bigger ticket sizes. Part of that is also our country expansion. Some countries we’ve grown more recently, faster than the others, and they have higher income levels in the market. With all that, we do see a stable credit risk within the country, within the segment, within the product. So we didn’t see any correlation between the increase of the outstanding per user and the increase of credit risk. The duration of the larger loans depends on the different countries. Some can be as long as 18 months, some can be 12 months, etc. But that’s a relatively small percentage, for very good prime users, or for some specific lending products like offline motorcycle loans that require a longer period.
Operator
Your next question comes from Jiang Xu with Barclays. Your line is open. Please go ahead.
Q6: Jiang Xu – Barclays
Thank you so much for taking our 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 2026 EBITDA of over a billion. 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. I was hoping you can talk about the drivers behind that. 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? My second question is back to Brazil. Competitors in Brazil have talked about the momentum they are seeing by lowering the import tax rates there and lowering the free-shipping threshold. But that clearly hasn’t stopped you from growing very fast. Could you just talk about your profitability outlook in Brazil in the coming quarters and years?
A6: Management
As you might point out, we shared the goal of more than one 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 the first half of the year. Of course, partially because of the growth of the market – the overall GMV base in the second half will be higher. We believe we still see quarter-over-quarter growth, so the second half of the year GMV base will be higher than the first half of the year. Part of that comes from the continued work on our initiatives. But again, e-commerce is a business where we adjust take rate and investment based on many premises, as I shared earlier – based on how we are optimizing the business, based on the overall business growth of each country, and also based on how competitive the market is.
For Brazil, I think the observation is correct. We still see that our growth is well above the market in the country, and if you look at the price competitiveness, we are still very price competitive, a lot stronger than the competitors in the region, even after their changes on the take rate and free-shipping threshold. So we believe that for the e-commerce business, the fundamentals still hold. It’s the price competitiveness of our assortment, the completeness of our assortment, the fundamental structure of cost-to-serve, and the experience of how buyers can discover the product on our platform. All those things help us to grow faster in the market. In Brazil, 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 e-commerce consumption with a growth rate that outpaces the market in the coming quarters.
Operator
Your next question comes from the line of Ranjan Sharma with J.P. Morgan. Your line is open. Please go ahead.
Q7: Ranjan Sharma – J.P. Morgan
Hello. Thank you so much for the opportunity and the invitation. Two questions from my side. Firstly, on Garena, we discussed the publishing rights. Can you also help us understand which geographies they should cover? And earlier in the year we talked about a possible Naruto collaboration coming back. 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 this quarter. What are the trends you’re seeing in delinquencies, and how does that affect your loan growth going forward? Thank you.
A7: Management
Hi, Ranjan. Thank you for your question. For the new publishing games, we especially talked about two games this quarter. One is Palworld Online, and since this game is our self-developed game, we’re going to publish it globally, and we probably will launch the game market by market and gradually. The plan will be a global publishing opportunity for us. And 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 markets we are familiar with, like Southeast Asia, Latin America, and Taiwan. And potentially we’re also going to launch the game in the Middle East and some more markets. So it is in the pipeline. The target launch time will be this year.
For the provision, it’s primarily driven by the loan mix. The higher provision is driven by two components. First is the growth of Shopee SPayLater, and the second one is the Brazil loan outstanding. Brazil, we have very good returns there, but it’s a high-interest, high-risk market. So the higher mix of these two components contributes to the higher provision you see.
Operator
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.
Casey Ong – Investor Relations
Thank you all for joining today’s call. We look forward to speaking to all of you again.
Operator
The conference has now concluded. Thank you for attending today’s presentation.
