Sea Group announced their Q3 2025 earnings last week (11 November 2025). The market has reacted negatively, sending the price down more than 8% in the trading day.
The main concerns investors have seem to be about the margins even with the raising of take rates to the merchants and brands on Shopee platform.
We will share our thoughts soon – but here is what we have captured from the Q&A section of the earnings call. You can find the prepared remarks by the management on Sea Group’s investor relations web site.
Q&A Session
Q: Usjima Pang Vittayaamnuaykoon – Goldman Sachs:
Hi, management. Thank you very much for the opportunity. Congrats for the great results.
2 questions from me, both on the ecommerce side. Number one, on your growth guidance of more than 25% year-on-year for 2025, what do you bake in, in terms of the driver and competitive landscape? What does it mean for your margin trend and how should we think about this trend carrying into 2026? That’s question number one.
Question number two, just to have a good understanding of the margins. So, the margin trend for ecommerce came down to 0.6% in the quarter, despite higher take rate. Can you help us understand where the investment area is, whether this is in the fulfillment, as you’ve mentioned, or is there also something else that we should be aware of? Are these more fixed or variable? And how long and how much should we expect this investment to be?
A: Chris Feng, President of Sea Group:
Yeah, in terms of the growth assumption, I think we are kind of half into the quarter already. It’s basically based on what we see so far in the market on the momentum and competitive landscape. Pretty much we took off what we saw so far as we came into the quarter. And regarding the margin forecast this year, we do expect improvement of margin.
If you look at the year-to-year basis, as we shared before, we will see quarter-to-quarter fluctuations sometimes for seasonality reasons. So I think if you look at our year-to-year trend, I think we believe that we’re able to deliver the EBITDA margin as we shared before and also have an improvement year-to-year if you look at the yearly basis.
In terms of where we are investing, we mentioned in the opening, further investment to the logistics and fulfillment. Beyond that, we are also deepening our buyer engagement and wallet shares through, for example, our Shopee VIP program that we shared in the opening as well.
And all those efforts have been showing results, our buying frequency improved 12% year-to-year and average monthly active buyers increased 15% year-on-year as well, which contributes to our great growth, which is beyond what we gave in earlier this year, which is 20%. Most of these investments are less fixed. We take an asset-light approach, even coming to our logistics and fulfillment businesses. We don’t own land.
Most of it is just improvement of building the warehouses or for our engagement and our buyer engagement and wallet share programme. It’s also less fixed in the early days to get everybody to understand the program and join the program. But then again, it should be a quite popular program in other e-commerce platforms across the globe.
Q: Divya Gangahar Kothiyal – Morgan Stanley:
My first question is on your new market entry strategy and framework. Could you explain the rationale behind closing some of the cross-border operations in LATAM and the reentry into Argentina? What milestones would you monitor for Argentina before making it a localized business, and is this part of your 2026 priorities?
My second question is on market share. If you can comment on the market share in ASEAN, how have they moved in the third quarter? And also if you could comment on Taiwan. Do you foresee increasing marketing spends and investments in Taiwan next year? We’re also seeing a bigger contribution from cross-border with Taobao getting more popular there. So if you can comment on the market shares in ASEAN and Taiwan, that would be helpful. Thank you.
A: Chris Feng:
Regarding the new market, we are very highly selective on new geographic expansions. Our initiatives will be very early stage testing in nature. The reason we look at Argentina is expansion of our capabilities in Brazil on our existing cross-border infrastructure, and the operational experiences we had already built in Brazil.
The objective across the regions is additional channels for our sellers with minimal increased investment. At the end, we will take to learn about the market without sort of coming into the market at this point in time.
Chile and Colombia, to wind down our cross border operations in Chile and Colombia as part of our ongoing review of our global business priorities to ensure our resources are in line with our long-term strategy in the region.
In Latin America, we will continue to explore the opportunity to serve consumers and businesses there. In Latin America, Brazil is the largest one where we are, as you mentioned, and Colombia and Chile are relatively smaller markets and also relatively more distant from Brazil.
Regarding the share in South Asia in quarter three, we shared our growth has been above expectations. And across the region, we actually do believe that we are gaining market shares in Southeast Asia.
For Taiwan in particular, the cross border to Taiwan has been, in general, small given the complexity of the buyer experience on the cross-border side. So we are less concerned about the players selling from overseas to Taiwan as a potential impact to our business.
impact to our business. If you look at the recent quarters, we grow very well in Taiwan. We grow double-digit, which tops the overall market in Taiwan.
Q: Alicia Yap – Citigroup:
Hi, good evening management. Thanks for taking my questions and congrats on the solid results. Two questions. One is if you can elaborate a little bit more on the overall competitive landscape in Southeast Asia. Are there any countries that we are seeing more intense competition lately? And also, you know, any countries where you see peers are growing faster than Shopee? And do you anticipate the live streaming peers to start shifting more of the traffic and also the purchase frequency to the shop-based marketplace model in addition to the live streaming? If that is happening, you know, what could be the potential threat to Shopee?
And then the second question is, should we assume the investment cycle this time around is similar to maybe a couple years ago where there could be some step-up investments that are more front-end loaded? With GMV growth and share growth to follow through later, especially for, for example, you need to ramp up your fulfillment, you know, capability in some of the markets, which will yield better results later on? So could you clarify if this time the investment cycle could be similar to what we saw last, I mean, two years ago?
A: Chris Feng:
On the competitive landscape, what we see is a relatively stable competitive landscape. I think as you can probably observe as well yourself, we didn’t see a particular market or another. That has been a general trend across the Asia markets in terms of the intensities or other behaviours of competitors.
Whether the live stream peers focus more on shelf-based models, I think it’s not something new, I think it’s something we have been trying to do for quite some time.
As you probably see from China as well, etc. We do see the nature of the platform is different. The percentage of share of commerce is relatively consistent from what we have observed. Also, if there is too much traffic pushing towards that, there is potential of impacting the overall app behaviour and user retention.
Anyway, that’s kind of similar behavior you will see in China and South Asia. We wouldn’t see that as a new thing impacting the competition in a meaningful way.
In the investment cycle, the short answer is probably not. It’s quite different from what you see two years ago in terms of the investment into the content ecosystem if you remember that. What we are doing now, the continuous investment to strengthen our competitive moat, pretty aligned with what we are continuously doing every quarter. We would like to invest into better logistics, and now we are extending the fulfillment network as well.
It’s actually, in a way, not completely new. It’s a capability we have been trying to build for a period of time, and now we feel it’s a good time to scale it even more. I shared just now, as you probably imagine, and also as we grow the business, it will help our growth as well because… This will help us to lower the overall cost to reduce the delivery time for the user and many of this contribute to our growth faster than we expected earlier.
If you look at the VIP programme, yes, it’s an investment in the early days, but we also see that with the investment, the users are willing to spend more with the platform. I think Forrest shared that the users purchased 40% more than before they joined the VIP programme. So, in a way, that’s a big front load investment. At this time, it’s more an ongoing investment programme to strengthen our competitive modes, as I shared earlier.
This will impact general growth as we invest.
Q: Piyush Choudhary – HSBC:
Hi, thanks for the opportunity. Congratulations for great numbers. Two questions. For Shopee Logistics, what percentage of orders are now fulfilled by SPX within Asia and Brazil? How has it changed over the last one year? How much of an increase in your cost of services is driven by this logistics investment and the outlook for this cost item?
Secondly, on Garena, can you share the outlook for Free Fire for 2026 after a successful 2025? Any planned IP collaboration, new game launches? Thanks a lot.
A: Chris Feng:
On the SPX, I do believe we shared before, more than half of our orders are delivered through our SPX, and the percentage has been increasing, let’s say, overall over the last year as we scale our network.
Our cost per order has been continuing to improve year on year. I think that contributes to our growth as well, because this lowers down the cost buyers have to pay to receive the orders.
But I also want to highlight, not only do we reduce the cost of our SPX deliveries, but we also increase the speed for our SPX. I mentioned that in Brazil, we also reduced buyer waiting time by 2 days. In Asia, we also reduced delivery time quite meaningfully year-to-year as well, by introducing the faster shipping channels.
If you look at three countries, we have instant delivery now. We also have the same day deliveries, but also the normal channels. I think these all contributed to our growth.
A: Forrest Li:
Garena Outlook, well, we are very excited to observe the momentum. I think this is a new turnaround after the COVID-19 pandemic. And in 2024, we have a very, very high growth, continuing to 2005, which is this year, accelerated compared to last year.
So the momentum is still very, very strong, so we remain very positive for 2026, the user base will continue to grow.
Offerings will be more, like they first said, and the user experience will be more immersive. Specifically this year, through very, very successful IP collaborations, I think Garena, as an organization, unlocked a very important capability.
How to continue to work with global IPs and deliver the best content, unique experience to our large user base? Whatever we put on the platform, like today, more than 100 million gamers from the world will be able to experience that, it’s a very, very powerful distribution channel.
We will continue to work with more IPs, but first of all, we’re also quite selective as well.
We’re really excited for the AI’s potential for future growth. At this moment, we are in the process of a detailed planning of what we will have ready to share to the market. We will have a better sense of what will be the specific outlook for Garena in 2026.
We always have new games, and we’re very, very strong and curious to expect new games and we have several games in the pipeline, or already live in some markets. And at this moment, I think it’s premature to project what is occurring in terms of the user base.
I don’t think even if we have any new games at an early stage it will make a significant impact in terms of the user numbers and the revenue and the financial side.
We are going to put in a lot of effort. Through the new games development, we also learn about the differences between some new markets we haven’t been to. This remains a very good opportunity for future growth. So we’re going to have to wait until the right time to share, to keep our shareholders informed.
Q: Jiong Shao – Barclays:
Thank you very much for taking my questions. My first question is on the VIP membership. I’m trying to get a better understanding of that program. It’s really a great thing to do. I suspect in the near term, I was wondering what the unit economics would look like for the members, and what do you think eventual VIP member penetration should be in the region.
So the reason I obviously ask that is because gross margins for ecommerce came down a bit, quarter over quarter. I suspect it’s kind of negative initially. Is there a time frame to kind of reach a break-even for the members?
Second question is about AI. I think Forrest recently did some media interviews talking about AI might power the company to be one of the first trillion dollar companies in the region. I was hoping you can talk about what are some of the things potentially you may do or you won’t do because some investors are worried about massive AI CapEx with any kind of a new venture. Thank you.
A: Chris Feng:
On the VIP, we are still in a very early stage of rolling out the product. It’s only a few months, but we see a very good growth on the users. For quarter-to-quarter, we see a 75% growth in terms of members. In terms of GMV penetration, we are in the early stage, still in the teens, but I believe this can be a lot higher, probably similar to the percentage you see in other parts of the world.
I think for us to look at the economics, we would like to make sure that VIP members not only receive benefits because they are paid members and important core users. We also want to make sure that we work with our partners to bring the benefit to them as well.
For videos in Vietnam, we work with FTP Play. We also work with ChatGPT to offer free programmes to VIP members.
All those will help us to have good economics for this programme. But you are right, in early days, it does require some sort of investment to bring the user over. And we monitor very closely the retention rate. We would like the user to bring to the programme to have a good retention.
And in our early market, we see the retention improve, almost double from last quarter to this quarter, which is big breakthrough for us given in our markets, credit card is not a common payment method. In other markets people use credit card to make sure it’s a continuous payment. We are working on a way to ensure that the retention goes well, especially with our digital finance side through the PayLater programme.
A: Forrest Li:
On the AI question, yeah, I mean, as I shared in the interview, we are deeply excited about this. I think it represents a fundamental technological revolution which will create massive opportunities and supercharge to unlock values for people everywhere. I think it’s really exciting for the markets we are in, which hundreds of millions of people have been underserved.
We have seen that uplift in the last 10 years through the mobile internet revolution. And we have observed how much it makes it convenient to people’s lives. And of course, we are part of this transformation. We try to focus on the applications and how to connect technology to people’s daily life.
The future pattern of AI revolution, probably this transformation will be much better. So, we are very much open to do what we are trying to do. We are not trying to do what big techs are going to do. We are not going to develop large language model breakthroughs, we are not going to build data centres.
We are very much open to work with all the big techs and we have a lot of admiration and respect to how much effort they can make to continually have the breakthrough of technology and make technology more powerful and useful.
We are going to focus more on applications and how that technology built in Silicon Valley or anywhere in the world can transform a consumer’s daily life, like a small business in Indonesia, Vietnam, Brazil. That’s what we are good at.
We have a lot we learnt in the past decade. I think that it also makes us really excited. We are going to have a very practical and bottoms-up approach. And we are focused on seeing the immediate return and result.
As I shared in the opening, we are very excited to see some very practical use in Shopee, right, and how much this can help on advertising conversion, how to make product discovery beyond search, how to help sellers improve the best retention and conversion rate.
We believe with the continuous improvement of capability enabled by more advanced AI development, there will be more things we can do in day-to-day business, which makes a positive impact on people’s daily life.
[THE END]
Disclaimer:
This transcript was compiled by Momentum Works from the publicly available earnings call of Sea Group held on 11 November 2025. It is intended solely for informational and analytical purposes. While we strive for accuracy, the transcript may contain unintentional errors or omissions due to audio quality, accents, and real-time interpretation.
All spoken content remains the copyright and intellectual property of Sea Group. Please refer to the company’s official recording or transcript for complete accuracy and authoritative reference.
Any analysis, commentary, or opinions provided by Momentum Works are independent, based on our own research and perspectives, and do not represent the views of Sea Group or any other organisations mentioned.
You can also make reference to the following Momentum Works reports for more:
- Food Delivery Platforms in Southeast Asia 2025
- Ecommerce in Southeast Asia 2025
- TikTok Shop in the U.S. H1 2025
- Who is Shopee?
