Sea Group announced their Q4 2025 earnings yesterday (3 March 2026). After the earnings call, Sea Group’s stock price plunged almost 27%, before closing 16.53% lower than the previous trading day. The market was probably concerned about the profitability in the current competitive landscape in Southeast Asia – although we are not sure whether the concerns were about the right underlying causes.
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. Two questions from me.
The first question is on Shopee. Can you provide more details on how you plan to achieve the target growth in 2026 while maintaining at least flat year-on-year absolute EBITDA? What assumption is specific are you making regarding the competitive landscape? And given a trajectory of lower year-on-year margin potentially, what are the key investment areas, and how long should we expect the investment to last? That’s question number one.
Question number two, this will be on Monee. The loanbook grew very strongly, closing the year more than 80% year-on-year. Can you elaborate on the key drivers of this strong performance? Was it primarily driven by new products, new markets, pricing, or stronger demand? Or how should we think particularly about growth in this year 2026? Likewise, how should we think about the EBITDA margin trend going forward as well for the segment?
A: Chris Feng, President of Sea Group:
If we start from the Shopee side, the first question, I think as Forrest mentioned in the opening, is that there are a few areas we are investing for growth. If you start from Southeast Asia, essentially there are two core elements of this. The first element to increase the share of wallet of the core users. Second, it’s to increase the buyer base.
If you start from the first one, the thing we are doing essentially is kind of similar to what we did before, but further enhanced in 2026 is to have better user experience through our logistics. For example, the instant delivery, same-day delivery, some users used to have a bad experience. On top of the general improvement of our delivery qualities, if you are in Southeast Asia, if you try our services, you will see a general faster delivery and better reliability. Over this year, we will continue to do that. The second part is to have a bigger fulfilment network. And I think this will both reduce the speed (note: time) the user will receive items because we can move the items closer to the users before the user actually ordered the items. I think in Southeast Asia, most of the countries have sort of concentrated in the capital regions. So if you are out of capital regions, having a warehouse closer to your area is a big speed improvement; but not only the speed, but also the reliability of the services and also helping the seller to offload many of their work. Essentially, to make it easier for sellers to sell on our platforms.
The other area is to increase the wallet share of the VIP programmes: not only offering better service through our own platforms, we are working with many different external partners to offer benefits to the VIP users as well. You probably can see that we work with OpenAI ChatGPTs, and we are also working with many local partners in different countries, and there are many global and local partners pending in the process. Again, this is on top of the many other things we are doing, for example, the price initiative to make sure that our platform is always price competitive. We are also continuing the effort on the content side, our content share of businesses has been growing over the years, more than 20% already, and I think that trend will continue, not only for our own contents, but we work with external partners like YouTube, like Facebook, and apps we’re discussing more collaboration for the external content providers for this. But again, this is a broader segment of increasing the wallet share for our core users.
Another part of the effort, as I shared earlier, is to increase the buyer base. I think if you look at where we are right now versus let’s say a year ago, one of the differences you will see is that our gross unit economics has been improved meaningfully through the ads effort, also part of the commission effort. We have essentially a higher take rate on the topline, but also we reduce our cost to serve, essentially, for the logistics, and payment, essentially is the raw cost to serve. With a better gross margin, there are more and more users that can serve in a profitable way, so this enables us to be able to essentially serve a larger group of users and what we are doing in 2026 is essentially to reach out to these users, to convert them to our platforms and hence enhance the overall the MTUs and the MUs for our platforms. So that’s kind of like a broader theme of what we are doing in Southeast Asia.
In Brazil and Taiwan, many things are similar, but I just want to highlight a few things that are specifically for the market as well. In Brazil, we have been operating with a much more efficient logistic network compared to what’s available to the other place in the market, with much lower cost. We are able to run the businesses profitably with, you know, much lower basket size. With this, we would like to essentially on top of this to serve the high-end customers over time in a higher basket size categories. In order to do that, there are essentially 3 things that’s important. One is to increase the speed of delivery. I think as far as mentioned in the opening, we have reduced the shipping speed over time meaningfully, like if you compare Q4 2025 versus Q4 2024, you will see one to two days difference on the specific time in Brazil. I think that’s very important to make sure that the user gets the item faster with lower cost – without impacting the cost, that’s very important. The second one is the fulfilment network that we’re building in Brazil. We’ve been renting up this in the past quarter, but 2026 is the real time that we’re going to grow this much larger. I think we spend quite a few months to get all the sort of details right, system right, get the location right, get the process right. I think it’s time to actually grow this much faster. The third one is to make sure we have all the right sellers fulfilling particular categories, like for example, autos, electronics et cetera, but also for the more sellers, brand sellers coming to our platform. I think with all the three elements coming in place, I think this will enable us to reach out to a new segment that we are not able to serve in the market. I think in Taiwan, we have a kind of quite a special network we build for our deliveries. I think in order for us to capitalise on that, we also start building the fulfilment part as well to have an integrated operation – it should not serve just for fulfilment, but it’s an integrated operation with our local networks. So we are able to serve the users in a much lower cost end to end, but also faster speed compared to what the experience was before with other networks in the market.
Yeah, so all in all, the things we are doing and many of these have the investment cycle as well. If you look at the fulfilment network that in a period of time we’ll build up, but you know that there’s a clear investment cycle that comes with it, rather than there is an ongoing perpetual investment. For example, if you look at the faster deliveries we’re building, I think in a period of time that we will scale the delivery fleet etc. It’s a size of fleet separately from the typical SPX services. For example, if you look at the VIP programme that, in a period of time, we will kind of educate the market, but also attract our partners as we get everything in place. I think the cost structure will be a lot better, and I think it’s been proven in many other markets as you probably are aware.
If you look at the sort of the overall profitability margins, our Q4, EBITDA margin is around 0.55, as you can see, compared to the year before 2024, we are actually improving on the margins. If you look at over the years, in the early part of the year 2025, we guided the market to grow around 20% for the toplines. Over the years, we actually realised that we are able to grow the businesses much faster. We end up with much higher than that. If you look at Q4 growth, we grow much larger, much higher than 20%. I think essentially over the years we realise that the areas we are able to drive the market to grow and we also learned that they are different levers that we can pull to drive the market growth. And in 2026 essentially is an extension from where we are in Q4 2025 and if you look at sort of like Q4 2025, if you look at the end of the year 2026, I do believe that we are able to expand the profitability margin there as well. This is a trend that can continue over the years. And I think we talk about 2 to 3% margin for ecommerce businesses over time. I think the ability is still clearly there. And we will demonstrate it to the market over the years. At the same time, we also believe that the market potential is probably larger than many projections before. And by 2026, as we shared earlier, we are able to grow around 25%. And of course, we will observe how the market behaves over the years and over the quarters. I think the core thing for the businesses is that we are very confident that there are things we can do to drive the business and the things are within our control and the thing we are doing has a clear investment cycle that we can drive over time. Regarding your question on the competitive landscape, I think what we observe is relatively stable competitive landscapes across most of our markets. Yeah, and I think we didn’t observe anything very different from what we saw from last quarter. I think that’s sort of a question for the ecommerce side.
In the Monee businesses, there are multiple drivers driving the growth. On a broader scale, we see that there are different phases of our businesses that we rolled out in different markets, and also different products we rolled out in different markets in different places. For example, the early market that we started the financial business in was Indonesia, so clearly Indonesia was the first country that grew much faster than others. And then over time, we started the services in countries like Thailand and Malaysia etc. So this kind of country will catch up on the growth. And the initial phase of the new market clearly will grow faster than the markets that have been there for quite some time. Another example would be like Brazil, essentially it’s our latest market when we launch many of our products, and Brazil is also in a pretty high growth phase as well.
There are other drivers on the product side as well, in most of the countries we started with SPayLater, which is our consumption loans. So, you know, that’s the first growth driver. Then later we rolled out the personal cash loans, we also rolled out the off-Shopee, and then the cash loans and off-Shopee will be the growth drivers. So if you look at the growth, the on-Shopee side we still see more penetration possible on Shopee, and even within SPayLater, we have differentiated products for different users, especially for the higher income segments, we offer differentiated products with longer tenures by the lower interest rate etc. to those segments. So we still see the opportunity to grow these segments. And for the off platform lendings, I think we shared quite some in the opening as well. For example, in some countries, like in Malaysia, we see the off-Shopee SPayLater has been 30% of the overall portfolio already. And I think all these are driving the growth for our loanbooks. Regarding the margins, I think the margins influence quite a lot by the country mix, product mix and also whether we see a good opportunity to acquire users. I think it might fluctuate a little bit quarter to quarter. But the fundamental of this is how our risk management capabilities are from what we see. We have seen very stable risks. If you look at a particular product for a particular market, the risk is very stable for us. You can see this from our NPL numbers as well. And we tracked this very closely internally to make sure that we don’t grow the loanbook because we want to grow the loanbook on the topline. We want to do it very prudently. At the same time, we actually upgrade our risk management models over the years, especially with many of the new AI technologies. We are experimenting with the new risk model with the transformer structure as well to do a sort of long sequence data training fitting to our model to utilise much of the ecommerce data that we are not able to use in the traditional risk modelling, and it has been showing us very good performance. And so many of these will help us to manage our risks, to reach out to the user base we’re not able to serve before, so that we can grow the loanbooks over time.
Q: Piyush Choudhary – HSBC:
Hi good evening, thanks for the opportunity. First question is on Shopee, you have elaborated on ubiquitous investments in the bucket, could you also elaborate how long these investment cycles could last in the context of how we should think about margins for 2027. And what are likely the deliverables from your partnership with Google to deepen AI powered solutions for Shopee?
And second question is on Garena, could you talk about the outlook for the booking growth in 2026 in the pipeline for any IP collaborations which you can share? Thank you.
A: Chris Feng:
For the investment cycle, as I shared earlier, I think for different initiatives, there are different investment cycles, and also for different markets, there are different investment cycles. So it’s a bit tricky to generalise it from a top-down perspective. But as we guided in the opening, we do want to make sure number one, the total probability in the absolute numbers in 2026 is better than 2025. And also, if you look at our probability levels, I do believe at the end of the year it won’t be worse than Q4 2025 and it should be able to grow over the year. We are not providing guidance, let’s say for FY2027 yet, but you know as for medium to long-term trend, I think the 2-3% EBITDA margin is well-achievable based on what we see so far. It’s in a way in our choices on how much we want to draw on the margins versus the growth levers on our hand. From what we see, we don’t have any concerns about that.
In terms of the partnership with Google, we are still in the process of developing the product. I think it shouldn’t take too long. When we have the product ready, I think we will be able to share with everyone. Working with Google for many years, Google Shopping, Google Ads and many other things, YouTube as well, so this extends our partnership.
A: Forrest Li, CEO
Regarding the outlook for Garena, at this moment, we still see the double-digit growth for Garena for 2026, and in terms of the collaboration pipelines, as we shared, we are super excited and motivated by seeing the success of the collaboration with IP such as Naruto. Actually this year we are going to extend that IP collaboration, and the deliverables might be around Q3 based on our current timeline. And we are also actively working with other potential IPs and collaborations. Meanwhile, this year is a big football year for the FIFA World Cup. We realised that the global football community has a very very high overlap with our global gamer community, so during the FIFA World Cup time, we’ll be having a lot of football-related promotions as well.
Q: Alicia Yap – Citigroup:
Good evening management, thanks for taking my question. Two questions here. Number one, could management provide some insights into the retention and also the renewal rate for your VIP members subscription programme? And then, furthermore, if you can give us how the VIP members influence the different purchasing frequencies and also the preferred product category? And also are there any differences between the customer profile across different countries and how does this affect your strategy?
And the second question is on AI. Can management share your industry priority, and how are you prioritising investments between the ecommerce main part and the AI amid the latest competitive environment and also the importance of the AI initiative, so if management can share how Sea is leveraging your synergies between your three core businesses to strengthen your competitive advantage and also to enhance your ecosystem value. Thank you.
A: Chris Feng
For the Shopee VIP programme, it has been growing quite a lot over this year’s past few months. In some countries, it’s been more than 15% of our total GMV – for the VIP members. I think we do believe this will grow further to double or triple from where we are right now.
The retention has been pretty good actually. One of the core challenges historically for similar programmes in origin is the payment success rate. When they roll from one month to another, many people drop off, simply because there’s no credit card available for many of our users in the region if you look at the more credit card market. I think we solve this by working closely between Shopee and Monee, to enable a smooth payment process for our VIP programme. As a result, our subscription rate has grown from 40% to 70% for Indonesia over the past few quarters. This is a big achievement for us in terms of how we can retain the VIP members on an ongoing basis. For most of the VIP members, if you look at the average purchase, we do see much higher frequent purchases and some with higher baskets as well. Overall, I think if you look at the general numbers, the VIP users spend 30-40% more on average. For different markets, actually we are seeing quite similar behaviours. The differences in different markets are mainly offerings, because there are different preferences in terms of user behaviors and what people care about. So we actually tailor the VIP offerings customised for each of the local markets. I think that’s probably more different than other user behaviors.
On the investment side, if you look at our different businesses, our Monee business is a very purple business. For most of the new user growth, or for most of the initiatives, it comes with their quite positive customer lifetime values. So in a way, every initiative has a positive ROI. I think if you look at the ecommerce side, we do spend quite a lot of effort on AI – I think you mentioned AI investment there. For investments on the ecommerce for AI, we also looked at the positive return of investments across the initiative. For example, if you look at one of the areas we spent on AI is our search recommendation and also ads systems. The uplift on our ad take rate is a consequence of many of our AI efforts. For example, how do we actually expand the description for our products – we can understand our products but how can we expand the queries from the users and understand user intention better. Recently we also rolled out a multi-model search engine in our platform as well so users can search a picture plus a long description and we are able to serve that just similar to how Gemini and ChatGPT will do. I think all those AI investments have a clear ROI. We also spend quite a lot of effort using AI to help our seller. For example, if you go to many of our countries, you can talk to the sellers with the help of AI already. So we built an AI chatbot for our sellers. They can customise for their own purposes. This will help the seller to reduce their manpower and not only reduce cost but also have better upsales for the buyers. And we also have tools for the sellers to create videos and featured descriptions for their products et cetera. All those typically come with fairly positive investment for our ecosystems. For the synergies across our businesses, clearly there is a lot of synergy between ecommerce and financial services. The financial services are essentially leveraging a lot of data, a lot of user behaviours from Shopee to be able to risk assess the users. As I said earlier on the previous questions, we still believe that there’s cycle room for Monee to penetrate the Shopee user base there, not only for credit, but also for our banking businesses, insurance businesses, our payment businesses, et cetera. Our Monee business also works with our game side, to help the game on the payment procedure as well. There is a collaboration with gaming business from Shopee as well in terms of the merchandising, in terms of the user acquisition side. So there are different types of collaborations among our businesses.
Q: Divya Gangahar Kothiyal – Morgan Stanley:
Thank you very much for the opportunity. My first question is on the Brazil side. Could you comment if you expect GMV growth in the bill to accelerate this year, given all that we are doing on the fulfilment capability? What kind of impact will that have on our AOVs, are the AOVs still significantly lower or 1/3 of the market leader and what kind of gap do you expect to be able to cover with this fulfilment uplift? Could you also comment on what are the penetration levels for Shopee PayLater, SParcelado? Should that also see a significant uplift this year?
My second question is on the content ecosystem that you alluded to. Could you comment on where you see the ecommerce content ecosystem flattering in ASEAN specifically? What are the unit economics now versus shared ecommerce for us and how is the market share trending in this?
A: Chris Feng
For Brazil, we come with a pretty high growth rate in 2025. We do believe the growth will continue in 2026. We don’t have guidance for specific countries on the growth rate, but in general, we’ll see pretty good growth in the market, and we also believe that we’ll outgrow the overall market in Brazil. For the AOVs, we do believe that AOVs will over time grow, the gap with MELI, I think will still have, but I think we will narrow down the gap over time.
For the SPayLater penetration in Brazil, it’s still in a quite early stage honestly, I think we grow quite a lot in Brazil. I think essentially we started Brazil a lot later than other countries, and the penetration level in Brazil is still similar to the early time of where we observed in our early markets. We believe the trend will continue in terms of the penetration of SPayLater in Brazil in 2026, similar to what we observed in other Asian markets.
For the content ecosystem, we don’t think it’s flattening yet for our platform – I wouldn’t comment on other platforms – but for our platform I do believe that there is further room to grow in the coming quarters. The unit economics has been improving over years. Sometimes there is scientific fluctuation from month to month, but the general direction is that unit economics is still improving over time. I think the gap between the content ecosystem and the non-content unit economics will be narrowed over time. It would not be too much difference in the future.
[THE END]
Disclaimer:
This transcript was compiled by Momentum Works from the publicly available earnings call of Sea Group held on 3 March 2026. 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.
