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On 10 November, Sea reported Q3 2026 earnings, with earnings of US$8.6 billion, up 43% YoY, and adjusted EBITDA of US$931 million, up 29%. Net income rose to US$502.5 million while gross cash position reduced by US$800 million to US$9.5 billion QoQ.
Investors seemed to be in disagreement about how to interpret these results. The shares fell as much as 10% before market open, rose about 9.2% after the earnings call, and closed down 1.5%.
Here are six things that stood out to us.
1. Every extra point of take rate is going back into the defence
Shopee’s take rate continued to rise – from 14.6% in Q2 to 15.3% in Q3. A year ago it was 13.3%. Its EBITDA margin on GMV remained practically unchanged QoQ, standing at about 0.7%. Management said on the call that part of the monetisation gains would be reinvested in growth.
Shopee has been resolutely pushing its GMV Max automated ads system, turning ads from optional add-on into a toll for many sellers and categories. Management also mentioned that ad take rate rose by more than 80 basis points YoY.
In March, we asked whether Shopee could be willing to pull back on vouchers and let some market share go. Since then, group sales and marketing growth has gone from 34% to 64%.
The same quarter last year, Sea experienced share price slump after earnings, as take rate increased while EBITDA margin dropped. Last year there was no Monee IPO or Sea Cloud.
2. ShopeeVIP has become the main instrument of that defence, but is it a wrapper for subsidies?
A year ago, ShopeeVIP had 3.5 million members in three markets, and contributed to about 10% of GMV in Indonesia. The membership count has increased to 21 million, contributing to 25% of Shopee’s GMV.
The metrics Sea discloses (80% monthly retention, higher spend after subscribing) describe the pool of users – they do not, however, tell us how much the programme actually adds value to the platform.
VIP or membership programmes have been used widely by transactional platforms from Amazon to Alibaba. Getting clear attribution of the value of such programmes is probably hard.
3. Monee’s 1.3% might not be as worrying as it looks.
Monee’s loanbook grew impressively QoQ from US$11.1 billion to US$12.6 billion, while NPL rose from 1.0% to 1.3% in a quarter.
While this NPL is the highest since Q2 2024, the absolute figure of 1.3% is still very low for unsecured lending at this scale. Monee has been expanding consumer credit to more cohorts of Shopee users and more off-platform use cases, adding millions of 1st time borrowers almost every quarter.
Management also attributes the NPL increase partially to Thailand and Brazil. Both are markets where Monee is rolling out new products.
We think Monee can bring NPL down when it adjusts the credit model across a few more cycles.
Momentum Works Consumer Credit in Southeast Asia report is coming out next week, where we will dive into these topics in depth.
4. A Monee IPO will turn internal allocations into related-party terms
Sea says Monee could list within one to three years, emphasising that the synergies with Shopee will stay.
When Monee goes public with (minority) outside shareholders, the checkout promotions, SPayLater merchant pricing and shared AI infrastructure would need prices that hold up at arm’s length, set out in a prospectus. Alibaba and Ant went through this: from 2014, Alibaba took 37.5% of Ant’s pre-tax profits under a profit-sharing agreement, later replaced by a 33% equity stake.
The flows between Shopee and Monee will need a formula of their own. Investors might also get a chance to more closely scrutinise Shopee’s own profitability as an ecommerce platform.
For this quarter, Monee’s S&M costs doubled to US$335 million. In Q2, management attributed the gap between Monee’s revenue and profit growth partly to promotional loans to new borrowers. Many of those promotions are offered at Shopee’s checkout, where they lift Shopee’s conversion. We discussed this in May.
5. Management is optimistic but very cautious when talking about Sea Cloud
On the Q3 2026 call, most of the (not many) questions from analysts were about Sea Cloud. Analysts are well aware that communications with investors about this new venture had been scant.
Management was cautious about the responses – emphasising again and again that Sea Cloud is still in early stage and the Group has confidence about the opportunity.
A year ago, Forrest Li said Sea would focus on applications and was “not going to build data centers”. Q3 2026 capex was about US$550 million, against US$135 million a year ago, mostly on compute and logistics.
The Jensen Huang investigation, revealed over the last couple of days, might have contributed to Sea’s management’s caution in the call.
Sea said it had signed no enterprise customers yet.
6. The October letter set the agenda for the call
Forrest Li’s internal letter announcing Sea Cloud and the Monee listing was filed to the SEC on 20 October, three weeks after the quarter closed.
The call featured only a total of 8 questions from 4 analysts, mostly about these two announcements. None asked about credit provisions, economics, or competition against TikTok Shop, which launched a new standalone ecommerce app last week in Southeast Asia.
It would have been more fun if Alex Yao covered the company.
