SEA Ltd: Weak EBITDA Guidance but core drivers remain strong
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- 4Q25 group adj EBITDA of USD787.1mn (+33% y/y, -10% q/q) was ~6% below the consensus’ due to lower-than-expected Adj EBITDA from E-commerce and FinTech
- FY26F e-commerce guidance implies 30+% cut to FY26F consensus adj EBITDA for E-commerce of USD1.38bn, Consensus also likely to lower FY26F fintech adj EBITDA by 15% due to lower margins.
- SE is front-loading opex over the next 6-7 months to increase its wallet share and customer base. Maintain Buy with a lower TP of USD151 (prev USD175).
Group adjusted (adj) EBITDA of USD787.1mn (+33% y/y, -10% q/q) in 4Q25 was below the consensus expectations of USD840.1mn. Sea Ltd (SE) reported group adj EBITDA of USD787.1mn (+33% y/y, -10% q/q) in 4Q25 (Dec YE), ~6% below the consensus of USD840.1mn, led by lower-than-expected Adj EBITDA from E-commerce and FinTech, which faced sequential declines or seasonal impacts despite strong y/y growth. Gaming adj EBITDA in 4Q25 stood at USD363.8mn (+26% y/y, -22% q/q), 3% above the consensus of USD354.6mn. Fintech adj EBITDA stood at USD263.1mn (+25% y/y, +1.9% q/q), below the consensus of USD296.2mn. E-commerce adj EBITDA came at USD202.5mn (+33% y/y, +8.8% q/q), below the consensus of USD209.3mn. The 10% q/q decline in group adj EBITDA due to softer e-commerce margins from higher promotional spendings, increased logistics investments and elevated marketing costs, partly offset by stable profitability in Fintech.
More importantly, our Top 3 share price drivers for Sea Ltd which have dictated the share price in the last 12-months beat consensus. (1) E-commerce revenue was at USD4,974.6mn (up 36% y/y and +16% q/q), ~6% above the consensus. (y/y growth has shown ~76% correlation with the share price change) (2) Gaming bookings in 4Q25 stood at USD672.4mn (+24% y/y, -20% q/q) 2% ahead of consensus while recording Gaming adj EBITDA (as a % of Bookings) margin of 54% (55% in 3Q25) vs. consensus’ 54%. The y/y growth in bookings was due to strong performance from Free Fire and stronger user engagement. (y/y growth has shown ~66% correlation with the share price change) (3) Loan book rose to USD9.2bn (up 80% y/y, 17% q/q) 16% ahead of consensus (y/y growth has shown ~58% correlation with the share price change). E-commerce Gross Merchandise Value (GMV) of USD36.7bn (+28% y/y, +14 q/q) was ~3% above the consensus expectation of USD35.8bn. E-commerce GAAP take rate in 4Q25 was 13.6% (13.3% in 3Q25 and 12.7% in 4Q24) vs consensus 13.1%.
Management guides FY26F Shopee GMV growth of ~25% y/y, above the 18% y/y consensus forecast. Guides e-commerce GMV growth to ~25% y/y in FY26F (+27% y/y in FY25) from >25% earlier, above the consensus estimate of 18% y/y. Management guides that Shopee’s FY26 Adjusted EBITDA will be no lower than FY25 levels in absolute dollar terms (implying at least flat y/y, FY25 USD881mn), implies ~30% cut to FY26F consensus adj EBITDA for E-commerce of USD1.38bn. This suggests limited near-term operating leverage and raises the risk of downward revisions if growth does not accelerate. Consensus also likely to lower FY26F adj EBITDA for FinTech segment by 15% due to lower margins.
BUY with a TP of USD151 (previous USD175) with e-commerce comprising ~50% of our SE valuation. (i) We value E-commerce business is at 2.0x 12-month EV/revenue (prev 2.5x) 16% below the peer average of 2.4x due to its lower profitabilty despite a revenue CAGR of 27% over FY25-27F, much higher than its peer average of 13%. (ii) Our combined value for SE’s gaming & fintech businesses stands at 15x (previous 17x) 12-month EV/EBITDA at a 20% premium to its peer average of 12.5x. We factored in USD4.1bn in net cash.
Sum-of-the parts valuation of Sea Ltd
| SOTP Valuation | 12-months Adj EBITDA | EV/EBITDA | 12-month ecommerce Adj Revenue | EV/Revenue | Enterprise Value (USDmn) |
| Fintech | 1,258 | 15.0 | 18,864 | ||
| Gaming | 1,655 | 15.0 | 24,828 | ||
| E-commerce | 21,835 | 2.0 | 43,671 | ||
| Total Enterprise Value | 87,363 | ||||
| Net cash/(debt) | 4,100 | ||||
| Equity Value | 91,463 | ||||
| Number of shares (m) | 605 | ||||
| Target Price (USD) | 151 | ||||
| Previous Target Price | 175 |
Source: DBS
We lower FY26F/27F group adj EBITDA by 27%/25% led by lower e-commerce and fintech margins
| DBS | Consensus | DBS vs Consensus | ||||
| FY25 | FY26F | FY27F | FY26F | FY27F | FY26F | FY27F | |
| Digital Entertainment | 2,409 | 2359 | 2599 | 2,698 | 2,924 | -13% | -11% |
| E-commerce | 16,565 | 20870 | 26665 | 19,973 | 23,430 | 4% | 14% |
| Digital Financial Services | 3,792 | 5232 | 6645 | 5,074 | 6,159 | 3% | 8% |
| Other Services | 173 | 191 | 206 | 173 | 177 | 10% | 17% |
| Total GAAP Revenue | 22,938 | 28652 | 36115 | 27,816 | 32,471 | 3% | 11% |
| |||||||
| Digital Entertainment | 1,656.1 | 1655 | 1657 | 1,700 | 1,777 | -3% | -7% |
| E-commerce | 880.6 | 897 | 1413 | 1,379 | 2,145 | -35% | -34% |
| Digital Financial Services | 1,018.1 | 1203 | 1528 | 1,423 | 1,762 | -15% | -13% |
| Other Services | (80.7) | -29 | -31 | (54) | (66) | -47% | -53% |
| Unallocated expenses + Share based compensation | (37.0) | -662 | -662 | (84) | (58) | 687% | 1043% |
| Total Adjusted EBITDA | 3,437 | 3065 | 3906 | 3,631 | 4,947 | -16% | -21% |
Source: DBS, Visible Alpha
Revenue expectations of Shopee’s closest peers compared to Shopee
| Revenue | FY25F | FY26F | FY27F | CAGR 25F-27F |
| eBay Inc | 11,100 | 12,035 | 12,680 | 6.9% |
| ETSY Inc | 2,884 | 2,721 | 2,817 | -1.2% |
| Allegro.eu SA | 3,339 | 3,678 | 4,090 | 10.7% |
| PDD Holdings | 61,695 | 72,014 | 81,582 | 15.0% |
| Peer Total | 79,018 | 90,448 | 101,169 | 13.2% |
| Shopee (DBS) | 16,565 | 20,870 | 26,665 | 27% |
| Shopee (Consensus) | 16,565 | 19,973 | 23,430 | 19% |
Source: Visible Alpha, DBS
12-months forward EV/Sales of Shopee’s e-commerce peers
| EV/Sales | 03.02.2026 |
| eBay Inc | 3.6 |
| ETSY Inc | 2.4 |
| Allegro.eu SA | 2.3 |
| PDD Holdings | 1.2 |
| Average | 2.4 |
Source: Visible Alpha, DBS
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