SEA Ltd: Inline results with stronger than expected Shopee; Shopee guidance above expectations
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- 2Q26 group adj EBITDA of USD917mn (+11% y/y, -11% q/q) was in line as stronger than expected Shopee was offset by higher losses from Other Services
- Management guided for Shopee to achieve USD1bn of adj EBITDA in FY26, ~3% above consensus, despite ongoing investments in logistics, content, advertising and loyalty
- Maintain BUY with an unchanged TP of USD148. Sea Ltd trades at 12-month forward EV/EBITDA of ~16x vs Grab’s 13x.
2Q26 Group adj EBITDA was broadly in line despite a strong Shopee beat. Sea Ltd (SE) reported 2Q26 revenue of USD7.8bn (+48% y/y, +10% q/q), ~9% above consensus of USD7.2bn, while group adjusted EBITDA of USD917mn (+11% y/y, -11% q/q) was broadly in line with consensus of USD905mn. The group EBITDA was limited by higher-than-expected adj EBITDA loss from Other Services of USD46mn, vs consensus’ USD23mn loss. Other Services mainly include AI related initiatives and ShopeeFood etc. Shopee revenue reached USD5.6bn (+48% y/y, +9% q/q), ~9% above consensus of USD5.1bn, driven by GMV growth of 28% y/y (+3% q/q) to USD38.3bn, ~2% above consensus of USD37.4bn with GAAP take-rate rising to 14.6% from 13.7% in 1Q26. Shopee adj EBITDA increased 12% y/y (+14% q/q) to USD255mn, 16% above consensus of USD221mn, with margin improving to 0.7% of GMV (0.6% in 1Q26 and 0.8% in 2Q25) vs 0.6% expected. Other key highlights were advertising revenue growing >70% y/y and livestreaming/short-form video orders increasing >50% y/y. Logistics also improved, with instant-delivery orders in Indonesia rising ~80% y/y while cost/order fell ~20% y/y. ShopeeVIP members exceeded 15mn, up 45% q/q. Monee revenue grew 59% y/y (+13% q/q) to USD1.4bn, ~6% above consensus of USD1.3bn, while adj EBITDA rose 13% y/y (+5% q/q) to USD288mn, broadly in line with consensus of USD287mn. Loan book reached USD11.1bn (+61% y/y) with NPL90+ stable at 1.0%. Importantly, AI is becoming operationally meaningful in Monee: AI-driven underwriting enhancements lifted approval rates by ~10% while maintaining a similar risk level, while AI tools for verifying income documents reduced review time by ~95%, allowing near-instant responses to credit-limit requests. Garena bookings grew 15% y/y (-18% q/q) to USD764mn, ~2% above consensus of USD748mn, while adj EBITDA of USD430mn (+17% y/y, -25% q/q) was ~3% above consensus of USD419mn, with margin at 56%.
Management is increasingly confident in Shopee’s FY26 profitability trajectory. Management is optimistic that Shopee will achieve USD1bn of adjusted EBITDA (~14% y/y) for FY26 vs consensus expected USD968mn. Shopee implemented multiple seller fee/commission increases across key markets in 1H26, including Singapore and Brazil in 1Q26 and Malaysia/Vietnam in 2Q26. Management stated that there remains meaningful room to lift take rates further through commissions, advertising and seller services, supporting continued margin expansion. We see the combination of stronger Shopee monetisation, improving logistics unit economics and increasingly embedded AI in Monee’s underwriting and servicing as supportive of sustainable margin expansion.
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