My Thoughts on $SE Sea Q3'26: Revenue Grows 43%, Monee Accelerates 64%, and Shopee Monetization Improves. Sea delivered strong Q3 results despite shares falling 5.8% after earnings. Revenue grew 43.4% YoY, decelerating from 48.1% in Q2. Gross margin improved for the fourth consecutive quarter to 45.85%, while operating and net margins declined slightly to 7.74% and 5.85%. I consider continued investment in logistics, fulfillment, and credit expansion positive, provided it supports sustainable growth. Shopee continues improving monetization. GMV grew 23.3% YoY, with quarterly orders reaching 4.5B (+300M QoQ). Revenue growth outpaced GMV, pushing commerce take rate to a record 15.3% (+0.7 PPs QoQ). Advertising revenue increased over 55% YoY, supported by 35%+ growth in advertising sellers and 13% higher spending per seller. Monee is Sea's fastest-growing business. Revenue growth accelerated to 63.8% YoY, with consumer and SME loans reaching $12.6B (+60% YoY). Off-Shopee SPayLater loans more than doubled, reaching 25% of SPayLater balances, demonstrating expansion beyond Shopee. Monee's 17.8% operating margin significantly exceeds Shopee's 2.6%. Management plans a standalone Monee IPO within 1–3 years to support future expansion. However, credit risks deserve attention. Loans overdue more than 90 days increased to 1.3%, particularly in Thailand and Brazil. Garena remains Sea's primary profit generator. Revenue grew 28.7% YoY, with operating margin reaching 53.9%. Despite contributing only around 10% of revenue, Garena generates the highest operating profit among Sea's businesses. Dependence on Free Fire remains a key risk, although new gaming titles could support diversification.
View original →
