$Sea Ltd(SE)$ is scheduled to release its Q4 2024 earnings result on 04 March 2025 before the market open.
The consensus estimate for revenues is expected at $4.84 billion, which would suggest year-over-year growth of 35.79%.
Consensus estimate for fourth-quarter earnings is expected at 62 cents per share, which is a significant improvement compared to a loss of 19 cents same period one year ago.
Sea Ltd (SE) Last Positive Earnings Call GIve Investors A 30.59% Change To Share Price
SE had managed to give investors a 30.59% change in share price since its last positive earnings call on 12 Nov 2024.
The call highlighted significant growth and profitability across all business segments, with strong performance metrics and strategic advancements positioning the company for continued success. Despite a slight increase in marketing expenses, the overall outlook remains robust.
Sea Ltd (SE) Guidance To Focus On Financial Service Expansion
During Sea Limited's Q3 2024 earnings call, the management provided optimistic guidance, highlighting significant year-on-year growth across its three main business segments. Shopee is on track to achieve mid-20% year-on-year GMV growth, while SeaMoney's loan book expanded over 70% year-on-year with a stable non-performing loan ratio of 1.2%. Garena anticipates Free Fire's bookings to increase by over 30% year-on-year. Shopee achieved positive adjusted EBITDA in both Asia and Brazil, reflecting improved profitability. The company also reported a 31% increase in total GAAP revenue to $4.3 billion and a leap in total adjusted EBITDA to $521 million.
The e-commerce segment saw a 25% rise in GMV and a 43% increase in marketplace revenue. Digital financial services revenue grew 38%, and digital entertainment bookings jumped 24%. The management emphasized continued growth in user engagement and financial service expansion, positioning the company for sustained profitable growth.
Areas (Core Segments) To Look At For SE Earnings
As Sea Limited (SE) had multiple core segments contributing to its earnings and revenue, so it is important for investors to look at these multiple factors that could affect the earnings amidst a broader market environment.
Segment Performance:
Shopee (E-commerce)
Growth Drivers: In Q3, Shopee's GMV grew by 25% year-on-year, Q4 typically benefits from holiday sales and year-end promotions. Shopee’s ability to maintain or increase market share against competitors like Lazada and Tokopedia will be critical. Improved logistics and cost efficiencies could boost margins.
Shopee achieved positive adjusted EBITDA in both Asia and Brazil, with Brazil achieving breakeven on an adjusted EBITDA basis for the first time.
Risks: High marketing spend during peak seasons might pressure profitability. Macroeconomic headwinds (inflation, reduced consumer spending) in Southeast Asia could dampen growth.
Garena (Gaming)
Growth Drivers: In Q3, Garena's Free Fire bookings grew over 30% year-on-year. Success of new game releases or updates to Free Fire could revive user engagement. Diversification beyond reliance on a single title would be a positive signal.
In Q3, Free Fire had over 100 million daily active users in Q3, with a 25% year-on-year growth, and was the #1 most downloaded mobile game globally per Sensor Tower.
Risks: Stagnation in game development or regulatory bans (e.g., past issues in India) may impact bookings. The gaming sector’s cyclicality could also play a role.
SeaMoney (Digital Finance)
Growth Drivers: In Q3 SeaMoney's loan book grew over 70% year-on-year, Expansion of financial services (e.g., loans, insurance) and increased adoption of digital wallets in underbanked regions. Partnerships with local merchants might drive transaction volume.
DFS GAAP revenue rose by 38% year-on-year, with consumer and SME loans principal outstanding reaching $4.6 billion, a 73% year-on-year increase.
Risks: Regulatory scrutiny in financial services and competition from established players like GrabPay or OVO.
Strategic and Macro Factors
Profitability Focus: Sea’s shift from growth-at-all-costs to cost discipline (evident in 2022–2024) may continue, potentially stabilizing EBITDA margins. In Q3, Sales and marketing expenses grew by 13% quarter-on-quarter, slightly impacting profitability. This is an area where investors might want to look at on how SE is managing the expenses and costs.
In Q3, Total GAAP revenue increased by 31% year-on-year to $4.3 billion, and total adjusted EBITDA was $521 million compared to $35 million in Q3 2023. If SE would be able to show a significant cost discipline, there might be a potential earnings surprise.
Competition: Intense rivalry in e-commerce and fintech could erode margins, especially if price wars escalate.
Regulatory Environment: Changes in data privacy, digital tax policies, or gaming regulations in key markets (Indonesia, Brazil, etc.) may impact operations.
Currency Risks: Exposure to emerging-market currencies (IDR, THB, BRL) could lead to FX volatility affecting reported revenues.
Market Sentiment & Valuation
Investor expectations will hinge on Sea’s ability to balance growth and profitability. Positive surprises in user metrics (GMV, active users) or margin expansion could drive stock upside.
Conversely, misses on revenue guidance or weaker-than-expected gaming bookings might trigger sell-offs.
Sea Ltd (SE) Price Target
Based on 8 Wall Street analysts offering 12 month price targets for Sea in the last 3 months. The average price target is $138.96 with a high forecast of $157.00 and a low forecast of $130.00. The average price target represents a 9.19% change from the last price of $127.27.
I would think that investors might have good sentiment considering the improvement in shopee and DFS services user engagement continued growth, but SE expenses might be a concern to some, I would think SE might be able to trade around the 132 to 135 dollars range.
Technical Analysis - Exponential Moving Average (EMA)
From the technicals, we are seeing SE trading in a sideways trend despite market sell-off last week, but there is a good attempt by the bulls to clear the 12-EMA, though it have not been very successful.
I believe the bulls would continue to attempt a daily uptrend expansion, which might be possible if SE would be able to show a significant improvement in its cost discipline hence reducing the expenses.
RSI need to show more buying sentiment from investors as it is currently in an indecisive period.
This is how I would view the two scenarios post earnings. I would think SE might be able to give us a bull case, I might load more SE shares.
Bull Case: Shopee sustains double-digit GMV growth, Garena launches a hit game, and SeaMoney achieves profitability. Macro conditions stabilize, favoring discretionary spending.
Bear Case: Competitive pressures squeeze Shopee’s take rate, Garena’s user base declines, and rising fintech regulations limit SeaMoney’s expansion. Currency depreciation further hurts earnings.
Summary
Analysts generally anticipate Sea Limited to report strong growth across its key segments: Shopee (e-commerce), Garena (digital entertainment), and SeaMoney (digital financial services).
While specific Q4 2024 results are unpredictable, Sea’s performance will likely hinge on execution in e-commerce monetization, gaming innovation, and fintech penetration. Investors should monitor pre-earnings guidance, regional economic indicators, and competitive dynamics.
Historical trends suggest cautious optimism if cost controls persist, but risks around competition and macro fragility remain key watchpoints.
While there is a general expectation of increased profitability, I would think investors need to pay attention on how SE cost control have been working.
Appreciate if you could share your thoughts in the comment section whether you think SE would be able to provide an earnings surprise if SE can show a significant improvement in its cost control.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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