$Sea Ltd(SE)$ the Southeast Asian internet giant, is slated to announce its fiscal first-quarter 2025 financial results on Tuesday, 13 May 2025, before the U.S. market opens.
Market analysts are forecasting significant year-over-year growth for Sea Limited in Q1 2025. The Zacks Consensus Estimate for earnings is pegged at $0.93 per share, a substantial increase from the $0.21 per share reported in the same quarter of the previous year.
Tipranks is providing the consensus EPS forecast at $0.81 per share.
Revenue projections are also optimistic, with a consensus estimate of $4.91 billion, suggesting a robust 29.7% increase year-over-year.
However, it is worth noting that Sea Limited has a history of missing Zacks Consensus Estimates in the trailing four quarters, with an average negative surprise of 22.65%.
Sea Limited (SE) Last Positive Earnings Call Saw Share Price Gain A Significant 12.70%
Sea Limited had a positive earnings call on 04 March 2025 which saw its share price gain 12.70% since.
The earnings call reflected a strong performance across all business segments, with record-breaking achievements in e-commerce, digital financial services, and digital entertainment. While there are some concerns about potential profitability fluctuations in Brazil and managing loan book growth risks, the overall sentiment is positive due to the significant growth and strategic achievements.
Sea Limited (SE) Guidance
In the Sea Limited Fourth Quarter and Full Year 2024 Results Conference Call, the company reported robust financial and operational performance across its three main business segments: e-commerce, digital financial services, and digital entertainment. For e-commerce, Shopee achieved a GMV of over $100 billion with a 28% year-on-year growth, recording over 10 billion orders in 2024, while maintaining positive adjusted EBITDA for the first full year. The digital financial services segment generated $2.4 billion in revenue with an adjusted EBITDA of over $700 million, driven by a 60% increase in the loan book to over $5 billion. The digital entertainment segment saw a resurgence with Free Fire's bookings growing 34% year-on-year, making it the world's largest mobile game by average DAU in 2024. Overall, Sea Limited's total GAAP revenue rose 29% year-on-year to $16.8 billion, with a full-year adjusted EBITDA of $2 billion, up from $1.2 billion in 2023.
The company also highlighted improvements in service quality and operational efficiencies, notably through AI integration, which contributed to increased customer satisfaction and reduced costs. Looking ahead, Sea Limited anticipates continued growth and profitability in 2025, with Shopee's GMV expected to grow by 20% and Garena projected to maintain double-digit growth in both user base and bookings.
While Shopee's GMV reached the US$70 billion mark in 2022, it continued to grow last year, albeit at a slower growth rate.
As for the next years, the online marketplace is expected to maintain a similar growth rate to last year, and reach USS$88.4 billion in GMV by 2025.
Specific Segments Expected To Have Significant Performance
There are some estimates for Sea Limited (SE) specific segments provided by market analysts, overall, the expectation for these segments performance have been significant.
Revenue - E-Commerce (Shopee): Expected to be around $3.63 billion, indicating a +32% year-over-year change.
Revenue - Digital Financial Services (SeaMoney): Forecasted at $733.24 million, a +46.8% increase from the year-ago quarter.
Adjusted EBITDA - Digital Entertainment (Garena): Projected to be $322.55 million, compared to $292.21 million in Q1 2024.
Adjusted EBITDA - Digital Financial Services (SeaMoney): Expected to reach $225.87 million, up from $148.66 million in the prior year's quarter.
Quarterly Active Users (Garena): Analysts predict this figure to be around 657 million, compared to 595 million a year ago.
Quarterly Paying Users (Garena): The consensus estimate stands at 53 million, up from 49 million in Q1 2024.
Key Factors to Watch For Sea Limited (SE) Fiscal Q1 Earnings
Shopee's Growth Momentum and Profitability: Investors will be closely scrutinizing Shopee's Gross Merchandise Value (GMV) growth and its path towards sustained profitability. While strong e-commerce demand is anticipated, potential headwinds from seasonal softness in the early part of the year and a highly competitive landscape (potentially pressuring take rates and requiring ongoing investment) will be key areas of focus. The performance of its integrated logistics arm, SPX Express, and its impact on service quality and cost efficiency will also be important.
Shopee's GMV surpassed $100 billion for the first time in 2024, with over 10 billion orders and a 28% year-on-year growth. It marked the first full year of being adjusted EBITDA positive.
Garena's Performance and Free Fire: The digital entertainment arm, Garena, is expected to benefit from its flagship game, Free Fire. A high-profile collaboration with NARUTO SHIPPUDEN launched in January is anticipated to have driven user engagement and bookings. Analysts will be looking for continued recovery and growth in Garena's user base and revenue. The potential relaunch of Free Fire in India remains a point of interest, though subject to government approvals.
Garena's Free Fire bookings grew 34% year-on-year, making it the world's largest mobile game by average DAU in 2024, with an average DAU growth of 28% year-on-year.
SeaMoney's Expansion: The digital financial services segment, SeaMoney, is projected to be a significant growth driver. Continued expansion in consumer and SME lending across Southeast Asia and Brazil, coupled with improvements in credit penetration, are expected to fuel robust revenue growth. The loan book surge observed in late 2024 is a trend analysts will be monitoring.
Sea's digital financial services segment achieved annual revenue of $2.4 billion and adjusted EBITDA of over $700 million, with a 30% year-on-year growth in both top and bottom lines.
Overall Profitability and Outlook: Beyond individual segment performance, the company's overall profitability and management's guidance for the upcoming quarters and the full fiscal year 2025 will be critical in shaping investor sentiment.
Total GAAP revenue increased 37% year-on-year to $5 billion in Q4 2024, with a total adjusted EBITDA of $591 million compared to $127 million in Q4 2023.
While Brazil showed strong growth and market share gains, profitability could be choppy quarter-to-quarter due to new market dynamics.
Despite the exceptional loan book growth of more than 60% year-on-year, there is a focus on maintaining stable risk exposure, with the 90-day NPL ratio at 1.2%.
Sea Limited (SE) Price Target
Based on 29 analysts from Tiger Brokers offering 12 month price targets for Sea in the last 3 months. The average price target is $155.74 with a high forecast of $182.00 and a low forecast of $120.00. The average price target represents a 11.90% change from the last price of $139.17.
While analysts have a generally positive outlook, some models, like Zacks, indicate a mixed picture regarding an earnings beat, with Sea Limited currently having a Zacks Rank #3 (Hold) and a negative Earnings ESP of -4.84%.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at how SE have been making a nice daily uptrend over the past week before retracting to a downside on Friday (09 May), this might signal that investors are cautious about the trade talk between US and China as there might be an impact on Shopee sellers which are mainly taking products from China.
Sea move to focus on the financial services business is good, but with the interest rate remain steady, this might not see much performance improvement, so we are seeing a decreasing momentum from the RSI, with a share price decline,
We need to understand that Sea share price will suffer a decline if there is an estimate miss with an earnings call not so positive so we need to monitor and watch the upcoming earnings call with Sea Limited's management as it will provide further details and context to these figures and expectations.
We are seeing signs of an increased short interest which could mean investors are planning to take profits before the earnings, this is not so much of a selling off of SE shares.
But this could cause a concerns if the sentiment continue to decline because of the consumer spending reducing and also the geopolitical tensions now building in Asia.
Summary
Investors and analysts are keenly watching for insights into the company's performance across its e-commerce (Shopee), digital entertainment (Garena), and digital financial services (SeaMoney) segments.
I think investors would be looking at Sea management earnings call on their strategy for Shopee to overcome the impact of tariffs on its sellers, and also what are the plans for their recent expansions of the SeaMoney which have been rebranded to Monee.
Appreciate if you could share your thoughts in the comment section whether you think SE would see a significant contribution from the digital financial services for its earnings to reduce the impact of tariffs on the Shopee side.
@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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